SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 28, 1999
AUDIOVOX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-9532 13-1964841
(State or other jurisdiction (Commission (IRS Employer Identification
of Incorporation or File Number) Number)
organization)
150 Marcus Boulevard, Hauppauge, New York 11788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 231-7750
Page 1 of (4) Pages
Exhibit Index on Page (4)
Item 5. Other Events.
Fourth Amended and Restated Credit Agreement and First Amendment to the Fourth
Amended and Restated Credit Agreement.
Effective July 28, 1999, the Company entered into the Fourth
Amended and Restated Credit Agreement (the "Credit Agreement") which superseded
the Third Amended and Restated Credit Agreement in its entirety.
Effective October 13, 1999, the Company executed a First
Amendment to the Company's Fourth Amended and Restated Credit Agreement (the
"Credit Agreement as Amended").
The Credit Agreement as Amended, added Firstar Corporation, to
the group of lenders. Firstar has an initial commitment of $15,000,000
($5,000,000 of which was acquired by assignment from The Chase Manhattan Bank
and $10,000,000 of which is a new commitment under the Credit Agreement as
Amended which resulted in an increase in the aggregate commitments of the
lenders to $200,000,000). The procedures for revolving credit borrowings and
optional prepayments were revised. In addition, the Credit Agreement as Amended,
allows the Company to guarantee certain obligations of GLM Wireless
Communications LLC to Fleet Bank and allows for the transfer of the Company's
Automotive Electronics Assets to a subsidiary at some point in the future at the
Company's sole discretion. The Credit Agreement as Amended contains covenants
requiring, among other things, minimum quarterly and annual levels of pre-tax
income and net worth. The Credit Agreement as Amended expires on July 28, 2004.
Page 2 of (4) Pages
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the company has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
AUDIOVOX CORPORATION
Dated: October 27, 1999 By: s/Charles M. Stoehr
----------------------
Charles M. Stoehr,
Senior Vice President and
Chief Financial Officer
Page 3 of (4) Pages
4
EXHIBIT INDEX
Exhibit Description
1 Fourth Amended and Restated
Credit Agreement
2 First Amendment to the Audiovox
Corporation Fourth Amended and
Restated Credit Agreement
Page 4 of (4) Pages
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July
28, 1999, among AUDIOVOX CORPORATION, a Delaware corporation (the "Borrower"),
the several banks and other financial institutions from time to time parties to
this Agreement (collectively, the "Lenders"; individually, a "Lender"), and THE
CHASE MANHATTAN BANK, a New York banking corporation, as administrative and
collateral agent for the Lenders hereunder (in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Agent are parties
to the Third Amended and Restated Credit Agreement, dated as of December 23,
1998 (as amended prior to the date hereof, the "Existing Credit Agreement");
WHEREAS, pursuant to the Existing Credit Agreement, certain of
the Lenders have over time made loans to, and have issued letters of credit,
steamship guarantees and airway releases and created bankers' acceptances for or
for the account of, the Borrower (collectively, the "Existing Extensions of
Credit") which are secured pursuant to the Security Documents (as hereinafter
defined);
WHEREAS, the Borrower has requested that the Existing Credit
Agreement be amended and restated in the manner provided for herein; and
WHEREAS, the security interests granted and guarantees issued
pursuant to the Security Documents will continue to provide collateral security
for the obligations of the Borrower under this Agreement:
ACCORDINGLY, the parties hereto hereby agree that, upon the
satisfaction of the conditions set forth in subsections 8.1 and 8.2 of this
Agreement, the Existing Credit Agreement is hereby amended and restated as
follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Acceptance Obligations": at any time, an amount equal to the sum
of (a) the aggregate face amount of unmatured Acceptances (including
Existing Acceptances) at such time and (b) the aggregate amount of all
unpaid Acceptance Reimbursement Obligations at such time.
"Acceptance Participants": with respect to each Acceptance
(including each Existing Acceptance), collectively, all the Lenders
other than the Accepting Bank.
"Acceptance Rate": the rate per annum equal to the Applicable
Margin then in effect for Eurodollar Loans plus the discount rate, as
determined from time to time by the Accepting Bank, in its sole and
absolute discretion, as generally available as the discount rate to
other
Exhibit 1
1
customers of the Accepting Bank for bankers' acceptances for up
to and including 90-day tenor.
"Acceptance Reimbursement Obligations": the obligation of the
Borrower to reimburse the Accepting Bank pursuant to subsection 5.5(b)
for the face amount of Acceptances (including any Existing
Acceptances).
"Acceptance Request": an Acceptance Request, substantially in the
form of Exhibit E hereto, with appropriate insertions, or in such
other form as the Accepting Bank shall reasonably request, including
any such Acceptance Request issued in connection with any Existing
Acceptance.
"Acceptances": as defined in subsection 5.1(a).
"Accepting Bank": Chase, or its successor pursuant to subsections
12.9 and 12.10, in its capacity as creator of Acceptances pursuant to
subsection 5.1(a).
"Account Debtor": as to any Account, any Person who is or may
become obligated to any other Person under, with respect to, or on
account of, such Account.
"Accounts": as to any Person at any time, all accounts, accounts
receivable and other receivables of such Person at such time.
"Acquisition": as to any Person, the acquisition by such Person
of (a) all of the Capital Stock of any other Person, (b) all or
substantially all of the assets of any other Person or (c) all or
substantially all of the assets constituting a business unit or
division of any other Person.
"Adjustment Date": the second Business Day following receipt by
the Agent of both (i) the financial statements required to be
delivered pursuant to subsection 9.1(a) or 9.1(b), as the case may be,
for the most recently completed fiscal period and (ii) the compliance
certificate required to be delivered pursuant to subsection 9.2(b)
with respect to such fiscal period.
"Administrative Schedule": Schedule 1.1(b) to this Agreement,
which contains administrative information in respect of each Available
Foreign Currency and each Foreign Currency Loan.
"Affiliate": as to any Person, (a) any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person,
including, without limitation, any Joint Venture of such Person, or
(b) any Person who is a director, officer, shareholder or partner (i)
of such Person, (ii) of any Subsidiary of such Person or (iii) of any
Person described in the preceding clause (a), provided that CellStar
shall not be an Affiliate of the Borrower or any of its Subsidiaries
for purposes of this Agreement. For purposes of this definition,
"control" of a Person means the power, directly
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or indirectly, either to (i) vote 10% or more of the securities
having ordinary voting power for the election of directors of such
Person or (ii) direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Aggregate Outstanding Direct Extensions of Credit": as to any
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Loans (other than Foreign Currency Loans) made
by such Lender then outstanding, (b) such Lender's Commitment
Percentage of the aggregate Dollar Equivalents of the principal
amounts of Foreign Currency Loans then outstanding and (c) such
Lender's Commitment Percentage of the Acceptance Obligations then
outstanding.
"Aggregate Outstanding Extensions of Credit": as to any Lender at
any time, an amount equal to the sum of (a) the aggregate principal
amount of all Loans (other than Foreign Currency Loans) made by such
Lender then outstanding, (b) such Lender's Commitment Percentage of
the aggregate Dollar Equivalents of the principal amounts of Foreign
Currency Loans then outstanding, (c) such Lender's Commitment
Percentage of the L/C Obligations then outstanding and (d) such
Lender's Commitment Percentage of the Acceptance Obligations then
outstanding.
"Agreement": this Fourth Amended and Restated Credit Agreement,
as the same may be amended, supplemented or otherwise modified from
time to time.
"Airway Release": as defined in subsection 4.1(b).
"Applicable Commitment Fee Rate": (a) prior to February 28, 2000,
0.50%, and (b) thereafter, the Applicable Commitment Fee Rate shall be
adjusted as necessary on each Adjustment Date (with the first such
Adjustment Date being deemed to occur on February 28, 2000) to be
equal to the Applicable Commitment Fee Rate set forth below opposite
the range of Consolidated Pre-Tax Income within which the Consolidated
Pre-Tax Income for the period of four consecutive fiscal quarters
ending on the last day of the period covered by the financial
statements relating to such Adjustment Date falls:
========================================================== =====================
Applicable Facility Fee
Consolidated Pre-Tax Income Range Rate
--------------------------------- ----
Greater than or equal to $15,000,000 0.25%
Greater than or equal to $10,000,000 but less 0.375%
than $15,000,000
Greater than or equal to $4,000,000 but less 0.375%
than $10,000,000
Less than $4,000,000 0.50%
========================================================== =====================
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provided, however, that (a) if on any Adjustment Date an Event of
Default shall have occurred and be continuing, no adjustment of the
Applicable Commitment Fee Rate shall be made on such Adjustment Date
which decreases the Applicable Commitment Fee Rate then in effect and
any such decrease shall not be effective unless and until such Event
of Default is cured or waived on or prior to the next succeeding
Adjustment Date and (b) in the event that the financial statements
required to be delivered pursuant to subsection 9.1(a) or 9.1(b), as
applicable, and the related compliance certificate required pursuant
to subsection 9.2(b), are not delivered when due, then if such
financial statements are delivered after the date such financial
statements were required to be delivered and the Applicable Commitment
Fee Rate increases from that previously in effect as a result of the
delivery of such financial statements, then the Applicable Commitment
Fee Rate during the period from the date upon which such financial
statements were required to be delivered until two Business Days
following the date upon which they actually are delivered shall be the
Applicable Commitment Fee Rate as so increased.
"Applicable Margin": (a) prior to February 28, 2000, with respect
to any Base Rate Loan, 0.0% and with respect to any Eurodollar Loan,
1.50%, and (b) thereafter, the Applicable Margin for Base Rate Loans
and Eurodollar Loans shall be adjusted as necessary on each Adjustment
Date (with the first such Adjustment Date being deemed to occur on
February 28, 2000) to be equal to the Applicable Margin set forth
below opposite the range of Consolidated Pre-Tax Income within which
the Consolidated Pre- Tax Income for the period of four consecutive
fiscal quarters ending on the last day of the period covered by the
financial statements relating to such Adjustment Date falls:
========================================================== =====================
Consolidated Pre-Tax Income Range Applicable Margin
Greater than or equal to $15,000,000 Base Rate Loan: 0.00%
Eurodollar Loan: 1.00%
Greater than or equal to $10,000,000 but less Base Rate Loan: 0.00%
than $15,000,000 Eurodollar Loan: 1.50%
Greater than or equal to $4,000,000 but less Base Rate Loan: 0.00%
than $10,000,000 Eurodollar Loan: 1.75%
Less than $4,000,000 Base Rate Loan: 0.25%
Eurodollar Loan: 2.00%
========================================================== =====================
provided, however, that (a) if on any Adjustment Date an Event of
Default shall have occurred and be continuing, no adjustment of the
Applicable Margin shall be made on such Adjustment Date which
decreases the Applicable Margin then in effect and any such decrease
shall not be effective unless and until such Event of Default is cured
or waived on or prior to the next succeeding Adjustment Date and (b)
in the event that the financial statements required to be delivered
pursuant to subsection 9.1(a) or 9.1(b), as applicable, and the
related compliance certificate required pursuant to subsection 9.2(b),
are not delivered when due,
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then if such financial statements are delivered after the date
such financial statements were required to be delivered and the
Applicable Margin increases from that previously in effect as a result
of the delivery of such financial statements, then the Applicable
Margin during the period from the date upon which such financial
statements were required to be delivered until two Business Days
following the date upon which they actually are delivered shall be the
Applicable Margin as so increased.
"Application": an application, in such form as the Issuing Bank
may specify from time to time, requesting the Issuing Bank to open a
Letter of Credit, including any such application issued in connection
with any Existing Letter of Credit.
"Audiovox Pledge Agreement": the Stock Pledge Agreement, dated as
of July 29, 1996, made by the Borrower in favor of the Collateral
Agent, a copy of which is attached hereto as Exhibit M, as the same
may be amended, supplemented or otherwise modified from time to time.
"Audiovox Holding Corp. Pledge Agreement": the Pledge Agreement,
dated as of February 9, 1996, made by Audiovox Holding Corp. in favor
of The Chase Manhattan Bank, as Pledge Agent, a copy of which is
attached hereto as Exhibit N, as the same may be amended, supplemented
or otherwise modified from time to time.
"Available Foreign Currency": Deutsche marks, Sterling, euros,
Japanese Yen, Spanish Peseta and any other available and freely
convertible Foreign Currency which is approved by the Agent and the
Fronting Bank.
"Available Commitment": as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's
Commitment over (b) the aggregate principal amount of the Aggregate
Outstanding Extensions of Credit of such Lender then outstanding.
"Base Rate": the rate of interest per annum publicly announced by
Chase as its prime rate in effect at its principal office in New York,
New York. The prime rate is not intended to be the lowest rate of
interest charged by Chase in connection with extensions of credit to
debtors.
"Base Rate Loans": Dollar Loans the rate of interest applicable
to which is based upon the Base Rate.
"Borrower Security Agreement": the Amended and Restated Security
Agreement, dated as of March 15, 1994, made by the Borrower in favor
of the Collateral Agent, a copy of which is attached hereto as Exhibit
J, as the same may be amended, supplemented or otherwise modified from
time to time.
"Borrowing Base": on any date of determination thereof, the sum
of (a) 75% of the aggregate amount of Eligible Accounts of the
Borrower and its consolidated Domestic and
5
Canadian Subsidiaries on such date of determination and (b) the
lesser of (i) 30% of the aggregate amount of Eligible Inventory of the
Borrower and its consolidated Domestic and Canadian Subsidiaries on
such date of determination and (ii) $45,000,000. The Borrowing Base
shall be reduced from time to time by an amount equal to the Foreign
Exchange Liabilities of the Borrower as most recently determined prior
to such time by the Agent pursuant to subsection 6.16. The Borrowing
Base shall be determined by the Agent in its sole discretion
exercising reasonable judgment from time to time by reference to the
most recent monthly Borrowing Base Certificate delivered to the Agent
pursuant to subsection 9.2(g). The Agent shall determine the Borrowing
Base in effect on the first Business Day of each month during the
Commitment Period and shall send a Borrowing Base Notice on such
Business Day of the Borrower and each Lender setting forth the
Borrowing Base as so determined. The Agent shall also send a Borrowing
Base Notice to the Borrower and each Lender on each Business Day on
which the Borrowing Base is changed other than pursuant to the
immediately preceding sentence setting forth the Borrowing Base as so
changed.
"Borrowing Base Certificate": a certificate, substantially in the
form of Exhibit C-1, or in such other form as the Agent shall from
time to time request.
"Borrowing Base Notice": a notice, substantially in the form of
Exhibit C-2, or in such other form as the Agent shall from time to
time specify.
"Borrowing Date": any Business Day specified in a notice pursuant
to subsection 2.3 or 3.2 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Business Day": (a) when such term is used in respect of a day on
which a Foreign Currency Loan is to be made, a payment is to be made
in respect of a Foreign Currency Loan, a Foreign Currency Loan is to
be continued as such, an Interest Period is to be determined in
respect thereof, or any other dealing in the applicable Foreign
Currency is to be carried out pursuant to this Agreement, such term
shall mean a London Banking Day which is also a day (i) on which banks
are open for general banking business in the city which is the
principal financial center of the country of such Foreign Currency and
(ii) which is a Business Day pursuant to clause (b) below and (b) when
such term is used in any other context in this Agreement, such term
shall mean a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to
close.
"Calculation Date": the last Business Day of each calendar month
and such other Business Days during such calendar month as may be
specified by the Agent.
"Canadian Subsidiary": Audiovox Canada Limited, an Ontario
corporation.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
6
"Cash Equivalents": (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than 180 days
from the date of acquisition, (ii) time deposits and certificates of
deposit having maturities of not more than 180 days from the date of
acquisition of any Lender or of any domestic commercial bank the
long-term debt of which is rated at least A-2 or the equivalent
thereof by Standard & Poor's Corporation or a-2 or the equivalent
thereof by Moody's Investors Service, Inc. and having capital and
surplus in excess of $500,000,000, (iii) repurchase obligations with a
term of not more than seven days for underlying securities of the
types described in clauses (i) and (ii) entered into with any bank
meeting the qualifications specified in clause (ii) above, (iv)
commercial paper rated at least A-2 or the equivalent thereof by
Standard & Poor's Corporation or a-2 or the equivalent thereof by
Moody's Investors Service, Inc. and in either case maturing within 180
days after the date of acquisition, (v) securities issued by any
municipality in the United States rated at least A-2 or the equivalent
thereof by Standard & Poor's Corporation or a-2 or the equivalent
thereof by Moody's Investors Service, Inc. and in either case maturing
within 180 days after the date of acquisition or (vi) any other
investment approved by the Agent in its sole discretion.
"CellStar": CellStar Corporation, a Delaware corporation.
"Cellular Inventory": at a particular date, all cellular
telephones and other cellular Inventory of the Borrower and its
Subsidiaries on hand at such date.
"Chase": The Chase Manhattan Bank, a New York banking
corporation.
"Closing Date": the date on which all the conditions set forth in
Section 8 shall first have been satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral Agent": Chase, in its capacity as collateral agent
(or, in the case of the Audiovox Holding Corp. Pledge Agreement,
Pledge Agent) under the Security Documents.
"Commitment": as to any Lender at any time, the obligation of
such Lender to make or participate in Loans and/or issue or
participate in Letters of Credit issued on behalf of the Borrower
and/or create or participate in Acceptances created for the Borrower
in an aggregate principal amount and/or face amount at any one time
outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 1.1(a) hereto, as the same may be reduced from time
to time in accordance with the terms of this Agreement; collectively
as to all the Lenders, the "Commitments".
"Commitment Percentage": as to any Lender at any time, the
percentage which such Lender's Commitment then constitutes of the
aggregate Commitments (or, at any time after the Commitments shall
have expired or terminated, the percentage which the aggregate amount
of such Lender's Aggregate Outstanding Extensions of Credit then
outstanding
7
constitutes of the aggregate amount of the Aggregate Outstanding
Extensions of Credit of all Lenders then outstanding).
"Commitment Period": the period from and including the date
hereof to but not including the Termination Date or such earlier date
on which the Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Consent of Guarantors": the Consent of Guarantors, dated as of
July 28, 1999, executed by the Subsidiaries parties to the
Subsidiaries Guarantee, the form of which Consent of Guarantors is
attached hereto as Exhibit I.
"Consolidated Adjusted Net Worth": at a particular date,
Consolidated Net Worth at such date minus, to the extent included in
the determination of such Consolidated Net Worth, all unrealized gain
as of such date on the shares of Capital Stock of CellStar owned by
the Borrower and its Subsidiaries.
"Consolidated Current Assets": at a particular date, all amounts
which would, in conformity with GAAP, be included under current assets
on a consolidated balance sheet of the Borrower and its Subsidiaries
as at such date.
"Consolidated Current Liabilities": at a particular date, all
amounts which would, in conformity with GAAP, be included under
current liabilities on a consolidated balance sheet of the Borrower
and its Subsidiaries as at such date.
"Consolidated Net Income": for any period, the consolidated net
income of the Borrower and its Subsidiaries for such period (taken as
a cumulative whole), determined in conformity with GAAP (but excluding
gains or losses from sale of securities of any Person (other than a
Subsidiary), including, without limitation, the sale of the Capital
Stock of CellStar). If Consolidated Net Income is less than zero for
any period, it is referred to herein as a "Consolidated Net Loss".
"Consolidated Net Worth": at a particular date, all amounts which
would, in conformity with GAAP, be included under stockholders' equity
on a consolidated balance sheet of the Borrower and its Subsidiaries
as at such date, excluding any treasury stock and any Foreign
Translation Adjustments.
"Consolidated Pre-Tax Income": for any period, Consolidated Net
Income for such period plus, to the extent deducted in determining
Consolidated Net Income for such period, Federal, state and local
income taxes. If Consolidated Pre-Tax Income is less than zero for any
period, it is referred to herein as a "Consolidated Pre-Tax Loss". For
purposes of this
8
Agreement, Consolidated Pre-Tax Income shall not (other than for
purposes of determining the Applicable Margin) include the effects of
any conversion of any Subordinated Debentures into common stock of the
Borrower or of any gains or losses from the sale of Capital Stock of
CellStar or any other extraordinary gains.
"Consolidated Total Liabilities": at a particular date, all
amounts which would, in conformity with GAAP, be included under
liabilities on a consolidated balance sheet of the Borrower and its
Subsidiaries as at such date, and including in any event the Aggregate
Outstanding Direct Extensions of Credit of the Lenders on such date,
and excluding in any event the Talk Note, the Subordinated Debentures
and any Standby Letter of Credit issued to support the Borrower's
obligation under the Subordinated Debentures.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its property is bound.
"Cost of Funds Rate": with respect to any Designated Foreign
Currency, the rate of interest determined by the Fronting Bank (which
determination shall be conclusive absent manifest error) to be the
cost to the Fronting Bank of obtaining funds denominated in such
Designated Foreign Currency for the period or, if applicable, the
relevant Interest Period or Periods during which any relevant amount
of the Designated Foreign Currency is outstanding.
"Default": any of the events specified in Section 11, whether or
not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Designated Foreign Currency": any Foreign Currency (other than
Available Foreign Currencies) approved by the Agent and the Fronting
Bank.
"DFS Agreement": the Agreement for Wholesale Financing, dated as
of April 1, 1999, between Deutsche Financial Services Corporation and
Audiovox Communications Corp., as amended, supplemented or otherwise
modified from time to time.
"DFS Inventory": at any particular date, any Cellular Inventory
of Audiovox Communications Corp. which is manufactured, distributed
and/or sold by LG International (America), Inc., or any of its
subsidiaries or corporate parent companies listed on Schedule 2 to the
DFS Intercreditor Agreement, to Audiovox Communications Corp. and
which bears the trademarks or tradenames of LG International
(America), Inc., or the trademarks or tradenames of any of its
subsidiaries or corporate parent companies listed on Schedule 2 to the
DFS Intercreditor Agreement, together with (i) all rebates, discounts,
credits and incentive payments to the extent payable by suppliers or
manufacturers directly in respect of DFS Inventory or otherwise not
constituting trade receivables, (ii) returns, repossesions, exchanges,
replacements, substitutions, attachments, parts, accessories and
accessions thereto and (iii) insurance proceeds thereof; it being
expressly agreed that, except for insurance proceeds, no Proceeds of
or Accounts arising from any of the foregoing shall be included in DFS
Inventory, and DFS shall have no security interest therein or right
thereto
9
(notwithstanding any term or provision of applicable law or any
instrument or filing to the contrary).
"DFS Intercreditor Agreement": the Intercreditor Agreement and
Subordination Agreement, dated as of March 12, 1999, among The Chase
Manhattan Bank, as Agent, and Deutsche Financial Services Corporation.
"Dollar Equivalent": at any time as to any amount denominated in
any relevant currency (other than Dollars), the equivalent amount in
Dollars as determined by the Agent at such time on the basis of the
Exchange Rate for the purchase of Dollars with such other relevant
currency on the most recent Calculation Date for such relevant
currency.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Dollar Loans": as defined in subsection 2.1.
"Domestic Subsidiary": any Subsidiary incorporated under the laws
of the United States of America or a State thereof.
"Draft": a draft, substantially in the form of Exhibit F hereto,
or in such other form as the Accepting Bank shall reasonably request.
"Eligible Accounts": as to any Person, at a particular date, the
total outstanding balance of Accounts of such Person:
(a) which are bona fide, valid and legally enforceable
obligations of the Account Debtor in respect thereof and arise
from the actual sale and delivery of goods or rendition and
acceptance of services in the ordinary course of business to
such Account Debtor;
(b) which do not contravene, or arise from sales which
contravene, any Requirement of Law applicable thereto;
(c) which are payable in full not later than 60 days after the
date of the creation of original invoices related thereto
unless the payment of such Accounts are supported by letters
of credit issued by a bank, and on terms, reasonably
acceptable to the Agent, provided that, notwithstanding the
foregoing, Eligible Accounts of the Borrower and its Domestic
and Canadian Subsidiaries may include up to $5,000,000 in
Accounts which are payable in full not later than 90 days (and
not earlier than 60 days) after the creation of the original
invoices related thereto ("Ninety-Day Accounts");
(d) which are not subject to any offset, net-out, set-off,
deduction, dispute, counterclaim or defense (other than
co-operative advertising credits), and with respect to which
no return, rejection or repossession has occurred;
10
(e) which do not represent a consignment sale, guaranteed
sale, sale or return or other similar arrangement;
(f) which are not Accounts relating to sales to employees or
representatives;
(g) which are reduced by any amounts then owing by such Person
to the Account Debtor or obligor in respect of such Accounts,
including, without limitation, any amounts credited or charged
back to such Accounts;
(h) which have been invoiced by such Person and which have not
been past due for more than 60 days (or, in the case of
Ninety-Day Accounts (as defined above), 30 days) after the
payment dates specified in the invoices related to such
Accounts;
(i) with respect to which, the Agent is, and continues to be,
reasonably satisfied with the credit standing of the Account
Debtor or obligor;
(j) which are not owed by an Account Debtor or obligor which
is an Affiliate (other than CellStar) or Subsidiary of such
Person;
(k) which are not owed by an Account Debtor or obligor which
has taken any of the actions or suffered any of the events of
the kind described in paragraph (g) of Section 11, except to
the extent any such Accounts are entitled to an administrative
expense priority under the Bankruptcy Code;
(l) with respect to which, together with its Affiliates, more
than 50% of the aggregate amount of Accounts owed by any
Account Debtor or obligor to such Person are not more than 60
days (or, in the case of Ninety-Day Accounts (as defined
above), 30 days) past due after the payment dates specified in
the invoices related to such Accounts;
(m) which are (i) with respect to Accounts owed to the
Borrower or any Domestic Subsidiary, denominated in Dollars
and payable only in Dollars and only in the United States of
America or denominated in any other currency which is covered
by a Foreign Exchange Contract and is otherwise acceptable to
the Agent and (ii) with respect to Accounts owed to the
Canadian Subsidiary, are denominated in Dollars or Canadian
dollars and payable only in Dollars or Canadian dollars and
only in the United States of America or Canada;
(n) which are owned solely by such Person free and clear of
all Liens or other rights or claims of any other Person
(except in favor of the Collateral Agent for the benefit of
the Lenders) and arise from sales in respect of which all
sales, excise or similar taxes have been paid in full;
11
(o) which are subject to a perfected first priority security
interest in favor of the Collateral Agent for the benefit of
the Lenders pursuant to the Borrower Security Agreement or the
Subsidiaries Security Agreement, as the case may be;
(p) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any
Governmental Authority, required to be obtained, effected or
given in connection with the execution, delivery and
performance of such Accounts have been duly obtained, effected
or given, and are in full force and effect;
(q) which are not Accounts owed by any Governmental Authority
other than such Accounts as to which all required filings to
perfect the security interest in such Accounts in favor of the
Collateral Agent for the benefit of the Lenders pursuant to
the Borrower Security Agreement or the Subsidiaries Security
Agreement, as the case may be, have been made, including,
without limitation, any filings and/or assignments required
under the Assignment of Claims Act of 1940, as amended;
(r) which, with respect to Accounts owed to the Canadian
Subsidiary, may be reduced by an amount, as determined by the
Agent in its reasonable discretion, equal to any costs, taxes
or other amounts that might be payable in the event the
security interest in such Accounts in favor of the Collateral
Agent for the benefit of the Lenders was to be enforced;
(s) which constitute "accounts" within the meaning of the
Uniform Commercial Code of the state in which the chief
executive office of such Person is located;
(t) which are owed by Account Debtors (i) which are organized
under the laws of the United States of America or a State
thereof or under the laws of Canada or a Province thereof,
(ii) the Capital Stock of which is traded on the New York
Stock Exchange, the NASDAQ/AMEX or any other american exchange
and which has a market capitalization of at least
$1,000,000,000, (iii) at least 20% of the outstanding Capital
Stock of which is owned by one or more of the Bell operating
companies or by any other Person the Capital Stock of which is
traded on the New York Stock Exchange, the NASDAQ/AMEX or any
other american exchange and which has a market capitalization
of at least $1,000,000,000 or (iv) which are otherwise
acceptable to the Agent, provided that the aggregate amount of
Eligible Accounts of Account Debtors described in clause (ii)
and (iii) above (and which do not qualify pursuant to clause
(i) above) shall not exceed $30,000,000 at any time; and
(u) which conform in all other respects to the representations
and warranties contained in the Borrower Security Agreement or
the Subsidiaries Security Agreement, as the case may be.
Standards of eligibility may be fixed and revised from time to time
solely by the Agent in the Agent's reasonable judgment, provided that
the Agent shall not revise the standards of
12
eligibility in a manner which would increase the outstanding balance of
Eligible Accounts at the time of such revision without the prior
written consent of the Required Lenders. Unless a Default or Event of
Default has occurred and is continuing, the Agent shall give five days
prior written notice to the Borrower of any change in the standards of
eligibility set forth above, except for changes relating to the credit
standing of the Account Debtor or obligor on any Account. To the extent
that the aggregate amount of co-operative advertising credits exceeds
$10,000,000 at any time, the aggregate amount of Eligible Accounts
shall be reduced by an amount equal to such excess.
"Eligible Inventory": as to any Person, at a particular date, the
aggregate amount of Inventory (other than DFS Inventory) of such
Person:
(a) which is owned solely by such Person free and clear of all
Liens or other rights or claims of any other Person (except in
favor of the Collateral Agent for the benefit of the Lenders);
(b) which (i) is subject to a perfected first priority
security interest in favor of the Collateral Agent for the
benefit of the Lenders pursuant to the Borrower Security
Agreement or the Subsidiaries Security Agreement, as the case
may be, and (A) is located at a storage, manufacturing or
public facility owned or leased by such Person in the United
States of America or, with respect to the Inventory of the
Canadian Subsidiary, in Canada, or (B) is in transit from one
such location in the United States of America (or in the case
of Canadian Subsidiaries, in Canada) to another such location
in the United States of America (or in the case of Canadian
Subsidiaries, Canada), and, in either case, as to which, if
such storage, manufacturing or public facility is leased, a
Landlord's Consent has been received by the Collateral Agent,
provided, that the requirement that the Collateral Agent shall
have received a Landlord's Consent shall not apply prior to
the date which is six months after the Closing Date, provided
that the aggregate amount of Inventory in transit pursuant to
clause (i)(B) which may be Eligible Inventory shall not exceed
$2,000,000, or (ii) is being shipped to the United States of
America or Canada if, upon arrival of such Inventory in the
United States of America or Canada, such Inventory will
immediately be subject to a first priority security interest
in favor of the Collateral Agent for the benefit of the
Lenders pursuant to the Borrower Security Agreement or the
Subsidiaries Security Agreement, as the case may be, provided
that, (x) if such Inventory is being shipped under a Letter of
Credit which is not denominated in Dollars, the value of such
Inventory shall be reduced from time to time to account for
currency fluctuations and (y) the aggregate amount of
Inventory which may be included in the determination of
Eligible Inventory as a result of this clause (ii) and which
is not being shipped under a Letter of Credit issued, or
Acceptance created, under this Agreement shall not exceed
$15,000,000;
(c) which is readily marketable for sale;
(d) which is not damaged;
13
(e) which has not been returned or rejected by any prospective
buyer thereof, unless, if such Inventory is returned, such
Inventory is readily marketable for sale upon return;
(f) which are not display goods;
(g) which is not in the form of books or other literature;
(h) which, in the case of Cellular Inventory, is expected to
be sold within six months based upon the turnover applicable
to such Cellular Inventory and, in the case of other
Inventory, is expected to be sold within nine months based
upon the turnover applicable to such Inventory provided that
no Inventory in respect of new products shall be subject to
the requirements of this paragraph (h) until such Inventory
has been available for sale by such Person, in the case of
Cellular Inventory, for a period of at least six months, and,
in the case of all other Inventory, for a period of at least
nine months;
(i) which is not owned by an Affiliate or Subsidiary of such
Person;
(j) with respect to which, no Account has been created;
(k) which, with respect to Inventory located at (or in transit
to) a storage, manufacturing or public facility in Canada, may
be reduced by an amount, as determined by the Agent in its
sole discretion, equal to any costs, taxes or other amounts
that would be payable in the event the security interest in
favor of the Collateral Agent was to be enforced;
(l) which is not work in progress, raw materials, supplies or
capitalized fees (it being understood that parts that are held
for resale in the automotive business of the Borrower shall
not be excluded pursuant to this paragraph (l) so long as the
aggregate amount thereof does not exceed $2,000,000); and
(m) which conforms in all other respects to the
representations and warranties contained in the Borrower
Security Agreement or the Subsidiaries Security Agreement, as
the case may be.
