Exhibit 10.30
REVOLVING CREDIT
AND
SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
(AS A LENDER AND AS ADMINISTRATIVE AGENT AND LEAD ARRANGER)
FEDERAL STANDARD BANK
NATIONAL ASSOCIATION
(by and through its agent
LASALLE BUSINESS CREDIT, LLC)
(AS A LENDER AND AS DOCUMENTATION AGENT)
AND
THE OTHER LENDERS PARTY HERETO
WITH
BRIGHTSTAR CORP.
BRIGHTSTAR US, INC.
BRIGHTSTAR PUERTO RICO, INC.
(BORROWERS)
April 26, 2004
TABLE OF CONTENTS
I. DEFINITIONS...................................................................................1
1.1. Accounting Terms................................................................1
1.2. General Terms...................................................................1
1.3. Uniform Commercial Code Terms..................................................24
1.4. Certain Matters of Construction................................................24
II. ADVANCES, PAYMENTS...........................................................................25
2.1. (a) Revolving Advances.........................................................25
(b) Discretionary Rights................................................26
(c) PR Advances.........................................................26
2.2. Procedure for Revolving Advances Borrowing.....................................26
2.3. Disbursement of Advance Proceeds...............................................28
2.4. Maximum Advances...............................................................28
2.5. Repayment of Advances..........................................................28
2.6. Repayment of Excess Advances...................................................29
2.7. Statement of Account...........................................................29
2.8. Letters of Credit..............................................................30
2.9. Issuance of Letters of Credit..................................................30
2.10. Requirements For Issuance of Letters of Credit.................................30
2.11. Disbursements, Reimbursement...................................................31
2.12. Repayment of Participation Advances............................................32
2.13. Documentation..................................................................32
2.14. Determination to Honor Drawing Request.........................................33
2.15. Nature of Participation and Reimbursement Obligations..........................33
2.16. Indemnity......................................................................34
2.17. Liability for Acts and Omissions...............................................35
2.18. Additional Payments............................................................36
2.19. Manner of Borrowing and Payment................................................36
2.20. Mandatory Prepayments..........................................................38
2.21. Use of Proceeds................................................................38
2.22. Defaulting Lender..............................................................38
III. INTEREST AND FEES............................................................................39
3.1. Interest.......................................................................39
3.2. Letter of Credit Fees..........................................................39
3.3. (a) Fee Letter.................................................................40
(b) Facility Fee........................................................40
3.4. Computation of Interest and Fees...............................................41
3.5. Maximum Charges................................................................41
3.6. Increased Costs................................................................41
3.7. Basis For Determining Interest Rate Inadequate or Unfair.......................42
3.8. Capital Adequacy...............................................................43
3.9. Gross Up for Taxes.............................................................43
3.10. Withholding Tax Exemption......................................................44
IV. COLLATERAL: GENERAL TERMS...................................................................45
4.1. Security Interest in the Collateral............................................45
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4.2. Perfection of Security Interest................................................45
4.3. Disposition of Collateral......................................................46
4.4. Preservation of Collateral.....................................................46
4.5. Ownership of Collateral........................................................46
4.6. Defense of Agent's and Lenders' Interests......................................47
4.7. Books and Records..............................................................47
4.8. Financial Disclosure...........................................................47
4.9. Compliance with Laws...........................................................48
4.10. Inspection of Premises and Appraisals..........................................48
4.11. Insurance......................................................................48
4.12. Failure to Pay Insurance.......................................................49
4.13. Payment of Taxes...............................................................49
4.14. Payment of Leasehold Obligations...............................................49
4.15. Receivables....................................................................50
(a) Nature of Receivables...............................................50
(b) Solvency of Customers...............................................50
(c) Location of Borrower................................................50
(d) Collection of Receivables...........................................50
(e) Notification of Assignment of Receivables...........................50
(f) Power of Agent to Act on Borrower's Behalf..........................50
(g) No Liability........................................................51
(h) Establishment of a Lockbox Account, Dominion Account................51
(i) Adjustments.........................................................52
4.16. Inventory......................................................................52
4.17. Maintenance of Equipment.......................................................52
4.18. Exculpation of Liability.......................................................52
4.19. Environmental Matters..........................................................52
4.20. Financing Statements...........................................................54
V. REPRESENTATIONS AND WARRANTIES...............................................................55
5.1. Authority......................................................................55
5.2. Formation and Qualification....................................................55
5.3. Survival of Representations and Warranties.....................................55
5.4. Tax Returns....................................................................56
