EXHIBIT 2
CREDIT AGREEMENT
among
RECOTON CORPORATION,
The Several Lenders
from Time to Time Parties Hereto
and
THE CHASE MANHATTAN BANK,
as Agent
Dated as of September 8, 1999
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS.......................................................1
1.1 DEFINED TERMS...................................................1
1.2 OTHER DEFINITIONAL PROVISIONS...................................5
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS...................................6
2.1 COMMITMENTS.....................................................6
2.2 PROCEDURE FOR BORROWING.........................................7
2.3 COMMITMENT FEE..................................................7
2.4 TERMINATION OR REDUCTION OF COMMITMENTS; MANDATORY
PREPAYMENTS.....................................................7
2.5 REPAYMENT OF LOANS; EVIDENCE OF DEBT............................8
2.6 OPTIONAL PREPAYMENTS............................................9
2.7 INTEREST RATES AND PAYMENT DATES................................9
2.8 COMPUTATION OF INTEREST AND FEES................................9
2.9 FACILITY FEE...................................................10
2.10 PRO RATA TREATMENT AND PAYMENTS...............................10
2.11 TAXES.........................................................11
2.12 CHANGE OF LENDING OFFICE......................................12
SECTION 3. LETTERS OF CREDIT................................................13
3.1 L/C COMMITMENT.................................................13
3.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT....................13
3.3 FEES, COMMISSIONS AND OTHER CHARGES............................14
3.4 L/C PARTICIPATIONS.............................................14
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER.......................15
3.6 OBLIGATIONS ABSOLUTE...........................................16
3.7 LETTER OF CREDIT PAYMENTS......................................16
3.8 APPLICATION....................................................16
SECTION 4. REPRESENTATIONS AND WARRANTIES...................................16
4.1 ORGANIZATION, CORPORATE EXISTENCE, ETC.........................17
4.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS........17
4.3 SECURITY DOCUMENTS.............................................17
4.4 FINANCIAL CONDITION............................................18
4.5 TAXES..........................................................18
4.6 TITLE TO PROPERTIES............................................18
4.7 LITIGATION.....................................................19
4.8 AGREEMENTS.....................................................19
4.9 EMPLOYEE BENEFIT PLANS.........................................19
4.10 FEDERAL RESERVE REGULATIONS...................................19
4.11 GOVERNMENTAL APPROVAL; LICENSES...............................20
4.12 AFFILIATES; SUBSIDIARIES......................................20
4.13 COMPLIANCE WITH APPLICABLE LAWS...............................20
4.14 ENVIRONMENTAL MATTERS.........................................20
4.15 INTELLECTUAL PROPERTY.........................................21
4.16 INVESTMENT COMPANY ACT........................................21
4.17 DEPOSITARY ACCOUNTS...........................................21
4.18 SCHEDULES.....................................................21
4.19 PURPOSE OF LOANS..............................................21
4.20 RAC-FSC.......................................................21
4.21 YEAR 2000 MATTERS.............................................21
4.22 REGULATION H..................................................22
4.23 LABOR MATTERS.................................................22
SECTION 5. CONDITIONS PRECEDENT.............................................22
5.1 CONDITIONS TO EFFECTIVENESS....................................22
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT.........................23
SECTION 6. AFFIRMATIVE COVENANTS............................................25
SECTION 7. NEGATIVE COVENANTS...............................................25
SECTION 8. EVENTS OF DEFAULT................................................25
SECTION 9. THE AGENT........................................................26
9.1 APPOINTMENT....................................................26
9.2 DELEGATION OF DUTIES...........................................26
9.3 EXCULPATORY PROVISIONS.........................................26
9.4 RELIANCE BY AGENT..............................................26
9.5 NOTICE OF DEFAULT..............................................27
9.6 NON-RELIANCE ON AGENT AND OTHER LENDERS........................27
9.7 INDEMNIFICATION................................................28
9.8 AGENT IN ITS INDIVIDUAL CAPACITY...............................28
9.9 SUCCESSOR AGENT................................................28
SECTION 10. MISCELLANEOUS...................................................29
10.1 AMENDMENTS AND WAIVERS........................................29
10.2 NOTICES.......................................................29
10.3 NO WAIVER; CUMULATIVE REMEDIES................................30
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES....................31
10.5 PAYMENT OF EXPENSES AND TAXES.................................31
10.6 FACILITY FEE ADJUSTMENT.......................................32
10.7 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS........32
10.8 ADJUSTMENTS; SET-OFF..........................................34
10.9 COUNTERPARTS..................................................35
10.10 SEVERABILITY.................................................35
10.11 INTEGRATION..................................................35
10.12 GOVERNING LAW................................................35
10.13 SUBMISSION TO JURISDICTION; WAIVERS..........................36
10.14 ACKNOWLEDGEMENTS.............................................36
10.15 WAIVERS OF JURY TRIAL........................................36
SCHEDULES
Schedule 1.1A Commitment Amounts
Schedule 2.1 Maximum Outstanding Amounts
Schedule 4.3(b) Jurisdictions in Which UCC-1 Financing Statements Filed
Schedule 4.7 Litigation
Schedule 4.12 Subsidiaries of Recoton Corporation
Schedule 4.15 Intellectual Property Claims
Schedule 10.2 Addresses for Notices
EXHIBITS
Exhibit A Form of Collateral Agreement
Exhibit B Form of Guarantee Agreement
Exhibit C Form of Participation Agreement
Exhibit D Form of Note
Exhibit E-1 Form of Fixed Facility Fee Warrant Agreement
Exhibit E-2 Form of Cancelable Facility Fee Warranty Agreement
Exhibit F Form of Registration Rights Agreement
Exhibit G Form of Borrowing Certificate
Exhibit H Form of Assignment and Acceptance
CREDIT AGREEMENT, dated as of September 8 1999, among RECOTON
CORPORATION, a New York corporation (the "BORROWER"), the several financial
institutions signatories to this Agreement (the "LENDERS"), and The Chase
Manhattan Bank, as agent for the Lenders (the "AGENT").
WITNESSETH
WHEREAS, the Borrower, certain of the Lenders (the "EXISTING BANKS"),
and the Agent are parties to the Second Amended and Restated Credit Agreement,
dated as of June 18, 1998 (as heretofore amended, supplemented or otherwise
modified prior to the date hereof (the "Existing Credit Agreement");
WHEREAS, the Borrower and certain other Lenders (the "SENIOR
NOTEHOLDERS") are parties to (i) the Note Purchase Agreement dated as of January
6, 1997, for $75,000,000 in adjustable rate senior notes due January 6, 2007,
and (ii) the Note Purchase Agreement dated as of September 1, 1998, for
$25,000,000 in adjustable rate senior notes due September 1, 2008 (collectively,
the "Senior Note Agreements");
WHEREAS, the Borrower has requested that the outstanding obligations
under the Existing Credit Agreement, the Senior Note Agreements and the
Securities Purchase Agreement dated as of February 4, 1999, for $35,000,000 in
senior subordinated notes due February 4, 2004 and 310,000 common stock purchase
warrants (the "1999 SECURITIES PURCHASE AGREEMENT") be restructured as set forth
in the Master Restructuring Agreement; and
WHEREAS, in connection with such restructuring transactions and to
finance working capital needs, the Borrower has requested, and the Lenders have
agreed to, the extension of new credit upon the following terms and conditions;
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, terms defined in MRA
Appendix A are used as so defined and the following terms shall have the
following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 2 of 1%. For purposes hereof: "PRIME RATE" shall mean the
rate of interest per annum publicly announced from time to time by the
Agent as its prime rate in effect at its principal office in New York City
(the Prime Rate not being intended to be the lowest rate of interest
charged by the Agent in connection with extensions of credit to debtors);
and "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it. Any change in the ABR due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective as
of the opening of business on the effective day of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.
"AGENCY FEE": $150,000 per annum to the Agent for its own account
payable in advance on the Closing Date and on each anniversary thereof.
"AGENT": Chase as the Agent for the Lenders under this Agreement and
the other Loan Documents.
"AGGREGATE OUTSTANDING EXTENSIONS OF CREDIT": as to any Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of
all Loans made (including Loans made by way of participation pursuant to
the Participation Agreement to which such Lender is a party) by such Lender
then outstanding and (b) such Lender's Commitment Percentage of the L/C
Obligations then outstanding; PROVIDED that Chase=s Loans and Commitment
Percentage of L/C Obligations shall not include any portion thereof
participated to other Lenders pursuant to the Participation Agreement.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"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.
"AVAILABLE COMMITMENT": as to any Lender, at any time, an amount equal
to the excess, if any, of (a) such Lender's Commitment over (b) such
Lender's Aggregate Outstanding Extensions of Credit.
"BORROWING DATE": any Business Day specified in a notice pursuant to
subsection 2.2 as a date on which the Borrower requests the Lenders to make
Loans hereunder.
"CLOSING DATE": the date on which the conditions precedent set forth
in subsection 5.1 shall be satisfied or waived as provided therein.
"COLLATERAL AGENCY FEE": $50,000 per annum to the Collateral Agent for
its own account payable in advance on the Closing Date and on each
anniversary thereof.
"COLLATERAL AGENT": as defined in the Collateral Agreement.
"COLLATERAL AGREEMENT": the Collateral Agreement, substantially in the
form of Exhibit A, in favor of the Collateral Agent for the benefit of the
Secured Creditors.
"COMMERCIAL LETTER OF CREDIT": as defined in subsection 3.1(b).
"COMMITMENT": as to any Lender, the obligation of such Lender to make
Loans (including by way of participation pursuant to the Participation
Agreements) and/or to issue or participate in (including by way of
participation pursuant to the Participation Agreements) Letters of Credit
issued on behalf of the Borrower hereunder in an aggregate principal and/or
face amount at any one time outstanding not to exceed the amount set forth
opposite such Lender's name on Schedule 1.1A (as such amount may be
adjusted from time to time in accordance with the provisions of this
Agreement, including, without limitation, subsections 2.4(a), 2.4(b) and
10.7(c)); PROVIDED that (i) the Commitment of Chase shall not include the
portion thereof participated to Voting Participants pursuant to the
Participation Agreements and (ii) the Commitment of each Voting Participant
shall be deemed to be the portion of the Commitments participated to such
Voting Participant pursuant to the Participation Agreement.