Eligible Inventory shall be increased by an amount equal to
the undrawn face amount of any Letter of Credit against which goods are
to be shipped to the Borrower or any of its Subsidiaries, provided that
if any such Letter of Credit is not denominated in Dollars, the amount
by which Eligible Inventory is increased pursuant to this sentence
shall be adjusted from time to time by the Agent to account for
currency fluctuations. Standards of eligibility may be fixed and
revised from time to time solely by the Agent in the Agent's reasonable
judgment, provided that the Agent shall not revise the standards of
eligibility in a manner which would increase the outstanding amount of
Eligible Inventory at the time of such revision without the prior
written consent of the Required Lenders. Unless a Default or Event
14
of Default has occurred and is continuing, the Agent shall give five
days prior written notice to the Borrower of any change in the
standards of eligibility set forth above.
"Environmental Laws": any and all foreign, Federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other
Requirements of Law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning protection of
human health or the environment, as now or may at any time hereafter
be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Base Rate": with respect to each day during each
Interest Period pertaining to a Foreign Currency Loan denominated in
an Available Foreign Currency, the rate appearing on the Page for the
applicable Available Foreign Currency of the Dow Jones Market Service
(or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service,
as determined by the Fronting Bank, in consultation with the Agent and
the Borrower, from time to time for purposes of providing quotations
of interest rates applicable to deposits in the applicable currency in
the London interbank market) at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period,
as the rate for deposits in the applicable Available Foreign Currency
with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the
"Eurocurrency Base Rate" with respect to such Foreign Currency Loan
for such Interest Period shall be the rate at which the Fronting Bank
is offered deposits in the applicable Available Foreign Currency in an
amount the Dollar Equivalent of which is approximately equal to
$2,000,000 and for a maturity comparable to such Interest Period in
immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, on the Quotation Day for such
Interest Period.
"Eurocurrency Rate": with respect to each day during each
Interest Period pertaining to a Foreign Currency Loan denominated in
an Available Foreign Currency, a rate per annum determined for such
day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurocurrency Base Rate
---------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan or Foreign Currency Loan, the aggregate (without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or
other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for
15
eurocurrency funding maintained by a member bank of such System or any
London branch of any Lender.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate at which Chase is offered Dollar deposits at or
about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery
on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined
for such day in accordance with the following formula (rounded upward
to the nearest 1/100th of 1%):
Eurodollar Base Rate
-----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar
Loans whose Interest Periods each begin on the same day and end on the
same other day.
"Event of Default": any of the events specified in Section 11,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Exchange Rate": on any day, with respect to any currency, the
rate at which such currency may be exchanged into Dollars (and, for
purposes of any provision of this Agreement requiring or permitting
the conversion of amounts in Foreign Currencies to Dollars, the rate
at which Dollars may be exchanged into the applicable Foreign
Currency), as set forth at approximately 11:00 a.m., London time, on
such date on the Reuters World Currency Page for such currency. In the
event that such rate does not appear on any Reuters World Currency
Page, the Exchange Rate shall be determined by reference to such other
publicly available service for displaying exchange rates as may be
agreed upon by the Agent, the Fronting Bank (or, in the case of
Exchange Rates relating to Letters of Credit, the Issuing Bank) and
the Borrower, or, in the absence of such agreement, such Exchange Rate
shall instead be the arithmetic average of the spot rates of exchange
of the Fronting Bank (or, in the case of Exchange Rates relating to
Letters of Credit, the Issuing Bank) in the market where its foreign
currency exchange operations in respect of such currency are then
being conducted, at or about 10:00 a.m., local time, on such date for
the purchase of Dollars (or such Foreign Currency, as the case may be)
for delivery two Business Days later, provided that if at the time of
any such determination, for any reason, no such spot rate is being
quoted,
16
the Fronting Bank (or, in the case of Exchange Rates relating to
Letters of Credit, the Issuing Bank) after consultation with the Agent
and the Borrower, may use any reasonable method it deems appropriate to
determine such rate, and such determination shall be presumed correct
absent manifest error.
"Existing Acceptances": such bankers' acceptances as are part of
the Existing Extensions of Credit and are outstanding and/or
unreimbursed on the Closing Date.
"Existing Credit Agreement": as defined in the recitals to this
Agreement.
"Existing Extensions of Credit": as defined in the recitals to
this Agreement.
"Existing Letters of Credit": such letters of credit, steamship
guarantees and airway releases as are part of the Existing Extensions
of Credit and are outstanding and/or unreimbursed on the Closing Date.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
"Foreign Currency": any currency other than Dollars.
"Foreign Currency Letter of Credit": any Letter of Credit issued
in a Foreign Currency.
"Foreign Currency Loan": any Loan denominated in a Foreign
Currency.
"Foreign Currency Loan Participant": with respect to each Foreign
Currency Loan, the collective reference to all Lenders other than the
Fronting Bank.
"Foreign Currency Sublimit": $15,000,000.
"Foreign Currency Tranche": the collective reference to Foreign
Currency Loans whose Interest Periods begin on the same day and end on
the same other day.
"Foreign Exchange Contracts": as defined in subsection 6.16.
"Foreign Exchange Liabilities": as defined in subsection 6.16.
"Foreign Translation Adjustment": as defined under GAAP.
"Fronting Bank": Chase, or its successor pursuant to subsections
12.9 and 12.10, in its capacity as the lender of Foreign Currency
Loans pursuant to subsection 3.1.
17
"Funding Office": (a) with respect to borrowings, conversions or
continuations of Dollar Loans, the office of the Agent located at 7600
Jericho Turnpike, Woodbury, New York 11797, or such other office as
the Agent shall designate in writing to the Borrower and the Lenders
from time to time, (b) with respect to the issuance of Letters of
Credit hereunder, the office of the Issuing Bank located at 7600
Jericho Turnpike, Woodbury, New York 11797, or such other office as
the Issuing Bank shall designate in writing to the Borrower, the Agent
and the Lenders from time to time, (c) with respect to the creation of
Acceptances hereunder, the office of the Accepting Bank located at
7600 Jericho Turnpike, Woodbury, New York 11797, or such other office
as the Accepting Bank shall designate in writing to the Borrower, the
Agent and the Lenders from time to time, and (d) with respect to
borrowings or continuations of Eurocurrency Loans, the applicable
Funding Office of the Fronting Bank set forth in respect thereof in
the Administrative Schedule, or such other office as the Fronting Bank
shall designate in writing to the Borrower, the Agent and the Lenders
from time to time.
"Funding Time": (a) with respect to Dollar Loans, 2:00 P.M., New
York City time, and (b) with respect to Foreign Currency Loans, the
applicable time set forth in respect thereof in the Administrative
Schedule.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Government Contracts": as defined in subsection 7.21.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit or bankers' acceptance) to induce the creation of which the
guaranteeing person has issued a reimbursement, counter indemnity or
similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations
(the "primary obligations") of any other third Person (the "primary
obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person, whether
or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor if such
purchase of property is primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in
respect thereof; provided, however, that the term Guarantee Obligation
shall not include endorsements of
18
instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of
the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person
may be liable are not stated or determinable, in which case the amount
of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as
determined by the Required Lenders in good faith.
"Guarantors": collectively, the Domestic Subsidiaries, the
Canadian Subsidiary and any other Subsidiaries required to execute a
guarantee, security agreement or other Security Document pursuant to
subsection 9.7.
"ICC Rules" as defined in subsection 4.1(c)
"Indebtedness": of any Person at any date, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price
of property or services (other than current trade liabilities, accrued
expenses and documentary acceptances incurred in the ordinary course
of business and payable in accordance with customary practices) or
which is evidenced by a note, bond, debenture or similar instrument,
(b) all obligations of such Person under Financing Leases, (c) all
obligations of such Person in respect of letters of credit or bankers'
acceptances issued or created for or for the account of such Person,
(d) all obligations of such Person under Foreign Exchange Contracts
and (e) all liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise
become liable for the payment thereof.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": with respect to any Loan, the last day
of each month to occur while such Loan is outstanding, provided that
(a) with respect to any Base Rate Loan, the date upon which such Loan
is converted to another Type of Loan shall also be an Interest Payment
Date for such Loan and (b) with respect to any Eurodollar Loan or
Foreign Currency Loan, the last day of the Interest Period with
respect to such Loan shall also be an Interest Payment Date for such
Loan.
"Interest Period": (a) with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two, three or
19
six months thereafter, as selected by the Borrower in its
notice of borrowing or notice of conversion, as the case may be,
given with respect thereto; and
(ii) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar
Loan and ending one, two, three or six months thereafter, as
selected by the Borrower by irrevocable notice to the Agent not
less than three Business Days prior to the last day of the then
current Interest Period with respect thereto;
(b) with respect to any Foreign Currency Loan:
(i) initially the period commencing on the borrowing date
with respect to such Foreign Currency Loan and ending at the end
of any permitted interest period for such Foreign Currency Loan
as set forth on the Administrative Schedule and selected by the
Borrower; and
(ii) thereafter, each period commencing on the last day of
the next preceding such interest period and ending on the last
day of the next permitted interest period selected by the
Borrower;
provided that all of the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result of
such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(ii) no Interest Period shall extend beyond the Termination
Date;
(iii) if the Borrower shall fail to give notice as provided
above in respect of any Eurodollar Loan, the Borrower shall be
deemed to have selected a Base Rate Loan to replace such
Eurodollar Loan;
(iv) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a
calendar month; and
(v) no Foreign Currency Loan may be converted into a Dollar
Loan by the Borrower.
"Inventory": as defined in the UCC and including, without
limitation, all Cellular Inventory.
20
"Issuing Bank": Chase, or its successor pursuant to subsections
12.9 and 12.10, in its capacity as issuer of Letters of Credit
pursuant to subsection 4.1(a).
"IPO": as to any Person, any sale by such Person through a public
offering of its common stock pursuant to an effective registration
statement (other than a registration statement on Form S-4, S-8 or any
successor or similar form) filed under the Securities Act of 1933, as
amended.
"Joint Venture": as to any Person, a corporation, partnership or
other entity (other than a Subsidiary) of which 50% or less (but more
than 10%) of the shares of stock or other ownership interests are at
the time owned, directly or indirectly, through one or more
intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Joint Venture " or "Joint Ventures" in this
Agreement shall refer to a Joint Venture or Joint Ventures of the
Borrower, including, without limitation, the entities listed in
Schedule 7.15 under the heading "Joint Ventures".
"Landlord's Consent": a consent substantially in the form of
Exhibit H hereto.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit issued in Dollars (including any such
Existing Letters of Credit), (b) the aggregate Dollar Equivalents of
the then undrawn and unexpired amount of the then outstanding Foreign
Currency Letters of Credit (including any such Existing Letters of
Credit), (c) the aggregate amount of unpaid L/C Reimbursement
Obligations in respect of Letters of Credit issued in Dollars at such
time and (d) the aggregate Dollar Equivalents of the amount of unpaid
L/C Reimbursement Obligations in respect of Foreign Currency Letters
of Credit at such time (including any such Existing Letters of
Credit).
"L/C Reimbursement Obligations": the obligation of the Borrower
to reimburse the Issuing Bank pursuant to subsection 6.5(a) for
amounts drawn under Letters of Credit (including Existing Letters of
Credit).
"L/C Participants": with respect to each Letter of Credit
(including each Existing Letter of Credit), collectively, all the
Lenders other than the Issuing Bank.
"Letters of Credit": as defined in subsection 4.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any Financing
Lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction in respect of
any of the foregoing).
21
"Loan": any loan made pursuant to this Agreement.
"Loan Documents": this Agreement, the Notes, the Security
Documents, the Consent of Guarantors, any Application, any Acceptance
Request, and all other documents executed and delivered in connection
herewith or therewith, including any amendments, supplements or other
modifications to any of the foregoing.
"London Banking Day": any day on which banks in London, England,
are open for general banking business, including dealings in foreign
currency and exchange.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property or financial condition of the Borrower
and its Subsidiaries taken as a whole, (b) the ability of the Borrower
to perform its obligations under this Agreement, the Notes or any of
the other Loan Documents, or (c) the validity or enforceability of
this Agreement, the Notes or any of the other Loan Documents or the
rights or remedies of the Agent, the Collateral Agent or the Lenders
hereunder or thereunder.
"Material Foreign Subsidiary": any Subsidiary, other than a
Domestic Subsidiary, which (a) has total assets of $5,000,000 (or the
equivalent thereof in any Foreign Currency) or greater or (b) has net
income in Dollars (or the equivalent thereof in any Foreign Currency)
in any year equal to or in excess of an amount equal to 10% of
Consolidated Net Income for such year, in either such case as
determined in accordance with GAAP or the comparable principles of any
foreign country used in the preparation of the financial statements of
such Subsidiary.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or
any hazardous or toxic substances, materials or wastes, defined or
regulated as such in or under any Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": in connection with any issuance or sale of
Capital Stock, the cash proceeds received from such issuance or sale,
net of attorneys' fees, investment banking fees, accountants' fees,
underwriting discounts and commissions and other customary fees and
expenses actually incurred in connection therewith.
"Net Worth Base Amount": (a)$175,000,000 plus (b) 50% of
Consolidated Net Income, if any, for each fiscal year ending on or
after November 30, 1999.
"Non-Excluded Taxes": as defined in subsection 6.15.
22
"Note": the collective reference to the promissory notes,
substantially in the form of Exhibit A hereto, issued pursuant to this
Agreement, including, without limitation, the promissory notes issued
pursuant to subsection 2.2.
"Participant": as defined in subsection 13.6(b).
"Participating Interest": with respect to each Letter of Credit
(including each Existing Letter of Credit) or Acceptance (including
each Existing Acceptance) or Foreign Currency Loan, (i) in the case of
the Issuing Bank, the Accepting Bank or the Fronting Bank, as the case
may be, its interest (a) in such Letter of Credit and any Application
relating thereto, (b) in such Acceptance and any Acceptance Request
relating thereto or (c) such Foreign Currency Loan, as the case may
be, in either case after giving effect to the granting of any
participating interests therein pursuant to this Agreement and (ii) in
the case of each Participating Lender, its undivided participating
interest (a) in such Letter of Credit and any Application relating
thereto, (b) in such Acceptance and any Acceptance Request relating
thereto or (c) such Foreign Currency Loan, as the case may be.
"Participating Lender": any Lender (other than the Issuing Bank,
the Accepting Bank or the Fronting Bank, as the case may be) with
respect to its Participating Interest in each Letter of Credit
(including each Existing Letter of Credit), Acceptance (including each
Existing Acceptance) and Foreign Currency Loan.
"Payment Office": (a) with respect to any payments on account of
the principal of, interest on or fees (other than pursuant to
subsection 3.3(b)) in respect of Eurocurrency Loans, the applicable
Payment Office set forth in respect thereof in the Administrative
Schedule, or such other office as the Fronting Bank shall designate in
writing to the Borrower and the Lenders from time to time, (b) with
respect to any payments to the Issuing Bank hereunder in respect of
Letters of Credit issued hereunder, the office of the Issuing Bank
located at 7600 Jericho Turnpike, Woodbury, New York 11797, or such
other office as the Issuing Bank shall designate in writing to the
Borrower, the Agent and the Lenders from time to time, (c) with
respect to any payments to the Accepting Bank hereunder in respect of
Acceptances created hereunder, the office of the Accepting Bank
located at 7600 Jericho Turnpike, Woodbury, New York 11797, or such
other office as the Accepting Bank shall designate in writing to the
Borrower, the Agent and the Lenders from time to time, and (d) with
respect to all other payments under this Agreement, the office of the
Agent located at 7600 Jericho Turnpike, Woodbury, New York 11797, or
such other office as the Agent shall designate in writing to the
Borrower, the Agent and the Lenders from time to time.
"Payment Time": (a) with respect to any payments on account of
the principal of, interest on or fees in respect of Foreign Currency
Loans, the applicable time set forth in respect thereof in the
Administrative Schedule and (b) with respect to all other payments
under this Agreement, 12:00 P.M. (Noon), New York City time.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
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"Person": an individual, partnership, corporation, business
trust, joint stock company, limited liability company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pledge Agent": Chase, in its capacity as pledge agent for the
secured parties under the Audiovox Holding Corp. Pledge Agreement.
"Proceeds": as defined in the UCC.
"Purchasing Lenders": as defined in subsection 13.6(c).
"Quotation Day": with respect to the determination of the
Eurocurrency Base Rate for any Interest Period, the day on which
quotations would ordinarily be given by prime banks in the London
Interbank market for deposits in the Available Foreign Currency for
delivery on the first day of such Interest, Period; provided, that if
quotations would ordinarily be given on more than one date, the
Quotation Day for such Interest Period shall be the last of such
dates. On the date hereof, the Quotation Day in respect of any
Interest Period for any Available Foreign Currency is customarily the
last day prior to the beginning of such Interest Period which is (i)
at least two London Banking Days prior to the beginning of such
Interest Period or, in the case of Sterling, the London Banking Day
which is the first day of such Interest Period and (ii) a day on which
banks are open for general banking business in the city which is the
principal financial center of the country of such Available Foreign
Currency.
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System.
"Required Lenders": at any time, Lenders the Commitment
Percentages of which then aggregate at least 51%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its material
property is subject.
"Reset Date": as defined in Section 1.3.
"Responsible Officer": the chief executive officer, the president
or the chief financial officer of the Borrower.
24
"Security Documents": collectively, the Audiovox Pledge Agreement
the Audiovox Holding Corp. Pledge Agreement, the Borrower Security
Agreement, the Subsidiaries Guarantee and the Subsidiaries Security
Agreement and any other agreement or document executed in connection
with this Agreement or any other Security Document which is intended
to provide security for the obligations of the Borrower and the
Subsidiaries under or in respect of this Agreement, including, without
limitation, any security agreement or document executed pursuant to
subsection 9.7.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Standby Foreign Currency Letter of Credit": any Standby Letter
of Credit issued in a Foreign Currency.
"Standby L/C Commitment": $15,000,000.
"Standby Letters of Credit": as defined in subsection 4.1(b).
"Standby L/C Obligations": at any time, an amount equal to the
sum of (a) the aggregate then undrawn and unexpired amount of the then
outstanding Standby Letters of Credit issued in Dollars, (b) the
aggregate Dollar Equivalents of the then undrawn and unexpired amount
of the then outstanding Standby Foreign Currency Letters of Credit,
(c) the aggregate amount of unpaid Standby L/C Reimbursement
Obligations in respect of Letters of Credit issued in Dollars at such
time and (d) the aggregate Dollar Equivalents of the amount of unpaid
L/C Reimbursement Obligations in respect of Standby Foreign Currency
Letters of Credit at such time.
"Steamship Guarantee": as defined in subsection 4.1(b).
"Subordinated Debenture Indenture": the Indenture dated as of
March 15, 1994, among the Borrower and Continental Stock Transfer &
Trust Company, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms of this
Agreement.
"Subordinated Debentures": the 6-1/4% Convertible Subordinated
Debentures due 2001 issued by the Borrower pursuant to the
Subordinated Debenture Indenture.
"Subsidiaries Guarantee": the Amended and Restated Subsidiaries
Guarantee, dated as of March 15, 1994, made by the Subsidiaries
parties thereto in favor of the Collateral Agent, a copy of which is
attached hereto as Exhibit K, as the same by amended, supplemented or
otherwise modified from the time to time.
"Subsidiaries Security Agreement": the Amended and Restated
Security Agreement, dated as of March 15, 1994, made by the
Subsidiaries parties thereto in favor of the Collateral
25
Agent, a copy of which is attached hereto as Exhibit L, as the
same by amended, supplemented or otherwise modified from the time to
time.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which more than 50% of the shares of stock, or other
ownership interests having ordinary voting power (other than stock or
such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other
entity, are at the time owned, directly or indirectly, through one or
more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or "Subsidiaries" shall
refer to a Subsidiary or Subsidiaries of the Borrower and shall
include, without limitation, the corporations listed in Schedule 7.15
under the headings "Domestic Subsidiaries", "Canadian Subsidiaries"
and "Material Foreign Subsidiaries".
"Talk Corporation": as defined in subsection 10.9(f).
"Talk Note": the note issued by the Borrower to General Leasing
USA in the aggregate principal amount of (Y)500,000,000.
"Termination Date": July 27, 2004.
"Trade Letters of Credit": as defined in subsection 4.1(b).
"Transferee": as defined in subsection 13.6(f).
"Type": as to any Loan, its nature as a Base Rate Loan, a
Eurodollar Loan or a Foreign Currency Loan.
"UCC": the Uniform Commercial Code as from time to time in effect
in the State of New York.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"Wholly Owned Foreign Subsidiary": as to any Person, any Material
Foreign Subsidiary of such Person of which such Person owns, directly
or indirectly, all of the Capital Stock of such Material Foreign
Subsidiary other than directors qualifying shares or shares held by
nominees.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the Notes or any certificate or other document made or
delivered pursuant hereto.
26
(b) As used herein and in the Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Borrower and its Subsidiaries not defined in subsection 1.1 and accounting
terms partly defined in subsection 1.1, to the extent not defined, shall have
the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
1.3 Exchange Rates. (a) Not later than 1:00 p.m., New York
City time, on each Calculation Date, the Fronting Bank (or, in the case of
clause (i)(B), the Issuing Bank) shall (i) determine the Exchange Rate as of
such Calculation Date with respect to each Foreign Currency (A) in which the
Fronting Bank shall have extended a commitment to make Loans, (B) in which any
Loan or Loans shall be outstanding or (C) in which any undrawn Letter of Credit
may be denominated and (ii) give notice thereof to the Lenders and the Borrower.
The Fronting Bank and the Issuing Bank shall immediately notify the Agent of any
Exchange Rates so determined. The Exchange Rates so determined shall become
effective on the first Business Day immediately following the relevant
Calculation Date (a "Reset Date"), shall remain effective until the next
succeeding Reset Date, and shall for all purposes of this Agreement (other than
subsection 3.5, subsection 6.5, subsection 6.10, subsection 6.14(c), subsection
13.17, or any other provision expressly requiring the use of a current Exchange
Rate) be the Exchange Rates employed in converting any amounts between Dollars
and Foreign Currencies.
(b) Not later than 5:00 p.m., New York City time, on each
Reset Date, each Borrowing Date and each date on which the Borrower requests the
issuance of a Letter of Credit or the creation of an Acceptance hereunder, the
Agent shall (i) determine the aggregate amount of the Dollar Equivalents of the
principal amounts of the Foreign Currency Loans and Foreign Currency Letters of
Credit then outstanding (after giving effect to any Foreign Currency Loans or
Foreign Currency Letters of Credit made, issued, repaid or canceled on such
date) and (ii) notify the Lenders and the Borrower of the results of such
determination.
SECTION 2. AMOUNT AND TERMS OF DOLLAR LOANS
2.1 Commitments. (a) Subject to the terms and conditions
hereof, each Lender severally agrees to make revolving credit loans ("Dollar
Loans") to the Borrower from time to time during the Commitment Period in an
aggregate principal amount at any one time outstanding, when added to such
Lender's Commitment Percentage of the sum of (i) the then outstanding L/C
Obligations and Acceptance Obligations and (ii) the aggregate Dollar Equivalents
of the principal amount of Foreign Currency Loans then outstanding, not to
exceed the lesser of (A) the amount of such Lender's Commitment and (B) such
Lender's Commitment Percentage share of the Borrowing
27
Base then in effect. During the Commitment Period the Borrower may use the
Commitments by borrowing, prepaying the Dollar Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Dollar Loans may from time to time be (i) Eurodollar
Loans, (ii) Base Rate Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Agent in accordance with subsections 2.3 and 6.8,
provided that no Dollar Loan shall be made or continued as or converted to a
Eurodollar Loan after the day that is one month prior to the Termination Date.
2.2 Repayment of Loans; Notes. (a) The Borrower hereby
unconditionally promises to pay to the Agent at the applicable Payment Office
for the account of the Lenders the then unpaid principal amount of each Dollar
Loan of such Lender on the Termination Date (or such earlier date on which the
Dollar Loans become due and payable pursuant to Section II). The Borrower hereby
further agrees to pay interest on the unpaid principal amount of the Dollar
Loans from time to time outstanding from the date hereof until payment in full
thereof at the rates per annum, and on the dates, set forth in Section 6.6.
(b) The Dollar Loans made by each Lender shall be evidenced by
a Note, substantially in the form of Exhibit A hereto, with appropriate
insertions as to payee, date and principal amount, payable to the order of such
Lender and in a principal amount equal to the lesser of (a) the amount set forth
opposite such Lender's name on Schedule 1.1(a) hereto under the heading
"Commitment" and (b) the aggregate unpaid principal amount of all Dollar Loans
made by such Lender. Each Lender is hereby authorized to record the date, Type
and amount of each Dollar Loan made by such Lender, each continuation thereof,
each conversion of all or a portion thereof to another Type, the date and amount
of each payment or prepayment of principal thereof and, in the case of
Eurodollar Loans, the Eurodollar Rate and the length of each Interest Period
with respect thereto, on the schedule annexed to and constituting a part of its
Note, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded; provided that the failure by any Lender
to make any such recordation on its Note (or any error therein) shall not affect
any of the obligations of the Borrower under such Note or this Agreement. Each
Note shall (x) be dated the Closing Date, (y) be stated to mature on the
Termination Date and (z) provide for the payment of interest in accordance with
subsection 6.6.
2.3 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Commitments during the Commitment Period on any Business Day,
provided that the Borrower shall give the Agent irrevocable notice (which notice
must be received by the Agent at the applicable Funding Office prior to 11:30
A.M., New York City time, (a) three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Dollar Loans are to be
initially Eurodollar Loans or (b) on the requested Borrowing Date, otherwise),
specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date,
(iii) whether the borrowing is to be of Eurodollar Loans, Base Rate Loans or a
combination thereof and (iv) if the borrowing is to be entirely or partly of
Eurodollar Loans, the amount of such Eurodollar Loans and the respective lengths
of the initial Interest Periods therefor. Each borrowing of Dollar Loans under
the Commitments shall be in an amount equal to (x) in the case of Base Rate
Loans, $500,000 or a whole multiple thereof (or, if the then Available
Commitments are less than $500,000, such lesser amount) and (y) in the case of
28
Eurodollar Loans, an amount equal to $1,500,000 or a whole multiple of $500,000
in excess thereof. Upon receipt of any such notice from the Borrower, the Agent
shall (a) in the case of a notice requesting a borrowing of Eurodollar Loans,
promptly notify each Lender thereof and (b) in the case of a notice requesting a
borrowing of Base Rate Loans, notify each Lender thereof prior to 1:00 P.M. on
the requested Borrowing Date. Each Lender will make the amount of its pro rata
share of each borrowing of Dollar Loans available to the Agent for the account
of the Borrower at the applicable Funding Office prior to the applicable Funding
Time on the Borrowing Date requested by the Borrower in funds immediately
available to the Agent. Such borrowing in Dollars will then be made available to
the Borrower by the Agent crediting the account of the Borrower on the books of
such Funding Office with the aggregate of the amounts made available to the
Agent by the Lenders and in like funds as received by the Agent.
SECTION 3. AMOUNT AND TERMS OF FOREIGN CURRENCY LOANS
3.1 Foreign Currency Commitments. Subject to the terms and
conditions set forth hereof, the Fronting Bank agrees to make Foreign Currency
Loans to the Borrower in Available Foreign Currencies or Designated Foreign
Currencies from time to time during the Commitment Period in an aggregate
principal amount the aggregate Dollar Equivalents of which at any one time
outstanding shall not exceed the Foreign Currency Sublimit, provided that, after
giving effect to any such Foreign Currency Loan, the Aggregate Outstanding
Extensions of Credit at such time do not exceed the lesser of (i) the
Commitments and (ii) the Borrowing Base then in effect. During the Commitment
Period, the Borrower may borrow, prepay and reborrow Foreign Currency, all in
accordance with the terms and conditions hereof. The Borrower hereby
unconditionally promises to pay to the Agent for the account of the Fronting
Bank the then unpaid principal amount of each Foreign Currency Loan on the
Termination Date (or such earlier date on which the Loans become due and payable
pursuant to Section II). The Borrower hereby further agrees to pay interest on
the unpaid principal amount of the Foreign Currency Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in Section 6.6. On the Closing Date, the
Foreign Currency Loans outstanding under the Existing Credit Agreement on the
Closing Date shall be deemed to be Foreign Currency Loans made and outstanding
under this Agreement.
3.2 Procedure for Foreign Currency Borrowings. The Borrower
may borrow Foreign Currency Loans pursuant to subsection 3.1 during the
Commitment Period on any Business Day, provided that the Borrower shall give the
Agent and the Fronting Bank irrevocable notice (which notice must be received by
the Fronting Bank at the applicable Funding Office prior to the time specified
for the relevant Foreign Currency in the Administrative Schedule), specifying
(i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) the
Foreign Currency in which the Foreign Currency Loans will be denominated and
(iv) the respective lengths of the initial Interest Periods therefor. The
Borrower shall also notify the Agent of any such borrowing request on the date
of such request. Each borrowing of Foreign Currency Loans shall be in such
minimum amounts as shall be specified for the applicable Foreign Currency in the
Administrative Schedule. The proceeds of each Fronted Currency Loan will be made
available by the Fronting Bank in respect thereof to the Borrower as specified
in the Administrative Schedule.
29
3.3 Fronting Fees, Commissions and Other Charges. (a) The
Borrower shall pay to the Fronting Bank at the applicable Payment Office with
respect to each Foreign Currency Loan, for the account of such Fronting Bank, a
fronting fee with respect to the period from and including the date of such
Foreign Currency Loan to but excluding the date of repayment thereof computed at
a rate of 0.25% per annum on the average daily principal amount of such Foreign
Currency Loan outstanding during the period for which such fee is calculated.
Such fronting fee shall be payable in arrears on each Interest Payment Date to
occur after the making of such Foreign Currency Loan and on the Termination Date
(or on such earlier date as the Commitments shall terminate as provided herein)
and shall be nonrefundable.
(b) The Borrower shall pay to the Agent at the applicable
Payment Office, for the account of the Foreign Currency Loan Participants, a
participation fee with respect to each Foreign Currency Loan with respect to the
period from and including the date of such Foreign Currency Loan to but
excluding the date of repayment thereof, computed at a rate per annum equal to
the Applicable Margin in respect of Eurodollar Loans from time to time in effect
on the average aggregate Dollar Equivalents of the daily principal amount of
such Foreign Currency Loan outstanding during the period for which such fee is
calculated. Such fee shall be shared ratably among the Foreign Currency
Participants in accordance with their respective Commitment Percentages. Such
commission shall be payable in arrears on each Interest Payment Date to occur
after the making of such Foreign Currency Loan and on the Termination Date (or
on such earlier date as the Commitments shall terminate as provided herein) and
shall be nonrefundable.
(c) The Agent shall promptly following its receipt thereof
distribute to the Fronting Bank and Foreign Currency Loan Participants all fees
received by the Agent for their respective accounts pursuant to this subsection.