5.5. Financial Statements...........................................................56
5.6. Entity Name....................................................................57
5.7. O.S.H.A. and Environmental Compliance..........................................57
5.8. Solvency; No Litigation, Violation, Indebtedness or Default....................57
5.9. Patents, Trademarks, Copyrights and Licenses...................................58
5.10. Licenses and Permits...........................................................59
5.11. Default of Indebtedness........................................................59
5.12. No Default.....................................................................59
5.13. No Burdensome Restrictions.....................................................59
5.14. No Labor Disputes..............................................................59
5.15. Margin Regulations.............................................................59
5.16. Investment Company Act.........................................................60
5.17. Disclosure.....................................................................60
5.18. Delivery of Subordinated Loan Documentation and Motorola Documents.............60
5.19. Swaps..........................................................................60
5.20. Conflicting Agreements.........................................................60
5.21. Application of Certain Laws and Regulations....................................60
5.22. Business and Property of Borrower..............................................61
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5.23. Section 20 Subsidiaries........................................................61
5.24. Anti-Terrorism Laws............................................................61
5.25. Trading with the Enemy.........................................................62
5.26. Federal Securities Laws........................................................62
VI. AFFIRMATIVE COVENANTS........................................................................62
6.1. Payment of Fees................................................................62
6.2. Conduct of Business and Maintenance of Existence and Assets....................62
6.3. Violations.....................................................................62
6.4. Government Receivables.........................................................62
6.5. (a) Leverage Ratio.............................................................63
(b) Fixed Charge Coverage Ratio.........................................63
6.6. Execution of Supplemental Instruments..........................................63
6.7. Payment of Indebtedness........................................................63
6.8. Standards of Financial Statements..............................................63
6.9. Tax Shelter Regulations........................................................64
6.11. Federal Securities Laws........................................................64
VII. NEGATIVE COVENANTS...........................................................................64
7.1. Merger, Consolidation, Acquisition and Sale of Assets..........................64
7.2. Creation of Liens..............................................................64
7.3. Guarantees.....................................................................64
7.4. Investments....................................................................65
7.5. Loans..........................................................................65
7.6. Capital Expenditures...........................................................65
7.7. Dividends......................................................................65
7.8. Indebtedness...................................................................66
7.9. Nature of Business.............................................................66
7.10. Transactions with Affiliates...................................................66
7.11. Leases.........................................................................66
7.12. Subsidiaries...................................................................67
7.13. Fiscal Year and Accounting Changes.............................................67
7.14. Pledge of Credit...............................................................67
7.15. Amendment of Articles of Incorporation and By-Laws.............................67
7.16. Compliance with ERISA..........................................................67
7.17. Prepayment of Indebtedness.....................................................68
7.18. Anti-Terrorism Laws............................................................68
7.19. Intentionally Omitted..........................................................68
7.20. Other Agreements...............................................................68
7.21. Subordinated Note..............................................................68
7.22. Other Agreements...............................................................69
VIII. CONDITIONS PRECEDENT.........................................................................69
8.1. Conditions to Initial Advances.................................................69
(a) Revolving Credit Note...............................................69
(b) Filings, Registrations and Recordings...............................69
(c) Corporate Proceedings of Borrower...................................69
(d) Incumbency Certificates of Borrower.................................69
(e) Certificates........................................................69
(f) Good Standing Certificates..........................................70
(g) Legal Opinion.......................................................70
(h) No Litigation.......................................................70
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(i) Financial Condition Certificates....................................70
(j) Collateral Examination..............................................70
(k) Fees................................................................70
(l) Financial Statements................................................70
(l) Intercreditor Agreement.............................................71
(n) Insurance...........................................................71
(o) Payment Instructions................................................71
(p) Blocked Accounts....................................................71
(q) Consents............................................................71
(r) No Adverse Material Change..........................................71
(s) Leasehold Agreements................................................71
(t) Subordinated Loan Documentation.....................................71
(u) Other Documents.....................................................71
(v) Contract Review.....................................................71
(w) Closing Certificate.................................................72
(x) Borrowing Base......................................................72