"COMMITMENT FEE RATE": 0.75% per annum on the average daily amount of
the Available Commitment.
"COMMITMENT PERCENTAGE": as to any Lender, a percentage representing a
fraction the numerator of which is the Commitment of such Lender (or,
following the termination or expiration of the Commitments, the sum of (x)
the aggregate principal amount of such Lender's Loans then outstanding PLUS
(y) such Lender's Commitment Percentage of all L/C Obligations then
outstanding), and the denominator of which is the aggregate Commitments of
all Lenders (or, following the termination or expiration of the
Commitments, the sum of (x) the aggregate principal amount of all Loans
then outstanding PLUS (y) the aggregate principal amount of all L/C
Obligations then outstanding); PROVIDED that (i) the Loans of Chase shall
not include the portion thereof participated to Voting Participants
pursuant to the Participation Agreement and (ii) the Loans of each Voting
Participant shall be deemed to be the portion of the Loans participated to
such Voting Participant pursuant to the Participation Agreement.
"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.
"ELIGIBLE ASSIGNEE": as defined in subsection 10.7(c).
"FACILITY FEE": as defined in subsection 2.9.
"GUARANTEE": the Guarantee, substantially in the form of Exhibit B,
executed and delivered by (i) certain Subsidiaries of the Borrower listed
on the signature pages thereof and (ii) any Person that becomes a party
thereto in accordance with the terms thereof, this Agreement or subsection
1.13(c) of MRA Appendix B.
"GUARANTOR": any Person which is or becomes a party to the Guarantee
or to any agreement delivered pursuant to Section 1.13(c) of MRA Appendix B
pursuant to which such Person guarantees the Borrower=s obligations under
this Agreement.
"INTEREST PAYMENT DATE": the last day of each calendar month.
"ISSUING BANK": Chase, in its capacity as issuer of any Letter of
Credit.
"L/C COMMITMENT": $8,080,000.
"L/C OBLIGATIONS": at any time, an amount equal to the (a) sum of (i)
the aggregate then undrawn and unexpired face amount of the then
outstanding Letters of Credit and (ii) the aggregate amount of drawings
under Letters of Credit which have not then been reimbursed pursuant to
subsection 3.5(a) minus (b) 95.25% of the aggregate amount on deposit in
the LIFO L/C Cash Collateral Account at such time.
"L/C PARTICIPANTS": the collective reference to all the Lenders other
than the Issuing Bank.
"LETTERS OF CREDIT": as defined in subsection 3.1(a).
"LOAN": any loan made (including by way of participation pursuant to
the Participation Agreement) by any Lender pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Notes, the Applications, the
Guarantee, any agreement delivered pursuant to Section 1.13 of MRA Appendix
B pursuant to which such Person guarantees the Borrower=s obligations under
this Agreement, the Security Documents and the Master Restructuring
Agreement.
"LOAN PARTIES": the Borrower and each Subsidiary of the Borrower which
is a party to a Loan Document.
"MAXIMUM OUTSTANDING AMOUNT": as defined in subsection 2.1(b).
"NON-EXCLUDED TAXES": as defined in subsection 2.11(a).
"NOTES": as defined in subsection 2.5(e).
"NONVOTING PARTICIPANT": as defined in subsection 10.7(b).
"PARTICIPATION AGREEMENT": each agreement between Chase and a Voting
Participant, substantially in the form of Exhibit C.
"REGISTER": as defined in subsection 10.7(d).
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to
reimburse the Issuing Bank pursuant to subsection 3.5(a) for amounts drawn
under Letters of Credit.
"REQUIRED LENDERS": at any time, Lenders the Commitment Percentages of
which aggregate at least 51%.
"RESPONSIBLE OFFICER": the chief executive officer, the president or
the chief operating officer of the Borrower.
"STANDBY LETTER OF CREDIT": as defined in subsection 3.1(b).
"TERMINATION DATE": June 30, 2001 (or, if such date is not a Business
Day, the next succeeding Business Day).
"TRANSFEREE": as defined in subsection 10.7(f).
"UCC": the Uniform Commercial Code as in effect on the date hereof 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.
"VOTING PARTICIPANTS": Xxxx Xxxxxxx Mutual Life Insurance Company,
Xxxx Xxxxxxx Variable Life Insurance Company, Investors Partner Life
Insurance Company, Mellon Bank, N.A., as trustee for the Long-Term
Investment Trust, Mellon Bank, N.A., as trustee for Xxxx Atlantic Master
Trust, and The Northern Trust Company, as trustee of the Lucent
Technologies Inc. Master Pension Trust.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement or in MRA Appendix A shall have the
defined meanings when used in any Notes or any certificate or other document
made or delivered pursuant hereto.
(b) As used herein and in any 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 or in MRA Appendix A
and accounting terms partly defined in subsection 1.1 or in MRA Appendix A, 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 words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation".
(e) Unless the context otherwise requires, a reference to any
document, instrument or agreement includes, except as otherwise specified in a
particular document. instrument or agreement, any amendment or supplement to, or
modification of, such document, instrument or agreement, entered into from time
to time in accordance with the terms of the document, instrument or agreement
and the Master Restructuring Agreement.
(f) Unless the context otherwise requires, a reference to any Person
includes its successors and permitted assigns.
(g) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 COMMITMENTS. (a) Subject to the terms and conditions hereof, each
Lender severally agrees to make Loans to the Borrower from time to time during
the Commitment Period in an aggregate principal amount at any one time
outstanding (i) which, when added to such Lender's Commitment Percentage of the
then outstanding L/C Obligations, does not exceed the amount of such Lender's
Commitment and (ii) which does not exceed such Lender=s Commitment Percentage of
the then applicable Maximum Outstanding Amount. For purposes of the preceding
sentence, (i) the amount of any Loan made by Chase shall be determined net of
the portion of such Loan participated to Voting Participants pursuant to the
Participation Agreement and (ii) the amount of any Loan of a Voting Participant
shall be the portion of such Loan participated to such Voting Participant
pursuant to the Participation Agreement to which it is a party. During the
Commitment Period the Borrower may use the Commitments by borrowing, prepaying
the Loans in whole or in part, and reborrowing, all in accordance with the terms
and conditions hereof, PROVIDED that no Loans may be made hereunder in an
aggregate amount greater than the then aggregate amount of the Available
Commitments.
(b) The Aggregate Outstanding Extensions of Credit of all Lenders
shall not exceed (i) on any day during any period set forth on Schedule 2.1
(except the last day during such period) the amount for such period under the
heading "Peak Amount" on Schedule 2.1 or (ii) on the last day of any period set
forth on Schedule 2.1, the amount set forth for such period under the heading
"End Amount" on Schedule 2.1 (such limits being referred to herein as the
"MAXIMUM OUTSTANDING AMOUNT"); PROVIDED that, unless the Borrower shall have
demonstrated in the manner provided in Schedule 2.1 that during the period set
forth on Schedule 2.1 in which the date of any proposed extension of credit
occurs Consolidated EBITDA and the Current Assets Ratio are not less than the
amount and ratio set forth for such period under the headings "Consolidated
EBITDA" and "Current Assets Ratio" on Schedule 2.1, the Aggregate Outstanding
Extensions of Credit after giving effect to any proposed extension of credit
shall be the lesser of (x) the "End Amount" on Schedule 2.1 for the period next
preceding the period in which the proposed extension of credit occurs and (ii)
the "End Amount" on Schedule 2.1 for the period in which the proposed extension
of credit occurs; PROVIDED, FURTHER, that during the period from September 1 to
September 30, 1999 if the Borrower shall not have demonstrated the requisite
amount of Consolidated EBITDA and the Current Asset Ratio for such period, such
proposed extension of credit shall not be made.
2.2 PROCEDURE FOR 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 prior to 10:00 A.M., New York City time, one Business Day prior to
the requested Borrowing Date, specifying (i) the amount to be borrowed, and (ii)
the requested Borrowing Date. Each borrowing under the Commitments shall be in
an amount equal to $1,000,000 or a whole multiple thereof (or, if the then
Available Commitments are less than $1,000,000, such lesser amount). Upon
receipt of any such notice from the Borrower, the Agent shall promptly notify
each Lender thereof. Each Lender which is not a Voting Participant will make the
amount of its pro rata share (which in the case of Chase shall be based on its
Commitment Percentage PLUS the Commitment Percentages of each Voting
Participant) of each borrowing available to the Agent for the account of the
Borrower at the office of the Agent located at 000-00 Xxxxxxxx Xxxxxxxxx, 0xx
Xxxxx, Xxxxxxxxxx, Xxx Xxxx 00000 prior to 11:00 A.M., New York City time, on
the Borrowing Date requested by the Borrower in funds immediately available to
the Agent. Such borrowing will then be made available to the Borrower by the
Agent crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Agent by the Lenders and in like
funds as received by the Agent. Settlements on Loans by Voting Participants
shall be made as provided in the Participation Agreement on the settlement dates
set forth therein.
2.3 COMMITMENT FEE. The Borrower agrees to pay to the Agent for the
account of each Lender a commitment fee for the period from and including the
first day of the Commitment Period to the Termination Date, computed at the
Commitment Fee Rate on the average daily amount of the Available Commitment of
such Lender during the period for which payment is made, payable monthly in
arrears on each Interest Payment Date, 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. The Borrower shall
pay to Chase, for its own account, a servicing fee in an amount equal to .10%
per annum of the aggregate Commitments of all Lenders that are Voting
Participants as of the Closing Date, payable monthly in arrears on each Interest
Payment Date.
2.4 TERMINATION OR REDUCTION OF COMMITMENTS; MANDATORY PREPAYMENTS.
(a) The Borrower shall have the right, upon not less than three Business Days'
notice to the Agent, to terminate the Commitments or, from time to time, to
reduce the amount of the Commitments PROVIDED that no such termination or
reduction shall be permitted if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, the Aggregate
Outstanding Extensions of Credit would exceed the Commitments then in effect.