3.4 Participations. (a) The Fronting Bank irrevocably agrees
to grant and hereby grants to each Foreign Currency Loan Participant, and, to
induce the Fronting Bank to make Foreign Currency Loans hereunder, each Foreign
Currency Loan Participant irrevocably agrees to accept and purchase and hereby
accepts and purchases from the Fronting Bank, on the terms and conditions
hereinafter stated, for such Foreign Currency Loan Participant's own account and
risk, an undivided interest equal to such Foreign Currency Loan Participant's
Commitment Percentage in the Fronting Bank's obligations and rights under each
Foreign Currency Loan made hereunder. Subject to subsection 3.5, each Foreign
Currency Loan Participant unconditionally and irrevocably agrees with the
Fronting Bank that, if a payment is made in respect of any Foreign Currency Loan
by the Fronting Bank for which the Fronting Bank is not reimbursed in full by
the Borrower in accordance with the terms of this Agreement, such Foreign
Currency Loan Participant shall pay to the Fronting Bank upon demand at the
applicable Payment Office an amount equal to such Foreign Currency Loan
Participant's Commitment Percentage of the amount of such payment, or any part
thereof, which is not so reimbursed.
(b) If any amount required to be paid by any Foreign Currency
Loan Participant to the Fronting Bank pursuant to subsection 3.4(a) or 3.5 in
respect of any unreimbursed portion of any payment made by the Fronting Bank in
respect of any Foreign Currency Loan is paid to the Fronting Bank within three
Business Days after the date such payment is due, such Foreign Currency Loan
30
Participant shall pay to the Fronting Bank on demand an amount equal to the
product of such amount, times the daily average Federal funds rate, as quoted by
the Fronting Bank (or, in the case of any amount in a Foreign Currency, the
Eurocurrency Rate or the Cost of Funds Rate, as the case may be), during the
period from and including the date such payment is required to the date on which
such payment is immediately available to the Fronting Bank, times a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any
Foreign Currency Loan Participant pursuant to subsection 3.4(a) is not in fact
made available to the Fronting Bank by such Foreign Currency Loan Participant
within three Business Days after the date such payment is due, the Fronting Bank
shall be entitled to recover from such Foreign Currency Loan Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Base Rate Loans (or Foreign Currency Loans in the
applicable Foreign Currency, as the case may be), which are not overdue
hereunder. A certificate of the Fronting Bank submitted to any Foreign Currency
Loan Participant with respect to any amounts owing under this subsection shall
be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Fronting Bank has made
payment in respect of any Foreign Currency Loan and has received from any
Foreign Currency Loan Participant its pro rata share of such payment in
accordance with subsection 3.4(a), the Fronting Bank receives any payment
related to such Foreign Currency Loan (whether directly from the Borrower or
otherwise, including proceeds of collateral applied thereto by the Fronting
Bank), or any payment of interest on account thereof, the Fronting Bank will,
within three Business Days after receipt thereof, distribute to such Foreign
Currency Loan Participant its pro rata share thereof; provided, however, that in
the event that any such payment received by the Fronting Bank shall be required
to be returned by the Fronting Bank, such Foreign Currency Loan Participant
shall, within three Business Days, return to the Fronting Bank the portion
thereof previously distributed by the Fronting Bank to it. If any amount payable
under this paragraph is paid within three Business Days after such payment is
due, the Lender which owes such amount shall pay to the Lender to which such
amount is owed on demand an amount equal to the product of (i) such amount,
times (ii) the daily average Federal funds rate, as quoted by such Lender (or,
in the case of any amount in a Foreign Currency, the Eurocurrency Rate or the
Cost of Funds Rate, as the case may be), during the period from and including
the date such payment is required to the date on which such payment is made
available to such Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any amount required to be paid under this paragraph is not in fact made
available to the Lender to which such amount is owed within three Business Days
after the date such payment is due, such Lender shall be entitled to recover
from the Lender which owes such amount, on demand, such amount with interest
thereon calculated from such due date at the rate per annum applicable to Base
Rate Loans (or Foreign Currency Loans in the applicable Foreign Currency, as the
case may be), which are not overdue hereunder.
3.5 Conversion of Foreign Currency Loans; Termination of
Foreign Currency Loan Subfacility. In the event that any Foreign Currency Loan
shall be outstanding and (i) the principal of or interest on such Foreign
Currency Loan shall not be paid within three Business Days after the date on
which it is due and the Fronting Bank shall deliver to the Agent and the
Borrower a request that the provisions of this paragraph take effect with
respect to such Foreign Currency Loan or (ii)
31
the Commitments shall be terminated or the Loans accelerated pursuant to Section
11, then (unless such request is revoked by the Fronting Bank) (x) the
obligations of the Borrower in respect of the principal of and interest on such
Foreign Currency Loan shall without further action be converted into obligations
denominated in Dollars at the applicable Exchange Rate on the date of such
conversion, as determined by the Agent in accordance with the terms hereof, (y)
such converted obligations will bear interest at the rate applicable to overdue
Base Rate Loans under subsection 6.6(e) and (z) each Lender shall pay the
purchase price for its Participating Interest in such Foreign Currency Loan by
wire transfer of immediately available funds in Dollars to the Administrative
Agent in the manner provided in subsection 3.4 (and the Agent shall promptly
wire the amounts so received to the Fronting Bank). Upon any event specified in
clause (ii) above, the commitment of the Fronting Bank to make loans in Foreign
Currencies pursuant to subsection 3.1 shall be permanently terminated. The
obligations of the Lenders to acquire and pay for their Participating Interests
pursuant to this paragraph shall be absolute and unconditional under any and all
circumstances.
SECTION 4. AMOUNT AND TERMS OF LETTERS OF CREDIT
4.1 Letters of Credit. (a) Subject to the terms and conditions
hereof, the Issuing Bank, in reliance on the agreements of the other Lenders set
forth in subsection 4.4(a), agrees to issue letters of credit, steamship
guarantees and airway releases (collectively, "Letters of Credit") for the
account of the Borrower on any Business Day during the Commitment Period in such
form as may be approved from time to time by the Issuing Bank; provided that the
Issuing Bank shall not issue any Letter of Credit if, after giving effect to
such issuance, the Aggregate Outstanding Extensions of Credit of the Lenders
would exceed the lesser of (i) the Commitments and (ii) the Borrowing Base then
in effect; and provided, further, that the Issuing Bank shall not issue any
Standby Letter of Credit if, after giving effect to such issuance, the Standby
L/C Obligations would exceed the Standby L/C Commitment. On the Closing Date,
the Existing Letters of Credit outstanding on the Closing Date shall be deemed
to be Letters of Credit issued and outstanding under this Agreement.
(b) Each Letter of Credit shall (i) (A) be denominated in
Dollars, Japanese Yen or any other currency reasonably acceptable to the Issuing
Bank and shall be either (x) a documentary letter of credit in respect of the
purchase of goods or services by the Borrower or any of its Subsidiaries in the
ordinary course of business (a "Trade Letter of Credit") or (y) a standby letter
of credit issued to support obligations of the Borrower, contingent or
otherwise, in favor of such beneficiaries as the Borrower may specify from time
to time (which shall be reasonably satisfactory to the Issuing Bank) (a "Standby
Letter of Credit"), (B) subject to the subsection 4.1(e) hereof, expire no later
than, in the case of Trade Letters of Credit, 90 days after the date of issuance
and, in the case of Standby Letters of Credit, 360 days after the date of
issuance, and in any event no later than five Business Days prior to the
Termination Date and (C) be payable at sight or (ii) be a steamship guarantee (a
"Steamship Guarantee") or airway release (an "Airway Release") denominated in
Dollars and issued in a form satisfactory to the Issuing Bank for the benefit of
a shipper of goods the purchase of which has been financed through the issuance
of a Trade Letter of Credit.
(c) Each Letter of Credit shall be subject to the Uniform
Customs (except to the extent that any Existing Letter of Credit continues to be
subject to the Uniform Customs and Practice
32
for Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 (and, after January 1, 1999, the ICC Rules on International
Standby Practices (ISP 98)) ("ICC Rules"), in accordance with its terms), and,
to the extent not inconsistent therewith, the laws of the State of New York.
(d) The Issuing Bank shall not at any time issue any Letter of
Credit hereunder if such issuance would conflict with, or cause the Issuing Bank
or any L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.
(e) Subject to the terms and conditions hereof, the Borrower
may request the extension or amendment of any Trade Letter of Credit (including
any Existing Letter of Credit which is a Trade Letter of Credit) issued
hereunder by giving written notice to the Issuing Bank at its Funding Office
with respect thereto at least five Business Days prior to the then current
expiration date of such Letter of Credit, and the Issuing Bank may, in its
discretion, grant such extension or amendment and, if such extension or
amendment is granted, shall furnish the Agent with a copy of such extended or
amended Trade Letter of Credit, provided that no extension or amendment of any
Trade Letter of Credit (including any Existing Letter of Credit which is a Trade
Letter of Credit) shall be granted if (i) such extension or amendment would be
for a period of more than 90 days, (ii) prior to such extension or amendment,
such Trade Letter of Credit shall have been extended or amended five times,
(iii) after giving effect to such extension or amendment, such Letter of Credit
would expire later than 360 days after the date of issuance of such Letter of
Credit or later than five Business Days prior to the Termination Date, (iv)
after giving effect to such extension or amendment, the Aggregate Outstanding
Extensions of Credit of the Lenders would exceed the lesser of (A) the
Commitments or (B) the Borrowing Base then in effect or (v) any Default or Event
of Default has occurred and is continuing; provided, further, that (i) if such
amendment (A) increases the face amount of the affected Trade Letter of Credit,
the Borrower shall pay to the Agent, for the account of the Issuing Bank and the
L/C Participants, a letter of credit commission or fee on the amount of such
increase in the face amount of such Letter of Credit determined in accordance
with subsection 4.3 as if the affected Trade Letter of Credit was issued on the
date of such increase to be shared ratably among the Issuing Bank and the L/C
Participants in accordance with their respective Commitment Percentages or (B)
extends the maturity of the affected Trade Letter of Credit, the Borrower shall
pay to the Agent, for the account of the Issuing Bank and the L/C Participants,
a letter of credit commission or fee on the face amount of such Letter of Credit
determined in accordance with subsection 4.3 as if the affected Trade Letter of
Credit was issued on the date such extension becomes effective to be shared
ratably among the Issuing Bank and the L/C Participants in accordance with their
respective Commitment Percentages. It is understood and agreed that the Issuing
Bank shall be under no obligation to issue any extension or amendment of a
Letter of Credit.
(f) The Issuing Bank shall notify each Lender on a monthly
basis of the issuance, extension or amendment of Letters of Credit, and any
drawings or other payments under Letters of Credit, during such month, provided
that the failure to give such notice shall not affect such Lender's obligations
in respect of such Letter of Credit.
4.2 Procedure for Issuance, Extension or Amendment of Letters
of Credit. The Borrower may from time to time request that the Issuing Bank
issue a Letter of Credit by delivering
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to the Issuing Bank at the applicable Funding Office an Application therefor,
including by electronic transmission, completed to the reasonable satisfaction
of the Issuing Bank, and such other certificates, documents and other papers and
information as the Issuing Bank may reasonably request. Upon receipt of any
Application, the Issuing Bank will process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing Bank be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Bank and the Borrower. The Borrower may
request the extension or amendment of a Trade Letter of Credit in accordance
with the provisions of subsection 4.1(e). If the Borrower requests such an
extension or amendment, the Issuing Bank shall promptly notify the Borrower as
to whether such extension or amendment will be granted (but in no event shall
the Issuing Bank be required to give such notice to the Borrower earlier than
two Business Days after its receipt of a request therefor). If such extension or
amendment is granted, the Issuing Bank shall promptly issue such extension or
amendment (but in no event shall the Issuing Bank be required to issue such
extension or amendment earlier than three Business Days after its receipt of a
request therefor) by issuing the original of such extended or amended Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Bank and the Borrower.
4.3 Fees, Commissions and Other Charges. (a) The Borrower
shall pay to the Agent at the applicable Payment Office, for the account of the
Issuing Bank and the L/C Participants, a letter of credit commission with
respect to each Trade Letter of Credit in an amount equal to .25% of the face
amount of such Trade Letter of Credit to be shared ratably among the Issuing
Bank and the L/C Participants in accordance with their respective Commitment
Percentages. Such commission shall be payable in advance on the date of issuance
of each Trade Letter of Credit and shall be nonrefundable.
(b) The Borrower shall pay to the Agent at the applicable
Payment Office, for the account of the Issuing Bank and the L/C Participants, a
letter of credit fee with respect to each Standby Letter of Credit, computed for
the period from the date of issuance to the date of expiration at the rate per
annum equal to the Applicable Margin in respect of Eurodollar Loans from time to
time in effect (or as otherwise agreed from time to time among the Borrower and
the Lenders), calculated on the basis of a 360 day year, of the aggregate amount
available to be drawn under such Standby Letter of Credit on the date of
issuance to be shared ratably among the Issuing Bank and the L/C Participants in
accordance with their respective Commitment Percentages. Such commissions shall
be payable in advance on the date of issuance of each Standby Letter of Credit,
on each Interest Payment Date to occur after the issuance thereof and on the
termination Date (or such earlier date as the Commitments shall terminate as
provided herein) and shall be nonrefundable.
(c) The Borrower shall pay to the Issuing Bank at the
applicable Payment Office, for its own account, on the date of issuance of a
Steamship Guarantee or Airway Release such processing fees as shall customarily
be charged by the Issuing Bank in connection with issuance of a Steamship
Guarantee or Airway Release.
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(d) In addition to the foregoing commissions, the Borrower
shall pay or reimburse the Issuing Bank for such normal and customary costs and
expenses as are incurred or charged by the Issuing Bank in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.
(e) The Agent shall, at the end of each month, distribute to
the Issuing Bank and the L/C Participants all commissions received by the Agent
for their respective accounts pursuant to this subsection.
(f) No fees or other commissions shall be payable by any
Issuing Bank to any L/C Participant with respect to any Existing Letter of
Credit.
4.4 L/C Participations. (a) The Issuing Bank irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to induce the
Issuing Bank to issue Letters of Credit (including Existing Letters of Credit)
hereunder, each L/C Participant irrevocably agrees to accept and purchase and
hereby accepts and purchases from the Issuing Bank, on the terms and conditions
hereinafter stated, for such L/C Participant's own account and risk, an
undivided interest equal to such L/C Participant's Commitment Percentage in the
Issuing Bank's obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid or other payment made by the Issuing
Bank thereunder. Each L/C Participant unconditionally and irrevocably agrees
with the Issuing Bank that, if a draft is paid or any payment is otherwise made
under any Letter of Credit (including any Existing Letter of Credit) for which
the Issuing Bank is not reimbursed in full by the Borrower in accordance with
the terms of this Agreement or the Application, as the case may be, such L/C
Participant shall pay to the Issuing Bank upon demand at the applicable Payment
Office an amount equal to such L/C Participant's Commitment Percentage of the
amount of such draft or payment, or any part thereof, which is not so
reimbursed.
(b) If any amount required to be paid by any L/C Participant
to the Issuing Bank pursuant to subsection 4.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Bank under any Letter of Credit
(including any Existing Letter of Credit) is paid to the Issuing Bank within
three Business Days after the date such payment is due, such L/C Participant
shall pay to the Issuing Bank on demand an amount equal to the product of (i)
such amount, times (ii) the daily average Federal funds rate, as quoted by the
Issuing Bank, during the period from and including the date such payment is
required to the date on which such payment is immediately available to the
Issuing Bank, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to subsection
4.4(a) is not in fact made available to the Issuing Bank by such L/C Participant
within three Business Days after the date such payment is due, the Issuing Bank
shall be entitled to recover from such L/C Participant, on demand, such amount
with interest thereon calculated from such due date at the rate per annum
applicable to Base Rate Loans which are not overdue hereunder. A certificate of
the Issuing Bank submitted to any L/C Participant with respect to any amounts
owing under this subsection shall be conclusive in the absence of manifest
error.
(c) Whenever, at any time after the Issuing Bank has made
payment under any Letter of Credit (including any Existing Letter of Credit) and
has received from any L/C Participant its pro
35
rata share of such payment in accordance with subsection 4.4(a), the Issuing
Bank receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Issuing Bank), or any payment of interest on account thereof, the Issuing
Bank will, within three Business Days after receipt thereof, distribute to such
L/C Participant its pro rata share thereof; provided, however, that in the event
that any such payment received by the Issuing Bank shall be required to be
returned by the Issuing Bank, such L/C Participant shall, within three Business
Days, return to the Issuing Bank the portion thereof previously distributed by
the Issuing Bank to it. If any amount payable under this paragraph is paid
within three Business Days after such payment is due, the Lender which owes such
amount shall pay to the Lender to which such amount is owed on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
funds rate, as quoted by such Lender, during the period from and including the
date such payment is required to the date on which such payment is made
available to such Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any amount required to be paid under this paragraph is not in fact made
available to the Lender to which such amount is owed within three Business Days
after the date such payment is due, such Lender shall be entitled to recover
from the Lender which owes such amount, on demand, such amount with interest
thereon calculated from such due date at the rate per annum applicable to Base
Rate Loans which are not overdue hereunder.
4.5 Obligations Absolute. The Borrower's obligations under
this Section 4 and subsection 6.5(a) shall be absolute and unconditional under
any and all circumstances and irrespective of any set-off, counterclaim or
defense to payment which the Borrower may have or have had against the Issuing
Bank or any beneficiary of a Letter of Credit (including any Existing Letter of
Credit). The Borrower also agrees with the Issuing Bank that the Issuing Bank
shall not be responsible for, and the Borrower's L/C Reimbursement Obligations
under subsection 6.5(a) shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit (including any Existing Letter of Credit) or any other party to which
such Letter of Credit may be transferred or any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee. The Issuing Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit (including
any Existing Letter of Credit), except for errors or omissions caused by the
Issuing Bank's gross negligence or willful misconduct. The Borrower agrees that
any action taken or omitted by the Issuing Bank under or in connection with any
Letter of Credit (including any Existing Letter of Credit) or the related drafts
or documents, if done in the absence of gross negligence or willful misconduct
and in accordance with the standards of care specified in the Uniform Customs or
ICC Rules, as applicable (and, to the extent not inconsistent therewith, the
UCC), shall be binding on the Borrower and shall not result in any liability of
the Issuing Bank to the Borrower.
4.6 Letter of Credit Payments. If any draft shall be presented
for payment or any payment is otherwise demanded under any Letter of Credit
(including any Existing Letter of Credit), the Issuing Bank shall promptly
notify the Borrower of the date and amount thereof. The responsibility of the
Issuing Bank to the Borrower in connection with any draft presented for payment
or other payment demanded under any Letter of Credit (including any Existing
Letter of Credit) shall,
36
in addition to any payment obligation expressly provided for in such Letter of
Credit, be limited to determining that the documents (including each draft)
delivered under such Letter of Credit in connection with such presentment are in
conformity with such Letter of Credit.
4.7 Application. To the extent that any provision of any
Application related to any Letter of Credit (including any Existing Letter of
Credit) is inconsistent with any provisions of this Agreement, such provisions
of this Agreement shall apply. The Borrower acknowledges and agrees that all
rights of the Issuing Bank under any Application shall inure to the benefit of
each Participating Bank to the extent of its Commitment Percentage as fully as
if such Participating Bank was a party to such Application.
SECTION 5. AMOUNT AND TERMS OF ACCEPTANCES
5.1 Acceptances. (a) Subject to the terms and conditions
hereof, the Accepting Bank, in reliance on the agreements of the other Lenders
set forth in subsection 5.3(a), agrees to create acceptances ("Acceptances") in
respect of Drafts in Dollars drawn on the Accepting Bank by the Borrower and
discounted by the Accepting Bank for the account of the Borrower on any Business
Day during the Commitment Period; provided that the Accepting Bank shall not
create any Acceptance, if after giving effect to such creation, the Aggregate
Outstanding Extensions of Credit of the Lenders would exceed the lesser of (x)
the Commitments and (y) the Borrowing Base then in effect; provided, further,
that concurrently therewith, the Borrower requests that such Bank discount such
Draft pursuant to subsection 5.4. On the Closing Date, the Existing Acceptances
outstanding on the Closing Date shall be deemed to be Acceptances created and
outstanding under this Agreement.
(b) The Accepting Bank shall not at any time create an
Acceptance hereunder if such creation would conflict with, or cause the
Accepting Bank or any Acceptance Participant to exceed any limits imposed by,
any applicable Requirement of Law or if, for reasons beyond the control of the
Accepting Bank, such Acceptance does not comply with applicable requirements of
Section 13 of the Federal Reserve Act or the regulations of the Board of
Governors of the Federal Reserve System of the United States of America
governing the creation and discounting of, and the maintenance of reserves with
respect to, bankers' acceptances.
(c) The Accepting Bank shall notify each Lender on a monthly
basis of the creation of Acceptances during such month, provided that the
failure to give such notice shall not affect such Lender's obligations in
respect of such Acceptance.
5.2 Procedure for Creation of Acceptances. (a) The Borrower
may from time to time request the creation of Acceptances hereunder by
delivering to the Accepting Bank at the applicable Funding Office on the date a
draft presented under any Letter of Credit is paid, (i) an Acceptance Request,
completed to the reasonable satisfaction of the Accepting Bank and specifying,
among other things, the date (which must be a Business Day), maturity and amount
of the Draft to be accepted, (ii) to the extent not theretofore supplied to the
Accepting Bank in accordance with subsection 5.7, a Draft to be drawn on the
Accepting Bank, appropriately completed in accordance with this
37
subsection 5.2 and (iii) such other certificates, documents and other papers and
information as the Accepting Bank may reasonably request.
(b) Each Draft submitted by the Borrower for acceptance
hereunder shall be denominated in Dollars, shall be dated the date specified in
the Acceptance Request with respect thereto and shall be stated to mature on a
Business Day which is 30, 60 or 90 days after the date thereof and, in any
event, not more than 90 days after the anticipated date of shipment specified in
the relevant Acceptance Request. No Acceptance created hereunder shall (i) be
created more than 30 days after the date of any shipments of goods to which such
Acceptance relates, (ii) have a tenor in excess of the period of time which is
usual and reasonably necessary to finance transactions of a similar character,
(iii) be in a face amount of less than $250,000 or (iv) be in a face amount
which, when taken together with all other Acceptances and other financings
relating to the shipment of goods to which such Acceptance relates, exceeds the
fair market value of such shipment.
(c) Subject to subsection 5.2(d), not later than the close of
business at its address for notices specified herein on the Business Day
specified in an Acceptance Request, and upon fulfillment of the applicable
conditions set forth in Section 8, the Accepting Bank shall, in accordance with
such Acceptance Request, (i) complete the date, amount and maturity of each
Draft presented for acceptance (to the extent not completed by the Borrower),
(ii) accept such Drafts and (iii) upon such acceptance, discount such
Acceptances in accordance with subsection 5.4.
(d) The acceptance and discounting of Drafts by the Accepting
Bank hereunder shall at all times be in the discretion of the Accepting Bank.
5.3 Acceptance Participations. (a) The Accepting Bank
irrevocably agrees to grant and hereby grants to each Acceptance Participant,
and, to induce the Accepting Bank to create Acceptances (including Existing
Acceptances) hereunder, each Acceptance Participant irrevocably agrees to accept
and purchase and hereby accepts and purchases from the Accepting Bank, on the
terms and conditions hereinafter stated, for such Acceptance Participant's own
account and risk, an undivided interest equal to such Acceptance Participant's
Commitment Percentage in the Accepting Bank's obligations and rights under each
Acceptance created hereunder and the face amount of each Acceptance created by
the Accepting Bank. Each Acceptance Participant unconditionally and irrevocably
agrees with the Accepting Bank that, if the Accepting Bank is not reimbursed in
full by the Borrower for the face amount of any Acceptance in accordance with
the terms of this Agreement, such Acceptance Participant shall pay to the
Accepting Bank upon demand at the applicable Payment Office an amount equal to
such Acceptance Participant's Commitment Percentage of the face amount of such
Acceptance, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any Acceptance
Participant to the Accepting Bank pursuant to subsection 5.3(a) in respect of
any unreimbursed portion of any payment made by the Accepting Bank under any
Acceptance is paid to the Accepting Bank within three Business Days after the
date such payment is due, such Acceptance Participant shall pay to the Accepting
Bank on demand an amount equal to the product of (1) such amount, times (2) the
daily average Federal funds rate, as quoted by the Accepting Bank, during the
period from and including the date such payment is required to the date on which
such payment is immediately available to the
38
Accepting Bank, times (3) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any Acceptance Participant pursuant to
subsection 5.3(a) is not in fact made available to the Accepting Bank by such
Acceptance Participant within three Business Days after the date such payment is
due, the Accepting Bank shall be entitled to recover from such Acceptance
Participant, on demand, such amount with interest thereon calculated from such
due date at the rate per annum applicable to Base Rate Loans which are not
overdue hereunder. A certificate of the Accepting Bank submitted to any
Acceptance Participant with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Accepting Bank has made
payment under any Acceptance and has received from any Acceptance Participant
its pro rata share of such payment in accordance with subsection 5.3(a), the
Accepting Bank receives any payment related to such Acceptance (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Accepting Bank), or any payment of interest on account thereof, the
Accepting Bank will, within three Business Days after receipt thereof,
distribute to such Acceptance Participant its pro rata share thereof; provided,
however, that in the event that any such payment received by the Accepting Bank
shall be required to be returned by the Accepting Bank, such Acceptance
Participant shall, within three Business Days, return to the Accepting Bank the
portion thereof previously distributed by the Accepting Bank to it. If any
amount payable under this paragraph is paid within three Business Days after
such payment is due, the Lender which owes such amount shall pay to the Lender
to which such amount is owed on demand an amount equal to the product of (i)
such amount, times (ii) the daily average Federal funds rate, as quoted by such
Lender, during the period from and including the date such payment is required
to the date on which such payment is made available to such Lender, times (iii)
a fraction the numerator of which is the number of days that elapse during such
period and the denominator of which is 360. If any amount required to be paid
under this paragraph is not in fact made available to the Lender to which such
amount is owed within three Business Days after the date such payment is due,
such Lender shall be entitled to recover from the Lender which owes such amount,
on demand, such amount with interest thereon calculated from such due date at
the rate per annum applicable to Base Rate Loans which are not overdue
hereunder.
5.4 Discount of Acceptances. (a) The Accepting Bank agrees, on
the terms and conditions of this Agreement, that on any date on which it creates
an Acceptance hereunder, the Accepting Bank will discount such Acceptance at the
Acceptance Rate, by making available to the Borrower an amount in immediately
available funds equal to the face amount of each Acceptance created by the
Accepting Bank on such date less such discount and notify the Agent that such
Draft has been accepted and discounted by the Accepting Bank. The Accepting Bank
will then pay to the Agent for the account of the Borrower an amount equal to
the proceeds of such discount.
(b) On the date that any Acceptance is discounted pursuant to
subsection 5.4(a), the Accepting Bank shall pay to each Acceptance Participant
an amount equal to a percentage of such Acceptance Participant's Commitment
Percentage of the face amount of such Acceptance, which percentage shall be
equal to the Applicable Margin for Eurodollar Loans used to calculate the
Acceptance Rate with respect to such Acceptance.
39
5.5 Mandatory Prepayment. (a) In the event that (i) there is a
determination made by any regulatory body or instrumentality thereof (including,
without limitation, any Federal Reserve Bank or any bank examiner), or there is
a change in, or change in interpretation of, any applicable law, rule or
regulation (such determination or such change, a "Reserve Determination"), in
either case to the effect that any bankers' acceptance created hereunder or in
connection with a substantially similar facility (whether or not the Borrower or
any Bank is directly involved as a party) will be ineligible for reserve-free
treatment (or, if already discounted, should have been ineligible for reserve-
free treatment) under Section 13 of the Federal Reserve Act or any other
regulation or rule of the Board of Governors of the Federal Reserve System of
the United States of America, and as a result any Lender is required to
maintain, or determines as a matter of prudent banking practice that it is
appropriate for it to maintain, additional reserves, or (ii) any restriction is
imposed on any Lender (including, without limitation, any change in acceptance
limits imposed on any Lender) which would prevent such Lender from creating or
participating in bankers' acceptances or otherwise performing its obligations in
respect of the Acceptances, then, with the consent of the Required Lenders, the
Agent may, or upon the direction of the Required Lenders, the Agent shall, by
notice to the Borrower in accordance with subsection 13.2, demand prepayment of
all outstanding Acceptances (if such prepayment is required), and the Accepting
Bank shall have no further obligation to accept or discount Drafts hereunder.
The Borrower agrees that it shall, within two Business Days of its receipt of a
notice of mandatory prepayment of the Acceptances, prepay all Acceptance
Obligations in accordance with the provisions of subsection 5.5(b) hereof.
(b) Any prepayment of any Acceptance Obligation made pursuant
hereto shall be made to the Accepting Bank and shall be in an amount equal to
the face amount of such Acceptance minus a prepayment discount calculated by the
Accepting Bank in accordance with its customary practice for similar Acceptances
and communicated to the Borrower; provided that, in the event that the Borrower
fails to make such prepayment as provided in this subsection 5.5(b), such
Acceptance Obligation shall be automatically converted into Base Rate Loans in
the amount of such prepayment. The Borrowing Date with respect to such borrowing
shall be the date of such prepayment.
(c) Except as otherwise provided herein, Acceptances may not
be prepaid prior to maturity.
5.6 Obligations Absolute. The Borrower's obligations under
this Section 5 and subsection 6.5(b) shall be absolute and unconditional under
any and all circumstances and irrespective of any set-off, counterclaim or
defense to payment which the Borrower may have or have had against the Accepting
Bank. The Borrower also agrees with the Accepting Bank that the Accepting Bank
shall not be responsible for, and the Borrower's Acceptance Reimbursement
Obligations under subsection 6.5(b) shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between or among the Borrower or any other party to which
such Acceptance may be transferred or any claims whatsoever of the Borrower or
any such transferee. The Borrower agrees that any action taken or omitted by the
Accepting Bank under or in connection with any Acceptance or the related drafts
or documents, if done in the absence of gross negligence or willful misconduct
and in accordance with the standards of care specified in the Uniform Customs or
ICC Rules, as applicable (and, to the extent not inconsistent therewith, the
40
UCC), shall be binding on the Borrower and shall not result in any liability of
the Accepting Bank to the Borrower.
5.7 Supply of Drafts. To enable the Accepting Bank to create
Acceptances in the manner specified in this Section 5, the Borrower may provide
to the Accepting Bank, on the Closing Date and thereafter from time to time upon
request of the Agent or the Accepting Bank, such number of blank Drafts
conforming to the requirements hereof as the Agent or the Accepting Bank may
reasonably request, each duly executed on behalf of the Borrower, and the
Accepting Bank shall hold any such documents in safekeeping. The Borrower and
the Accepting Bank hereby agree that in the event that any authorized signatory
of the Borrower whose signature shall appear on any Draft shall cease to have
such authority at the time that an Acceptance is to be created with respect
thereto, such signature shall nevertheless be valid and sufficient for all
purposes as if such authority had remained in full force and effect at the time
of such creation.
5.8 Delivery of Certain Documentation. Upon request by the
Agent or the Accepting Bank, the Borrower shall furnish to the Agent or the
Accepting Bank (a) a copy of the contract of sale or any bill of lading,
warehouse receipt, policy or certificate of insurance or other document covering
or otherwise relating to each shipment of goods specified in the Acceptance
Request relating to such Acceptance and (b) such other documents or information
as the Accepting Bank or the Agent shall reasonably request with respect to the
creation of such Acceptance.
5.9 Notice. The Agent shall notify the Federal Reserve Bank of
New York of the terms under which Acceptances may be made if requested or
required to do so by such institution.
5.10 Use of Proceeds. The proceeds of the Acceptances shall be
used solely to finance the payment of an L/C Obligation with respect to any
Letter of Credit which relates to the purchase of Inventory of the Borrower in
transactions which fulfill the requirements of Section 13 of the Federal Reserve
Act or the regulations of the Board of Governors of the Federal Reserve System
of the United States of America governing the creation and discounting of, and
the maintenance of reserves with respect to, bankers' acceptances.
SECTION 6. GENERAL PROVISIONS APPLICABLE TO THE
LOANS, LETTERS OF CREDIT AND ACCEPTANCES.
6.1 Termination or Reduction of Commitments. (a) The Borrower
shall have the right, upon not less than five Business Days' notice to the
Agent, to terminate the Commitments or, from time to time, reduce the amount of
the Commitments to an amount not less than the sum of (i) the aggregate
principal amount of the Loans (or, in the case of Foreign Currency Loans, the
aggregate Dollar Equivalents thereof) then outstanding after giving effect to
any contemporaneous prepayment thereof, and (ii) the then outstanding L/C
Obligations and Acceptance Obligations, provided, further, that any such
reduction shall also reduce the Foreign Currency Sublimit to the extent the
Foreign Currency Sublimit would exceed the Commitments after giving effect to
such reduction. Any termination of the Commitments shall be accompanied by the
prepayment in full of the Loans, together with accrued interest thereon to the
date of such prepayment, the collateralization
41
of the then outstanding L/C Obligations and Acceptance Obligations in accordance
with subsection 6.3(a), and the payment of any unpaid commitment fee and any
other fees and commissions then accrued hereunder with respect to the
Commitments and any other amounts payable hereunder. Any such reduction shall be
in an amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof
and shall reduce permanently pro rata in accordance with subsection 6.11 the
amount of the Commitments then in effect.
6.2 Optional Prepayments. The Borrower may on the last day of
any Interest Period with respect thereto, in the case of Eurodollar Loans or
Foreign Currency Loans, and at any time and from time to time, in the case of
Base Rate Loans, prepay the Loans, in whole or in part, without premium or
penalty, upon (a) in the case of Dollar Loans, at least four Business Days'
irrevocable notice to the Agent at its payment Office, specifying the date and
amount of prepayment and whether the prepayment is of Eurodollar Loans, Base
Rate Loans or a combination thereof, and, if of a combination thereof, the
amount allocable to each and (b) in the case of Foreign Currency Loans, the
required irrevocable notice to the Fronting Bank and the Agent at their
applicable Payment Offices, specifying the date, amount and currency of the
Loans to be prepaid. Upon receipt of any such notice in respect of Dollar Loans,
the Agent shall promptly notify each Lender thereof. If any such notice is
given, the amount specified in such notice shall be due and payable on the date
specified therein, together with any amounts payable pursuant to subsection
6.13. Partial prepayments shall be, in the case of Eurodollar Loans, in an
aggregate principal amount of $1,000,000 or a whole multiple thereof, in the
case of Base Rate Loans, in an aggregate principal amount of $500,000 or a whole
multiple thereof, and in the case of Foreign Currency Loans, in an aggregate
principal amount set forth for the relevant Foreign Currency on the
Administrative Schedule. All repayments shall be made to the applicable Payment
Office specified herein.
6.3 Mandatory Prepayments. (a) The Borrower, without notice or
demand, shall immediately prepay the Loans to the extent, if any, that at any
time the Aggregate Outstanding Extensions of Credit at such time exceeds the
Commitments of all the Lenders then in effect. To the extent that after giving
effect to any prepayment of the Loans required by the immediately preceding
sentence, the Aggregate Outstanding Extensions of Credit of the Lenders exceed
the Commitments of all the Lenders then in effect, the Borrower shall, without
notice or demand, immediately deposit in a cash collateral account with the
Agent, having terms and conditions satisfactory in form and substance to the
Agent, as cash collateral security for the liability of the Issuing Bank
(whether direct or contingent) under any Letters of Credit (including any
Existing Letters of Credit) then outstanding or of the Accepting Bank (whether
direct or contingent) under any Acceptances (including any Existing Acceptances)
then outstanding, an aggregate amount equal to the amount by which the Aggregate
Outstanding Extensions of Credit of the Lenders exceed the Commitments of all
the Lenders then in effect.
(b) If, at any time during the Commitment Period, the
Aggregate Outstanding Extensions of Credit of the Lenders exceed the Borrowing
Base then in effect, the Borrower shall, without notice or demand, immediately
prepay the Loans in an aggregate principal amount equal to such excess, together
with commitment fees, fronting fees and letter of credit fees accrued to the
date of such payment or prepayment. To the extent that after giving effect to
any prepayment of the Loans required by the immediately preceding sentence, the
Aggregate Outstanding Extensions of Credit of
42
the Lenders exceed the Borrowing Base then in effect, the Borrower shall,
without notice or demand, immediately deposit in a cash collateral account with
the Agent, having terms and conditions satisfactory in form and substance to the
Agent, as cash collateral security for the liability of the Issuing Bank
(whether direct or contingent) under any Letters of Credit (including any
Existing Letters of Credit) then outstanding or of the Accepting Bank (whether
direct or contingent) under any Acceptances (including any Existing Acceptances)
then outstanding, an aggregate amount equal to the amount by which the Aggregate
Outstanding Extensions of Credit of the Lenders exceed the Borrowing Base then
in effect.
(c) If, on any day, the aggregate Dollar Equivalents of the
outstanding principal amounts of Foreign Currency Loans exceeds an amount equal
to 103% of the Foreign Currency Sublimit, the Borrower shall, without notice or
demand, immediately repay such of the outstanding Loans in an aggregate
principal amount such that, after giving effect thereto, the aggregate Dollar
Equivalents of the outstanding principal amounts of Foreign Currency Loans does
not exceed the Foreign Currency Sublimit.
(d) Upon the receipt of any Net Cash Proceeds from the
issuance and sale of common stock of any Subsidiary in accordance with
subsection 10.6(j), the Borrower shall, without notice or demand, immediately
prepay the Loans in an aggregate principal amount equal to such Net Cash
Proceeds.
(e) Interest accrued on any Loans prepaid pursuant to this
subsection 6.3 to and including the date of such prepayment shall be payable on
the next succeeding Interest Payment Date following the date on which such
prepayment is made. All prepayments pursuant to this subsection 6.3 shall be
subject to the provisions of subsection 6.13 and shall be made to the applicable
Payment Offices specified herein.
6.4 Certain Fees. (a) The Borrower agrees to pay to the Agent
at the applicable Payment Office for the account of the Lenders a non-refundable
commitment fee for the period from and including the first day of the Commitment
Period to and including the Termination Date or such earlier date as the
Commitments shall terminate as provided herein, computed at a rate per annum on
the daily average amount of the Available Commitments during the period for
which payment is made equal to the Applicable Commitment Fee Rate. Such
commitment fees shall be payable quarterly in arrears on the last day of each
February, May, August and November and on the Termination Date or such earlier
date as the Commitments shall terminate as provided herein, commencing on the
first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Agent at the applicable
Payment Office for the account of the Lenders the fees required to be paid
pursuant to the Fee Letter, dated as of July 26, 1999, between the Borrower and
the Agent.
(c) The Borrower agrees to pay to the Agent at the applicable
Payment Office during the period from the first day of the Commitment Period to
the Termination Date or such earlier date as the Commitments shall terminate as
provided herein, as compensation for its services as Agent
43
hereunder, an administrative fee in an amount separately agreed by the Borrower
and the Agent, payable in advance on the Closing Date and on each anniversary of
the Closing Date.
6.5 Reimbursement Obligations of the Borrower. (a) The
Borrower agrees to reimburse the Issuing Bank at the applicable Payment Office
on demand on each date on which the Issuing Bank notifies the Borrower of the
date and amount of a draft presented or other payment demanded under any Letter
of Credit (including any Existing Letter of Credit) and paid by the Issuing Bank
for the amount of (i) such draft so paid or payment so made and (ii) any taxes,
reasonable fees, charges or other costs or expenses incurred by the Issuing Bank
in connection with such payment. Each such payment shall be made to the Issuing
Bank at its address for notices specified herein in the relevant currency and in
immediately available funds. If the Borrower fails to make such payment when due
in respect of a Foreign Currency Letter of Credit then, upon notice from the
Issuing Bank to the Borrower and the Agent, the amount payable shall without
further action be converted into an obligation denominated in Dollars at the
applicable Exchange Rate on the date of such conversion, as determined by the
Issuing Bank in accordance with the terms hereof, and the Issuing Bank shall
notify the Agent and each Lender of the applicable L/C Reimbursement Obligation,
the payment then due from the Borrower in respect thereof and such Lender's
Commitment Percentage thereof. Each drawing or other payment under any Letter of
Credit issued in Dollars shall constitute a request by the Borrower to the Agent
for a borrowing pursuant to subsection 2.1 of a Base Rate Loan in the amount of
such drawing or payment. The Borrowing Date with respect to such borrowing shall
be the date of such drawing or other payment if such drawing or payment is made
prior to 10:00 A.M. on such date and otherwise the first Business Day following
the date of such drawing or payment.
(b) The Borrower shall be obligated, and hereby
unconditionally agrees to reimburse the Accepting Bank on demand at the
applicable Payment Office on the maturity date thereof or on such earlier date
as the Acceptance Obligations shall become or shall have been declared due and
payable in an amount equal to the face amount of each Acceptance created by the
Accepting Bank hereunder (including each Existing Acceptance). Each such payment
shall be made to the Accepting Bank at the applicable Payment Office in Dollars
and in immediately available funds. Each payment under any Acceptance shall
constitute a request by the Borrower to the Agent for a borrowing pursuant to
subsection 2.1 of a Base Rate Loan in the amount of such payment. The Borrowing
Date with respect to such borrowing shall be the date of such payment if such
payment is made prior to 10:00 A.M. on such date and otherwise on the first
Business Day following the date of such payment.
(c) To the extent that a drawing or payment is not reimbursed
pursuant to this subsection on the date such drawing or payment is made,
interest shall be payable on such amounts for the Business Day for which such
amounts remain unpaid at the rate applicable to Base Rate Loans hereunder.
Interest shall be payable on any and all amounts remaining unpaid by the
Borrower under this subsection from the date such amounts become payable until
payment in full at the rate which would be payable on any outstanding Base Rate
Loans which were then overdue.
6.6 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
44
(b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin.
(c) Each Foreign Currency Loan denominated in an Available
Foreign Currency shall bear interest for each day during each Interest Period
with respect thereto at a rate per annum equal to the Eurocurrency Rate
determined for such day.
(d) Each Foreign Currency Loan denominated in a Designated
Foreign Currency shall bear interest for each day during each Interest Period
with respect thereto at a rate per annum equal to the Cost of Funds Rate
determined for such day.
(e) If all or a portion of (i) any of the principal amount of
any Loan, (ii) any interest payable thereon or (iii) any commitment fee or other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum which is (x) in the case of overdue principal, the rate that
would otherwise be applicable thereto pursuant to the foregoing provisions of
this subsection plus 2% or (y) in the case of overdue interest, commitment fee
or other amount, (A) the rate described in paragraph (b) of this subsection plus
2%, in the case of amounts owing that are denominated in Dollars, or (B) (I) the
Eurocurrency Rate in respect of an Available Currency or the Cost of Funds Rate
determined by the Administrative Agent in respect of a Designated Currency, plus
(II) 2%, in the case of amounts owing that are denominated in Foreign
Currencies, in each case from the date of such non-payment until such overdue
principal, interest, commitment fee or other amount is paid in full (as well
after as before judgment).
(f) Interest shall be payable in arrears on each Interest
Payment Date and on the Termination Date, provided that interest accruing
pursuant to paragraph (e) of this subsection shall be payable from time to time
on demand.
6.7 Computation of Interest and Fees. (a) Interest on Loans,
commitment fees and letter of credit fees shall be calculated on the basis of a
360 day year for the actual days elapsed. The Agent shall as soon as practicable
notify the Borrower and the Lenders of each determination of a Eurodollar Rate.
Any change in the interest rate on a Loan resulting from a change in the Base
Rate or the Eurocurrency Reserve Requirement shall become effective as of the
opening of business on the day on which such change in the Base Rate or the
Eurocurrency Reserve Requirement becomes effective. The Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent or
Fronting Bank pursuant to any provision of this Agreement shall be conclusive
and binding on the Borrower and the Lenders in the absence of manifest error.
6.8 Conversion and Continuation Options. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving
the Agent at least two Business Days' prior irrevocable notice of such election
at the applicable Funding Office, provided that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with
45
respect thereto. The Borrower may elect from time to time to convert Base Rate
Loans to Eurodollar Loans by giving the Agent at least three Business Days'
prior irrevocable notice of such election at the applicable Funding Office. Any
such notice of conversion to Eurodollar Loans shall specify the length of the
initial Interest Period or Interest Periods therefor. Upon receipt of any such
notice the Agent shall promptly notify each Lender thereof. All or any part of
outstanding Eurodollar Loans and Base Rate Loans may be converted as provided
herein, provided that (i) no Dollar Loan may be converted into a Eurodollar Loan
when any Event of Default has occurred and is continuing and the Agent has or
the Required Lenders have determined that such a conversion is not appropriate,
(ii) partial conversions to Base Rate Loans (except pursuant to paragraph (b) of
this subsection) shall be in an aggregate principal amount of $1,000,000 or a
whole multiple of $100,000 in excess thereof and partial conversions to
Eurodollar Loans shall be in an amount equal to $1,500,000 or a whole multiple
of $500,000 in excess thereof and (iii) no Dollar Loan may be converted into a
Eurodollar Loan after the date that is one month prior to the Termination Date.
(b) Any Eurodollar or Foreign Currency Loans may be continued
as such in the same currency upon the expiration of the then current Interest
Period with respect thereto by the Borrower giving notice to the Agent at the
applicable Funding Office, in accordance with the applicable provisions
contained in the definition of the term "Interest Period" set forth in
subsection 1.1, of the length of the next Interest Period to be applicable to
such Loans, provided that (i) no Eurodollar Loan may be continued as such when
any Event of Default has occurred and is continuing and the Agent has or the
Required Lenders have determined that such a continuation is not appropriate or
(ii) no Eurodollar or Foreign Currency Loan may be continued as such after the
date that is one month prior to the Termination Date and provided, further, that
if the Borrower shall fail to give any required notice as described above in
this paragraph in respect of any Eurodollar Loan or if such continuation is not
permitted in respect of any Eurodollar Loan pursuant to the preceding proviso
such Eurodollar Loans shall be automatically converted to Base Rate Loans on the
last day of such then expiring Interest Period.
6.9 Minimum Amounts of Tranches. All borrowings, conversions,
payments, prepayments and selection of Interest Periods hereunder in respect of
the Loans shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of any one
Eurodollar Tranche shall not be less than $1,500,000 and there shall be no more
than three Foreign Currency Tranches outstanding in any single Foreign Currency
at any time.
6.10 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period with respect to (i) Loans that the Borrower has
requested be made as Eurodollar Loans or Foreign Currency Loans, (ii) Eurodollar
Loans that will result from the requested conversion of Base Rate Loans into
Eurodollar Loans or (iii) the continuation of Eurodollar Loans or Foreign
Currency Loans beyond the expiration of the then current Interest Period with
respect thereto:
(a) the Agent shall have determined (which determination shall
be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the interbank eurodollar market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate or
Eurocurrency Rate for any requested Interest Period;
46
(b) the Agent shall have received notice prior to the first
day of such Interest Period from Lenders constituting the Required
Lenders that the interest rate determined pursuant to subsection 6.6
for such Interest Period does not accurately reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period; or
(c) the Fronting Bank shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Cost of Funds Rate
for such Interest Period in respect of any relevant currency;
the Agent (or the Fronting Bank, in the case of clause (c) above) shall give
telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter. If such notice is given in respect of Eurodollar Loans
(v) any Eurodollar Loans requested to be made on the first day of such Interest
Period shall be made as Base Rate Loans, any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (x) any outstanding Eurodollar Loans shall be
converted, on the first day of such Interest Period, to Base Rate Loans. If such
notice is given in respect of Foreign Currency Loans in any Foreign Currency,
(y) any Foreign Currency Loan in such Foreign Currency requested to be made on
the first day of such Interest Period shall not be made and (z) any outstanding
Foreign Currency Loans in such Foreign Currency shall be due and payable on the
first day of such Interest Period. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans or Foreign Currency Loans in
an affected Foreign Currency, as the case may be, shall be made or continued as
such, nor shall the Borrower have the right to convert Base Rate Loans to
Eurodollar Loans.
6.11 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower of Dollar Loans from the Lenders hereunder, each conversion or
continuation of a Dollar Loan, each payment by the Borrower on account of any
commitment fee and letter of credit or participation fees hereunder and any
reduction of the Commitments of the Lenders shall be made pro rata according to
the respective Commitment Percentages of the Lenders. Each payment (including
each prepayment) by the Borrower on account of principal of and interest on the
Dollar Loans shall be made pro rata according to the respective outstanding
principal amounts of the Dollar Loans then held by the Lenders, except as
otherwise provided in subsection 8.1(l). Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the
Foreign Currency Loans shall be made to the Fronting Bank, except as otherwise
provided in subsection 3.4(c). All payments (including prepayments) to be made
by the Borrower hereunder and under the Notes, whether on account of principal,
interest, fees or otherwise, shall be made without set-off or counterclaim and
shall be made, except as otherwise set forth herein, prior to the applicable
Payment Time, on the due date thereof to the applicable Payment Office, in
Dollars or the applicable Foreign Currency, as the case may be, and in
immediately available funds. The Agent shall distribute such payments in
accordance with the terms hereof to the Lenders or the Fronting Bank, as the
case may be, promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall
47
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension.
(b) Unless the Agent shall have been notified in writing by
any Lender at least two days prior to a Borrowing Date that such Lender will not
make the amount that would constitute its Commitment Percentage of any borrowing
in Dollars on such date available to the Agent, the Agent may assume that such
Lender has made such amount available to the Agent on such Borrowing Date, and
the Agent may, in reliance upon such assumption, make available to the Borrower
a corresponding amount. If such amount is made available to the Agent on a date
after such Borrowing Date, such Lender shall pay to the Agent on demand an
amount equal to the product of (i) the daily average Federal funds rate during
such period as quoted by the Agent, times (ii) the amount of such Lender's
Commitment Percentage of such borrowing, times (iii) a fraction the numerator of
which is the number of days that elapse from and including such Borrowing Date
to the date on which such Lender's Commitment Percentage of such borrowing shall
have become immediately available to the Agent and the denominator of which is
360. A certificate of the Agent submitted to any Lender with respect to any
amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Lender's Commitment Percentage of such borrowing is not
in fact made available to the Agent by such Lender within three Business Days of
such Borrowing Date, the Agent shall be entitled to recover from the Borrower,
on demand, such amount with interest thereon at the rate per annum applicable to
Base Rate Loans which are not overdue hereunder.
6.12 Illegality. Notwithstanding any other provisions herein,
if any Requirement of Law or any change therein or in the interpretation or
application thereof shall make it unlawful for any Lender to make, maintain or
participate in Eurodollar Loans or Foreign Currency Loans as contemplated by
this Agreement, (a) the commitment of such Lender hereunder to make Eurodollar
Loans or to make or participate Foreign Currency Loans in any affected Foreign
Currency, as applicable, or to convert Base Rate Loans to Eurodollar Loans shall
forthwith be canceled, (b) such Lender's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to Base Rate Loans on the
respective last days of the then current Interest Periods for such Loans or
within such earlier period as required by law, and (c) any Foreign Currency
Loans in any affected Foreign Currency shall be due on the respective last days
of the then current Interest Periods with respect to such Loans or within such
earlier periods as required by law. If any such prepayment or conversion of a
Eurodollar Loan or a Foreign Currency Loan occurs on a day which is not the last
day of the current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to subsection
6.13. During any such period of illegality any Eurodollar Loans that, but for
the application of the preceding sentence would have been maintained as
Eurodollar Loans, shall be made and maintained by the affected Lender as Base
Rate Loans.
6.13 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Borrower in payment when
due of the principal amount of or interest on any Eurodollar Loans or Foreign
Currency Loans of such Lender, (b) default by the Borrower in making a borrowing
or conversion after the Borrower has given a notice of borrowing or a notice of
conversion in accordance with provisions of this Agreement, (c) default by the
Borrower in making any prepayment after the Borrower has given a notice in
accordance with provisions of this
48
Agreement or (d) the making of a prepayment of a Eurodollar Loan or Foreign
Currency Loan on a day which is not the last day of an Interest Period with
respect thereto, including, without limitation, in each case, any such loss or
expense arising from the reemployment of funds obtained by it to maintain its
Eurodollar Loans or Foreign Currency Loans hereunder or from fees payable to
terminate the deposits from which such funds were obtained. This covenant shall
survive termination of this Agreement, payment of the outstanding Notes and all
other amounts payable hereunder.
6.14 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note, any Eurodollar Loan or any
Foreign Currency Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non- Excluded
Taxes covered by subsection 6.15 and changes in the rate of tax on the
overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate, the
Eurocurrency Rate or the Cost of Funds Rate, as applicable, hereunder;
or
(iii shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing, maintaining or participating in Eurodollar Loans or Foreign Currency
Loans or issuing or participating in Letters of Credit or creating or
participating in Acceptances or to reduce any amount receivable hereunder in
respect thereof, then, in any such case, the Borrower shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this subsection, it
shall promptly notify the Borrower, through the Agent, of the event by reason of
which it has become so entitled. A certificate as to any additional amounts
payable pursuant to this subsection submitted by such Lender, through the Agent,
to the Borrower shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect of
reducing the rate of
49
return on such Lender's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such change or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender to the Borrower (with a copy to
the Agent) of a written request therefore, the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Notwithstanding any other provision of this Agreement, if,
after the date hereof, there shall have occurred any change in national or
international financial, political or economic conditions (including the
imposition of or any change in exchange controls) or currency exchange rates
which would make it impracticable for the Fronting Bank to make or maintain
Foreign Currency Loans denominated in any Foreign Currency to, or for the
account of, the Borrower, or for the Lenders to participate therein, then, by
written notice to the Borrower and to the Agent:
(A) the Fronting Bank or the Required Lenders may declare that
Foreign Currency Loans (in the affected Foreign Currency or Foreign
Currencies) will not thereafter (for the duration of such condition) be
made hereunder (or be continued for additional Interest Periods),
whereupon any request for a Foreign Currency Loan (in the affected
Foreign Currency or Foreign Currencies) or to continue a Foreign
Currency Loan (in the affected Foreign Currency or Foreign Currencies),
as the case may be, for an additional Interest Period) shall be
ineffective; and
(B) the Fronting Bank or the Required Lenders may require that all
outstanding Foreign Currency Loans (in the affected Foreign Currency or
Foreign Currencies)(unless repaid by the Borrower) be converted to Base
Rate Loans as of the effective date of such notice and at the Exchange
Rate on the date of such conversion or, at the option of the Borrower,
repaid on the last day of the then current Interest Period with respect
thereto or, if earlier, the date on which the applicable notice becomes
effective.
6.15 Taxes. (a) All payments made by the Borrower under this
Agreement and the Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Agent or any Lender as a result of a
present or former connection between the Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or the Notes). If any such non-excluded taxes, levies, imposts,
duties, charges, fees deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Agent or any Lender
hereunder or under the Notes, the amounts so payable to the Agent or such Lender
shall be increased to the extent necessary to yield to the Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement and
the Notes,
50
provided, however, that the Borrower shall not be required to increase any such
amounts payable to any Lender that is not organized under the laws of the United
States of America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this subsection. Whenever any Non-Excluded
Taxes are payable by the Borrower, as promptly as possible thereafter the
Borrower shall send to the Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required documentary evidence,
the Borrower shall indemnify the Agent and the Lenders for any incremental
taxes, interest or penalties that may become payable by the Agent or any Lender
as a result of any such failure. The agreements in this subsection shall survive
the termination of this Agreement and the payment of the Notes and all other
amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i deliver to the Borrower and the Agent (A) two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be, and (B) an
Internal Revenue Service Form W-8 or W-9, or successor applicable form,
as the case may be;
(ii deliver to the Borrower and the Agent two further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be requested by
the Borrower or the Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to subsection 13.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.
6.16 Foreign Exchange Contracts. The Borrower may enter into
foreign exchange contracts ("Foreign Exchange Contracts") which are acceptable
in form and substance to the Agent and which are designed to limit the risk
and/or exposure of the Borrower to fluctuations in currency
51
exchange rates in the ordinary course of business; provided that the Borrower
may only enter into Foreign Exchange Contracts with a Lender or an Affiliate of
any Lender; and provided, further, that (a) the Borrower may not in any event
enter into Foreign Exchange Contracts for speculative purposes; and (b) the
aggregate face or notional amount of all such Foreign Exchange Contracts shall
at no time exceed $50,000,000 and the Borrower shall at no time be obligated or
have the right to (i) purchase an aggregate amount of the relevant foreign
currency greater than the relevant foreign currency equivalent of $50,000,000 or
(ii) receive payments with respect to fluctuations in the relevant foreign
currency to Dollar exchange rate in respect of an aggregate Dollar amount in
excess of $50,000,000. The Borrower and the relevant Lender each agrees to
promptly provide to the Agent a copy of any Foreign Exchange Contract to which
it may be a party. The Agent shall determine the liabilities (the "Foreign
Exchange Liabilities") of the Borrower under all outstanding Foreign Exchange
Contracts on a "mark to market" basis at least once during each month and at
such other times as the Agent shall determine in its discretion. The Agent shall
upon request notify the Borrower and the Lenders of any determination made by it
pursuant to the immediately preceding sentence.
SECTION 7. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make
or participate in the Loans, to issue or participate in the Letters of Credit
(including Existing Letters of Credit) and to create or participate in the
Acceptances (including Existing Acceptances), the Borrower hereby represents and
warrants to the Agent and each Lender that:
7.1 Financial Condition. The audited consolidated balance
sheets of the Borrower and its Subsidiaries as at November 30, 1997 and November
30, 1998 and the related audited consolidated statements of operations,
stockholders' equity and cash flows for the fiscal year ended on such date,
reported on by KPMG Peat Marwick, copies of which have heretofore been furnished
to each Lender, are complete and correct and present fairly the consolidated
financial condition and results of operations of the Borrower and its
Subsidiaries as at such dates and for the fiscal years which ended on such
dates. The unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as at May 31, 1999 and the related unaudited consolidated
statements of operations, stockholders' equity and cash flows for the six month
period ended on such date, certified by a Responsible Officer, copies of which
have heretofore been furnished to each Lender, are complete and correct and
present fairly the consolidated financial condition and results of operations of
the Borrower and its Subsidiaries as at such date and for the six month period
ended on such date. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein). Other than the Foreign Exchange Contracts set forth in Schedule 7.1,
neither the Borrower nor any of its Subsidiaries had, at the date of the most
recent balance sheet referred to above, any material Guarantee Obligation,
contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected in
the foregoing statements or in the notes thereto. Except as set forth in
Schedule 7.1, during the period from November 30, 1998 to and including the date
hereof there has been no sale, transfer or other disposition by the Borrower or
any
52
of its Subsidiaries of any material part of its business or property and no
purchase or other acquisition of any business or property (including any capital
stock of any other Person) material in relation to the consolidated financial
condition of the Borrower and its Subsidiaries at November 30, 1998.
7.2 No Change. Except as set forth in Schedule 7.2 or as set
forth in the financial statements referred to in subsection 7.1, since November
30, 1998 (a) there has been no development or event which has had or could
reasonably be expected to have a Material Adverse Effect and (b) no dividends or
other distributions have been declared, paid or made upon the Capital Stock of
the Borrower nor has any of the Capital Stock of the Borrower been redeemed,
retired, purchased or otherwise acquired for value by the Borrower or any of its
Subsidiaries.
7.3 Corporate Existence; Compliance with Law. Each of the
Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except to the extent that the failure to be so qualified could not, in the
aggregate, have a Material Adverse Effect and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, have a Material Adverse Effect.
7.4 Corporate Power; Authorization; Enforceable Obligations.
The Borrower has the corporate power and authority to make, deliver and perform
this Agreement, the Notes, the Security Documents to which it is a party, any
Application and any Acceptance Request and to borrow hereunder and has taken all
necessary corporate action to authorize the borrowings on the terms and
conditions of this Agreement and the Notes and to authorize the execution,
delivery and performance of this Agreement, the Notes, the Security Documents to
which it is a party, any Application and any Acceptance Request. Each Guarantor
has the corporate power and authority, and the legal right to make, deliver and
perform the Security Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Security Documents to which it is a party. No consent or authorization
of, filing with or other act by or in respect of, any Governmental Authority or
any other Person is or will be required in respect of the Borrower or any
Guarantor in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of this Agreement, the Notes,
the Security Documents, the other Loan Documents, any Application or any
Acceptance Request. This Agreement has been, each Note will be, and each
Security Document to which it is a party has been or will be, duly executed and
delivered on behalf of the Borrower. The Security Documents have been or will be
duly executed and delivered on behalf of each Guarantor that is a party thereto.
This Agreement constitutes, each Note to which it is a party when executed and
delivered, will constitute, and each Security Document to which it is a party
constitutes or, when executed and delivered, will constitute, legal, valid and
binding obligations of the Borrower, and the Security Documents constitute or,
when executed and delivered, will constitute, legal, valid and binding
obligations of each Guarantor that is a party thereto, in each case enforceable
against the Borrower or such Guarantor, as the case may be, in accordance with
its terms, except as enforceability may be limited
53
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
7.5 No Legal Bar. The execution, delivery and performance of
this Agreement, the Notes, the Security Documents, the other Loan Documents, any
Application and any Acceptance Request, the borrowings hereunder and the use of
the proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries that is a party to any
such document and will not result in, or require, the creation or imposition of
any Lien on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
7.6 No Material Litigation. Except as set forth in Schedule
7.6, no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to this
Agreement, the Notes, the Security Documents or any of the other Loan Documents
or any of the transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a Material Adverse Effect.
7.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
7.8 Ownership of Property; Liens. Each of the Borrower and its
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to all its other
property, and none of such property is subject to any Lien except as permitted
by subsection 10.3. Schedule 7.8 (as the same may be updated pursuant to
subsection 9.2(g)) sets forth a true and complete list of all leases and
warehouse contracts relating to real property upon which any Inventory of the
Borrower or any of its Subsidiaries is kept or to which the Borrower or any of
its Subsidiaries is a party, in each case identifying the lessor or
warehouseman, as the case may be, describing the location of the real property,
the size of the real property, the rent and the expiration of such lease or
warehouse contract, as the case may be. Schedule 7.8 (as the same may be updated
pursuant to subsection 9.2(g)) also sets forth a true and complete list of all
leases with Affiliates.
7.9 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights
and patents necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not have a Material
Adverse Effect (the "Intellectual Property"). No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does the Borrower know of any valid basis for any such claim. The
use of such Intellectual Property by the Borrower and its Subsidiaries does not
54
infringe on the rights of any Person, except for such claims and infringements
that, in the aggregate, do not have a Material Adverse Effect.
7.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries has a Material
Adverse Effect.
7.11 Taxes. Each of the Borrower and its Subsidiaries has
filed or caused to be filed all tax returns which, to the knowledge of the
Borrower, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
7.12 Federal Regulations. No part of the proceeds of any
Loans, Letters of Credit or Acceptances will be used for "purchasing" or
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect or for any purpose which
violates the provisions of the Regulations of such Board of Governors. If
requested by any Lender or the Agent, the Borrower will furnish to the Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in said Regulation U.
7.13 ERISA. Except as set forth in Schedule 7.13, neither a
Reportable Event nor an "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all material
respects with the applicable provisions of ERISA and the Code. No termination of
a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan
has arisen, during such five-year period with respect to which any liability or
encumbrance remains outstanding or in effect. The present value of all accrued
benefits under each Single Employer Plan, if any, (based on those assumptions
used to fund such Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the value
of the assets of such Plan allocable to such accrued benefits. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan, and to the best knowledge of the
Borrower, neither the Borrower nor any Commonly Controlled Entity would become
subject to any liability under ERISA if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of
the valuation date most closely preceding the date on which this representation
is made or deemed made. To the best knowledge of the Borrower, no such
Multiemployer Plan is in Reorganization or Insolvent. The present value
(determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
liability of the Borrower and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does
not, as of the valuation date most
55
closely preceding the date on which this representation is made or deemed made,
in the aggregate, exceed the value of the assets of all such Plans allocable to
such benefits.
7.14 Investment Company Act; Other Regulations. The Borrower
is not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
The Borrower is not subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.