Any such reduction shall be in an amount equal to $1,000,000 or a whole multiple
thereof and shall reduce permanently the Commitments then in effect.
(b) If on any date prior to the LIFO Repayment Date, (i) the Aggregate
Outstanding Extensions of Credit of all Lenders exceed the applicable Maximum
Outstanding Amount during the period in which such date occurs or (ii) the
outstanding Loans and the L/C Obligations exceed the aggregate Commitments then
in effect, the Borrower, without notice or demand, shall immediately after
obtaining knowledge thereof apply an amount equal to the greater of such excess:
FIRST, to the prepayment in full of the outstanding Loans, SECOND, to the
payment in full of any unreimbursed drawings under any Letters of Credit, and
THIRD, to cash collateralize any outstanding but undrawn Letter of Credit in
accordance with Section 3.5(d).
(c) If at any time the Borrower or any Subsidiary shall receive Net
Cash Proceeds from an Asset Sale of the type described in subsections 2.5(e) or
2.5(f)(ii) of MRA Appendix B then, within two Business Days following such
receipt, the Borrower shall apply such Net Cash Proceeds: FIRST, to the
prepayment in full of the outstanding Loans, SECOND, to the payment in full of
any unreimbursed drawings under any Letters of Credit, and THIRD, to cash
collateralize any outstanding but undrawn Letter of Credit in accordance with
Section 3.5(d), or with the consent of all Lenders, to the prepayment of the
Existing Senior Obligations.
2.5 REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrower hereby
unconditionally promises to pay on the Termination Date (or such earlier date on
which the Loans become due and payable pursuant to Section 8) to the Agent (i)
for the account of each Lender which is not Chase or a Voting Participant, the
then unpaid amount of each Loan of such Lender and (ii) for the account of
Chase, the then unpaid principal amount of each Loan of Chase and each Voting
Participant. If there are any L/C Obligations constituting undrawn Letters of
Credit, the Borrower shall replace such Letter(s) of Credit or cash
collateralize such L/C Obligations, in each case in accordance with subsection
3.5(d). The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in subsection 2.7. Settlement of payments with Voting Participants shall
be made by Chase as provided in the Participation Agreement.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan (or purchase of participations in Loans pursuant to the
Participation Agreement by such Lender) from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement (or the Participation Agreement).
(c) The Agent shall maintain the Register pursuant to subsection
10.7(d), and a subaccount therein for each Lender, in which shall be recorded
(i) the amount of each Loan made hereunder, (ii) the amount of any principal or
interest due and payable on to become due and payable from the Borrower to each
Lender hereunder and (iii) both the amount of any sum received by the Agent
hereunder from the Borrower and each Lender=s share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 2.5(b) shall, to the extent permitted by
applicable law, be PRIMA FACIE evidence of the existence and amounts of the
obligations of the Borrower therein recorded; PROVIDED, HOWEVER, that the
failure of any Lender to maintain any such account, or any error therein, shall
not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Loans made (including by way of purchase of
participations pursuant to the Participation Agreement) by such Lender in
accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Agent by any
Lender which is not a Voting Participant, the Borrower will promptly execute and
deliver to such Lender a promissory note of the Borrower evidencing the Loans of
such Lender (which, in the case of Chase, shall include Loans participated to
Voting Participants pursuant to the Participation Agreement), substantially in
the form of Exhibit D with appropriate insertions as to date and principal
amount (a "NOTE").
2.6 OPTIONAL PREPAYMENTS. The Borrower may at any time and from time
to time, prepay the Loans, in whole or in part, without premium or penalty, on
at least one Business Day's irrevocable notice to the Agent, specifying the date
and amount of prepayment. Upon receipt of any such notice, 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 2.11. Partial
prepayments shall be in an aggregate principal amount of $1,000,000 or a whole
multiple thereof. Settlement of prepayments with Voting Participants shall be
made by Chase as provided in the Participation Agreement.
2.7 INTEREST RATES AND PAYMENT DATES. (a) Each Loan shall bear
interest at a rate per annum equal to the ABR plus 3.5%.
(b) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any other amount
payable hereunder shall not be paid after the expiration of any applicable grace
period (whether at the stated maturity, by acceleration or otherwise), the
principal of the Loans and any such overdue interest, commitment fee or other
amount shall bear interest at a rate per annum equal to the ABR plus 5.5%, 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).
(c) Interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (b) of this
subsection shall be payable from time to time on demand.
2.8 COMPUTATION OF INTEREST AND FEES. (a) Commitment and Standby
Letter of Credit fees and, whenever it is calculated on the basis of the Prime
Rate, interest shall be calculated on the basis of a 365- (or 366-, as the case
may be) day year for the actual days elapsed, and, otherwise, interest shall be
calculated on the basis of a 360-day year for the actual days elapsed. Any
change in the interest rate on a Loan resulting from a change in the ABR shall
become effective as of the opening of business on the day on which such change
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 pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
and the Lenders in the absence of manifest error.
2.9 FACILITY FEE. On the Closing Date the Borrower shall (i) pay to
the Agent for the ratable benefit of the Lenders a fee in an amount equal to
2.35% of the aggregate Commitments payable in cash on the Closing Date and (ii)
issue to each Lender its ratable share of warrants exercisable for 250,000
shares of the Borrower=s common stock, to be dated the date of issue thereof, to
expire on the fifth anniversary of the Closing Date and to be substantially in
the form of Exhibit E (the "FACILITY FEE WARRANTS"); PROVIDED that 75,000 of
such Facility Fee Warrants (the "FIXED FACILITY FEE WARRANTS") shall be
immediately exercisable on the Closing Date and subject to Section 10.6, the
balance (i.e., 175,000 (the "CANCELABLE FACILITY FEE WARRANTS")) of such
warrants shall be exercisable at any time on or after July 1, 2000. The holders
of such Warrants shall have the benefit of a registration rights agreement to be
executed by the Borrower on the Closing Date substantially in the form of
Exhibit F. The cash payment and the Facility Fee Warrants described in this
subsection 2.9 are collectively the "FACILITY FEE".
2.10 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing of Loans by
the Borrower from the Lenders hereunder shall be made, each payment by the
Borrower on account of any commitment fee in respect of the Commitments and on
account of the Facility Fee hereunder shall be allocated by the Agent, and any
reduction of the Commitments of the Lenders shall be allocated by the Agent, PRO
RATA according to the Commitment Percentages of the Lenders; PROVIDED that the
Agent shall allocate to Chase both the PRO RATA share due to it and the PRO rata
shares due to the Voting Participants, and Chase shall settle with the Voting
Participants as provided in the Participation Agreement. Each payment (including
each prepayment) by the Borrower on account of principal of and interest on any
Loan shall be allocated by the Agent PRO RATA according to the respective
outstanding principal amounts of such Loans then held by the Lenders, PROVIDED,
that the Agent shall allocate to Chase both the PRO rata share due to it and the
PRO RATA shares due to the Voting Participants, and Chase shall settle with the
Voting Participants as provided in the Participation Agreement. All payments
(including prepayments) to be made by the Borrower hereunder, whether on account
of principal, interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 2:00 P.M., New York City time, on the
due date thereof to the Agent, for the account of the Lenders, at the Agent's
office specified in subsection 10.2, in Dollars and in immediately available
funds. The Agent shall distribute such payments to the Lenders which are not
Voting Participants promptly upon receipt in like funds as received. If any
payment hereunder becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day, and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(b) Unless the Agent shall have been notified in writing by any Lender
which is not a Voting Participant prior to a borrowing that such Lender will not
make the amount that would constitute its Commitment Percentage (or, in the case
of Chase, its Commitment Percentage plus the Commitment Percentages of the
Voting Participants) of such borrowing available to the Agent, the Agent may
assume that such Lender is making such amount available to the Agent, and the
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Agent, on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes such
amount immediately available to the Agent. A certificate of the Agent submitted
to any Lender which is not a Voting Participant with respect to any amounts
owing under this subsection shall be conclusive in the absence of manifest
error. If such Lender's Commitment Percentage (or, in the case of Chase, its
Commitment Percentage plus the Commitment Percentages of the Voting
Participants) of such borrowing is not made available to the Agent by such
Lender within three Business Days of such Borrowing Date, the Agent shall also
be entitled to recover such amount with interest thereon at the rate per annum
applicable to ABR Loans hereunder, on demand, from the Borrower.
2.11 TAXES. (a) All payments made by the Borrower under this Agreement
and any 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 any Note). 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 any Note, 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,
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 Loans 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 Nonvoting
Participant pursuant to subsection 10.7 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 Nonvoting
Participant such Nonvoting Participant shall furnish all such required forms and
statements to the Lender from which the related participation shall have been
purchased.
2.12 CHANGE OF LENDING OFFICE. Each Lender agrees that if it makes any
demand for payment under subsection 2.11(a), it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, as determined in its
sole discretion) to designate a different lending office if the making of such a
designation would reduce or eliminate the need for the Borrower to make payments
under subsection 2.11(a).
SECTION 3. LETTERS OF CREDIT
3.1 L/C COMMITMENT. (a) Subject to the terms and conditions hereof,
the Issuing Bank, in reliance on the agreements of the other Lenders set forth
in subsection 3.4(a), agrees to issue letters of credit ("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 have no obligation to issue any Letter of Credit (i)
if there is sufficient availability under the Existing Credit Agreement to issue
an Existing Letter of Credit in the requested amount or (ii) if, after giving
effect to such issuance, (x) the L/C Obligations would exceed the L/C
Commitment, (y) the Available Commitments would be less than zero or (z) the
Aggregate L/C Obligations would exceed $24,000,000. No Letter of Credit shall be
issued hereunder unless after giving effect thereto the Borrower shall be in
compliance with the provisions of subsection 2.1(b).
(b) Each Letter of Credit shall:
(i) be denominated in Dollars and shall be either (A) a standby
letter of credit issued to support obligations of the Borrower, contingent
or otherwise, the terms and conditions of which are satisfactory to the
Required Lenders, as evidenced by their prior written approval (a "STANDBY
LETTER OF CREDIT"), or (B) a commercial letter of credit issued in respect
of the purchase of goods and services by the Borrower and its Subsidiaries
in the ordinary course of business (a "COMMERCIAL LETTER OF Credit"); and
(ii) expire no later than the Termination Date unless cash
collateralized as provided in subsection 3.5(d).
(c) Each Letter of Credit shall be subject to the Uniform Customs and,
to the extent not inconsistent therewith, the laws of the State of New York.
(d) The Issuing Bank shall not at any time be obligated to 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.
3.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. The Borrower may from
time to time request that the Issuing Bank issue a Letter of Credit by
delivering to the Issuing Bank at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Bank, and
such other certificates, documents and other papers and information as the
Issuing Bank may 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 Issuing Bank shall furnish a copy of such Letter of Credit to
the Borrower promptly following the issuance thereof.
3.3 FEES, COMMISSIONS AND OTHER CHARGES. (a) The Borrower shall pay to
the Agent, for the account of the Issuing Bank and the L/C Participants, a
letter of credit fee (i) with respect to each Standby Letter of Credit, computed
at the rate per annum equal to 3.50%, payable in arrears on each Interest
Payment Date, on the aggregate amount from time to time available to be drawn
under such Standby Letter of Credit and (ii) with respect to Commercial Letters
of Credit, computed at the rate per annum equal to 1.50% of the average daily
amount from time to time available to be drawn under all outstanding Commercial
Letters of Credit, payable in arrears on each Interest Payment Date. Such fees
shall be nonrefundable and shall be payable to the Agent to be shared ratably
among the Lenders in accordance with their respective Commitment Percentages in
effect from time to time during the period for which payment of such fee is
being made.
(b) In addition to the foregoing fees, 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.
(c) The Agent shall, not more often than monthly, distribute to the
Issuing Bank and the L/C Participants all fees and commissions received by the
Agent for their respective accounts pursuant to this subsection.
3.4 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 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 by the
Issuing Bank thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Bank that, if a draft is paid under any Letter of Credit
for which the Issuing Bank is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement, such L/C Participant shall pay to
the Issuing Bank upon demand at the Issuing Bank's address for notices specified
herein an amount equal to such L/C Participant's Commitment Percentage of the
amount of such draft, 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 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Bank under any Letter of Credit is
paid to the Issuing Bank within three Business Days after the date demand is
made by the Issuing Bank as contemplated by Section 3.4(a), 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 Effective 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 paragraph
3.4(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 the Loans 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 and has received from any L/C Participant its pro
rata share of such payment in accordance with subsection 3.4(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 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 return to the Issuing Bank the portion thereof previously
distributed by the Issuing Bank to it.
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER. (a) The Borrower agrees
to reimburse the Issuing Bank on each date on which the Issuing Bank notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Bank for the amount of (i) such draft so paid and
(ii) any taxes, 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 Dollars and in
immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid
by the Borrower under this subsection from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in
full, in accordance with paragraph (c) below or from the Borrower=s available
cash or otherwise, at a rate equal to the ABR plus 5.5%.
(c) Each drawing under any Letter of Credit which is not reimbursed
pursuant to subsection 3.5(a) on the same day it is drawn shall constitute a
request by the Borrower to the Agent for a borrowing (pursuant to subsection
2.2) of Loans in the amount of such drawing (which Loan shall be made
irrespective of the Borrower=s ability to satisfy the conditions set forth in
subsection 5.2). The Borrowing Date with respect to a borrowing under this
paragraph shall be deemed to be the date of such drawing.
(d) On the Termination Date, all outstanding Letters of Credit shall
be replaced and returned to the Issuing Bank undrawn and marked "canceled", or
to the extent that the Borrower is unable to replace any Letters of Credit, such
Letters of Credit shall be cash collateralized under the Collateral Agreement by
the Borrower depositing an amount equal to 105% of the face amount of such
Letters of Credit into the LIFO L/C Cash Collateral Account.
3.6 OBLIGATIONS ABSOLUTE. (a) The Borrower's obligations under this
Section 3 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.
(b) The Borrower also agrees with the Issuing Bank that the Issuing
Bank shall not be responsible for, and the Borrower's Reimbursement Obligations
under subsection 3.5(a) shall not be affected by, among other things, (i) 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 (ii)
any dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
(iii) any claims whatsoever of the Borrower against any beneficiary of such
Letter of Credit or any such transferee.
(c) 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, except for
errors or omissions caused by the Issuing Bank's gross negligence or willful
misconduct.
(d) The Borrower agrees that any action taken or omitted by the
Issuing Bank under or in connection with any 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 UCC,
shall be binding on the Borrower and shall not result in any liability of the
Issuing Bank to the Borrower.
3.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented for
payment under any 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 under any
Letter of Credit shall, in addition to any payment obligation expressly provided
for in such Letter of Credit, be limited to determining that the documents
(including each draft) delivered under such Letter of Credit in connection with
such presentment are in conformity with such Letter of Credit.
3.8 APPLICATION. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall govern.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Loans and issue or participate in the Letters of Credit, the Borrower hereby
represents and warrants to the Agent and each Lender that:
4.1 ORGANIZATION, CORPORATE EXISTENCE, ETC. Each of the Borrower and
the other Loan Parties (a) is a corporation duly incorporated, validly existing
and in good standing (or equivalent) under the laws of its state or country of
incorporation (as applicable), (b) has the corporate power and authority to own
its properties and to carry on its business as now being conducted, (c) is duly
qualified to do business in every jurisdiction wherein the conduct of its
business or the ownership of its properties is such as to require such
qualification in all cases where failure to do so would be reasonably likely to
have a Material Adverse Effect, (d) has the corporate power to execute and
perform this Agreement and all other Loan Documents to which it is a party, and
(e) with respect to the Borrower only, has the corporate power to borrow the
Loans.
4.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each Loan
Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the borrowings on the terms and conditions of this Agreement. Other
than for the filing of UCC financing statements and the recordation of Mortgages
with respect to the Collateral and any filings with Governmental Authorities
with respect to the Foreign Subsidiary Security Agreements, no consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
borrowings hereunder or with the execution, delivery, performance, validity or
enforceability of the Loan Documents. Each Loan Document has been duly executed
and delivered on behalf of each Loan Party party thereto. This Agreement
constitutes, and each other Loan Document when executed will constitute, a
legal, valid and binding obligation of each Loan Party party thereto enforceable
against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.3 SECURITY DOCUMENTS. (a) The Collateral Agreement is effective to
create in favor of the Collateral Agent, for the benefit of the Lenders, a
legal, valid and enforceable security interest in the Pledged Securities
referred to in the Collateral Agreement and proceeds thereof and, the stock
certificates representing the Pledged Stock referred to in the Collateral
Agreement having been delivered to, and remaining in the possession of, the
Collateral Agent, the Collateral Agreement constitutes a fully perfected first
priority Lien on, and security interest in, all right, title and interest of the
relevant Loan Party in such Pledged Securities and the proceeds thereof, as
security for the LIFO Obligations, in each case prior and superior in right to
any other Person.
(b) The Collateral Agreement is effective to create in favor of the
Collateral Agent, for the benefit of the Lenders, a legal, valid and enforceable
security interest in the Collateral described therein (and not covered in
subsection 4.3(a)) and proceeds thereof, and subject to financing statements in
appropriate form being on file in the offices specified on Schedule 4.3(b) and
the other actions indicated on such schedule as having been taken, the
Collateral Agreement constitutes a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties executing such
agreement in such Collateral and the proceeds thereof, as security for the LIFO
Obligations, in each case prior and superior in right to any other Person, other
than with respect to Permitted Liens.
(c) Each of the Mortgages upon execution and delivery thereof will be
effective to create in favor of the Collateral Agent, for the benefit of the
Lenders, a legal, valid and enforceable Lien on the Mortgaged Properties
described therein and proceeds thereof, and subject to the Mortgages being on
file in the appropriate offices, each such Mortgage will constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in the Mortgaged Properties and the proceeds thereof, as
security for the LIFO Obligations (as defined in the relevant Mortgage), in each
case prior and superior in right to any other Person, other than with respect to
Permitted Liens.
(d) Each Foreign Subsidiary Security Agreement upon execution and
delivery thereof will be effective to create in favor of the Collateral Agent,
for the benefit of the Lenders, a legal, valid and enforceable security interest
in the Collateral described therein and proceeds thereof, and subject to all
appropriate actions necessary to perfect a security interest in the Collateral
having been taken, each such Foreign Subsidiary Security Agreement will
constitute a fully perfected Lien on all right, title and interest of the
Subsidiary executing such agreement in such Collateral and the proceeds thereof,
as security for the Secured Obligations, in each case prior and superior in
right to any other Person, other than with respect to Permitted Liens.
4.4 FINANCIAL CONDITION. The Borrower has heretofore furnished to each
Lender consolidated financial statements, including a balance sheet and
statements of income and of cash flows, for the fiscal year ended December 31,
1998, audited by Xxxxxxx, Xxxxxx & Xxxxxxx LLP, as well as unaudited statements
for the quarters ending March 31, 1999 and June 30, 1999. Such financial
statements present fairly the financial condition of the Borrower and its
Subsidiaries on a consolidated basis as of such date and their consolidated
results of operations and cash flows for the periods covered thereby in
conformity with GAAP. There is no obligation or liability, contingent or
otherwise, of the Borrower or any of its Subsidiaries, which is material in
amount and which is not reflected in such financial statements. Other than the
items set forth on Schedule 1.4 to MRA Appendix B, since June 30, 1999, no
Material Adverse Effect has occurred.
4.5 TAXES. No Loan Party has received any notice of deficiencies from
any taxing authority having jurisdiction over it or any of its property other
than those that could not reasonably be expected to have a Material Adverse
Effect. Each Loan Party has filed or caused to be filed all Federal, state and
local tax returns which are required to be filed, and has paid or caused to be
paid all taxes as shown on said returns or on any assessment received by it to
the extent that such taxes have become due.