7.15 Subsidiaries and Joint Ventures. Schedule 7.15 sets forth
a true and complete list of all Subsidiaries of the Borrower and the Joint
Ventures of the Borrower, in each case setting forth the nature and percentage
of the capital stock or other ownership interests which is directly or
indirectly owned by the Borrower, the respective jurisdictions of organization
of such Subsidiaries and Joint Ventures and whether such Subsidiary is a
Material Foreign Subsidiary.
7.16 Purpose of Loans. The proceeds of the Loans, Letters of
Credit and Acceptances shall be used by the Borrower for working capital
purposes in the ordinary course of business and to pay fees and expenses
incurred in connection with transactions contemplated under this Agreement and
the other Loan Documents.
7.17 Environmental Matters. Except as set forth in Schedule 7.17:
(a) None of the properties of the Borrower or any of its
Subsidiaries contain, and have not previously contained, any Materials
of Environmental Concern in amounts or concentrations which (i)
constitute or constituted a violation of, or (ii) could reasonably give
rise to liability under, Environmental Laws.
(b) The properties of the Borrower and its Subsidiaries and
all operations at such properties are in compliance, and have in the
last 5 years been in compliance, with all applicable Environmental
Laws, and there is no contamination at, under or about such properties,
or violation of any Environmental Law with respect to such properties
which could interfere with the continued operation of such properties
or impair the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of their
respective properties or businesses, nor does the Borrower have
knowledge or reason to believe that any such notice will be received or
is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from any property of the Borrower or any of
its Subsidiaries in violation of, or in a manner or to a location which
could reasonably give rise to liability under, Environmental Laws, nor
have any Materials of Environmental Concern been generated, treated,
stored or disposed of at, on or under any of such properties in
violation of, or in a manner that could reasonably give rise to
liability under, any applicable Environmental Laws.
56
(e) No judicial proceedings or governmental or administrative
action is pending, or, to the knowledge of the Borrower, threatened,
under any Environmental Law to which the Borrower is or will be named
as a party with respect to any of the properties of the Borrower or any
of its Subsidiaries nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental Law with respect to such properties.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from any of the properties of
the Borrower or any of its Subsidiaries, or arising from or related to
the operations of the Borrower in connection with such properties, in
violation of or in amounts or in a manner that could reasonably give
rise to liability under Environmental Laws.
7.18 Security Documents. (a) The Security Documents remain in
full force and effect and are enforceable in accordance with their terms except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(b) Except as expressly stated therein, each security interest
that is purported to be granted under the Security Documents constitutes a
perfected first priority security interest in favor of the Collateral Agent for
the benefit of the Lenders in the collateral subject thereto and such security
interests are continuing, valid and enforceable and are not subject to any
defense, counterclaim or setoff.
(c) Attached hereto as Exhibit J, K, L, L, M and N are true,
complete and correct copies of the Borrower Security Agreement, the Subsidiaries
Guarantee, the Subsidiaries Security Agreement, the Audiovox Pledge Agreement
and the Audiovox Holding Corp. Pledge Agreement, respectively.
(d) Any Foreign Exchange Contract or interest rate agreement
entered by the Borrower with any Affiliate of any Lender shall be deemed to be
entered into with such Lender for purposes of the definitions of "Obligations"
and "Secured Obligations", as applicable, under the Security Documents.
7.19 Insurance. The Borrower and its Subsidiaries maintain
insurance with financially sound and reputable insurance companies on all their
properties in such amounts and against such risks (but, including in any event,
public liability and product liability) as are usually insured against by
companies engaged in the same or a similar business.
7.20 No Change in Credit Criteria or Collection Policies.
There has been no material relaxation in credit criteria or collection policies
concerning accounts receivable of the Borrower or any of its Subsidiaries since
November 30, 1991. All Accounts from time to time designated as Eligible
Accounts of the Borrower and its Subsidiaries satisfy (for so long as such
Accounts continue to be designated as Eligible Accounts) all the eligibility
criteria set forth in the definition of Eligible
57
Accounts and are not subject to any claims, defenses or set-offs. All Accounts
of the Borrower and its Subsidiaries are valid, binding and enforceable
obligations of the Account Debtors or obligors on such Accounts, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
7.21 Government Contracts. Schedule 7.21 (as the same may be
updated pursuant to subsection 9.2(l)) sets forth a true and complete list of
all contracts (the "Government Contracts") between the Borrower or any of its
Subsidiaries and any Governmental Authority or other government agency.
7.22 Existing Extensions of Credit. The Borrower hereby
acknowledges, confirms and agrees that the Existing Extensions of Credit (a)
constitute legal, valid, binding and enforceable obligations of the Borrower,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law) and (b) are subject to
no defense, offset or counterclaim of any kind whatsoever.
7.23 Licensing. All export and import licenses and exchange
control and other approvals required under applicable laws and regulations with
respect to the importation of goods or Inventory by the Borrower and its
Subsidiaries and the payment of the purchase price and costs related thereto
have been obtained and are in full force and effect, except to the extent that
the failure to so obtain could not, in the aggregate, have a Material Adverse
Effect.
7.24 Year 2000 Reprogramming. Any reprogramming required to
permit the proper functioning, in and following the year 2000, of (a) the
Borrower's material computer systems and (b) material equipment containing
embedded microchips (including systems and equipment supplied by others or with
which the Borrower's systems interface) and the testing of all such systems and
equipment, as so reprogrammed, has been completed. The cost to the Borrower of
the reasonably foreseeable consequences of year 2000 to the Borrower (including,
without limitation, reprogramming errors and the failure of others' systems or
equipment) will not result in a Default or a Material Adverse Effect. The
computer and management information systems of the Borrower and its Subsidiaries
are and, with ordinary course upgrading and maintenance, will continue for the
term of this Agreement to be, sufficient to permit the Borrower to conduct its
business without Material Adverse Effect.
SECTION 8. CONDITIONS
8.1 Conditions to Effectiveness of Agreement. The
effectiveness of this Agreement is subject to the satisfaction on or prior to
the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Agent shall have received (i) this
Agreement duly executed and delivered by a Responsible Officer of the
Borrower with a counterpart for each Lender, (ii) for the account of
each Lender, a Note conforming to the requirements hereof and
58
executed by a Responsible Officer of the Borrower and (iii) the Consent
of Guarantors duly executed and delivered by each Loan Party party
thereto, with a counterpart for the Agent and each Lender.
(b) Corporate Proceedings of the Borrower and each Subsidiary.
The Agent shall have received, with a counterpart for each Lender, a
copy of the resolutions, in form and substance satisfactory to the
Agent, of the Board of Directors of the Borrower and each Subsidiary
that is a party to any Loan Document authorizing (i) in the case of the
Borrower, (A) the execution, delivery and performance of this
Agreement, the Notes, the Security Documents to which it is a party,
any Application, any Acceptance Request and any other Loan Document to
which it is a party, and (B) the borrowings contemplated hereunder, and
(ii) in the case of each such Subsidiary, the execution, delivery and
performance of the Security Documents and any other Loan Document to
which it is a party, in each case certified by the Secretary or an
Assistant Secretary of the Borrower or such Subsidiary, as the case may
be, as of the Closing Date, which certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded and shall be in form and substance satisfactory to the
Agent.
(c) Borrowing Certificate. The Agent shall have received, with
an executed counterpart for each Lender, a Borrowing Certificate of the
Borrower dated the Closing Date, substantially in the form of Exhibit B
hereto, executed by a Responsible Officer of the Borrower.
(d) Incumbency Certificate. The Agent shall have received,
with an executed counterpart for each Lender, a certificate of the
Secretary or an Assistant Secretary of the Borrower and each Subsidiary
that is a party to any Loan Document, dated the Closing Date, as to the
incumbency and signatures of the officers thereof executing the Loan
Documents to which it is a party including, in the case of the
Borrower, this Agreement and the Notes, together with evidence of the
incumbency of such Secretary or Assistant Secretary.
(e) Corporate Documents. The Agent shall have received, (i)
with an executed counterpart for each Lender, true and complete copies
of the certificate of incorporation and by-laws of the Borrower and
each Subsidiary that is a party to any Loan Document, certified as of
the Closing Date as complete and correct copies thereof by the
Secretary or an Assistant Secretary of the Borrower or such Subsidiary,
as the case may be, and (ii) good standing certificates for the
Borrower and each of its Subsidiaries that is a party to any Loan
Document from their respective jurisdictions of organization.
(f) No Violation. The consummation of the transactions
contemplated hereby shall not contravene, violate or conflict in any
material respect with, nor involve the Agent or any Lender in any
violation of, any Requirement of Law.
(g) Consents, Licenses and Approvals. The Agent shall have
received, with an executed counterpart for each Lender, a certificate
of a Responsible Officer of the Borrower (i) attaching copies of all
consents, authorizations and filings if any, referred to in subsection
59
7.4, and (ii) stating that such consents, licenses and filings are in
full force and effect, and each such consent, authorization and filing
shall be in form and substance reasonably satisfactory to the Agent.
(h) Filings, Registrations and Recordings. Any documents
(including, without limitation, financing statements and filings under
the Assignment of Claims Act of 1940) required to be filed, and any
other actions required to be taken, under or in connection with any of
the Security Documents in order to create or confirm, in favor of the
Collateral Agent for the benefit of the Lenders, a perfected security
interest in the collateral thereunder shall have been properly filed or
taken, as the case may be, and the Collateral Agent shall have received
evidence satisfactory to it of each such filing, registration,
recordation or other action and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto.
(i) Fees. The Agent shall have received the fees to be
received on the Closing Date referred to in subsection 6.4, together
with any other fees and the reimbursement of expenses which are due and
payable on the Closing Date.
(j) Legal Opinions. The Agent shall have received, with a
counterpart for each Lender, the executed legal opinion of (i) Levy &
Stopol, special counsel to the Borrower and certain of its
Subsidiaries, substantially in the form of Exhibit G-1 hereto and (ii)
Simpson Thacher & Bartlett, special counsel to the Agent and the
Lenders, substantially in the form of Exhibit G-2 hereto. Such legal
opinion shall cover such other matters incident to the transactions
contemplated by this Agreement as the Agent may reasonably require.
(k) Borrowing Base Certificate. The Agent shall have received
a Borrowing Base Certificate dated the Closing Date executed and
delivered by a Responsible Officer of the Borrower setting forth the
Borrowing Base as of June 30, 1999.
(l) Adjustment of Outstanding Extensions of Credit. On the
Closing Date,(i) the Lenders shall make such payments to each other as
may be specified by the Agent such that each Lender's share of the
Aggregate Outstanding Extensions of Credit on the Closing Date
corresponds with such Lender's Commitment Percentage hereunder and (ii)
the Lenders' Participating Interests in all Letters of Credit,
Acceptances and Foreign Currency Loans outstanding hereunder shall be
based upon their Commitments in effect on and after the Closing Date.
8.2 Conditions to Each Loan, Letter of Credit and Acceptance.
The agreement of each Lender to make any Loan requested to be made by it, the
agreement of the Issuing Bank to issue any Letter of Credit and the agreement of
the Accepting Lender to create any Acceptance, on any date is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrower or its Subsidiaries
in or pursuant to the Loan Documents shall be true and correct in all
material respects on and as of such date as if made on and as of such
date,
60
except for representations and warranties expressly stated to relate to
a specific earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loans and/or Letters of Credit and/or Acceptances requested to be made,
issued or created, as the case may be, on such date.
(c) Borrowing Base. After giving effect to the Loans and/or
Letters of Credit and/or Acceptances requested to be made, issued or
created, as the case may be, on such date, the Aggregate Outstanding
Extensions of Credit of the Lenders shall not exceed the Borrowing Base
then in effect.
Each borrowing by, Letter of Credit issued on behalf of, and Acceptance created
by or on behalf of, the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date of such borrowing, of the issuance of
such Letter of Credit or of the creation of such Acceptance that the conditions
contained in this subsection 8.2 have been satisfied.
SECTION 9. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Loan, Letter of Credit (including any Existing Letter of
Credit) or Acceptance (including any Existing Acceptance) remains outstanding
and unpaid or any other amount is owing to any Lender or the Agent hereunder,
the Borrower shall and shall cause each of its Subsidiaries to:
9.1 Financial Statements. Furnish to the Agent and each
Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the
consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of such year and the related consolidated statements of
operations, stockholders' equity and cash flows for such year, setting
forth in each case in comparative form the figures for the previous
year, reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by
KPMG Peat Marwick, or other independent certified public accountants of
nationally recognized standing acceptable to the Required Lenders; and
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each
fiscal year of the Borrower, the unaudited consolidated balance sheet
of the Borrower and its Subsidiaries as at the end of such quarter and
the related unaudited consolidated statements of operations,
stockholders' equity and cash flows of the Borrower and its
Subsidiaries for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material
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respects when considered in relation to the consolidated financial
statements of the Borrower and its Subsidiaries;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods.
9.2 Certificates; Other Information. Furnish to the Agent
and each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 9.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default under subsection 10.1
hereof, except as specified in such certificate;
(b) concurrently with the delivery of (i) the financial
statements referred to in subsections 9.1(a) and 9.1(b), a certificate
of a Responsible Officer (A) stating that, to the best of such
Responsible Officer's knowledge, the Borrower and each of its
Subsidiaries during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition,
contained in this Agreement and in the Notes and the other Loan
Documents to which it is a party to be observed, performed or satisfied
by it, and that such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate
and (B) showing in detail calculations supporting such statement in
respect of subsections 10.1, 10.8, 10.9 and 10.10 and (ii) the
financial statements referred to in subsection 9.1(a), a certificate of
a Responsible Officer showing in detail the calculations required to
determine if any Subsidiary is a Material Foreign Subsidiary;
(c) not later than 45 days after the end of each fiscal year
of the Borrower, a copy of the projections by the Borrower of the
operating budget and cash flow budget of the Borrower and its
Subsidiaries for the next fiscal year;
(d) within ten days after the same are sent, copies of all
financial statements and reports which the Borrower sends to its
stockholders, and within five days after the same are filed, copies of
all financial statements and reports which the Borrower may make to, or
file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority;
(e) concurrently with the delivery of any financial statements
and business plans required to be delivered to the holders of the
Subordinated Debentures under the Subordinated Debenture Indenture, a
copy of such financial statements or business plans;
(f) at any time at the request of the Agent and at the
Borrower's expense, an audit of the Accounts, Inventory and books and
records of the Borrower and its Subsidiaries by the Agent, in form and
substance satisfactory to the Agent;
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(g) within 15 days after the last day of each calendar month,
a Borrowing Base Certificate setting forth the Borrowing Base as of
such last day, which shall contain among other things a list of any
lease or warehouse contract entered into by the Borrower or any of its
Subsidiaries and a list of each contract entered into by the Borrower
or any of its Subsidiaries with any Governmental Authority or other
government agency after the date hereof and in each case still in
effect at such time; Schedule 7.8 and Schedule 7.21 shall be deemed to
be amended to include any such lease, warehouse contract or government
contract on the date such list is provided;
(h) within 15 days after the last day of each month, monthly
schedules, in form and substance satisfactory to the Agent, current as
of the close of business on the last Business Day of such month,
certified by a Responsible Officer, (i) of all Accounts of the Borrower
and its Subsidiaries, showing separately those which are more than 30
days, 60 days, 90 days and 120 days old together with a reconciliation
of such Accounts and (ii) setting forth such information as to accounts
payable as the Agent shall request;
(i) within 15 days after the last day of each month, a
certification of Inventory, in the form of Exhibit C-3 or such other
form as the Agent shall from time to time request, setting forth a
breakdown (and aging, where appropriate) of the type and nature of
Inventory of the Borrower and its Subsidiaries and the location
thereof;
(j) promptly after receipt thereof, a copy of all management
letters from the Borrower's independent certified public accountants;
(k) a copy of any notice received from the trustee or any
holder of Subordinated Debentures under the Subordinated Debt
Indenture; and
(l) promptly, such additional financial and other information
and copies of such documents and instruments as the Agent or any Lender
may from time to time reasonably request, including, without
limitation, a copy of any material debt instrument, security agreement
or other material contract to which the Borrower or any Subsidiary may
be a party.
9.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith, including by
appropriate proceedings, if any are required in the good faith judgment of the
Borrower, and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or its Subsidiaries, as the case may be.
9.4 Conduct of Business and Maintenance of Existence. Continue
to engage in business of the same general type as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except as otherwise
permitted pursuant to subsection 10.5; and comply with all Contractual
Obligations and Requirements of Law
63
except to the extent that failure to comply therewith could not, in the
aggregate, have a Material Adverse Effect.
9.5 Maintenance of Property; Insurance. Keep all material
property useful and necessary in its business in good working order and
condition; maintain with financially sound and reputable insurance companies
insurance on all its property in such amounts and against such risks (but
including in any event public liability and product liability) as are usually
insured against in the same general area by companies engaged in the same or a
similar business; and furnish to each Lender, upon written request, full
information as to the insurance carried.
9.6 Inspection of Property; Books and Records; Discussions;
Audits. Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made in all
material respects of all dealings and transactions in relation to its business
and activities; permit representatives of the Agent and any Lender to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
required, including, without limitation, any such visit, inspection or
examination by the Agent and any Lender in connection with any audit conducted
by the Agent, and at which a representative of any Lender may be present, of the
Accounts, Inventory and books and records of the Borrower and its Subsidiaries
from time to time at the Agent's discretion, and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants. Without limiting the
Agent's rights under this subsection and without creating any obligations on the
part of the Agent, the Agent currently intends that audits of the Borrower will
be conducted on an approximately yearly basis.
9.7 New Subsidiaries. Within 30 days after the creation or
acquisition of any direct or indirect Domestic Subsidiary or any Subsidiary
which is a Wholly Owned Foreign Subsidiary or within 30 days after any
Subsidiary becomes a Wholly Owned Foreign Subsidiary after the date hereof, at
its own cost and expense, (a) in the case of a Domestic Subsidiary, cause such
Subsidiary to grant a security interest in its assets (to the same extent that
it would grant such a security interest if it were a party to the Subsidiaries
Security Agreement) to the Collateral Agent, for the benefit of the Lenders, as
collateral security for the Obligations (as defined in the Subsidiaries
Guarantee) and to guarantee such Obligations, in each case pursuant to security
documents which are in form and substance reasonably satisfactory to the
Collateral Agent and (b) in the case of any Wholly Owned Foreign Subsidiary, (i)
cause such Wholly Owned Foreign Subsidiary to grant a security interest in its
assets (to the same extent that it would grant such a security interest if it
were a party to the Subsidiaries Security Agreement) to the Collateral Agent,
for the benefit of the Lenders, as collateral security for the Obligations (as
defined in the Subsidiaries Guarantee) and to guarantee such Obligations, in
each case pursuant to security documents which are in form and substance
reasonably satisfactory to the Collateral Agent or (ii) pledge the stock of such
Wholly Owned Foreign Subsidiary or provide such other collateral security as
shall be satisfactory to the Collateral Agent and pursuant to such documents as
shall be in form and substance reasonably satisfactory to the Collateral Agent.
Schedule 7.15 shall be deemed to be amended to include any Subsidiary created
after the date hereof, provided that the terms and provisions of this subsection
9.7, subsection 10.9 and any other applicable
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subsections of this Agreement are complied with in connection with the creation
of any such Subsidiary.
9.8 Consignment of Title Documents. At any time at the request
of the Agent or the Required Lenders, deliver or cause to be delivered to the
Collateral Agent for the benefit of the Lenders any title or similar documents
(including, without limitation, warehouse receipts) in respect of goods covered
or originally covered by a Letter of Credit (including any Existing Letter of
Credit) or Acceptance (including any Existing Acceptance) or goods which are
otherwise included in the determination of Eligible Inventory.
9.9 Notices. Promptly give notice to the Agent and each Lender
of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority, which in either case, if not cured or if adversely
determined, as the case may be, could have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any
of its Subsidiaries in which the amount involved is $1,000,000 or more
and which is not covered by insurance or in which injunctive or similar
relief is sought which, if granted, could have a Material Adverse
Effect;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, or any withdrawal from, or the termination,
Reorganization or Insolvency of any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan;
(e) the occurrence of a default under the Debenture Exchange
Agreement or the Subordinated Debenture Indenture; and
(f) the occurrence of a development or event which has had or
could reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower or any of its Subsidiaries proposes to take
with respect thereto.
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9.10 Environmental Laws. (a) Comply with, and ensure
compliance by all tenants and subtenants of any real property owned or leased by
the Borrower, if any, with, all applicable Environmental Laws and obtain and
comply with and maintain, and ensure that all such tenants and subtenants obtain
and comply with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws except to the
extent that failure to do so could not be reasonably expected to have a Material
Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws except to the extent
that the same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not be reasonably expected to have a
Material Adverse Effect.
(c) Defend, indemnify and hold harmless the Agent and the
Lenders, and their respective parents, subsidiaries, affiliates, employees,
agents, officers and directors, from and against any claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under any
Environmental Laws applicable to the operations or properties of the Borrower or
any of its Subsidiaries, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, attorney's and
consultant's fees, investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any of the foregoing
arise out of the gross negligence or willful misconduct of the party seeking
indemnification therefor. If any claim, action or other proceeding is brought
against the Agent or any Lender or their respective parents, subsidiaries,
affiliates, employees, agents, officers or directors with respect to which the
Agent or such Lender would be entitled to seek indemnification under this
paragraph, the Borrower shall be entitled to assume the defense thereof with
counsel satisfactory to the Agent or such Lender, as the case may be. The Agent
or such Lender, as the case may be, shall be entitled, at the Borrower's
expense, to retain counsel in connection with any such claim, action or other
proceeding, provided, that the Agent and the Lenders shall agree upon and retain
one counsel to represent them in connection with any single claim, action or
other proceeding unless, the retention of one counsel would be prejudicial to
the interests of the Agent or any Lender in their sole discretion. The Borrower
shall not without the prior written consent of the Agent or any affected Lender
effect any settlement of any pending or threatened proceeding, claim or action
against the Agent or such Lender in respect of which the Agent or such Lender or
their respective parents, subsidiaries, affiliates, employees, agents, officers
or directors is a party or would be entitled to seek indemnification under this
paragraph, unless such settlement includes an unconditional release of the Agent
or such Lender and their respective parents, subsidiaries, affiliates,
employees, agents, officers or directors from all liability on claims that are
the subject matter of such claim, action or other proceeding and is otherwise
acceptable to the Agent or such Lender and their respective counsel, in their
sole discretion. This indemnity shall continue in full force and effect and
survive the termination of this Agreement.
9.11 Further Assurances. Execute any and all further
documents, and take all further action which the Required Lenders or the Agent
may reasonably request in order to effectuate the transactions contemplated by
the Loan Documents. Without limiting the generality of the foregoing,
66
such further documents and actions shall include the execution of agreements and
instruments, and filing Uniform Commercial Code financing statements, in order
to effectuate the transactions contemplated by this Agreement and in order to
grant, preserve, protect and perfect the validity and priority of the security
interests created or intended to be created by the Security Documents.
SECTION 10. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Loan, Letter of Credit (including any Existing Letter of
Credit) or Acceptance (including any Existing Acceptance) remains outstanding
and unpaid or any other amount is owing to any Lender, the Agent or the
Collateral Agent hereunder or under any other Loan Document, the Borrower shall
not, and shall not permit any Subsidiary to, directly or indirectly:
10.1 Financial Condition Covenants.
(a) Maintenance of Pre-Tax Income. Permit (i) Consolidated
Pre-Tax Income for (A) the period of two consecutive fiscal quarters
ending May 31, 2000, May 31, 2001, May 31, 2002, May 31, 2003 or May
31, 2004 to be less than $1,500,000, (B) the period of two consecutive
fiscal quarters ending November 30, 1999, November 30, 2000, November
30, 2001, November 30, 2002 or November 30, 2003, to be less than
$2,500,000 (C) any fiscal year ending on or after November 30, 1999, to
be less than $4,000,000, (ii) a Consolidated Pre-Tax Loss to occur in
any two consecutive fiscal quarters or (iii) a Consolidated Pre-Tax
Loss in excess of $1,000,000 to occur in any fiscal quarter.
(b) Maintenance of Consolidated Adjusted Net Worth. Permit
Consolidated Adjusted Net Worth to be less than (i) the Net Worth Base
Amount at such time minus (ii) the aggregate purchase price of all
Capital Stock of the Borrower purchased pursuant to the Stock
Repurchase Program.
(c) Total Liabilities to Consolidated Net Worth Ratio. Permit
the ratio of Consolidated Total Liabilities to Consolidated Net Worth
at the end of any fiscal quarter to be greater than 1.75 to 1.
10.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness in respect of the Loans, the Notes, the
Letters of Credit (including Existing Letters of Credit), the
Acceptances (including Existing Acceptances) and other obligations of
the Borrower under this Agreement;
(b) Indebtedness of the Borrower to any Subsidiary and any
Domestic Subsidiary to the Borrower or any other Subsidiary;
67
(c) Indebtedness of any Subsidiary (other than a Domestic
Subsidiary) to finance the working capital requirements of such
Subsidiary not to exceed, taken together with all Indebtedness of all
other Subsidiaries (other than Domestic Subsidiaries) outstanding under
this paragraph, $20,000,000 in the aggregate at any time;
(d) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition of fixed or capital assets (whether pursuant to
a loan, a Financing Lease or otherwise) permitted under subsection
10.8;
(e) Indebtedness of the Borrower under the Subordinated
Debenture Indenture and the Subordinated Debentures in an aggregate
amount not exceeding $2,270,000 at any time;
(f) Indebtedness of the Borrower in respect of Foreign
Exchange Contracts permitted under subsection 6.16;
(g) Indebtedness of the Borrower which is subordinated and
junior in right of payment to the Obligations (as defined in the
Borrower Security Agreement) terms and conditions satisfactory to the
Agent and the Lenders (including, without limitation, Indebtedness of
the Borrower under the Talk Note);
(h) Indebtedness of Audiovox Communications Corp. incurred
pursuant to the DFS Agreement to finance the purchase of DFS Inventory,
provided that the aggregate principal amount of such Indebtedness at
any time outstanding shall not exceed $15,000,000; and
(i) other Indebtedness in an aggregate principal amount not to
exceed $1,000,000 at any one time outstanding, provided that such
Indebtedness shall not represent Indebtedness for money borrowed but
shall only represent liabilities, other than Indebtedness for money
borrowed secured by a Lien on the property of the Borrower or any of
its Subsidiaries permitted under subsection 10.3(j).
10.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets (including, without limitation,
the capital stock of any Subsidiary) or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, if any are required in the
good faith judgment of the Borrower, provided that adequate reserves
with respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP (or, in the
case of Subsidiaries organized under the laws of a foreign country,
generally accepted accounting principles in effect from time to time in
their respective jurisdictions of organization);
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
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(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, are not substantial in amount and
which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;
(f) Liens securing Indebtedness of the Borrower and its
Subsidiaries permitted by subsection 10.2(d) incurred to finance the
acquisition of fixed or capital assets, provided that (i) such Liens
shall be created substantially simultaneously with the acquisition of
such fixed or capital assets, (ii) such Liens do not at any time
encumber any property other than the property financed by such
Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased at any time and (iv) the principal amount of Indebtedness
secured by any such Lien shall at no time exceed 100% of the original
purchase price of such property at the time it was acquired;
(g) Liens in favor of the Collateral Agent for the benefit of
the Lenders created pursuant to the Security Documents and any liens
created pursuant to subsection 9.7;
(h) Liens on Cellular Inventory of Audiovox Communications Corp.
to secure the Indebtedness permitted under subsection 10.2(h);
(i) Liens on the Capital Stock of Talk Corporation owned by
the Borrower to secure repayment of Indebtedness under the Talk Note;
and
(j) Liens securing any Indebtedness permitted under subsection
10.2(i), provided that any such Liens shall not cover any Accounts (as
defined in the Borrower Security Agreement) or Inventory of the
Borrower or any of its Subsidiaries.
In no event shall the Borrower create, incur, assume or suffer to exist any Lien
upon the Capital Stock of CellStar now owned or hereafter acquired by the
Borrower, other than Liens in favor of the Collateral Agent for the benefit of
the Lenders created pursuant to clause (g) above.
10.4 Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation except (a) Guarantee
Obligations under the Subsidiaries Guarantee, (b) any Guarantee Obligations
created pursuant to subsection 9.7, (c) any Guarantee Obligations (other than in
respect of Indebtedness) of Audiovox Communications Corp. in the ordinary course
of business, (d) Guarantee Obligations of the Borrower in respect of obligations
of any wholly-owned Guarantor in an aggregate amount not to exceed $5,000,000 at
any time, (e) Guarantee Obligations of the Borrower and Quintex Communications
Corp. in respect of the obligations of GLM Wireless
69
Communications Inc. to Fleet Bank with respect to a line of credit made
available by Fleet Bank to GLM Wireless Communications Inc., provided that (i)
the aggregate principal amount (including the face amount of letters of credit
and bankers' acceptances) of extensions of credit under such line of credit
shall not exceed $200,000 and (ii) such line of credit is also guaranteed, on a
joint and several basis with the Borrower and Quintex Communications Corp., by
G.L.M. Security & Sound, Inc. and G.L.M. Security & Sound of St. James, Inc. and
(f) Guarantee Obligations of the Borrower guaranteeing the Indebtedness of
Audiovox Communication Corp. permitted under subsection 10.2(h).
10.5 Limitations on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, except that (a) any Subsidiary of the Borrower may be merged
or consolidated with or into the Borrower (provided that (i) the Borrower shall
be the continuing or surviving corporation and (ii) the security interests
created under the Security Documents in favor of the Collateral Agent, and the
rights and remedies under such Security Documents, are not otherwise adversely
affected) or with or into any one or more Domestic Subsidiaries (other than
Hermes Telecommunications Inc. and Lenex Corporation) (provided that (i) a
Domestic Subsidiary shall be the continuing or surviving corporation and (ii)
the security interests created under the Security Documents in favor of the
Collateral Agent, and the rights and remedies under such Security Documents, are
not otherwise adversely affected), (b) any Domestic Subsidiary of the Borrower
may sell or distribute all or substantially all of its assets to the Borrower or
any other Domestic Subsidiary (other than Hermes Telecommunications Inc. and
Lenex Corporation) and (c) Hermes Telecommunications Inc. and Lenex Corporation
may be liquidated and dissolved.
10.6 Limitation on Sale of Assets. Except as permitted
hereunder, convey, sell, lease, assign, transfer or otherwise dispose of any of
its property, business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, or, in the case
of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock
to any Person (other than the Borrower or any Guarantor or, if such Subsidiary
is not a Guarantor, the Borrower or any Subsidiary), except:
(a) obsolete or worn out property disposed of in the ordinary
course of business or other items of property (other than Accounts (as
defined in the Borrower Security Agreement) or Inventory) disposed of
in the ordinary course of business which, individually or in the
aggregate, are of nonmaterial economic value to the Borrower or any of
its Subsidiaries disposing of such item of property;
(b) the sale of Inventory in the ordinary course of business;
(c) the liquidation of investments in Cash Equivalents
permitted under subsection 10.9(b);
(d) the transfer of the stock or other ownership interests in
any Joint Venture by the Borrower or any of its Subsidiaries to
Audiovox Holding Corp., provided that (x) Audiovox
70
Holding Corp. (i) does not engage in any business other than the
ownership of such stock or other ownership interests, (ii) does not
incur any indebtedness for borrowed money or issue any Guarantee
Obligation (other than under the Subsidiaries Guarantee)or (iii) does
not acquire or own any assets other than such stock or other ownership
interests and (y) if any Capital Stock of Audiovox Communications Corp.
is transferred to Audiovox Holding Corp., such Capital Stock shall be
pledged as collateral security pursuant to the Audiovox Holding Corp.