4.6 TITLE TO PROPERTIES. Each Loan Party has good and marketable title
in fee simple to, or a valid leasehold interest in, all of its real property,
and good title to, or a valid leasehold interest in, all its other properties
and assets except to the extent that any defects therein, individually and in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect. There are no Liens on any of its properties and assets, except for those
in favor of the Collateral Agent or Permitted Liens.
4.7 LITIGATION. As to the Borrower and each Loan Party except as set
forth in Schedule 4.7, (a) there are no actions, suits or proceedings (whether
or not purportedly on behalf of the Borrower or any Guarantor) pending or, to
its knowledge, threatened against it at law or in equity or before or by any
Federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, which could reasonably
be expected to have a Material Adverse Effect; and (b) it is not in default with
respect to any judgment, writ, injunction, decree, rule, or regulation of any
court or Federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign in
any respect which could reasonably be expected to have a Material Adverse
Effect.
4.8 AGREEMENTS. Neither the Borrower nor any other Loan Party is a
party to any agreement or instrument or subject to any charter or other
corporate restriction or any judgment, order, writ, injunction, decree or
regulation which would be reasonably likely to have a Material Adverse Effect,
assuming such agreement or instrument, charter, other corporate restriction or
any judgment, order, writ, injunction, decree or regulation is performed as
written. Neither the Borrower nor any other Loan Party is in default in its
performance, observance, or fulfillment of any material obligation, covenant, or
condition contained in any other agreement or instrument to which it is a party,
including, without limitation, those involving the Lenders (including this
Agreement) which has not been waived except to the extent such default
individually and in the aggregate, would not be reasonably likely to have a
Material Adverse Effect.
4.9 EMPLOYEE BENEFIT PLANS. If applicable, each of the Borrower and
the other Loan Parties is in compliance in all material respects with the
applicable provisions of ERISA and the regulations and published interpretations
thereunder. No Reportable Event has occurred with respect to a Plan, if any,
administered by the Borrower or any Loan Party or an administrator designated by
it. The present value of all accrued benefits under each Single Employer Plan
(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 by an amount which could reasonably be expected to have a
Material Adverse Effect.
4.10 FEDERAL RESERVE REGULATIONS. (a) Neither the Borrower nor any
other Loan Party is engaged principally in, nor has as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying any "margin stock" (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System). If requested by any Lender, the
Borrower will furnish to such Lender a statement on Federal Reserve Form U-1.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock, or to refund Indebtedness originally
incurred for such purpose, or (ii) for any purpose which violates or is
inconsistent with the provisions of Regulations T, U or X of the Board of
Governors of the Federal Reserve System.
4.11 GOVERNMENTAL APPROVAL; LICENSES. Other than for the filing of UCC
financing statements and the recordation of Mortgages with respect to the
Collateral and any filings with Governmental Authorities with respect to the
Foreign Subsidiary Security Agreements, no license, permit or certificate,
registration with or consent or approval of, or other action by, any Federal,
state, municipal or other Governmental Authority is required in connection with
its execution, delivery, and performance of this Agreement or any of the other
Loan Documents. Each of the Borrower and the other Loan Parties possesses all
licenses, permits, certificates, approvals and the like ("LICENSES") necessary
for the lawful operation of its business, to the extent that failure to possess
such Licenses would have a Material Adverse Effect. All such Licenses are in
full force and effect, and there exists no threat of a revocation or suspension
of any Licenses, except as could not reasonably be expected to have a Material
Adverse Effect.
4.12 AFFILIATES; SUBSIDIARIES. As of the date hereof, the Borrower has
no Affiliates or Subsidiaries except as set forth on Schedule 4.12.
4.13 COMPLIANCE WITH APPLICABLE LAWS. Each of the Borrower and the
other Loan Parties is in compliance with the material requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority
applicable to it, except as could not reasonably be expected to have a Material
Adverse Effect.
4.14 ENVIRONMENTAL MATTERS. In the ordinary course of its business,
the Borrower conducts an ongoing review of the effect of Environmental Laws on
the business, operations and properties of the Borrower and its Subsidiaries
(not, however, necessarily including PRC Subsidiaries), in the course of which
it identifies and evaluates associated liabilities and costs (including, without
limitation, any capital or operating expenditures required for clean-up or
closure of properties presently or previously owned, any capital or operating
expenditures required to achieve or maintain compliance with environmental
protection standards imposed by law or as a condition of any license, permit or
contract, any related constraints on operating activities, including any
periodic or permanent shutdown of any facility or reduction in the level of or
change in the nature of operations conducted thereat, any costs or liabilities
in connection with off-site disposal of wastes or Hazardous Substances, and any
actual or potential liabilities to third parties, including employees, and any
related costs and expenses). On the basis of this review, the Borrower has
reasonably concluded that such associated liabilities and costs, including the
costs of compliance with Environmental Laws, could not reasonably be expected to
exceed $1,500,000.
4.15 INTELLECTUAL PROPERTY. Each of the Borrower and the other Loan
Parties owns, or is taking appropriate actions to secure the ownership of (and
believes in good faith that, prior to obtaining such ownership, it is entitled
to use) or is licensed to use, all trademarks, trade names, patents, copyrights,
technology, know-how and processes necessary for the conduct of its business as
currently conducted (the "INTELLECTUAL PROPERTY"), except for those where the
failure to own or license the same could not have a Material Adverse Effect.
Except as set forth on Schedule 4.15, as of the date hereof, to the best
knowledge of the Borrower and each other Loan Party, (i) no claim 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, (ii) there
is no valid basis for any such claim and (iii) the use of such Intellectual
Property does not infringe upon the rights of any Person. Except as set forth on
Schedule 4.15, as of any date after the Closing Date upon which this
representation and warranty shall be deemed to be made pursuant to subsection
5.2 of this Agreement or otherwise, to the best knowledge of the Borrower and
each Loan Party, (i) no claim 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, (ii) there is no valid basis
for any such claim, and (iii) the use of such Intellectual Property does not
infringe on the rights of any Person except for claims or infringements that in
the aggregate are not reasonably likely to have a Material Adverse Effect.
4.16 INVESTMENT COMPANY ACT. Neither the Borrower nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
4.17 DEPOSITARY ACCOUNTS. As of the date hereof, Schedule 1.13(b) to
MRA Appendix B sets forth a true and complete list of all bank accounts
maintained by the Borrower and its Subsidiaries.
4.18 SCHEDULES. All of the information which is required to be
scheduled pursuant to this Agreement and any other Loan Document is correct and
accurate on the date hereof.
4.19 PURPOSE OF LOANS. The proceeds of the Loans shall be used by the
Borrower exclusively for working capital purposes in the ordinary course of
business.
4.20 RAC-FSC. RAC-FSC has no material assets.
4.21 YEAR 2000 MATTERS. Any reprogramming required to permit the
proper functioning (but only to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Borrower or any of its
Subsidiaries or used or relied upon in the conduct of their business (including
any such systems and other equipment supplied by others or with which the
computer systems of the Borrower or any of its Subsidiaries interface), and the
testing of all such systems and other equipment as so reprogrammed, has been
completed. The costs to the Borrower and its Subsidiaries that have not been
incurred as of the date hereof for such reprogramming and testing and for the
other reasonably foreseeable consequences to them of any improper functioning of
other computer systems and equipment containing embedded microchips due to the
occurrence of the year 2000 could not reasonably be expected to result in a
Default or Event of Default or to have a Material Adverse Effect. Except for any
reprogramming referred to above, the computer 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 for the conduct of
their business as currently conducted.
4.22 REGULATION H. No Mortgage encumbers improved real property which
is located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968.
4.23 LABOR MATTERS. There are no strikes or other labor disputes
against the Borrower or any of its Subsidiaries pending or, to the knowledge of
the Borrower, threatened that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. Hours worked by and
payment made to employees of the Borrower and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Requirement of
Law dealing with such matters, which violation (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect. All
payments due from the Borrower or any of its Subsidiaries on account of employee
health and welfare insurance that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect if not paid have been
paid or accrued as a liability on the books of the Borrower or the relevant
Subsidiary.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO EFFECTIVENESS. The agreement of each Lender to make
Loans hereunder shall not become effective unless and until the following
conditions precedent shall have been satisfied on or before September 10, 1999.
(a) LOAN DOCUMENTS. The Agent shall have received each Loan Document,
executed and delivered by a duly authorized officer of the Borrower or other
relevant Loan Party, with a counterpart for each Lender, PROVIDED, HOWEVER, that
(i) with respect to the Guarantee, such document shall have been executed and
delivered by a duly authorized officer of each Domestic Subsidiary, Recoton
German Holdings GmbH, MacAudio Electronic GmbH, Magnat Audio-Produkte GmbH, HECO
Audio-Produkte GmbH, and Recoton Canada Ltd.; and (ii) with respect to the
Collateral Agreement, such document shall have been executed and delivered by a
duly authorized officer of the Borrower and each Domestic Subsidiary.
(b) CORPORATE PROCEEDINGS OF THE LOAN PARTIES. 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 Domestic Subsidiary authorizing (i) the execution, delivery
and performance of this Agreement and the other Loan Documents to which it is a
party and (ii) the performance of all transactions contemplated under the Loan
Documents, certified by the Secretary or an Assistant Secretary of such Loan
Party as of the Closing Date, which certificate shall be in form and substance
satisfactory to the Agent and shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded.
(c) BORROWER INCUMBENCY CERTIFICATE. The Agent shall have received,
with a counterpart for each Lender, a Borrowing Certificate, dated the Closing
Date, as to the incumbency and signature of the officers of the Borrower
executing any Loan Document satisfactory in form and substance to the Agent,
executed by the President or any Vice President and the Secretary or any
Assistant Secretary of the Borrower; substantially in the form of Exhibit G
hereto.
(d) FEES. The Borrower shall have (i) paid to the Agent (x) for the
ratable benefit of the Lenders the Facility Fee and (y) for the Agent=s own
account, the Agency Fee and the Collateral Agency Fee and (ii) reimbursed, with
respect to invoices received at least one Business Day prior to the Closing
Date, each Lender and the Agent for all its reasonable costs and expenses,
including without limitation, the reasonable fees and disbursements of counsel
to each Lender and the Agent (including the allocated fees and expenses of
in-house counsel) as provided in Section 10.5; PROVIDED that with respect to
invoices received on or after the Closing Date, the Borrower shall reimburse the
entity submitting such invoice in accordance with this Agreement as soon as
practicable thereafter.
(e) INSURANCE. The Agent shall have received on the Closing Date one
or more schedules describing all insurance maintained by the Borrower and each
Guarantor pursuant to subsection 1.5 of MRA Appendix B.
(f) INFORMATION. The Agent and each of the Lenders shall have received
such information (financial or otherwise) as may be reasonably requested by the
Agent or any Lender and the Agent and each of Lenders shall have completed, and
shall be satisfied with the results of, all due diligence deemed necessary by
each of them.
(g) MASTER RESTRUCTURING AGREEMENT CONDITIONS PRECEDENT. Each of the
conditions precedent specified in Section 7 of the Master Restructuring
Agreement has been satisfied or waived in accordance with the terms thereof.
(h) ADDITIONAL MATTERS. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be satisfactory in form and substance to the Agent, and the Agent shall have
received such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it shall
reasonably request.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit but excluding
the purchase of participations pursuant to the Participation Agreement, which
shall be governed by the terms thereof) is subject to the satisfaction of the
following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by any Loan Party in or pursuant to Section 4 or which
are contained in any other Loan Document shall be true and correct in all
material respects on and as of the date of such Loan or the issuance of
such Letter of Credit as if made on and as of such date (unless stated to
relate to a specific earlier date, in which case, such representations and
warranties shall be true and correct in all material respects as of such
earlier date), including that there shall not have occurred any event or
condition since the Closing Date which could reasonably be expected to
result in a Material Adverse Effect.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date.
(c) BORROWING CERTIFICATE. The Agent shall have received a
certificate executed by an executive officer of the Borrower, substantially
in the form of Exhibit G, certifying that (i) the requested Loan or Letter
of Credit and the application or use thereof are consistent with the terms
of this Agreement and is necessary, after utilization and application of
the Borrower=s available cash, in order to satisfy the Borrower=s
obligations in the ordinary course of business or as otherwise permitted
hereunder, (ii) the Borrower and each Guarantor has observed or performed
all of its covenants and other agreements in all material respects, and
satisfied in all material respects every condition, contained herein or in
any other Loan Document to be observed, performed or satisfied by the
Borrower or such Guarantor and (iii) such officer has no knowledge of any
Default or Event of Default.
(d) FEES. The Borrower shall have paid to the Agent and the
Lenders the then unpaid balance of all accrued and unpaid fees and expenses
then payable under and pursuant to this Agreement.
(e) AVAILABILITY UNDER EXISTING L/C COMMITMENT. With respect to
the issuance of any Letter of Credit, there shall not be sufficient
availability under the Existing L/C Commitment to issue an Existing Letter
of Credit in the requested amount.
Each borrowing by and Letter of Credit issued on behalf of the
Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date of such Loan or issuance that the conditions contained
in this subsection have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Note or any Letter of Credit remains outstanding and unpaid (unless
cash collateralized) or any other amount is owing to any Lender or the Agent
hereunder, the Borrower shall and (except in the case of delivery of financial
information, reports and notices) shall cause each of its Subsidiaries to
observe the affirmative covenants set forth in Section 1 of MRA Appendix B,
which are incorporated by reference herein as if fully set forth herein.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Note or any Letter of Credit remains outstanding and unpaid (unless
cash collateralized) or any other amount is owing to any Lender or the Agent
hereunder, the Borrower shall not, and shall not permit any of its Subsidiaries,
directly or indirectly, to breach any of the negative covenants set forth in
Section 2 of MRA Appendix B, which are incorporated by reference herein as if
fully set forth herein.
SECTION 8. EVENTS OF DEFAULT
If any Event of Default shall occur and be continuing then, and in any
such event, (A) if such event is an Event of Default specified in clause (i) or
(ii) of paragraph (f) of MRA Appendix C with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) and 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 the Notes to be due and payable forthwith,
whereupon the same shall immediately become due and payable. With respect to all
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 the LIFO L/C Cash Collateral Account an
amount equal to the aggregate then undrawn and unexpired amount of such Letters
of Credit.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 9. THE AGENT
9.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Agent as the Agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement 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 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 or any other Loan Document or otherwise exist against the Agent.
9.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement 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.
9.3 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 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 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 or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement 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 or any other Loan Document, or to inspect the
properties, books or records of the Borrower or any of its Subsidiaries.
9.4 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, 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 or any of its Subsidiaries), accountants of
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 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 held harmless and indemnified in
acting, or in refraining from acting, under this Agreement 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 Loans.
9.5 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 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; 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.
9.6 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 its Subsidiaries and made its own decision to make its Loans
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 and its Subsidiaries. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Agent hereunder (including matters with respect to which the Borrower is
required to deliver to the Agent a sufficient number of copies of counterparts
for each Lender), 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 or any of its Subsidiaries which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
9.7 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
Commitment Percentages in effect on the date on which indemnification is sought
(or, if indemnification is sought after the date upon which the Commitments
shall have terminated and the Loans and Reimbursement Obligations shall have
been paid in full, ratably in accordance with their Commitment Percentages
immediately prior to such date), 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 Loans)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of, the Commitments, this Agreement, 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, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent's gross negligence or
willful misconduct. The agreements in this subsection shall survive the payment
of the Loans, the termination of the Commitments, and all other amounts payable
hereunder.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY.
(a) 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 and under the other Loan Documents.
(b) With respect to its 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, the Agent shall have the same rights and powers under this Agreement 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.
9.9 SUCCESSOR AGENT. The Agent may resign as Agent upon 30 days'
notice to the Lenders and the Borrower. If the Agent shall resign as Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor Agent for the Lenders, whereupon such
successor Agent, shall succeed to the rights, powers and duties of the Agent
hereunder. Effective upon such appointment and approval, the term "Agent" shall
mean such successor Agent, 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 Loans. After any retiring Agent's resignation as Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents.
SECTION 10. MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Agent may, from time to time, (a) enter into with the Borrower written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder or (b) waive, on such terms and conditions as the
Required Lenders or the Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement 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 (i) reduce the amount or extend the scheduled date of maturity of any Loan
or of any installment thereof, or reduce the stated rate of any interest or fee
payable hereunder or extend the scheduled date of any payment thereof, or
increase the amount or extend the expiration date of any Lender's Commitment, or
modify the provisions of subsection 2.10 with regard to pro rata treatment of
the Lenders, or modify the terms of any warrants issued to any Lender hereunder
in each case without the consent of each Lender affected thereby, or (ii) amend,
modify or waive any provision of this subsection or reduce the percentage
specified in the definition of Required Lenders, or consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents, in each case without the written consent
of all the Lenders, or (iii) increase the total amount of the Commitment set
forth on Schedule 1.1A without the consent of all Lenders, or (iv) amend, modify
or waive any provision of Section 9 without the written consent of the then
Agent. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Borrower, the
Lenders, the 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 positions and rights hereunder and under the 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.
10.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by registered or certified mail,
five days (or ten days, in the case of mailings between locations inside and
outside of the United States) after being deposited in the mails, postage
prepaid (airmail, in the case of mailings between locations inside and outside
of the United States), or (c) in the case of delivery by facsimile transmission,
when sent and receipt has been confirmed, addressed as follows in the case of
the Borrower and the Agent, and as set forth in Schedule 10.2 in the case of the
other parties hereto, or to such other address as may be hereafter notified by
the respective parties hereto:
The Borrower: Recoton Corporation
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxx 00000
Attention: Stuart Mont
Fax: 000-000-0000
With a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attn: Managing Clerk
The Administrative
Agent: The Chase Manhattan Bank
000-00 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Recoton Account Officer
Fax: 000-000-0000
with a copy to:
Xx. Xxxxx Xxxxx
The Chase Manhattan Bank
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
PROVIDED that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 2.2, 2.4, 2.6 or 2.10 shall not be effective until
received.
10.3 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 or under the other Loan Documents 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.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents 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 making of the
Loans hereunder.
10.5 PAYMENT OF EXPENSES AND TAXES. In addition to their obligations
under Section 5.1 hereof, the Borrower and each other Loan Party agree (a) to
pay or reimburse the Agent and each Lender for all their reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of this Agreement and the other Loan Documents and any
other documents prepared in connection herewith or therewith, including the
reasonable fees and disbursements of professionals to the Agent or counsel to
any such Lender, (b) to pay or reimburse the Agent, The Prudential Insurance
Company of America and Xxxx Xxxxxxx Mutual Life Insurance Company for all their
reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the 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, but
including only the reasonable fees and disbursements of professionals to the
Agent or counsel to The Prudential Insurance Company of America and counsel to
Xxxx Xxxxxxx Mutual Life Insurance Company, (c) to pay or reimburse the Agent
and each Lender for all their reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel) to the Agent and each
Lender, (d) to pay, indemnify, and hold the Agent and each Lender 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 other Loan
Documents and any such other documents, and (e) to pay, indemnify, and hold the
Agent and each Lender, their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "indemnitee") 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 other Loan Documents or
the use of proceeds of the Loans, including, any of the foregoing relating to
the violation of, noncompliance with or liability under any Environmental Law
applicable to the operations or properties of the Borrower, any of its
Subsidiaries, (all the foregoing in this clause (e), collectively, the
"indemnified liabilities"), PROVIDED, that the Borrower shall have no obligation
hereunder to any indemnitee with respect to indemnified liabilities to the
extent such indemnified liabilities resulted from the gross negligence or
willful misconduct of such indemnitee. The agreements in this subsection shall
survive repayment of the Loans and all other amounts payable under the Loan
Documents.