Pledge Agreement pursuant to documentation in form and substance
satisfactory to the Collateral Agent;
(e) the sale of any CellStar stock owned by the Borrower or
Audiovox Holding Corp.;
(f) the sale of assets (other than Accounts (as defined in the
Borrower Security Agreement) or Inventory) in an aggregate amount not
exceeding $1,000,000 in the aggregate after the date hereof;
(g) the disposition of all or a portion of the Capital Stock
of Talk Corporation owned by the Borrower in satisfaction of all of the
Indebtedness under the Talk Note;
(h) as permitted by subsection 10.5;
(i) the sale or issuance of up to 5% of the Capital Stock of
Audiovox Communications Corp. to Toshiba Corporation; and
(j) subject to no Default or Event of Default having occurred
and being continuing or resulting therefrom (including under Section
6.3(d)), the sale or issuance of the common stock of any Subsidiary in
an IPO, provided that (x) the Borrower owns, after giving effect to
such sale or issuance, Capital Stock of such Subsidiary representing at
least 51% of the aggregate ordinary voting power represented by the
issued and outstanding Capital Stock of such Subsidiary and (y) if such
Subsidiary is a Guarantor, such Subsidiary shall continue to be a
Guarantor.
10.7 Limitation on Dividends; Stock Repurchases. Declare or
pay any dividend (other than dividends payable solely in common stock of the
Borrower) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Borrower, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower or any Subsidiary, except that the
Borrower may repurchase shares of its Capital Stock with an aggregate purchase
price not to exceed $10,000,000 (the "Stock Repurchase Program").
10.8 Limitation on Capital Expenditures. Make or commit to
make (by way of the acquisition of securities of a Person or otherwise) any
expenditure in respect of the purchase or other acquisition of fixed or capital
assets except for expenditures not exceeding, in the aggregate for the Borrower
and its Subsidiaries, $7,500,000 during any fiscal year.
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10.9 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person (an
"Investment"), except:
(a) extensions of trade credit in the ordinary course of
business;
(b) Investments in Cash Equivalents;
(c) Acquisitions by the Borrower and its Domestic
Subsidiaries, provided that the aggregate amount of all such
Acquisitions since the Closing Date (including assumed Indebtedness)
shall not exceed $10,000,000, provided that, to the extent any such
Acquisition results in the creation or acquisition of a Subsidiary, the
Borrower and such Subsidiary comply with the requirements of subsection
9.7;
(d) Investments arising as a result of the compromise or
settlement of Accounts (other than Eligible Accounts) in the ordinary
course of business as generally conducted over a period of time;
(e) Investments in (i) Domestic Subsidiaries and (ii) Joint
Ventures and Subsidiaries (other than Domestic Subsidiaries)
outstanding on the date hereof and described in Schedule 10.9(e),
provided that the Borrower and its Subsidiaries shall be in compliance
with their obligations under subsection 9.7; and
(f)(i) Investments by the Borrower and its Subsidiaries in (A)
any newly formed Joint Venture or Subsidiary (other than a Domestic
Subsidiary), (B) any existing Joint Venture or Subsidiary (other than a
Domestic Subsidiary) made after the date hereof, not to exceed
$5,000,000 with respect to any single such investment, and (C) Shintom
Co., Ltd. in the form of an Investment totaling up to $7,300,000 in
convertible debentures thereof or in the common stock thereof upon
conversion of such debentures (the "Shintom Investment") and (ii)
acquisitions of all the capital stock or all or substantially all of
the assets of any Person, provided that (w) the aggregate amount of all
such Investments and acquisitions after the date hereof (less the net
cash proceeds from any sale or other disposition of the Shintom
Investment or any part thereof) shall not exceed $10,000,000 in the
aggregate, (x) to the extent that any such Subsidiary in which an
Investment is made is or becomes a Wholly Owned Foreign Subsidiary, the
Borrower and such Wholly Owned Foreign Subsidiary comply with the
provisions of subsection 9.7 and (y) to the extent that any acquisition
pursuant to clause (ii) above results in the acquisition or creation of
a Subsidiary, the Borrower and such Subsidiary comply with the
provisions of subsection 9.7.
10.10 Limitation on Payments on the Talk Notes and other
Subordinated Indebtedness. Make any optional prepayment, optional redemption,
optional defeasance or optional purchase of the principal of the Talk Note or
any other Indebtedness permitted under subsection 10.2(g).
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10.11 Limitation on Modifications to Subordinated Debenture
Indenture and the Talk Note. Amend, modify or supplement any provision of (a)
the Subordinated Debenture Indenture or the Subordinated Debentures, other than
amendments pursuant to Section 901(5) of the Subordinated Debenture Indenture to
cure any ambiguity in the Subordinated Debenture Indenture, provided that such
amendment does not adversely affect the interests of the Lenders or (b) amend,
modify or waive any provision of the Talk Note or any other Indebtedness
permitted under subsection 10.2(g).
10.12 Transactions with Affiliates. Except as set forth on
Schedule 10.12, enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate, unless such transaction is in the ordinary course of, and
pursuant to the reasonable requirements of, the Borrower's or such Subsidiary's
business, is in good faith and is upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person not an Affiliate
and, with respect to a transaction between the Borrower or any Subsidiary, on
the one hand, and a Joint Venture, on the other hand, is upon such terms that
are (a) commercially reasonable based upon the volume of business transacted
between the Borrower or such Subsidiary, on the one hand, and such Joint
Venture, on the other hand, and (b) with respect to transfers of Inventory, at a
price not less than the lowest price charged to the Borrower's other Joint
Ventures and in no event less than the price for a sale of such Inventory in
effect with such Joint Venture on the Closing Date. Accounts owed by any Joint
Venture to the Borrower or any Subsidiary shall be promptly invoiced (and, in
any event, shall be invoiced within five days after the shipment of goods
relating thereto), shall be payable not later than 90 days after the date of
creation of original invoices related thereto, and the time for payment on any
such Account shall not be extended, nor shall any such Account be compromised,
compounded or settled for less than the full amount thereof.
10.13 Sale and Leaseback. Enter into any arrangement with any
Person providing for the leasing by the Borrower or any Subsidiary of real or
personal property which has been or is to be sold or transferred by the Borrower
or such Subsidiary to such Person or to any other Person to whom funds have been
or are to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Subsidiary.
10.14 Fiscal Year. Permit the fiscal year of the Borrower or any of its
Subsidiaries to end on a day other than November 30.
10.15 Limitation on Negative Pledge Clauses. Enter into any
agreement or Financing Leases permitted by this Agreement (in which cases, any
prohibition or limitation shall only be effective against the assets financed
thereby), with any Person other than the Lenders pursuant hereto which prohibits
or limits the ability of the Borrower or any of its Subsidiaries to create,
incur, assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired.
10.16 Compromise of Receivables. Except other than in the
ordinary course of business as generally conducted over a period of time, grant
any extension of the time of payment of any of the Accounts, compromise,
compound or settle the same for less than the full amount thereof,
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release, wholly or partially, any Person liable for the payment thereof, or
allow any credit or discount whatsoever thereon.
10.17 Accounting Policies and Procedures. Except as set forth
in Schedule 10.17, permit any material change in the accounting policies or
procedures of the Borrower or any of its subsidiaries, other than as required by
GAAP (or, in the case of Subsidiaries organized under the laws of a foreign
country, generally accepted accounting principles in effect from time to time in
their respective jurisdictions of organization), without the prior written
consent of the Agent.
10.18 Consignment of Title Documents. Deliver any title or
other similar documents in respect of Inventory as collateral security to any
Person other than the Collateral Agent.
10.19 Limitation on Restrictions on Intercompany Payments.
Enter into any agreement which restricts in any way, or has the effect of
restricting, the payment of dividends, distributions or other amounts to the
Borrower by any Subsidiary or amend the terms of any existing agreement so as to
impose or increase any restrictions on the payment of dividends, distributions
or other amounts to the Borrower by any Subsidiary or Joint Venture in a manner
that is more onerous than any such restrictions in effect on the Closing Date.
10.20 Limitation on Foreign Exchange Contracts and Interest
Rate Agreement. (a) Enter into a Foreign Exchange Contract except in the
ordinary course of business for non-speculative purposes and so long as the
aggregate amount of Foreign Exchange Liabilities of the Borrower at such time,
as most recently determined prior to such time by the Agent pursuant to this
subsection 6.16 and after giving effect to such Foreign Exchange Contract, does
not exceed $10,000,000 and (b) enter into any interest rate swap agreement,
option, collar or other similar or derivative agreement, except in the ordinary
course of business for non-speculative purposes.
SECTION 11. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of or
interest on any Loan or any L/C Obligation or Acceptance Obligation or
any fee or other amount payable hereunder when due in accordance with
the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower herein, in any Security Document or in any other Loan Document
or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this
Agreement or any Security Document or other Loan Document shall prove
to have been incorrect in any material respect on or as of the date
made or deemed made; or
(c) The Borrower shall default in the observance or
performance of any agreement contained in subsection 9.2(g) or Section
10 or Section 5(h), 5(i), 5(j) or 5(k) of the
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Borrower Security Agreement or the Subsidiaries Security Agreement or
Section 5(b) of the Audiovox Pledge Agreement; or
(d) The Borrower shall default in the observance or
performance of any other agreement contained in this Agreement, any
Security Document or any of the other Loan Documents (other than as
provided in paragraphs (a) through (c) of this Section), and such
default shall continue unremedied (i) in the case of the agreements
contained in subsection 9.1, for a period of 14 days and (ii) in the
case of all other agreements, for a period of 30 days; or
(e) (i) an Event of Default (as defined in the Debenture
Exchange Agreement) or an event which with notice or lapse of time or
both would become an Event of Default under and as defined in the
Debenture Exchange Agreement shall occur and be continuing under the
Debenture Exchange Agreement or (ii) an Event of Default (as defined in
the Subordinated Debenture Indenture) shall occur and be continuing
under the Subordinated Debenture Indenture; or
(f) The Borrower or any of its Subsidiaries shall (i) default
in any payment of principal of or interest on any Indebtedness (other
than the Subordinated Debentures), or in the payment of any Guarantee
Obligation (provided that the principal amount of such Indebtedness or
Guarantee Obligation exceeds, individually, or in the aggregate,
$500,000), provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created; or (ii) default in
the observance or performance of any other agreement or condition
relating to any such Indebtedness or Guarantee Obligation (provided
that the principal amount of such Indebtedness or Guarantee Obligation
exceeds, individually, or in the aggregate, $500,000) or contained in
any instrument or agreement evidencing, securing or relating thereto,
or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries
of such Guarantee Obligation (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable; or
(g) (i) The Borrower or any of its Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for
all or any substantial part of its assets, or the Borrower or any of
its Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any
of its Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there
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shall be commenced against the Borrower or any of its Subsidiaries any
case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order
for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof;
or (iv) the Borrower or any of its Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Borrower or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(h) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion
of the Required Lenders, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA, (v) the Borrower or
any Commonly Controlled Entity shall, or in the reasonable opinion of
the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist, with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could, in the reasonable judgment of the
Borrower or the Required Lenders, subject the Borrower or any Commonly
Controlled Entity to any tax, penalty or other liabilities that in the
aggregate could reasonably be expected to have a Material Adverse
Effect; or
(i) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $500,000 or more
and (i) all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the
entry thereof or (ii) the judgement creditors with respect to such
judgments or their successors or assigns shall have commenced
enforcement proceedings, which enforcement proceedings shall have
remained unstayed for 10 consecutive days; or
(j) Any Security Document shall cease for any reason to be in
full force and effect, or the Borrower shall so assert or the security
interests created by any such Document shall cease for any reason,
other than a release by the Lenders, to be enforceable and of the same
effect and priority purported to be created thereby;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C Obligations,
whether or not the
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beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder and all amounts of Acceptance Obligations, whether
or not the Acceptances related thereto have matured) and the Notes shall
immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Required Lenders, the Agent may, or upon the request of the
Required Lenders, the Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Agent may, or upon the request of the Required Lenders, the Agent shall, by
notice of default to the Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder and all amounts of Acceptance Obligations, whether
or not the Acceptances related thereto have matured) and the Notes to be due and
payable forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit (including Existing
Letters of Credit) with respect to which presentment for honor shall not have
occurred at the time of an acceleration pursuant to the preceding paragraph, the
Borrower shall at such time deposit in a cash collateral account opened by the
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be applied
by the Agent to the payment of drafts drawn under such Letters of Credit, and
the unused portion thereof after all such Letters of Credit shall have expired
or been fully drawn upon and, if any, shall be applied to repay other
Obligations of the Borrower hereunder and under the Notes. After all such
Letters of Credit shall have expired or been fully drawn upon, all L/C
Obligations shall have been satisfied and all other Obligations of the Borrower
hereunder and under the Notes shall have been paid in full, the balance, if any,
in such cash collateral account shall be returned to the Borrower.
Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
SECTION 12. THE AGENT
12.1 Appointment. Each Lender hereby irrevocably designates
and appoints Chase as the Agent of such Lender under this Agreement, the
Security Documents and the other Loan Documents, and each such Lender
irrevocably authorizes Chase, as the Agent for such Lender, to take such action
on its behalf under the provisions of this Agreement, the Security Documents and
the other Loan Documents and to exercise such powers and perform such duties as
are expressly delegated to the Agent by the terms of this Agreement, the
Security Documents and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement, the Security Documents or any other Loan Document or otherwise exist
against the
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Agent. References in this Section 11 to the "Agent" shall include Chase in
its capacity as Collateral Agent.
12.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement, the Security Documents and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
12.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement, the Security Documents or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement, the Security Documents or any
other Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement, the Security Documents or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, the Notes, the Security Documents or any other Loan Document
or for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, the Security
Documents or any other Loan Document, or to inspect the properties, books or
records of the Borrower.
12.4 Reliance by Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Agent. The Agent shall be fully justified in failing or refusing
to take any action under this Agreement, the Security Documents or any other
Loan Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement, the Notes, the Security Documents and the other
Loan Documents in accordance with a request of the Required Lenders, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Notes.
12.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice
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from a Lender or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, the Agent shall
give notice thereof to the Lenders. The Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders, including any action under the Security Documents;
provided that unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders. Any knowledge of any
Default or Event of Default which the Agent has or acquires in its capacity as a
Lender shall be deemed to be notice to the Agent of such Default or Event of
Default.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
and/or issue or participate in Letters of Credit (including Existing Letters of
Credit) and/or create or participate in Acceptances (including Existing
Acceptances) hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
12.7 Indemnification. The Lenders agree to indemnify the Agent
in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their original Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in its capacity as such
in any way relating to or arising out of this Agreement, the Security Documents,
any of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
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judgments, suits, costs, expenses or disbursements to the extent resulting from
the Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Notes and all other amounts payable
hereunder.
12.8 Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower as though the Agent were not the Agent
hereunder, the Security Documents and the other Loan Documents. With respect to
Loans made or renewed by it and any Note issued to it and with respect to any
Letter of Credit issued or participated in by it or any Acceptance created or
participated in by it, the Agent shall have the same rights and powers under
this Agreement, the Security Documents and the other Loan Documents as any
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
12.9 Successor Agent. The Agent may resign as Agent upon 30
days' notice to the Lenders. If the Agent shall resign as Agent under this
Agreement then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be approved by the
Borrower, whereupon such successor agent shall succeed to the rights, powers and
duties of the Agent, and the term "Agent" shall mean such successor agent
effective upon its appointment, and the former Agent's rights, powers and duties
as Agent shall be terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement or any holders
of the Notes. After any retiring Agent's resignation as Agent, the provisions of
this subsection shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
12.10 Issuing Bank, Accepting Bank and Fronting Bank. The
provisions of this Section 12 shall apply mutatis mutandis to the Issuing Bank,
the Accepting Bank and the Fronting Bank in their respective capacities as such
to the same extent that such provisions apply to the Agent.
SECTION 13. MISCELLANEOUS
13.1 Amendments and Waivers. Neither this Agreement, any Note,
Security Document or other Loan Document, nor any terms hereof or thereof may be
amended, supplemented or modified except in accordance with the provisions of
this subsection. With the prior written consent of the Required Lenders, the
Agent and the Borrower may, from time to time, enter into written amendments,
supplements or modifications hereto and to the Notes, the Security Documents and
the other Loan Documents for the purpose of adding any provisions to this
Agreement, the Notes, the Security Documents or the other Loan Documents or
changing in any manner the rights of the Lenders or of the Borrower hereunder or
thereunder or waiving, on such terms and conditions as the Agent may specify in
such instrument, any of the requirements of this Agreement, the Notes, the
Security Documents or the other Loan Documents or any Default or Event of
Default and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (a) increase the Commitments, reduce
the amount or extend the maturity of any Loan or any installment thereof, or
extend the maturity of any Letter of Credit or Acceptance to a date later than
the Termination Date, or reduce the rate or extend the time of payment of
interest
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thereon, or reduce the amount, or extend the time of payment, of any fee payable
to any Lender hereunder, or change the amount of any Lender's Commitment, in
each case without the consent of all the Lenders affected directly or indirectly
thereby, or (b) amend, modify or waive any provision of this subsection or
reduce the percentage specified in the definition of Required Lenders, or
increase the advance rates specified in the definition of Borrowing Base, or
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or the other Loan Documents or consent to the
release of all or a substantial part of the collateral upon which Liens have
been created pursuant to the Security Documents or consent to the release of any
Guarantee Obligations under the Security Documents, or amend the DFS
Intercreditor Agreement to increase the $15,000,000 limit set forth in Section
3(a) thereof in respect of the priority of DFS Obligations (as defined in the
DFS Agreement) thereunder, in each case without the prior written consent of all
the Lenders, or (c) amend, modify or waive any provision of Section 3 without
the prior written consent of the Fronting Bank or (d) amend, modify or waive any
provision of Section 4 without the prior written consent of the Issuing Bank, or
(e) amend, modify or waive any provision of Section 5 without the prior written
consent of the Accepting Bank, or (f) amend, modify or waive any provision of
Section 12 without the prior written consent of the then Agent, provided,
further that the Administrative Schedule may be amended by the Borrower, the
Fronting Bank and the Agent. Any such waiver and any such amendment, supplement
or modification shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the Lenders, the Agent and all future holders of the Loans.
In the case of any waiver, the Borrower, the Lenders and the Agent shall be
restored to their former position and rights hereunder and under the outstanding
Notes and any other Loan Documents, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such waiver shall extend
to any subsequent or other Default or Event of Default, or impair any right
consequent thereon.
13.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy or nationally recognized courier service), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand, or, in the case of telecopy notice, when received, or, in the
case of a nationally recognized courier service, one Business Day after delivery
to such courier service, addressed as follows in the case of the Borrower and
the Agent, and as set forth in Schedule 13.2 in the case of the other parties
hereto, or to such other address as may be hereafter notified by the respective
parties hereto and any future holders of the Notes:
The Borrower: Audiovox Corporation
150 Marcus Boulevard
Hauppauge, New York 11788
Attention: Charles M. Stoehr
Telecopy: (516) 273-6922
Telephone: (516) 231-7750
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With a copy to: Levy & Stopol
Counselors at Law
One Pennsylvania Plaza
49th Floor
New York, New York 10119-0165
Attention: Robert Levy
The Agent and the
Collateral Agent
(and Chase, in its
capacity as
Issuing Bank,
Accepting Bank and
Fronting Bank): The Chase Manhattan Bank
7600 Jericho Turnpike
Woodbury, New York 11797
Attention: John Budzynski
Telecopy: (516) 364-3307
Telephone: (516) 677-4502
with a copy to: Chase Agent Bank Services
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Jesus Sang
Telecopy: (212) 552-5662
Telephone: (212) 552-7916
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 2.3, 5.1, 5.3 or 5.8 shall not be effective until
received.
13.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
13.4 Survival of Representations and Warranties. All
representations and warranties made hereunder or under any other Loan Document
and in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the Notes.
13.5 Payment of Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse the Agent and each Lender for all its out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to,
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this Agreement, the Notes, the Security Documents and the other Loan Documents
and any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Agent, (b) to pay or reimburse each Lender and the Agent for all
its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the Notes, the Security
Documents, the other Loan Documents and any such other documents, including,
without limitation, fees and disbursements of counsel to the Agent and to the
several Lenders, (c) to pay, indemnify, and hold each Lender and the Agent and
their respective parents, subsidiaries, affiliates, employees, agents, officers
and directors harmless from, any and all recording and filing fees and any and
all liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the Notes, the Security Documents, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender and
the Agent and their respective parents, subsidiaries, affiliates, employees,
agents, officers and directors harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the Notes, the Security Documents, the other Loan Documents, and any
such other documents including, without limitation, any costs and expenses
relating to the conversion of amounts owing in any currency under this Agreement
to another currency (all the foregoing, collectively, the "indemnified
liabilities"), provided, that the Borrower shall have no obligation hereunder to
the Agent or any Lender, as the case may be, with respect to indemnified
liabilities arising from (i) the gross negligence or willful misconduct of the
Agent or any such Lender, as the case may be, (ii) legal proceedings commenced
against the Agent or any such Lender by any security holder or creditor thereof
arising out of and based upon rights afforded any such security holder or
creditor solely in its capacity as such, or (iii) legal proceedings commenced
against the Agent or any such Lender by any other Lender or by any Transferee
(as defined in subsection 13.6). The agreements in this subsection shall survive
repayment of the Notes and all other amounts payable hereunder.
13.6 Successors and Assigns; Participations; Purchasing
Lenders.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Lenders, the Agent, all future holders of
the Notes and their respective successors and assigns, except that the
Borrower may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Note held
by such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents. In the event
of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under this Agreement to the
other parties to this Agreement shall remain unchanged, such Lender
shall remain solely
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responsible for the performance thereof, such Lender shall remain the
holder of any such Note for all purposes under this Agreement and the
other Loan Documents, and the Borrower and the Agent shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents. The Borrower agrees that if amounts outstanding under this
Agreement and the Notes are due or unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off
in respect of its participating interest in amounts owing under this
Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement or any Note, provided that such Participant shall only be
entitled to such right of set-off if it shall have agreed in the
agreement pursuant to which it shall have acquired its participating
interest to share with the Lenders the proceeds thereof as provided in
subsection 13.7. The Borrower also agrees that each Participant shall
be entitled to the benefits of subsections 6.12, 6.13, 6.14, 6.15 and
13.5 with respect to its participation in the Commitments and the Loans
outstanding from time to time; provided, that no Participant shall be
entitled to receive any greater amount pursuant to such subsections
than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such
transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time
sell to any Lender or any affiliate thereof and, with the consent of
the Borrower and the Agent (which in each case shall not be
unreasonably withheld), to one or more additional banks or financial
institutions ("Purchasing Lenders") all or any part of its rights and
obligations under this Agreement and the Notes pursuant to an
Assignment and Acceptance substantially in the form of Exhibit D,
executed by such Purchasing Lender, such transferor Lender (and, in the
case of a Purchasing Lender that is not then a Lender or an affiliate
thereof, by the Borrower and the Agent) and delivered to the Agent for
its acceptance and recording in the Register (as defined in subsection
13.6(d)); provided that (i) in the case of a Purchasing Lender that is
not then a Lender or an affiliate thereof, no such sale to a Purchasing
Lender shall be in an aggregate principal amount of less than
$7,500,000 (other than in the case of a sale of all of a transferor
Lender's interests under this Agreement), unless otherwise agreed by
the Borrower and the Agent and (ii) except in the case of a sale of all
of a transferor Lender's interests under this Agreement, the Commitment
of the transferor Lender (determined after giving effect to such sale)
shall not be less than $7,500,000, unless otherwise agreed by the
Borrower and the Agent; provided further that if an Event of Default
has occurred under paragraph (a) or, with respect to the Borrower, (g)
of Section 11 and is continuing, the consent or approval of the
Borrower shall not be required in connection with any sale by a Lender
under this paragraph. Upon such execution, delivery, acceptance and
recording, from and after the Effective Date determined pursuant to
such Assignment and Acceptance, (x) the Purchasing Lender thereunder
shall be a party hereto and, to the extent provided in such Assignment
and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment as set forth therein, and (y) the transferor Lender
thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and,
in the case of an
84
Assignment and Acceptance covering all or the remaining portion of a
transferor Lender's rights and obligations under this Agreement, such
transferor Lender shall cease to be a party hereto). Such Assignment
and Acceptance shall be deemed to amend this Agreement to the extent,
and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of Commitment
Percentages arising from the purchase by such Purchasing Lender of all
or a portion of the rights and obligations of such transferor Lender
under this Agreement and the Notes. On or prior to the Transfer
Effective Date determined pursuant to such Assignment and Acceptance,
the Borrower, at its own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note a new Note to the order of
such Purchasing Lender in an amount equal to the Commitment assumed by
it pursuant to such Assignment and Acceptance and, if the transferor
Lender has retained a Commitment hereunder, a new Note to the order of
the transferor Lender in an amount equal to the Commitment retained by
it hereunder. Such new Notes shall be dated the Closing Date and shall
otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the transferor Lender shall be returned by the Agent to
the Borrower marked "cancelled".
(d) The Agent shall maintain at its address referred to in
subsection 13.2 a copy of each Assignment and Acceptance delivered to
it and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of
the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the Loan recorded therein for
all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by a transferor Lender and Purchasing Lender (and, in the case of a
Purchasing Lender that is not then a Lender or an affiliate thereof, by
the Borrower and the Agent) together with payment to the Agent of a
registration and processing fee of $5,000, the Agent shall (i) promptly
accept such Assignment and Acceptance and (ii) on the Effective Date
determined pursuant thereto record the information contained therein in
the Register and give notice of such acceptance and recordation to the
Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Purchasing Lender (each, a "Transferee") and any
prospective Transferee any and all financial information in such
Lender's possession concerning the Borrower and its affiliates which
has been delivered to such Lender by or on behalf of the Borrower
pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lender's credit
evaluation of the Borrower and its affiliates prior to becoming a party
to this Agreement, provided that any prospective Transferee shall have
agreed to be bound by subsection 13.8 or shall have executed a
confidentiality agreement to substantially the same effect.
85
(g) If, pursuant to this subsection, any interest in this
Agreement or any Note is transferred to any Transferee which is
organized under the laws of any jurisdiction other than the United
States of America or any state thereof, the transferor Lender shall
cause such Transferee, concurrently with the effectiveness of such
transfer, (i) to represent to the transferor Lender (for the benefit of
the transferor Lender, the Agent and the Borrower) that under
applicable law and treaties no taxes will be required to be withheld by
the Agent, the Borrower or the transferor Lender with respect to any
payments to be made to such Transferee in respect of the Loans, (ii) to
furnish to the transferor Lender (and, in the case of any Purchasing
Lender registered in the Register, the Agent and the Borrower) either
U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein such Transferee claims entitlement to
complete exemption from U.S. federal withholding tax on all interest
payments hereunder) and (iii) to agree (for the benefit of the
transferor Lender, the Agent and the Borrower) to provide the
transferor Lender (and, in the case of any Purchasing Lender registered
in the Register, the Agent and the Borrower) a new Form 4224 or Form
1001 upon the expiration or obsolescence of any previously delivered
form and comparable statements in accordance with applicable laws of
the United States of America and regulations and amendments duly
executed and completed by such Transferee, and to comply from time to
time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
(h) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Lender in accordance with
applicable law.
13.7 Adjustments; Set-off.
(a) If any Lender (a "benefitted Lender") shall at any time
receive any payment of all or part of its Loans or the Reimbursement
Obligations owing to it, or interest thereon, or receive any collateral
in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section
11(g), or otherwise), in a greater proportion than any such payment to
or collateral received by any other Lender, if any, in respect of such
other Lender's Loans, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders such portion of each such
other Lender's Loan, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the
Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted
Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without
interest. The Borrower agrees that each Lender so purchasing a portion
of another Lender's Loan may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such portion as
fully as if such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice
to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, upon any amount
86
becoming due and payable by the Borrower hereunder or under the Notes
(whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in
any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such
Lender or any branch or agency thereof to or for the credit or the
account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Agent after any such set-off and application made by
such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
13.8 Confidentiality. Each Lender agrees that all non-public
information provided to such Lender (or any officer or employee of such Lender)
pursuant to this Agreement is confidential and proprietary to the Borrower and
that the Lender will not disclose (other than to the directors, officers,
employees, affiliates and agents of the Lender who require such information in
connection with the Lender's administration and enforcement of this Agreement
and who have been directed to treat such information as confidential and
proprietary to the Borrower or to outside advisors or auditors of the Lender,
provided that such advisors or auditors have agreed to treat such information as
confidential and proprietary to the Borrower or to bank examiners or other
similar officials) any such information (excluding information which becomes (i)
generally available to the public other than as a result of the disclosure
thereof by the Lender or its representatives or (ii) available to the Lender on
a non-confidential basis from a source other than Borrower or any of its
Subsidiaries or any of their respective directors, officers, employees, agents
or representatives, provided such source is not bound by a confidentiality
agreement with the Borrower), except to the extent the Lender is required by law
or requested or required by any Governmental Authority to disclose such
information.
13.9 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Agent.
13.10 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13.11 Integration. This Agreement represents the agreement of
the Borrower, the Agent and the Lenders with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Agent or any Lender relative to subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.
13.12 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK.
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13.13 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any
judgement in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United States
of America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in subsection 13.2 or
at such other address of which the Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
13.14 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement, the Notes and the other Loan
Documents;
(b) neither the Agent nor any Lender has any fiduciary
relationship to the Borrower, and the relationship between Agent and
Lenders, on one hand, and the Borrower, on the other hand, is solely
that of debtor and creditor; and
(c) no joint venture exists among the Lenders or among the
Borrower and the Lenders.
13.15 WAIVERS OF JURY TRIAL. THE BORROWER THE AGENT AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
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13.16 European Economic and Monetary Union. (a) Definitions.
In this subsection 13.16 and in each other provision of this Agreement to which
reference is made in this subsection 13.16 expressly or implicitly, the
following terms have the meanings given to them in this subsection 13.16:
"commencement of the third stage of EMU": the date of
commencement of the third stage of EMU or the date on which
circumstances arise which (in the opinion of the Agent) have
substantially the same effect and result in substantially the same
consequences as commencement of the third stage of EMU as contemplated
by the Treaty on European Union.
"EMU": economic and monetary union as contemplated in the Treaty
on European Union.
"EMU legislation": legislative measures of the European Council
for the introduction of, changeover to or operation of a single or
unified European currency (whether known as the euro or otherwise),
being in part the implementation of the third stage of EMU;
"euro": the single currency of participating member states of the
European Union;
"euro unit": the currency unit of the euro;
"national currency unit": the unit of currency (other than a euro
unit) of a participating member state;
"participating member state": each state so described in any EMU
legislation; and
"Target Operating Day": any day that is not (i) a Saturday or
Sunday, (ii) Christmas Day or New Year's Day or (iii) any other day on
which the Trans-European Real-time Gross Settlement Operating System
(or any successor settlement system) is not operating (as determined
by the Agent); and
"Treaty on European Union": the Treaty of Rome of March 25, 1957,
as amended by the Single European Act 1986 and the Maestricht Treaty
(which was signed at Maestricht on February 7, 1992, and came into
force on November 1, 1993), as amended from time to time.
(b) Effectiveness of Provisions. The provisions of paragraphs
(c) to (j) below (inclusive) shall be effective at and from the commencement of
the third stage of EMU, provided, that if and to the extent that any such
provision relates to any state (or the currency of such state) that is not a
participating member state on the commencement of the third stage of EMU, such
provision shall become effective in relation to such state (and the currency of
such state) at and from the date on which such state becomes a participating
member state.
(c) Redenomination and Alternative Currencies. Each obligation
under this Agreement of a party to this Agreement which has been denominated in
the national currency unit of a participating member state shall be
redenominated into the euro unit in accordance with EMU
89
legislation, provided, that if and to the extent that any EMU legislation
provides that following the commencement of the third stage of EMU an amount
denominated either in the euro or in the national currency unit of a
participating member state and payable within the participating member state by
crediting an account of the creditor can be paid by the debtor either in the
euro unit or in that national currency unit, each party to this Agreement shall
be entitled to pay or repay any such amount either in the euro unit or in such
national currency unit.
(d) Loans. Any Loan in the currency of a participating member
state shall be made in the euro unit.