10.6 FACILITY FEE ADJUSTMENT. If on or before June 30, 2000 (a) the
LIFO Repayment Date shall have occurred and (b) all Existing Senior Obligations
shall have been paid or cash collateralized, as applicable, in full and the
Existing L/C Commitment shall have been terminated, the Cancelable Facility Fee
Warrants shall be returned to the Borrower and cancelled.
10.7 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (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 business and in
accordance with applicable law, at any time sell to any financially sound bank,
insurance company or other similar financial institution ("NONVOTING
PARTICIPANTS") participating interests in any portion of (i) with respect to a
Lender not a Voting Participant, any Loan or Reimbursement Obligation 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 such Lender's Notes or any
other Loan Documents and (ii) with respect to a Voting Participant, its
participating interest under the Participation Agreement, any Commitment of such
Voting Participant or any other interest of such Voting Participant hereunder or
under any other Loan Documents PROVIDED, that a participant of a Voting
Participant may not become a Voting Participant without the written consent of
Chase, PROVIDED, FURTHER that with respect to clauses (i) and (ii) (y) such
Lender shall simultaneously sell, and such Nonvoting Participant shall purchase,
a participating interest in a similar percentage of such Lender=s Existing
Senior Obligations and (z) the aggregate principal amount of the portion of the
Loans or Reimbursement Obligations or the aggregate amount of the Commitments,
as the case may be, in which any such participating interest is sold shall not
be less than US$1,000,000. In the event of any such sale by a Lender of a
participating interest to a Nonvoting Participant, such Lender's obligations
under this Agreement to the other parties to this Agreement (and its
Participation Agreement, if applicable) shall remain unchanged, such Lender
shall remain solely responsible for the performance thereof, such Lender shall
remain the holder of any such Loan for all purposes under this Agreement and the
other Loan Documents, and the Borrower, the Agent and, if applicable, Chase as a
party to the Participation Agreement shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and, if applicable, the Participation Agreement and the other
Loan Documents. No Lender shall be entitled to create in favor of any Nonvoting
Participant, in the agreement pursuant to which such Nonvoting Participant's
participating interest shall be created or otherwise, any right to vote on,
consent to or approve any matter relating to this Agreement or any other Loan
Document except for those specified in clauses (i) and (ii) of the proviso to
subsection 10.1. 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
Nonvoting Participant shall, to the maximum extent permitted by applicable law,
be deemed to have the right of setoff 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, in purchasing such participating
interest, such Nonvoting Participant shall be deemed to have agreed to share
with the Lenders the proceeds thereof as provided in subsection 10.8(a) as fully
as if it were a Lender hereunder. The Borrower also agrees that each Nonvoting
Participant shall be entitled to the benefits of subsection 2.11 with respect to
its participation in the Commitments and the Loans outstanding from time to time
as if it was a Lender; PROVIDED that such Nonvoting Participant shall have
complied with the requirements of said subsection and PROVIDED, FURTHER, that no
Nonvoting Participant shall be entitled to receive any greater amount pursuant
to any such subsection 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 Nonvoting Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign to any
Lender or any Affiliate thereof or, with the consent of the Agent (which shall
not be unreasonably withheld), to any financially sound bank, insurance company
or other similar financial institution that satisfies the requirements in
clauses (i) and (ii) below, as applicable, (an "ELIGIBLE ASSIGNEE") all or any
part of its rights and obligations under this Agreement and the other Loan
Documents pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit H, executed by such Eligible Assignee, such assigning Lender (and, in
the case of an Eligible Assignee that is not then a Lender or an Affiliate
thereof, by the Agent) and delivered to the Agent for its acceptance, PROVIDED
that (i) such Lender shall assign, and the Eligible Assignee shall assume, a
similar percentage of such Lender=s Existing Senior Obligations and (ii) the sum
of the aggregate principal amount of the Loans, the aggregate amount of the L/C
Obligations and the aggregate amount of the Available Commitment being assigned
is equal to at least $5,000,000 (or if such Lender=s Commitment is less than
$5,000,000, the remaining amount of its Commitment), PROVIDED, FURTHER, that
unless Chase shall otherwise consent in writing, the Eligible Assignee of any
Voting Participant shall not be a Voting Participant but shall become a party to
this Agreement as a direct Lender. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Eligible Assignee 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 assigning Lender thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement and its Participation Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such assigning Lender shall cease to be a
party hereto).
(d) The Agent, on behalf of the Borrower, shall maintain at the
address of the Agent referred to in subsection 10.2 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 Commitments of,
and principal amounts 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 (and, in the case of any Loan or
other obligation hereunder not evidenced by a Note, shall) treat each Person
whose name is recorded in the Register as the owner of a Loan or other
obligation hereunder as the owner thereof for all purposes of this Agreement and
the other Loan Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other obligation hereunder not evidenced by a Note
shall be effective only upon appropriate entries with respect thereto being made
in the Register. 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 an
assigning Lender and an Eligible Assignee (and, in the case of an Eligible
Assignee that is not then a Lender or an Affiliate thereof, by the Agent)
together with payment by the Eligible Assignee to the Agent of a registration
and processing fee of $3,500, 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, subject to
appropriate confidentiality agreements to any Nonvoting Participant or Eligible
Assignee (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.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law or Federal Reserve Bank requirement.
10.8 ADJUSTMENTS; SET-OFF. (a) If any Lender (a "benefitted Lender")
at any time shall 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 paragraph (f) of
MRA Appendix C, 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 the Reimbursement Obligations owing to it, or interest
thereon, such benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loan or the
Reimbursement Obligations owing to it, 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; and if
after taking into account such sharing the benefitted Lender continues to have
access to additional funds of or collateral granted by the Borrower for
application on account of its debt, then the benefitted Lender shall use such
funds or collateral to reduce indebtedness of the Borrower held by it and share
such payments and the benefits of such collateral with the other Lenders;
PROVIDED, HOWEVER, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Loan may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder or under the Notes (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit 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.
10.9 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), 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.
10.10 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.
10.11 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Agent or any Lender relative
to subject matter hereof and thereof not expressly set forth or referred to
herein or in the other Loan Documents or in the Participation Agreement.
10.12 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.13 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 judgment 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 10.2 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 xxx 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.
10.14 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between Agent and Lenders, on one hand, and the Borrower, on
the other hand, in connection herewith or therewith is solely that of
debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrower and the Lenders.
10.15 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 ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
10.16 CONFIDENTIALITY. Each Lender agrees to keep confidential all
information provided to it by the Borrower pursuant to this Agreement; PROVIDED
that nothing herein shall prevent any Lender from disclosing any such
information (i) to the Agent or any other Lender, (ii) to any Transferee or
prospective Transferee which agrees to comply with the provisions of this
subsection, (iii) to such of its employees, directors, agents, attorneys,
accountants and other professional advisors who need to know such information
and who are advised of the obligation to maintain the confidentiality of such
information, and who have agreed to maintain the confidentiality of such
information, (iv) upon the request or demand, or in accordance with the
requirements (including reporting requirements), of any Governmental Authority
having jurisdiction over such Lender, (v) in response to any subpoena, order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (vi) the National Association of Insurance
Commissioners or any similar organization, or any nationally recognized rating
agency that requires access to information about such Lender=s investment
portfolio, (vii) which has been publicly disclosed other than in breach of this
Agreement, or (viii) in connection with the exercise of any remedy hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
RECOTON CORPORATION
By: /S/ STUART MONT
-----------------------------------
Name: Stuart Mont
Title: Chief Operating Officer
Executive Vice President
THE CHASE MANHATTAN BANK, as Agent, Issuing
Bank and as a Lender
By: /S/ XXXXX XXXXX
----------------------------
Name: Xxxxx Xxxxx
Title: Managing Director
XXXXXX TRUST AND SAVINGS BANK, as a Lender
By: /S/ XXXXXXX X. XXXXXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
HSBC BANK U.S.A. (formerly known as MARINE
MIDLAND BANK), as a Lender
By: /S/ XXXXXXXX X. XXXXXX
-------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Vice President
FIRST UNION NATIONAL BANK, as a Lender
By: /S/ XXXXX X. XXXXXXX
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, as a Lender
By: /S/ XXXX X. XXXXXXX
-----------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY,
as a Lender and a Voting Participant
By: /S/ XXXXXXX X. XXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Second Vice President
XXXX XXXXXXX VARIABLE LIFE INSURANCE
COMPANY, as a Lender and a Voting
Participant
By: /S/ XXXXXXX X. XXXXX
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Authorized Officer
MELLON BANK, N.A., AS TRUSTEE FOR THE
LONG-TERM INVESTMENT TRUST, solely in its
capacity as Trustee and not in its
individual capacity (as directed by Xxxx
Xxxxxxx Mutual Life Insurance Company), as
a Lender and a Voting Participant
By: /S/ XXXXXX XXXXX
------------------------------
Name: Xxxxxx Xxxxx
Title: Authorized Signatory
MELLON BANK, N.A. AS TRUSTEE FOR XXXX
ATLANTIC MASTER PENSION TRUST, solely in
its capacity as Trustee and not in its
individual capacity (as directed by Xxxx
Xxxxxxx Mutual Life Insurance Company), as
a Lender and a Voting Participant
By: /S/ XXXXXX XXXXX
------------------------------
Name: Xxxxxx Xxxxx
Title: Authorized Signatory
THE NORTHERN TRUST COMPANY, AS TRUSTEE OF
THE LUCENT TECHNOLOGIES INC. MASTER PENSION
TRUST, as a Lender and a Voting Participant
BY: Xxxx Xxxxxxx Mutual Life Insurance
Company, as Investment Manager
By: /S/ XXXXXXX X. XXXXX
---------------------------
Name: Xxxxxxx X. Xxxxx
Title: Second Vice President
INVESTORS PARTNER LIFE INSURANCE COMPANY,
as a Lender and a Voting Participant
By: /S/ XXXXXXX X. XXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Second Vice President
Schedule 1.1A
COMMITMENT AMOUNTS
HOLDER LIFO LIFO
COMMITMENT COMMITMENT
AMOUNT PERCENTAGES
The Chase Manhattan Bank $ 12,688,088.00 25.37617600%
First Union National Bank 4,653,175.00 9.30635000%
Xxxxxx Trust and Savings Bank 3,221,600.00 6.00000000%
HSBC Bank, U.S.A. (formerly known as Marine Midland Bank) 4,647,969.00 9.29593800%
The Prudential Insurance Company of America 15,493,230.00 30.98646000%
Xxxx Xxxxxxx Mutual Life Insurance Company 7,938,731.06 15.87746212%
Xxxx Xxxxxxx Variable Life Insurance Company 371,837.52 0.74367504%
Investors Partner Life Insurance Company 120,847.19 0.00000000%
Mellon Bank, N.A., as Trustee for Long-Term
Investment Trust, solely in its capacity as Trustee 158,030.94 0.31606190%
and not in its individual capacity (as directed by Xxxx
Xxxxxxx Mutual Life Insurance Company)
Mellon Bank, N.A., as Trustee for Xxxx Atlantic
Master Pension Trust, solely in its capacity as 371,837.52 0.74367504%
Trustee and not in its individual capacity (as
directed by Xxxx Xxxxxxx Mutual Life Insurance
Company)
The Northern Trust Company, as Trustee of
the Lucent Technologies Inc. Master Pension Trust 334,653.77 0.66930754%
TOTAL $50,000,000.00 100%
============== ===
SCHEDULE 2.1
Period Maximum Outstanding Amount Consolidated Current
(000's) EBITDA Assets Ratio
Peak Amount End Amount
September 1-30, 1999 $23,100,000 $23,100,000 ($2,500,000) 1.35:1
October 1-31, 1999 30,600,000 30,600,000 (2,500,000) 1.35:1
November 1-15, 1999 34,600,000 34,600,000 (2,500,000) 1.35:1
November 16-30, 1999 44,600,000 44,600,000 5,700,000 1.35:1
December 1-31, 1999 44,600,000 38,100,000 7,400,000 1.35:1
January 1-31, 2000 38,100,000 23,100,000 7,150,000 1.30:1
February 1-29, 2000 23,100,000 18,100,000 7,150,000 1.30:1
March 1-31, 2000 23,100,000 18,100,000 7,150,000 1.25:1
April 1-30, 2000 23,100,000 18,100,000 1,700,000 1.25:1
May 1-15, 2000 31,100,000 26,100,000 1,400,000 1.25:1
May 16-31, 2000 31,100,000 26,100,000 5,700,000 1.25:1
June 1-30, 2000 34,100,000 29,100,000 650,000 1.30:1
July 1-31, 2000 34,100,000 29,100,000 600,000 1.30:1
August 1-15, 2000 39,100,000 34,100,000 600,000 1.30:1
August 16-31, 2000 39,100,000 34,100,000 2,400,000 1.30:1
September 1-30, 2000 44,100,000 39,100,000 4,000,000 1.35:1
October 1-31, 2000 44,600,000 44,600,000 5,300,000 1.35:1
November 1-15, 2000 44,600,000 44,600,000 5,300,000 1.35:1
November 16-30, 2000 44,600,000 39,600,000 14,700,000 1.35:1
December 1-31, 2000 44,600,000 34,600,000 9,900,000 1.35:1
January 1-31, 2001 38,100,000 21,000,000 9,900,000 1.30:1
February 1-28, 2001 23,100,000 10,000,000 9,900,000 1.30:1
March 1-31, 2001 18,100,000 8,100,000 9,900,000 1.30:1
April 1-30, 2001 13,100,000 2,600,000 2,200,000 1.30:1
May 1-15, 2001 13,100,000 2,600,000 1,800,000 1.30:1
May 16-30, 2001 13,100,000 2,600,000 7,900,000 1.30:1
June 1-30, 2001 13,100,000 2,600,000 2,200,000 1.30:1
NOTE: Compliance with the Current Asset Ratio test during any period set forth
above shall be determined in accordance with the most recently delivered
Current Asset Ratio Certificate. Compliance with Consolidated EBITDA
test set forth above for any period shall be determined by reference to
the following financial statements:
PERIOD FINANCIAL STATEMENTS REFERENCED FOR PERIOD
------ ------------------------------------------
January through March Financial statements for November of the
preceding year
April Financial statements for month of January
May 1-15 Financial statements for month of February
May 16-31 Financial statements for fiscal quarter
ending March 31
June Financial statements for month of April
July Financial statements for month of May
August 1-15 Financial statements for month of May
August 16-31 Financial statements for fiscal quarter
ending June 30
September Financial statements for month of July
October Financial statements for month of August
November 1-15 Financial statements for month of August
November 16-30 Financial statements for fiscal quarter
ending September 30
December Financial statements for month of October
EXHIBIT D
[FORM OF NOTE]
$___________________New York, New York
_____________, 1999
FOR VALUE RECEIVED, the undersigned, Recoton Corporation, a New York
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of _____________ (the "LENDER") at the office of The Chase Manhattan Bank
located at 000-00 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxx Xxxx, 00000, in
lawful money of the United States of America and in immediately available funds,
on the Termination Date (as defined in the Credit Agreement referred to below)
the principal amount of (a) DOLLARS ($ ), or, if less, (b) the aggregate unpaid
principal amount of all Loans made by the Lender to the Borrower pursuant to
subsection 2.1 of the Credit Agreement, as hereinafter defined. The Borrower
further agrees to pay interest in like money at such office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in subsection 2.7 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date and amount of each Loan made
pursuant to the Credit Agreement and the date and amount of each payment or
prepayment of principal thereof. Each such endorsement shall constitute PRIMA
FACIE evidence of the accuracy of the information endorsed. The failure to make
any such endorsement shall not affect the obligations of the Borrower in respect
of such Loan.
This Note (a) is one of the Notes referred to in the Credit Agreement
dated as of __________, 1999 (as amended, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"), among the Borrower, the Lender, the
other banks and financial institutions from time to time parties thereto and The
Chase Manhattan Bank, as Agent, (b) is subject to the provisions of the Credit
Agreement and (c) is subject to optional and mandatory prepayment in whole or in
part as provided in the Credit Agreement. This Note is guaranteed and secured as
provided in the Loan Documents. Reference is hereby made to the Loan Documents
for a description of the nature and extent of the Guarantee, the terms and
conditions upon which the Guarantee was granted and the rights of the holder of
this Note in respect thereof and for a description of the Collateral securing
the obligations of the Borrower and the Guarantors under the Loan Documents.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
RECOTON CORPORATION
By: ____________________________
Name: ____________________________
Title: ____________________________
SCHEDULE A TO NOTE
LOANS AND REPAYMENTS OF LOANS
AMOUNT OF UNPAID PRINCIPAL
DATE AMOUNT OF PRINCIPAL OF BALANCE OF NOTATION
LOANS LOANS REPAID LOANS MADE BY
EXHIBIT H
[FORM OF
ASSIGNMENT AND ACCEPTANCE]
Reference is made to the Credit Agreement, dated as of ______ ___,
1999 (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), among Recoton Corporation (the "BORROWER"), the Lenders
named therein and The Chase Manhattan Bank, as Agent for the Lenders (in such
capacity, the "AGENT" or "AGENT"). Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.
The Assignor identified on Schedule l hereto (the "ASSIGNOR") and the
Assignee identified on Schedule l hereto (the "ASSIGNEE") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the interest described in Schedule 1 hereto
(the "ASSIGNED INTEREST") in and to the Assignor's rights and obligations under
the Credit Agreement with respect to those credit facilities contained in the
Credit Agreement as are set forth on Schedule 1 hereto (individually, an
"ASSIGNED FACILITY"; collectively, the "ASSIGNED Facilities"), in a principal
amount for each Assigned Facility as set forth on Schedule 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Subsidiaries or any other
obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Credit Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Notes held
by it evidencing the Assigned Facilities and (i) requests that the Agent, upon
request by the Assignee, exchange the attached Notes for a new Note or Notes
payable to the Assignee and (ii) if the Assignor has retained any interest in
the Assigned Facility, requests that the Agent exchange the attached Notes for a
new Note or Notes payable to the Assignor, in each case in amounts which reflect
the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements delivered pursuant to subsection 4.4 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (c) agrees
that it will, independently and without reliance upon the Assignor, 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 decisions in taking or
not taking action under the Credit Agreement, the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; (d) appoints
and authorizes the Agent to take such action as Agent on its behalf and to
exercise such powers and discretion under the Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Agent by the terms thereof, together with such
powers as are incidental thereto; and (e) agrees that it will be bound by the
provisions of the Credit Agreement and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement are required to
be performed by it as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States, its obligation pursuant to subsection
2.11(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule 1 hereto (the "EFFECTIVE
DATE"). Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance by it and recording by the Agent pursuant
to the Credit Agreement, effective as of the Effective Date (which shall not,
unless otherwise agreed to by the Agent, be earlier than five Business Days
after the date of such acceptance and recording by the Agent).
5. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignor for amounts which have accrued to the Effective Date and to the
Assignee for amounts which have accrued subsequent to the Effective Date. The
Assignor and the Assignee shall make all appropriate adjustments in payments by
the Agent for periods prior to the Effective Date or with respect to the making
of this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
other Loan Documents and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
Schedule 1
to Assignment and Acceptance
Name of Assignor: __________________________________________________________
Name of Assignee: __________________________________________________________
Effective Date of Assignment: ______________________________________________
Credit Principal Commitment Percentage
Facility Assigned Amount Assigned Assigned(1) _____
$____________.____________%
[Name of Assignee] [Name of Assignor]
By: By:
Title: Title:
Accepted:
THE CHASE MANHATTAN BANK, as Agent
By:
Title:
-------------------
(1) Calculate the Commitment Percentage that is assigned to at least
15 decimal places and show as a percentage of the aggregate Commitments of
all Lenders.