(e) Business Days. With respect to any amount denominated or
to be denominated in the euro or a national currency unit, any reference to a
"Business Day" shall be construed as a reference to a day (other than a Saturday
or Sunday) on which banks are generally open for business in
(i) London and New York City; and
(ii) For purposes of determining the date on which the
Eurocurrency Rate is determined under this Agreement
for any Loan denominated in the euro (or any national
currency unit) for any Interest Period therefor,
references in this Agreement to "Business Days" shall
be deemed to be references to Target Operating Days. In
addition, if the Agent determines that there is no
Eurocurrency Rate displayed on the Screen for deposits
denominated in the national currency unit in which any
Loans are denominated, the Eurocurrency Rate for such
Loans shall be based upon the rate displayed on the
Screen for the offering of deposits denominated in the
euro.
(iii)Frankfurt am Main, Germany (or such principal financial
center or centers in such participating member state or
states as the Agent may from time to time nominate for
this purpose).
(f) Payments to the Agent. Subsections 2.2., 3.2 and 6.11
shall be construed so that, in relation to the payment of any amount of euro
units or national currency units, such amount shall be made available to the
Agent in immediately available, freely transferable, cleared funds to such
account with such bank in Frankfurt am Main, Germany (or such other principal
financial center in such participating member state as the Agent may from time
to time nominate for this purpose) as the Agent shall from time to time nominate
for this purpose.
(g) Payments by the Agent to the Lenders. Any amount payable
by the Agent to the Lenders under this Agreement in the currency of a
participating member state shall be paid in the euro unit.
(h) Payments by the Agent Generally. With respect to the
payment of any amount denominated in the euro or in a national currency unit,
the Agent shall not be liable to the Borrower or any of the Lenders in any way
whatsoever for any delay, or the consequences of any delay, in the
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crediting to any account of any amount required by this Agreement to be paid by
the Agent if the Agent shall have taken all relevant steps to achieve, on the
date required by the Agreement, the payment of such amount in immediately
available, freely transferable, cleared funds (in the euro unit or, as the case
may be, in a national currency unit) to the account with the bank in the
principal financial center in the participating member state which the Borrower
or, as the case may be, any Lender shall have specified for such purpose. In
this paragraph (h), "all relevant steps" means all such steps as may be
prescribed from time to time by the regulations or operating procedures of such
clearing or settlement system as the Agent may from time to time determine for
the purpose of clearing or settling payments of the euro.
(i) Basis of Accrual. If the basis of accrual of interest or
fees expressed in this Agreement with respect to the currency of any state that
becomes a participating state shall be inconsistent with any convention or
practice in the London Interbank Market or, as the case may be, the Paris
Interbank Market for the basis of accrual of interest or fees in respect of the
euro, such convention or practice shall replace such expressed basis effective
as of and from the date on which such state becomes a participating member
state; provided, that if any Loan in the currency of such state is outstanding
immediately prior to such date, such replacement shall take effect, with respect
to such Loan, at the end of the then current Interest Period.
(j) Rounding and Other Consequential Changes. Without
prejudice and in addition to any method of conversion or rounding prescribed by
any EMU legislation and without prejudice to the respective liabilities for
indebtedness of the Borrowers to the Lenders and the Lenders to the Borrowers
under or pursuant to this Agreement:
(i) each reference in this Agreement to a minimum amount
(or an integral multiple thereof) in a national
currency unit to be paid to or by the Agent shall be
replaced by a reference to such reasonably comparable
and convenient amount (or an integral multiple
thereof) in the euro unit as the Agent may from time
to time specify; and
(ii) except as expressly provided in this subsection
13.16, each provision of this Agreement shall be
subject to such reasonable changes of construction as
the Agent may from time to time specify to be
necessary or appropriate to reflect the introduction
of or changeover to the euro in participating member
states.
(k) Increased Costs. Each relevant Borrower shall from time to
time, at the request of the Agent, pay to the Agent for the account of each
Lender the amount of any cost or increased cost incurred by, effective return on
its capital to, or of interest or other return foregone by, such Lender or any
holding company of such Lender as a result of the introduction of, changeover to
or operation of the euro in any participating member state, other than any such
cost or reduction or amount foregone reflected in the relevant Cost of Funds."
13.17. Conversion of Currencies. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto agrees, to
the fullest extent that it may effectively do so, that the rate of exchange
91
used shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the first currency could be purchased with such other
currency on the Business Day immediately preceding the day on which final
judgment is given.
(b) The obligations of the Borrower in respect of any sum due
to any party hereto or any holder of the obligations owing hereunder (the
"Applicable Creditor") shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than the currency in which such sum is stated to be
due hereunder (the "Agreement Currency"), be discharged only to the extent that,
on the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, the Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrower contained
in this subsection 13.17 shall survive the termination of this Agreement and the
payment of all other amounts owing hereunder.
92
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York by their
proper and duly authorized officers as of the day and year first above written.
AUDIOVOX CORPORATION
By: s/Charles M. Stoehr
Name: Charles M. Stoehr
Title: Senior Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Agent and as a Lender
By: s/Richard G. Grabowski
Name: Richard G. Grabowski
Title: Vice President
FLEET BANK N.A., as a Lender
By: s/Steven J. Melicharek
Name: Steven J. Melicharek
Title: Senior Vice President
BANKBOSTON, as a Lender
By: s/Neal Hesler
Name: Neal Hesler
Title: Vice President
THE CIT GROUP/BUSINESS CREDIT, INC., as a
Lender
By:s/Kevin O'Hara
Name: Kevin O'Hara
Title: Assistant Vice President
93
EUROPEAN AMERICAN BANK, as a Lender
By: s/Anthony V. Pantina
Name: Anthony V. Pantina
Title: Vice President
MELLON BANK, N.A.
By: s/Christine G. Dekajlo
Officer: Christine G. Dekajlo
Title: First Vice President
Mellon Financial Services Corporation,
Attorney-in-fact for Mellon Bank, N.A.
DEUTSCHE FINANCIAL SERVICES
CORPORATION, as a Lender
By: s/Mark B. Schafer
Name: Mark B. Schafer
Title: Vice President, Operations
ISRAEL DISCOUNT BANK OF NEW YORK, as a
Lender
By: s/Scott Fishbein
Name: Scott Fishbein
Title: Vice President
By: s/Ronald Bongiovanni
Name: Ronald Bongiovanni
Title: Vice President
NATIONAL BANK OF CANADA
By:s/James Drum / Vincent Lima
Name: James Drum/ Vincent Lima
Title: Vice President / Vice President
94
THE DIME SAVINGS BANK OF NEW YORK, as
a Lender
By:s/Gary R. Olson
Name: Gary R. Olson
Title: Vice President
BANK LEUMI USA
By:s/Paul Tine / John Koeniggberg
Name: Paul Tine / John Koeniggberg
Title: Vice President / Vice President
Schedule 1.1(a)
COMMITMENTS
Commitment
Lender Commitment Percentage
- ----------------------------------------- ------------ ----------
The Chase Manhattan Bank $ 35,000,000 18.42%
Deutsche Financial Services Corporation $ 25,000,000 13.16%
Mellon Bank, N.A $ 20,000,000 10.53%
The CIT Group/Business Credit, Inc. $ 20,000,000 10.53%
European American Bank $ 15,000,000 7.89%
National Bank of Canada $ 15,000,000 7.89%
Israel Discount Bank of New York $ 14,000,000 7.37%
Fleet Bank N.A $ 13,500,000 7.11%
BankBoston $ 12,500,000 6.58%
The Dime Savings Bank of New York $ 10,000,000 5.26%
Bank Leumi USA $ 10,000,000 5.26%
------------ ------
TOTAL $190,000,000
CONFORMED COPY
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
among
AUDIOVOX CORPORATION,
as Borrower,
the Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative and Collateral Agent
Dated as of July 28, 1999
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS............................................................................................1
1.1 Defined Terms...................................................................................................1
1.2 Other Definitional Provisions..................................................................................26
1.3 Exchange Rates.................................................................................................27
SECTION 2. AMOUNT AND TERMS OF DOLLAR LOANS......................................................................27
2.1 Commitments....................................................................................................27
2.2 Repayment of Loans; Notes......................................................................................28
2.3 Procedure for Revolving Credit Borrowing.......................................................................28
SECTION 3. AMOUNT AND TERMS OF FOREIGN CURRENCY LOANS............................................................29
3.1 Foreign Currency Commitments...................................................................................29
3.2 Procedure for Foreign Currency Borrowings......................................................................29
3.3 Fronting Fees, Commissions and Other Charges...................................................................30
3.4 Participations.................................................................................................30
3.5 Conversion of Foreign Currency Loans; Termination of Foreign Currency Loan
Subfacility...........................................................................................31
SECTION 4. AMOUNT AND TERMS OF LETTERS OF CREDIT.................................................................32
4.1 Letters of Credit..............................................................................................32
4.2 Procedure for Issuance, Extension or Amendment of Letters of Credit............................................33
4.3 Fees, Commissions and Other Charges............................................................................34
4.4 L/C Participations.............................................................................................35
4.5 Obligations Absolute...........................................................................................36
4.6 Letter of Credit Payments......................................................................................36
4.7 Application....................................................................................................37
SECTION 5. AMOUNT AND TERMS OF ACCEPTANCES.......................................................................37
5.1 Acceptances....................................................................................................37
5.2 Procedure for Creation of Acceptances..........................................................................37
5.3 Acceptance Participations......................................................................................38
5.4 Discount of Acceptances........................................................................................39
5.5 Mandatory Prepayment...........................................................................................40
5.6 Obligations Absolute...........................................................................................40
5.7 Supply of Drafts...............................................................................................41
5.8 Delivery of Certain Documentation..............................................................................41
5.9 Notice ......................................................................................................41
5.10 Use of Proceeds...................................................................................................41
i
Page
SECTION 6. GENERAL PROVISIONS APPLICABLE TO THE
LOANS, LETTERS OF CREDIT AND ACCEPTANCES..............................................................41
6.1 Termination or Reduction of Commitments........................................................................41
6.2 Optional Prepayments...........................................................................................42
6.3 Mandatory Prepayments..........................................................................................42
6.4 Certain Fees...................................................................................................43
6.5 Reimbursement Obligations of the Borrower......................................................................44
6.6 Interest Rates and Payment Dates...............................................................................44
6.7 Computation of Interest and Fees...............................................................................45
6.8 Conversion and Continuation Options............................................................................45
6.9 Minimum Amounts of Tranches....................................................................................46
6.10 Inability to Determine Interest Rate...........................................................................46
6.11 Pro Rata Treatment and Payments................................................................................47
6.12 Illegality.....................................................................................................48
6.13 Indemnity......................................................................................................48
6.14 Requirements of Law............................................................................................49
6.15 Taxes ......................................................................................................50
6.16 Foreign Exchange Contracts.....................................................................................51
SECTION 7. REPRESENTATIONS AND WARRANTIES........................................................................52
7.1 Financial Condition............................................................................................52
7.2 No Change......................................................................................................53
7.3 Corporate Existence; Compliance with Law.......................................................................53
7.4 Corporate Power; Authorization; Enforceable Obligations........................................................53
7.5 No Legal Bar...................................................................................................54
7.6 No Material Litigation.........................................................................................54
7.7 No Default.....................................................................................................54
7.8 Ownership of Property; Liens...................................................................................54
7.9 Intellectual Property..........................................................................................54
7.10 No Burdensome Restrictions.....................................................................................55
7.11 Taxes ......................................................................................................55
7.12 Federal Regulations............................................................................................55
7.13 ERISA ......................................................................................................55
7.14 Investment Company Act; Other Regulations......................................................................56
7.15 Subsidiaries and Joint Ventures................................................................................56
7.16 Purpose of Loans...............................................................................................56
7.17 Environmental Matters..........................................................................................56
7.18 Security Documents.............................................................................................57
ii
Page
7.19 Insurance......................................................................................................57
7.20 No Change in Credit Criteria or Collection Policies............................................................57
7.2. Government Contracts...........................................................................................58
7.22 Existing Extensions of Credit..................................................................................58
7.23 Licensing......................................................................................................58
7.24 Year 2000 Reprogramming........................................................................................58
SECTION 8. CONDITIONS............................................................................................58
8.1 Conditions to Effectiveness of Agreement.......................................................................58
8.2 Conditions to Each Loan, Letter of Credit and Acceptance.......................................................60
SECTION 9. AFFIRMATIVE COVENANTS.................................................................................61
9.1 Financial Statements...........................................................................................61
9.2 Certificates; Other Information................................................................................62
9.3 Payment of Obligations.........................................................................................63
9.4 Conduct of Business and Maintenance of Existence...............................................................63
9.5 Maintenance of Property; Insurance.............................................................................64
9.6 Inspection of Property; Books and Records; Discussions; Audits.................................................64
9.7 New Subsidiaries...............................................................................................64
9.8 Consignment of Title Documents.................................................................................65
9.9 Notices ......................................................................................................65
9.10 Environmental Laws.............................................................................................66
9.11 Further Assurances.............................................................................................66
SECTION 10. NEGATIVE COVENANTS....................................................................................67
10.2 Limitation on Indebtedness.....................................................................................67
10.3 Limitation on Liens............................................................................................68
10.4 Limitation on Guarantee Obligations............................................................................69
10.5 Limitations on Fundamental Changes.............................................................................70
10.6 Limitation on Sale of Assets...................................................................................70
10.7 Limitation on Dividends; Stock Repurchases.....................................................................71
10.8 Limitation on Capital Expenditures.............................................................................71
10.9 Limitation on Investments, Loans and Advances..................................................................72
10.10 Limitation on Payments on the Talk Notes and other Subordinated Indebtedness...................................72
10.11 Limitation on Modifications to Subordinated Debenture Indenture \
and the Talk Note.....................................................................................73
10.12 Transactions with Affiliates...................................................................................73
10.13 Sale and Leaseback.............................................................................................73
10.14 Fiscal Year....................................................................................................73
iii
Page
10.15 Limitation on Negative Pledge Clauses..........................................................................73
10.16 Compromise of Receivables......................................................................................73
10.17 Accounting Policies and Procedures.............................................................................74
10.18 Consignment of Title Documents.................................................................................74
10.19 Limitation on Restrictions on Intercompany Payments............................................................74
10.20 Limitation on Foreign Exchange Contracts and Interest Rate Agreement...........................................74
SECTION 11. EVENTS OF DEFAULT.....................................................................................74
SECTION 12. THE AGENT.............................................................................................77
12.1 Appointment....................................................................................................77
12.2 Delegation of Duties...........................................................................................78
12.3 Exculpatory Provisions.........................................................................................78
12.4 Reliance by Agent..............................................................................................78
12.5 Notice of Default..............................................................................................78
12.6 Non-Reliance on Agent and Other Lenders........................................................................79
12.7 Indemnification................................................................................................79
12.8 Agent in Its Individual Capacity...............................................................................80
12.9 Successor Agent................................................................................................80
12.10 Issuing Bank, Accepting Bank and Fronting Bank.................................................................80
SECTION 13. MISCELLANEOUS.........................................................................................80
13.1 Amendments and Waivers.........................................................................................80
13.2 Notices ......................................................................................................81
13.3 No Waiver; Cumulative Remedies.................................................................................82
13.4 Survival of Representations and Warranties.....................................................................82
13.5 Payment of Expenses and Taxes..................................................................................82
13.6 Successors and Assigns; Participations; Purchasing Lenders.....................................................83
13.7 Adjustments; Set-off...........................................................................................86
13.8 Confidentiality................................................................................................87
13.9 Counterparts...................................................................................................87
13.10 Severability...................................................................................................87
13.11 Integration....................................................................................................87
13.12 GOVERNING LAW..................................................................................................87
13.13 Submission To Jurisdiction; Waivers............................................................................88
13.14 Acknowledgments................................................................................................88
13.15 WAIVERS OF JURY TRIAL..........................................................................................88
13.16 European Economic and Monetary Union...........................................................................89
13.17. Conversion of Currencies.......................................................................................91
iv
Schedules
Schedule 1.1(a) Commitments
Schedule 1.1(b) Administrative Schedule
Schedule 7.1 Changes of Events
Schedule 7.2 Stock Repurchases
Schedule 7.6 Litigation
Schedule 7.8 Leases and Warehouse Contracts
Schedule 7.13 ERISA Matters
Schedule 7.15 Subsidiaries and Joint Ventures
Schedule 7.17 Environmental Matters
Schedule 7.18(b) Filing Jurisdictions
Schedule 7.21 Government Contracts
Schedule 10.9(e) Investments in Joint Ventures and Foreign
Subsidiaries
Schedule 10.12 Transactions with Affiliates
Schedule 10.17 Changes in Accounting Policies and Procedures
Schedule 13.2 Addresses of Banks and Subsidiaries
Exhibits
Exhibit A Form of Note
Exhibit B Form of Borrowing Certificate
Exhibit C-1 Form of Borrowing Base Certificate
Exhibit C-2 Form of Borrowing Base Notice
Exhibit C-3 Form of Certification of Inventory
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Acceptance Request
Exhibit F Form of Draft
Exhibit G-1 Form of Opinion of Counsel to the Borrower and
the Subsidiaries
Exhibit G-2 Form of Opinion of Simpson Thacher & Bartlett
Exhibit H Form of Landlord's Consent
Exhibit I Form of Consent of Guarantors
Exhibit J Borrower Security Agreement
Exhibit K Subsidiaries Guarantee
Exhibit L Subsidiaries Security Agreement
Exhibit M Audiovox Pledge Agreement
Exhibit N Audiovox Holding Corp. Pledge Agreement
v
CONFORMED COPY
FIRST AMENDMENT AND CONSENT, dated as of October 12, 1999
(this "Amendment and Consent"), to the Fourth Amended and Restated Credit
Agreement, dated as of July 28, 1999 (as the same may be amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among Audiovox
Corporation, a Delaware corporation (the "Borrower"), the several banks and
other financial institutions from time to time parties thereto (collectively,
the "Lenders"; individually, a "Lender"), and The Chase Manhattan Bank, a New
York banking corporation, as administrative and collateral agent for the Lenders
(in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Agent are parties to the Credit
Agreement;
WHEREAS, the Borrower has requested that the Lenders increase
the aggregate amount of the Commitments under the Credit Agreement to
$200,000,000 and to amend certain terms in the Credit Agreement in the manner
provided for herein;
WHEREAS, the Borrower has also requested that the Agent and
the Lenders consent to the transfer by the Borrower of the assets used in its
automotive electronics business (the "Automotive Electronics Assets") to a
wholly-owned Subsidiary of the Borrower (the "Automotive Subsidiary"); and
WHEREAS, the Agent and the Lenders are willing to agree to
increase the aggregate amount of the Commitments under the Credit Agreement to
$200,000,000 and are willing to agree to the requested amendments and to provide
the requested consent, in each case on the terms and conditions provided for
herein;
NOW, THEREFORE, in consideration of the premises contained
herein, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms which
are defined in the Credit Agreement and used herein (and in the recitals hereto)
as defined terms are so used as so defined.
2. Increase in Commitments; Assignment and Transfer; Amendment
to Schedule 1.1(a); Joinder of Lender.
(a) The Borrower, the Lenders and the Agent hereby acknowledge
and agree that from and after the First Amendment Effective Date, Firstar Bank,
N.A. shall be a Lender party to the Credit Agreement for all purposes with an
initial Commitment of $15,000,000 ($5,000,000 of which shall be acquired by
assignment from The Chase Manhattan Bank pursuant to Section 9(b) below and
$10,000,000 of which shall be a new Commitment under the Credit Agreement which
shall result in an increase of the aggregate Commitments of the Lenders to
$200,000,000) and shall have the rights
1
and obligations of a Lender thereunder and under the other Loan Documents and
shall be bound by the provisions thereof.
(b) The Borrower, the Lenders and the Agent hereby further
acknowledge and agree that, in order to effect such increase in the Commitments,
the Borrower, the Lenders and the Agent hereby agree that Schedule 1.1(a) to the
Credit Agreement shall be amended by deleting such Schedule in its entirety and
substituting in lieu thereof a new Schedule 1.1(a) to read in its entirety as
set forth in Exhibit A hereto.
3. Amendment of Subsection 1.1 (Definitions). Subsection 1.1
is hereby amended by adding the following new definition in the proper
alphabetical order:
"First Amendment Effective Date": October 12, 1999.
4. Amendment of Subsection 2.3 (Procedure for Revolving Credit
Borrowing). Subsection 2.3 is hereby amended by deleting clause (iv)(x) in its
entirety and replacing it with the following clause:
"(x) in the case of Base Rate Loans, $500,000 or a
whole multiple of $100,000 in excess thereof (or, if the then
Available Commitments are less than $500,000, such lesser
amount) and"
5. Amendment of Subsection 6.2 (Optional Prepayments).
Subsection 6.2 is hereby amended by deleting the second to last sentence thereof
in its entirety and replacing it with the following sentence:
"Partial prepayments shall be, in the case of
Eurodollar Loans, in an aggregate principal amount of
$1,000,000 or a whole multiple thereof, in the case of Base
Rate Loans, in an aggregate principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof, and in the case
of Foreign Currency Loans, in an aggregate principal amount
set forth for the relevant Foreign Currency on the
Administrative Schedule."
6. Amendment of Subsection 10.4 (Limitation on Guarantee
Obligations). Subsection 10.4 is hereby amended by deleting clause (e) in its
entirety and replacing it with the following clause:
"(e) Guarantee Obligations of the Borrower and Quintex
Mobile Communications Corp. in respect of the obligations of GLM
Wireless Communications Inc. to Fleet Bank with respect to a line
of credit made available by Fleet Bank to GLM Wireless
Communications Inc., provided that (i) the aggregate principal
amount (including the face amount of letters of credit and
bankers' acceptances) of extensions of credit under such line of
credit shall not exceed $300,000 and (ii) such line of credit is
also guaranteed, on a joint and several basis with the Borrower
and Quintex Mobile Communications Corp., by G.L.M. Security &
Sound, Inc. and G.L.M. Security & Sound of St. James, Inc. and"
2
7. Consent. Notwithstanding the provisions of subsections 10.5
and 10.6 of the Credit Agreement, the Agent and the Lenders hereby consent to
the transfer by the Borrower of the Automotive Electronics Assets to the
Automotive Subsidiary pursuant to agreements and other documents in form and
substance reasonably satisfactory to the Agent.
8. Representations and Warranties. On and as of the date
hereof, the Borrower hereby confirms, reaffirms and restates the representations
and warranties set forth in Section 7 of the Credit Agreement mutatis mutandis,
except to the extent that such representations and warranties expressly relate
to a specific earlier date in which case the Borrower hereby confirms, reaffirms
and restates such representations and warranties as of such earlier date.
9. Conditions to Effectiveness. (a) This Amendment and Consent
(other than Sections 2 and 7) shall become effective as of the date first
written above upon receipt by the Agent of counterparts to this Amendment and
Consent duly executed by the Borrower and the Required Lenders.
(b) Section 2 of this Amendment and Consent shall become
effective upon receipt by the Agent of (i) counterparts of this Amendment and
Consent duly executed by the Borrower and the Required Lenders and (ii) an
Assignment and Acceptance Agreement, executed and delivered by a duly authorized
officer of The Chase Manhattan Bank ("Chase") and Firstar Bank, N.A. and
pursuant to which Chase shall sell and assign and Firstar Bank, N.A. shall
purchase and assume certain rights and obligations of Chase under the Credit
Agreement.
(c) Section 7 of this Amendment and Consent shall become
effective upon receipt by the Agent of (i) counterparts of this Amendment and
Consent duly executed by the Borrower, the Required Lenders and the Agent, (ii)
a Guarantee Assumption Agreement, substantially in the form of Exhibit B to this
Amendment and Consent, executed and delivered by a duly authorized officer of
the Automotive Subsidiary and pursuant to which the Automotive Subsidiary shall
guarantee the payment and performance of the Obligations (as defined in the
Subsidiaries Guarantee), (iii) a Subsidiaries Security Agreement Supplement,
substantially in the form of Exhibit C to this Amendment and Consent, executed
and delivered by a duly authorized officer of the Automotive Subsidiary and
pursuant to which the Automotive Subsidiary shall grant a security interest in
certain of its assets as collateral security for the Obligations (as defined in
the Subsidiaries Guarantee), (iv) a Stock Pledge Agreement, substantially in the
form of Exhibit D to this Amendment and Consent, executed and delivered by a
duly authorized officer of the Borrower pursuant to which the Borrower shall
pledge all of the Capital Stock of the Automotive Subsidiary as collateral
security for the Obligations (as defined in the Borrower Security Agreement),
(v) an acknowledgment from the Automotive Subsidiary executed and delivered by a
duly authorized officer of the Automotive Subsidiary acknowledging the pledge
described in the immediately preceding clause (iv) and in form and substance
reasonably satisfactory to the Agent, (vi) stock certificates and undated stock
powers with respect to the stock certificates representing all of the
outstanding Capital Stock of the Automotive Subsidiary, (vii) a satisfactory
legal opinion of counsel to the Borrower and the subsidiaries covering the
applicable matters set forth in Exhibit E to this Amendment and Consent, (viii)
such resolutions, incumbency certificates and legal opinions as are reasonably
requested by the Agent with respect to the transfer of the Automotive Electronic
Assets by the Borrower to the Automotive Subsidiary and the delivery of the
documents described in this paragraph and the transactions contemplated thereby
and (ix) evidence in form and substance reasonably satisfactory
3
to it that all filings, recordings, registrations and other actions, including,
without limitation, the filing of duly executed financing statements on Form
UCC-1, necessary or, in the reasonable opinion of the Agent, desirable to
perfect the Liens created by the Security Documents shall have been completed
(or, to the extent that any such filings, recordings, registrations and other
actions shall not have been completed, arrangements reasonably satisfactory to
the Agent for the completion thereof shall have been made).
10. Continuing Effect; No Other Waivers. Except as expressly
provided herein, all of the terms and provisions of the Credit Agreement are and
shall remain in full force and effect. The amendments and consent provided for
herein are limited to the specific subsections of the Credit Agreement specified
herein and shall not constitute a consent, waiver or amendment of, or an
indication of the Agent's or the Lenders' willingness to consent to any action
requiring consent under or to waive or amend, any other provisions of the Credit
Agreement or the same subsections for any other date or time period (whether or
not such other provisions or compliance with such subsections for another date
or time period are affected by the circumstances addressed in this Amendment and
Consent).
11. Expenses. The Borrower agrees to pay and reimburse the
Agent for all its reasonable costs and out-of-pocket expenses incurred in
connection with the preparation and delivery of this Amendment and Consent,
including, without limitation, the reasonable fees and disbursements of counsel
to the Agent.
12. Counterparts. This Amendment and Consent may be executed
in any number of counterparts by the parties hereto (including by facsimile
transmission), each of which counterparts when so executed shall be an original,
but all the counterparts shall together constitute one and the same instrument.
13. GOVERNING LAW. THIS AMENDMENT AND CONSENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment and Consent to be executed and delivered by their respective duly
authorized officers as of the date first above written.
AUDIOVOX CORPORATION
By: s/Charles M. Stoehr
Name: Charles M. Stoehr
Title: Senior Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Agent and as a Lender
By:s/Richard E. Grabowski
Name: Richard E. Grabowski
Title: Vice President
FLEET BANK N.A., as a Lender
By: s/Steven J. Melicharek
Name: Steven J. Melicharek
Title: Senior Vice President
BANKBOSTON, as a Lender
By:s/Neal Hesler
Name: Neal Hesler
Title: Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By:s/Karen Hoffman
Name: Karen Hoffman
Title: Vice President
5
EUROPEAN AMERICAN BANK, as a Lender
By:s/Anthony V. Pantina
Name: Anthony V. Pantina
Title: Vice President
MELLON BANK, N.A., as a Lender
By:s/Christine G. Dekajlo
Name: Christone G. Dekajlo
Title: First Vice President
DEUTSCHE FINANCIAL SERVICES
CORPORATION, as a Lender
By:s/Mark B. Schafer
Name: Mark B. Schafer
Title: Vice President, Operations
ISRAEL DISCOUNT BANK OF NEW YORK,
as a Lender
By:s/Scott Fishbein
Name: Scott Fishbein
Title: Vice President
By:s/Ronald Bongiovanni
Name: Ronald Bongiovanni
Title: Vice President
NATIONAL BANK OF CANADA, as a Lender
By:s/James Drum / Gaitan R. Frosind
Name: James Drum / Gaitan R. Frosind
Title: Vice President / Vice President
6
THE DIME SAVINGS BANK OF NEW YORK,
as a Lender
By:s/Gary R. Olson
Name: Gary R. Olson
Title: Vice President
BANK LEUMI USA, as a Lender
By:s/Paul Tine / Richard Silverstein
Name: Paul Tine / Richard Silverstein
Title: Vice President / Sr. Vice President
FIRSTAR BANK, N.A., as a Lender
By:s/Mark A. Whitson
Name: Mark A. Whitson
Title: Vice President
7
EXHIBIT A
TO FIRST AMENDMENT AND CONSENT
Schedule 1.1(a)
COMMITMENTS
Commitment
Lender Commitment Percentage
- ----------------------------------------------- ------------ ----------
The Chase Manhattan Bank $ 30,000,000 15.00%
Deutsche Financial Services Corporation $ 25,000,000 12.50%
Mellon Bank, N.A $ 20,000,000 10.00%
The CIT Group/Business Credit, Inc. $ 20,000,000 10.00%
European American Bank $ 15,000,000 7.50%
National Bank of Canada $ 15,000,000 7.50%
Firstar Bank, N.A $ 15,000,000 7.50%
Israel Discount Bank of New York $ 14,000,000 7.00%
Fleet Bank N.A $ 13,500,000 6.75%
BankBoston $ 12,500,000 6.25%
The Dime Savings Bank of New York $ 10,000,000 5.00%
Bank Leumi USA $ 10,000,000 5.00%
------------ ------
TOTAL $200,000,000
1
EXHIBIT B
TO FIRST AMENDMENT AND CONSENT
[FORM OF
GUARANTEE ASSUMPTION AGREEMENT]
GUARANTEE ASSUMPTION AGREEMENT, dated as of October 13, 1999,
made by [Automotive Subsidiary], a Delaware corporation (the "Additional
Guarantor"), in favor of THE CHASE MANHATTAN BANK, a New York banking
corporation, as collateral agent (in such capacity, the "Collateral Agent") for
the several banks and other financial institutions (collectively, the "Lenders";
individually, a "Lender") from time to time parties to the Fourth Amended and
Restated Credit Agreement, dated as of July 28, 1999 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among Audiovox
Corporation, a Delaware corporation (the "Borrower"), the Lenders and The Chase
Manhattan Bank, as administrative and collateral agent for the Lenders (in such
capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, in connection with the Credit Agreement, certain
Subsidiaries of the Borrower entered into a Second Amended and Restated
Subsidiaries Guarantee, dated as of March 15, 1994 (the "Subsidiaries
Guarantee");
WHEREAS, the Borrower and the Additional Guarantor have
requested that the Lenders and the Agent agree to consent to the transfer by the
Borrower of the assets used in its automotive electronics business (the
"Automotive Electronics Assets") to the Additional Guarantor pursuant to the
First Amendment and Consent, dated as of October 13, 1999 (the "First Amendment
and Consent"), to the Credit Agreement; and
WHEREAS, it is a condition precedent to the effectiveness of
the consent to the transfer of the Automotive Electronics Assets to the
Additional Guarantor that the Additional Guarantor shall have executed and
delivered this Guarantee Assumption Agreement;
NOW, THEREFORE, the Additional Guarantor hereby agrees to
become a "Guarantor" for all purposes of the Subsidiaries Guarantee and, as
such, shall be subject to and bound by the terms and conditions thereof. Without
limiting the generality of the foregoing, the Additional Guarantor hereby
jointly and severally with the other Guarantors, guarantees to each Lender and
the Agent and their respective successors, indorsees, the Automotive Subsidiary
and assigns the prompt and complete payment and performance by the Borrower when
due (whether at stated maturity, by acceleration or otherwise) of the
Obligations in the same manner and to the same extent as is provided in Section
2 of the Subsidiaries Guarantee. The undersigned further agrees to be bound by
all of the provisions of the Subsidiaries Guarantee applicable to a Guarantor
thereunder and agrees that it shall become a Guarantor for all purposes of the
Subsidiaries Guarantee to the same extent as if originally a party thereto with
the representations and warranties contained therein being deemed to be made by
the undersigned as of the date hereof. Terms defined in the Subsidiaries
Guarantee shall have their defined meanings when used herein.
1
IN WITNESS WHEREOF, the Additional Guarantor has caused this
Guarantee Assumption Agreement to be duly executed and delivered as of the day
and year first above written.
[Automotive Subsidiary]
By:---------------------------
Name:
Title:
Address for Notices:
Attention:
Telecopier:
Accepted and agreed:
THE CHASE MANHATTAN BANK,
as Agent
By:--------------------------------------------
Name:
Title:
QUINTEX MOBILE COMMUNICATIONS CORP.
By:--------------------------------------------
Name:
Title:
AMERICAN RADIO CORP.
By:--------------------------------------------
Name:
Title:
2
AUDIOVOX INTERNATIONAL CORP.
By:--------------------------------------------
Name:
Title:
AUDIOVOX CANADA LIMITED
By:--------------------------------------------
Name:
Title:
AUDIOVOX HOLDING CORP.
By:--------------------------------------------
Name:
Title:
AUDIOVOX ASIA INC.
By:--------------------------------------------
Name:
Title:
AUDIOVOX LATIN AMERICA LTD.
By:--------------------------------------------
Name:
Title:
AUDIOVOX COMMUNICATIONS CORP.
By:--------------------------------------------
Name:
Title:
3
EXHIBIT C
TO FIRST AMENDMENT AND CONSENT
[FORM OF
SUBSIDIARIES SECURITY AGREEMENT SUPPLEMENT]
SUBSIDIARIES SECURITY AGREEMENT SUPPLEMENT, dated as of
October 13, 1999, made by [Automotive Subsidiary], a Delaware corporation (the
"Additional Subsidiary"), in favor of THE CHASE MANHATTAN BANK, a New York
banking corporation, as collateral agent (in such capacity, the "Collateral
Agent") for the several banks and other financial institutions (collectively,
the "Lenders"; individually, a "Lender") from time to time parties to the Fourth
Amended and Restated Credit Agreement, dated as of July 28, 1999 (as the same
may be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Audiovox Corporation, a Delaware corporation (the
"Borrower"), the Lenders, and The Chase Manhattan Bank, as administrative and
collateral agent for the Lenders (in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, in connection with the Credit Agreement, certain
Subsidiaries of the Borrower are parties to that certain Amended and Restated
Subsidiaries Security Agreement, dated as of March 15, 1994 (the "Subsidiaries
Security Agreement"), made by such Subsidiaries in favor of the Collateral
Agent, pursuant to which the Subsidiaries granted a security interest in certain
of their respective assets as collateral security for, among other things, their
respective obligations to the Lenders under the Guarantee (as defined in the
Subsidiaries Security Agreement);
WHEREAS, the Borrower and the Additional Subsidiary have
requested that the Lenders and the Agent agree to consent to the transfer by the
Borrower of the assets used in its automotive electronics business (the
"Automotive Electronics Assets") to the Additional Subsidiary pursuant to the
First Amendment and Consent, dated as of October 13, 1999 (the "First Amendment
and Consent"), to the Credit Agreement;
WHEREAS, it is a condition precedent to the effectiveness of
the consent to the transfer of the Automotive Electronics Assets to the
Additional Subsidiary that the Additional Subsidiary become a "Guarantor" under
the Guarantee (as defined in the Subsidiaries Security Agreement) and, in
satisfaction of such condition, the Additional Subsidiary is executing and
delivering a Guarantee Assumption Agreement, dated as of October __, 1999, in
respect of such Guarantee; and
WHEREAS, it is also a condition precedent to the effectiveness
of the consent to the transfer of the Automotive Electronics Assets to the
Additional Subsidiary that the Additional Subsidiary shall have executed and
delivered this Subsidiaries Security Agreement Supplement pursuant to which the
Additional Subsidiary shall grant a security interest in certain of its assets
as collateral security for its obligations under the Guarantee (as defined in
the Subsidiaries Security Agreement);
NOW, THEREFORE, in consideration of the premises contained
herein and to induce the Lenders to enter into the First Amendment and Consent
and to make their loans and other extensions of credit under the Credit
Agreement, the Additional Subsidiary hereby agrees with the Collateral Agent,
for the benefit of the Lenders, as follows:
1
1. The Additional Subsidiary agrees to become a "Subsidiary"
for all purposes of the Subsidiaries Security Agreement and, as such, shall be
subject to and bound by the terms and conditions thereof. Without limiting the
generality of the foregoing, the Additional Subsidiary hereby grants to the
Collateral Agent, for the benefit of the Lenders, a security interest in all of
the property now owned or at any time hereafter acquired by it or in which it
now has or at any time in the future may acquire any right, title or interest,
in the same manner and to the same extent as is provided in Section 2 of the
Subsidiaries Security Agreement.
2. Schedules 1, 2 and 3 to the Subsidiaries Security Agreement
are hereby amended by adding at the end of each thereof, the information
contained in Schedules 1, 2 and 3 to this Subsidiaries Security Agreement
Supplement, respectively.
3. The undersigned further agrees to be bound by all of the
provisions of the Subsidiaries Security Agreement applicable to a Subsidiary
thereunder and agrees that it shall become a Subsidiary, for all purposes of the
Subsidiaries Security Agreement to the same extent as if originally a party
thereto with the representations and warranties contained therein being deemed
to be made by the undersigned as of the date hereof. Without limiting the
foregoing, the Additional Subsidiary hereby represents and warrants that (a) the
security interests granted by the Additional Subsidiary pursuant to this
Subsidiaries Security Agreement Supplement and the Subsidiaries Security
Agreement, upon completion of the filings and other actions specified on
Schedule 1 attached hereto, will constitute perfected security interests on the
Subsidiaries Collateral of the Additional Subsidiary in favor of the Collateral
Agent, for the ratable benefit of the Lenders, which are prior to all other
Liens on such Subsidiaries Collateral in existence on the date hereof except for
Liens permitted to exist pursuant to the Credit Agreement and are enforceable as
such against all creditors of and purchasers from the Additional Subsidiary
(except purchasers of Inventory in the ordinary course of business), except in
each case as enforceability is affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing, (b) such Additional Subsidiary's chief executive office
and chief place of business is located at the address listed in Schedule 2
hereto and (c) all of its Inventory is located at the locations listed in
Schedule 3 hereto. Terms defined in the Subsidiaries Security Agreement shall
have their defined meanings when used herein.
2
IN WITNESS WHEREOF, the Additional Subsidiary has caused this
Subsidiaries Security Agreement Supplement to be duly executed and delivered as
of the date first above written.
[Automotive Subsidiary]
By:------------------------------
Name:
Title:
Accepted and agreed:
THE CHASE MANHATTAN BANK,
as Agent
By:--------------------------------------------
Name:
Title:
QUINTEX MOBILE COMMUNICATIONS CORP.
By:--------------------------------------------
Name:
Title:
AMERICAN RADIO CORP.
By:--------------------------------------------
Name:
Title:
AUDIOVOX INTERNATIONAL CORP.
By:--------------------------------------------
Name:
Title:
3
AUDIOVOX CANADA LIMITED
By:--------------------------------------------
Name:
Title:
AUDIOVOX HOLDING CORP.
By:--------------------------------------------
Name:
Title:
AUDIOVOX ASIA INC.
By:--------------------------------------------
Name:
Title:
AUDIOVOX LATIN AMERICA LTD.
By:--------------------------------------------
Name:
Title:
AUDIOVOX COMMUNICATIONS CORP.
By:--------------------------------------------
Name:
Title:
4
Schedule 1 to
Subsidiaries Security Agreement Supplement
UCC FILING JURISDICTIONS
[Automotive Subsidiary]
5
Schedule 2 to
Subsidiaries Security Agreement Supplement
CHIEF EXECUTIVE OFFICES OF
THE SUBSIDIARIES
NAME OF SUBSIDIARY CHIEF EXECUTIVE OFFICE CHIEF PLACE OF BUSINESS
[Automotive Subsidiary]
6
Schedule 3 to
Subsidiaries Security Agreement Supplement
LOCATIONS OF INVENTORY
NAME OF SUBSIDIARY LOCATION
[Automotive Subsidiary]
7
EXHIBIT D
TO FIRST AMENDMENT AND CONSENT
[FORM OF
STOCK PLEDGE AGREEMENT]
STOCK PLEDGE AGREEMENT, dated as of October 13, 1999, made by
AUDIOVOX CORPORATION, a Delaware corporation (the "Borrower"), in favor of THE
CHASE MANHATTAN BANK, a New York banking corporation, as collateral agent (in
such capacity, the "Collateral Agent") for the several banks and other financial
institutions (collectively, the "Lenders"; individually, a "Lender") from time
to time parties to the Fourth Amended and Restated Credit Agreement, dated as of
July 28, 1999 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among the Borrower, the several banks and other
financial institutions from time to time parties thereto (collectively, the
"Lenders"; individually, a "Lender") and The Chase Manhattan Bank, as
administrative and collateral agent for the Lenders (in such capacity, the
"Agent").
W I T N E S S E T H:
WHEREAS, the Borrower owns all of the issued and outstanding
shares of Pledged Stock (as hereinafter defined) issued by the Issuer (as
hereinafter defined);
WHEREAS, the Borrower and the Issuer have requested that the
Lenders and the Agent agree to consent to the transfer by the Borrower of the
assets used in its automotive electronics business (the "Automotive Electronics
Assets") to the Issuer pursuant to the First Amendment and Consent, dated as of
October 13, 1999 (the "First Amendment and Consent"), to the Credit Agreement;
WHEREAS, it is a condition precedent to the effectiveness of
the consent to the transfers of the Automotive Electronics Assets to the Issuer
that the Borrower shall have executed and delivered this Stock Pledge Agreement;
NOW, THEREFORE, in consideration of the premises and to induce
the Agent and the Lenders to enter into the First Amendment and Consent and to
induce the Lenders to make their respective extensions of credit to the Borrower
under the Credit Agreement, the Borrower hereby agrees with the Collateral
Agent, for the benefit of the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement (and in the recitals hereto) and used herein
shall have the meanings given to them in the Credit Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Stock Pledge Agreement, as the same may be
amended, modified or otherwise supplemented from time to time.
"Code": the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral": the Pledged Stock and all Proceeds thereof.
"Collateral Account": any account established to hold money
Proceeds, maintained under the sole dominion and control of the
Collateral Agent, subject to withdrawal by the Collateral Agent
for the account of the Lenders only as provided in Section 8(a).
"Issuer": [Automotive Subsidiary], a Delaware corporation.
"Obligations": the collective reference to the unpaid
principal of and interest on the Loans and the Notes and all
other obligations and liabilities of the Borrower to the Agent,
the Collateral Agent and the Lenders (including, without
limitation, interest accruing at the then applicable rate
provided in the Credit Agreement after the maturity of the Loans
and interest accruing at the then applicable rate provided in the
Credit Agreement after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such
proceeding), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Credit
Agreement, the Notes, any Letter of Credit, any Acceptance, this
Agreement, the other Loan Documents, any Foreign Exchange
Contract or interest rate agreement entered into with any Lender,
or any other document made, delivered or given in connection
therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees
and disbursements of counsel to the Agent, the Collateral Agent
or to the Lenders that are required to be paid by the Borrower
pursuant to the terms of the Credit Agreement or this Agreement
or any other Loan Document).
"Pledged Stock": the shares of Capital Stock listed on
Schedule 1 hereto, together with all stock certificates, options
or rights of any nature whatsoever that may be issued or granted
by the Issuer to the Borrower in respect of the Pledged Stock
while this Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in
Section 9-306(1) of the Code in effect on the date hereof of the
Pledged Stock and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Stock,
collections thereon or distributions with respect thereto.
"Securities Act": the Securities Act of 1933, as amended.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2
2. Pledge; Grant of Security Interest. The Borrower hereby
delivers to the Collateral Agent, for the benefit of the Lenders, all the
Pledged Stock and hereby grants to the Collateral Agent, for the benefit of the
Lenders, a first security interest in the Collateral, as collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.
3. Stock Powers. Concurrently with the delivery to the
Collateral Agent of each certificate representing one or more shares of Pledged
Stock, the Borrower shall deliver an undated stock power covering such
certificate, duly executed in blank by the Borrower with, if the Collateral
Agent so requests, signature guaranteed.
4. Representations and Warranties. The Borrower represents and
warrants that:
(a) The Borrower has the corporate power and authority and the
legal right to execute and deliver, to perform its obligations under, and
to grant the security interest in the Collateral pursuant to, this
Agreement and has taken all necessary corporate action to authorize its
execution, delivery and performance of, and grant of the security interest
in the Collateral pursuant to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms, and
upon delivery to the Collateral Agent of the stock certificates evidencing
the Pledged Stock, the security interest created pursuant to this Agreement
will constitute a valid, perfected first priority security interest in the
Collateral, enforceable in accordance with its terms against all creditors
of the Borrower and any Persons purporting to purchase any Collateral from
the Borrower, except in each case as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding
in equity or at law) and an implied covenant of good faith and fair
dealing.
(c) The execution, delivery and performance of this Agreement
will not violate any provision of any Requirement of Law or Contractual
Obligation of the Borrower and will not result in the creation or
imposition of any Lien on any of the properties or revenues of the Borrower
pursuant to any Requirement of Law or Contractual Obligation of the
Borrower, except the security interest created by this Agreement.
(d) Except for such consents as have been obtained and are in
full force and effect, no consent or authorization of, filing with, or
other act by or in respect of, any arbitrator or Governmental Authority and
no consent of any other Person (including, without limitation, any
stockholder or creditor of the Borrower), is required in connection with
the execution, delivery, performance, validity or enforceability of this
Agreement.
(e) No litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the knowledge of
the Borrower, threatened by or against the Borrower or against any of its
properties or revenues with respect to this Agreement or any of the
transactions contemplated hereby.
3
(f) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
(g) The Borrower is the record and beneficial owner of, and
has good and marketable title to, the Pledged Stock, free of any and all
Liens or options in favor of, or claims of, any other Person, except the
security interests created by this Agreement.
5. Covenants. The Borrower covenants and agrees with the
Collateral Agent and the Lenders that, from and after the date of this Agreement
until this Agreement is terminated and the security interests created hereby are
released:
(a) If the Borrower shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any shares of the
Pledged Stock, or otherwise in respect thereof, the Borrower shall accept
the same as the agent of the Collateral Agent and the Lenders, hold the
same in trust for the Collateral Agent and the Lenders and deliver the same
forthwith to the Collateral Agent in the exact form received, duly indorsed
by the Borrower to the Collateral Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by the
Borrower and with, if the Collateral Agent so requests, signature
guaranteed, to be held by the Collateral Agent, subject to the terms
hereof, as additional collateral security for the Obligations. Any sums
paid upon or in respect of the Pledged Stock upon the liquidation or
dissolution of the Issuer shall be paid over to the Collateral Agent to be
held by it hereunder as additional collateral security for the Obligations,
and in case any distribution of capital shall be made on or in respect of
the Pledged Stock or any property shall be distributed upon or with respect
to the Pledged Stock pursuant to the recapitalization or reclassification
of the capital of the Issuer or pursuant to the reorganization thereof, the
property so distributed shall be delivered to the Collateral Agent to be
held by it hereunder as additional collateral security for the Obligations.
If any sums of money or property so paid or distributed in respect of the
Pledged Stock shall be received by the Borrower, the Borrower shall, until
such money or property is paid or delivered to the Collateral Agent, hold
such money or property in trust for the Lenders, segregated from other
funds of the Borrower, as additional collateral security for the
Obligations.
(b) Without the prior written consent of the Collateral Agent,
the Borrower will not (i) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Collateral, (ii)
create, incur or permit to exist any Lien or option in favor of, or any
claim of any Person with respect to, any of the Collateral, or any interest
therein, except for the security interests created by this Agreement or
(iii) enter into any agreement or undertaking restricting the right or
ability of the Borrower or the Collateral Agent to sell, assign or transfer
any of the Collateral.
(c) The Borrower shall maintain the security interest created
by this Agreement as a first, perfected security interest and shall defend
such security interest against claims and demands of all Persons
whomsoever. At any time and from time to time, upon the written request of
the
4
Collateral Agent, and at the sole expense of the Borrower, the Borrower
will promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Collateral Agent may
reasonably request for the purposes of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted. If
any amount payable under or in connection with any of the Collateral shall
be or become evidenced by any promissory note, other instrument or chattel
paper, such note, instrument or chattel paper shall be immediately
delivered to the Collateral Agent, duly endorsed in a manner satisfactory
to the Collateral Agent, to be held as Collateral pursuant to this
Agreement.
(d) The Borrower shall pay, and save the Collateral Agent and
the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect
to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
6. Cash Dividends; Voting Rights. Unless an Event of Default
shall have occurred and be continuing and the Collateral Agent shall have given
notice to the Borrower of the Collateral Agent's intent to exercise its
corresponding rights pursuant to Section 7 or 8 below, the Borrower shall be
permitted to receive all cash dividends paid in the normal course of business of
the Issuer and consistent with past practice in respect of the Pledged Stock and
to exercise all voting and corporate rights with respect to the Pledged Stock;
provided, however, that no vote shall be cast or corporate right exercised or
other action taken which, in the Collateral Agent's reasonable judgment, would
impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, any Notes, this Agreement or
any other Loan Document.
7. Rights of the Lenders and the Collateral Agent. (a) All
money Proceeds received by the Collateral Agent hereunder shall be held by the
Collateral Agent for the benefit of the Lenders in a Collateral Account. All
Proceeds while held by the Collateral Agent in a Collateral Account (or by the
Borrower in trust for the Collateral Agent and the Lenders) shall continue to be
held as collateral security for all the Obligations and shall not constitute
payment thereof until applied by the Collateral Agent to the payment thereof
pursuant to Section 8(a).
(b) If an Event of Default shall occur and be continuing and
the Collateral Agent shall give notice of its intent to exercise such rights to
the Borrower, (i) the Collateral Agent shall have the right to receive any and
all cash dividends paid in respect of the Pledged Stock and make application
thereof to the Obligations in accordance with Section 8(a) and (ii) all shares
of the Pledged Stock shall be registered in the name of the Collateral Agent or
its nominee, and the Collateral Agent or its nominee may thereafter exercise,
(A) all voting, corporate and other rights pertaining to such shares of the
Pledged Stock at any meeting of shareholders of the Issuer or otherwise and (B)
any and all rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to such shares of the Pledged Stock as if it
were the absolute owner thereof (including, without limitation, the right to
exchange at its discretion any and all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of the Issuer, or upon the exercise by the Borrower or
the Collateral Agent of any right, privilege or option pertaining to such shares
of the Pledged Stock, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Stock with any committee,
5
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Collateral Agent may determine), all without liability
except to account for property actually received by it, but the Collateral Agent
shall have no duty to the Borrower to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
8. Remedies. (a) If an Event of Default shall have occurred
and be continuing, at any time at the Collateral Agent's election, the
Collateral Agent may apply all or any part of Proceeds held in any Collateral
Account in payment of the Obligations in such order as the Collateral Agent
shall determine.
(b) If an Event of Default shall occur and be continuing, the
Collateral Agent, on behalf of the Lenders, may exercise, in addition to all
other rights and remedies granted in this Agreement and in any other instrument
or agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, the Collateral Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the Borrower or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give option or options to purchase or otherwise dispose
of and deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, in the
over-the-counter market, at any exchange, broker's board or office of the
Collateral Agent or any Lender or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Collateral
Agent or any Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Borrower, which right or equity is hereby waived or
released. The Collateral Agent shall apply any Proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Collateral Agent and the Lenders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements of counsel to the
Collateral Agent, to the payment in whole or in part of the Obligations, in such
order as the Collateral Agent shall determine, and only after such application
and after the payment by the Collateral Agent of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Collateral Agent account for the surplus, if any, to the
Borrower. To the extent permitted by applicable law, the Borrower waives all
claims, damages and demands it may acquire against the Collateral Agent or any
Lender arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition.
(c) The Borrower waives and agrees not to assert any rights or
privileges which it may acquire under Section 9-112 of the Code. The Borrower
shall remain liable for any deficiency if the proceeds of any sale or other
disposition of Collateral are insufficient to pay the Obligations and
6
the fees and disbursements of any attorneys employed by the Collateral Agent or
any other Lender to collect such deficiency.
9. Registration Rights; Private Sales. (a) If the Collateral
Agent shall determine to exercise its right to sell any or all of the Pledged
Stock pursuant to Section 8(b) hereof, and if in the opinion of the Collateral
Agent it is necessary or advisable to have the Pledged Stock, or that portion
thereof to be sold, registered under the provisions of the Securities Act, the
Borrower will use its best efforts to cause the Issuer to (i) execute and
deliver, and cause the directors and officers of the Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts as may be, in the opinion of the Collateral Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) to use its best efforts to
cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (iii) to
make all amendments thereto and/or to the related prospectus which, in the
opinion of the Collateral Agent, are necessary or advisable, all in conformity
with the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Borrower agrees to
use its best efforts to cause the Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the Collateral
Agent shall designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) The Borrower recognizes that the Collateral Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. The
Borrower acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if the Issuer would agree to do so.
(c) The Borrower further agrees to use its best efforts to do
or cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Pledged Stock pursuant to this Section valid
and binding and in compliance with any and all other applicable Requirements of
Law. The Borrower further agrees that a breach of any of the covenants contained
in this Section will cause irreparable injury to the Collateral Agent and the
Lenders, that the Collateral Agent and the Lenders have no adequate remedy at
law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section shall be specifically enforceable against the
Borrower, and the Borrower hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred.
7
10. Irrevocable Authorization and Instruction to Issuer. The
Borrower hereby authorizes and instructs the Issuer to comply with any
instruction received by it from the Collateral Agent in writing that (a) states
that an Event of Default has occurred and (b) is otherwise in accordance with
the terms of this Agreement, without any other or further instructions from the
Borrower, and the Borrower agrees that the Issuer shall be fully protected in so
complying.
11. Collateral Agent's Appointment as Attorney-in-Fact. (a)
The Borrower hereby irrevocably constitutes and appoints the Collateral Agent
and any officer or agent of the Collateral Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Borrower and in the name of
the Borrower or in the Collateral Agent's own name, from time to time in the
Collateral Agent's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer.
(b) The Borrower hereby ratifies all that said attorneys shall
lawfully do or cause to be done pursuant to the power of attorney granted in
Section 11(a). All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are released.
12. Duty of Collateral Agent. The Collateral Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Collateral Agent deals with
similar securities and property for its own account, except that the Collateral
Agent shall have no obligation to invest funds held in any Collateral Account
and may hold the same as demand deposits. Neither the Collateral Agent, any
Lender nor any of their respective directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Borrower or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
13. Execution of Financing Statements. Pursuant to Section
9-402 of the Code, the Borrower authorizes the Collateral Agent to file
financing statements with respect to the Collateral without the signature of the
Borrower in such form and in such filing offices as the Collateral Agent
reasonably determines appropriate to perfect the security interests of the
Collateral Agent and the Lenders under this Agreement. A carbon, photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement for filing in any jurisdiction.
14. Authority of Collateral Agent. The Borrower acknowledges
that the rights and responsibilities of the Collateral Agent under this
Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Collateral Agent and the
Lenders, be governed by such agreements with respect thereto as may exist from
time to time among them, but, as between the Collateral Agent and the Borrower,
the Collateral Agent shall be conclusively presumed to be acting as agent for
the
8
Lenders with full and valid authority so to act or refrain from acting, and
neither the Borrower nor the Issuer shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
15. Notices. Notices may be given by hand, by telecopy, or by
nationally recognized overnight courier service, addressed or transmitted to the
Person to which it is being given at such Person's address or transmission
number set forth in the Credit Agreement and shall be effective (a) when
delivered by hand, (b) in the case of a nationally recognized overnight courier
service, one Business Day after delivery to such courier service, and (c) in the
case of telecopy notice when received. The Borrower may change its address and
transmission number by written notice to the Collateral Agent, and the
Collateral Agent or any Lender may change its address and transmission number by
written notice to the Borrower and, in the case of a Lender, to the Collateral
Agent.
16. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
17. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Borrower and the Collateral Agent.
(b) Neither the Collateral Agent nor any Lender shall by any
act (except by a written instrument pursuant to Section 17(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Collateral Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by the Collateral Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Collateral Agent or such Lender would otherwise have
on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
18. Section Headings. The section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
19. Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of the Borrower and shall inure to the benefit
of the Collateral Agent and the Lenders and their successors and assigns.
20. Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.
9
IN WITNESS WHEREOF, the undersigned has caused this Agreement
to be duly executed and delivered as of the date first above written.
AUDIOVOX CORPORATION
By:--------------------------
Name:
Title:
10
SCHEDULE 1
TO PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
Stock Certificate
Issuer Class of Stock* No. No. of Shares
- -------------------------- --------------- ----------------- -------------
[Automotive Subsidiary] 1 [10]
- ------------------------------------
*Stock is assumed to be common stock unless otherwise indicated.
11
EXHIBIT E
TO FIRST AMENDMENT AND CONSENT
[FORM OF OPINION OF COUNSEL TO
THE BORROWER AND ITS SUBSIDIARIES]
1. The Borrower and each Domestic Subsidiary (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and (b) has the corporate power and authority to own and operate
its property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged.
2. The Borrower has the corporate power and authority to execute and
deliver the First Amendment, the Notes and the Stock Pledge Agreement and
perform its obligations under the First Amendment, the Credit Agreement, the
Notes, and the Stock Pledge Agreement and to borrow under the Credit Agreement
and has taken all necessary corporate action to authorize the borrowings on the
terms and conditions of the Credit Agreement and the Notes and to authorize the
execution, delivery and performance of the First Amendment, the Credit
Agreement, the Notes and the Stock Pledge Agreement.
3. The First Amendment, the Credit Agreement, the Notes and the Stock
Pledge Agreement (i) have been duly executed and delivered on behalf of the
Borrower, and (ii) constitute legal, valid and binding obligations of Borrower
enforceable against the Borrower in accordance with their respective terms
except as affected by bankruptcy, insolvency, moratorium, reorganization or
other similar laws affecting creditors' rights generally and by general
principles of equity.
4. Each Domestic Subsidiary has the corporate power and authority to
execute, deliver and perform and has taken all necessary corporate action to
authorize the execution, delivery and performance of the Acknowledgment and
Consent attached to the First Amendment. The Automotive Subsidiary has the
corporate power and authority to execute, deliver and perform and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Guarantee Assumption Agreement, the Subsidiaries Guarantee, the
Subsidiaries Securities Agreement Supplement and the Subsidiaries Security
Agreement. The Guarantee Assumption Agreement, the Subsidiaries Guarantee, the
Subsidiaries Security Agreement Supplement and the Subsidiaries Security
Agreement (i) have been duly executed and delivered on behalf of the Automotive
Subsidiary and (ii) constitute the legal, valid and binding obligations of the
Automotive Subsidiary enforceable against the Automotive Subsidiary in
accordance with their respective terms except as affected by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors' rights generally and by general principles of equity.
5. No consent or authorization of, or other act by or in respect of any
Federal, or New York or Delaware state, governmental authority or any other
Person is or will be required in connection with the borrowings under the Credit
Agreement or with the execution, delivery, performance, validity or
enforceability of the First Amendment, the Credit Agreement, the Notes, the
Stock Pledge Agreement, the Guarantee Assumption Agreement or the Subsidiaries
Security Agreement Supplement except for filings necessary to perfect security
interests created by the Security
12
Documents and consents and filings which have been obtained or made, as the case
may be, and which are in full force and effect.
6. The execution, delivery and performance of the First Amendment, the
Credit Agreement, the Notes, the Stock Pledge Agreement, the Guarantee
Assumption Agreement and the Subsidiaries Security Agreement Supplement, the
borrowings under the Credit Agreement and the use of the proceeds thereof (a) do
not violate applicable Federal laws, New York laws or Delaware corporate
statutory laws or regulations or breach or result in a default under or conflict
with any existing Contractual Obligation of the Borrower or any Domestic
Subsidiary and (b) do not result in, or require, the creation or imposition of
any Lien on any of its or their respective properties or revenues pursuant to
any such laws or any such obligations.
7. The Borrower is not an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended.
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Stock Pledge
Agreement, dated as of October 13, 1999 (as the same may be amended,
supplemented, waived or otherwise modified from time to time, the "Pledge
Agreement"), made by Audiovox Corporation, a Delaware corporation (the
"Borrower"), in favor of The Chase Manhattan Bank, a New York banking
corporation, as collateral agent (in such capacity, the "Collateral Agent") for
the several banks and other financial institutions (collectively, the "Lenders";
individually, a "Lender") from time to time parties to the Fourth Amended and
Restated Credit Agreement, dated as of July 28, 1999 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, the several banks and other financial institutions from time to time
parties thereto (collectively, the "Lenders"; individually, a "Lender") and The
Chase Manhattan Bank, as administrative and collateral agent for the Lenders (in
such capacity, the "Agent"). The undersigned agrees for the benefit of the Agent
and the Lenders as follows:
1. The undersigned will be bound by the terms of the Pledge Agreement and
will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Agent promptly in writing of the
occurrence of any of the events described in Section 5(a) of the Pledge
Agreement.
3. The terms of Section 9(c) of the Pledge Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it
under or pursuant to or arising out of Section 9 of the Pledge Agreement.
[Automotive Subsidiary]
By:
Title:
ACKNOWLEDGMENT AND CONSENT
Each of the undersigned corporations (i) as a guarantor under that certain
Amended and Restated Subsidiaries Guarantee, dated as of March 15, 1994 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee"),
made by each of such corporations in favor of the Collateral Agent, (ii) as a
grantor under that certain Amended and Restated Security Agreement, dated as of
March 15, 1994 (as amended, supplemented or otherwise modified from time to
time, the "Security Agreement"), made by each of such corporations in favor of
the Collateral Agent, and (iii) in the case of Audiovox Holding Corp., as the
pledgor under that certain Pledge Agreement, dated as of February 9, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Pledge
Agreement"), made by Audiovox Holding Corp. in favor of The Chase Manhattan
Bank, as pledge agent for the secured parties thereunder, hereby consents to the
execution and delivery of the Amendment and Consent to which this Acknowledgment
and Consent is attached and hereby confirms and agrees that the Guarantee, the
Security Agreement and the Pledge Agreement are, and shall continue to be, in
full force and effect and are hereby ratified and confirmed in all respects and
the Guarantee, the Security Agreement, the Pledge Agreement and all of the
Subsidiaries Collateral (as defined in the Security Agreement) and Collateral
(as defined in the Pledge Agreement) do, and shall continue to, secure the
payment of all of the Obligations (as defined in the Guarantee and the Security
Agreement, as the case may be) pursuant to the terms of the Guarantee or the
Security Agreement, as the case may be, or, in the case of the Pledge Agreement,
secure the payment of the Secured Obligations (as defined in the Pledge
Agreement) pursuant to the terms of the Pledge Agreement. Capitalized terms not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement referred to in the Amendment and Consent to which this Acknowledgment
and Consent is attached.
QUINTEX MOBILE COMMUNICATIONS
CORP.
By: _________________________
Name:
Title:
AMERICAN RADIO CORP.
By: _________________________
Name:
Title:
AUDIOVOX INTERNATIONAL CORP.
By: _________________________
Name:
Title:
AUDIOVOX CANADA LIMITED
By: _________________________
Name:
Title:
AUDIOVOX HOLDING CORP.
By: _________________________
Name:
Title:
AUDIOVOX ASIA INC.
By: _________________________
Name:
Title:
AUDIOVOX LATIN AMERICA LTD.
By: _________________________
Name:
Title:
AUDIOVOX COMMUNICATIONS CORP.
By: _________________________
Name:
Title:
Dated as of October 13, 1999