(y) Undrawn Availability................................................72
(z) Compliance with Laws................................................72
(aa) Other...............................................................72
8.2. Conditions to Each Advance.....................................................72
(a) Representations and Warranties......................................72
(b) No Default..........................................................72
(c) Maximum Advances....................................................73
IX. INFORMATION AS TO BORROWERS..................................................................73
9.1. Disclosure of Material Matters.................................................73
9.2. Schedules......................................................................73
9.3. Environmental Reports..........................................................73
9.4. Litigation.....................................................................74
9.5. Material Occurrences...........................................................74
9.6. Government Receivables.........................................................74
9.7. Annual Financial Statements....................................................74
9.8. Monthly Financial Statements...................................................75
9.9. Other Reports..................................................................75
9.10. Additional Information.........................................................75
9.11. Projected Operating Budget.....................................................75
9.12. Variances From Operating Budget................................................75
9.13. Notice of Suits, Adverse Events................................................76
9.14. ERISA Notices and Requests.....................................................76
9.15. Tax Shelter Provisions.........................................................76
9.16. Additional Documents...........................................................77
9.17. Eligible Foreign Receivables...................................................77
X. EVENTS OF DEFAULT............................................................................77
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT...................................................79
11.1. Rights and Remedies............................................................79
11.2. Agent's Discretion.............................................................81
11.3. Setoff.........................................................................81
11.4. Rights and Remedies not Exclusive..............................................81
11.5. Allocation of Payments After Event of Default..................................81
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XII. WAIVERS AND JUDICIAL PROCEEDINGS.............................................................82
12.1. Waiver of Notice...............................................................82
12.2. Delay..........................................................................83
12.3. Jury Waiver....................................................................83
XIII. EFFECTIVE DATE AND TERMINATION...............................................................83
13.1. Term...........................................................................83
13.2. Termination....................................................................83
XIV. REGARDING AGENT..............................................................................84
14.1. Appointment....................................................................84
14.2. Nature of Duties...............................................................84
14.3. Lack of Reliance on Agent and Resignation......................................85
14.4. Certain Rights of Agent........................................................85
14.5. Reliance.......................................................................85
14.6. Notice of Default..............................................................86
14.7. Indemnification................................................................86
14.8. Agent in its Individual Capacity...............................................86
14.9. Delivery of Documents..........................................................86
14.10. Borrower's Undertaking to Agent................................................86
14.11. No Reliance on Agent's Customer Identification Program.........................87
14.11. Other Agreements...............................................................87
XV. BORROWING AGENCY.............................................................................87
15.1. Borrowing Agency Provisions....................................................87
15.2. Waiver of Subrogation..........................................................89
XVI. MISCELLANEOUS................................................................................89
16.1 Governing Law..................................................................89
16.2. Entire Understanding...........................................................89
16.3. Successors and Assigns; Participations; New Lenders............................92
16.4. Application of Payments........................................................94
16.5. Indemnity......................................................................94
16.6. Notice.........................................................................94
16.7. Survival.......................................................................96
16.8. Severability...................................................................96
16.9. Expenses.......................................................................96
16.10. Injunctive Relief..............................................................97
16.11. Consequential Damages..........................................................97
16.12. Captions.......................................................................97
16.13. Counterparts; Facsimile Signatures.............................................97
16.14. Construction...................................................................97
16.15. Confidentiality; Sharing Information...........................................97
16.16. Publicity......................................................................98
16.17. Certifications From Banks and Participants; US Patriot Act.....................98
16.18. Regarding Documentation Agent..................................................99
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List of Exhibits and Schedules
Exhibits
Exhibit 1.2 Borrowing Base Certificate
Exhibit 2.1(a) Revolving Credit Revolving Credit Note
Exhibit 5.5(b) Financial Projections
Exhibit 8.1(k) Financial Condition Certificate
Exhibit 16.3 Commitment Transfer Supplement
Schedules
Schedule 1.2 Permitted Encumbrances
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.15(h) Deposit and Investment Accounts
Schedule 4.19 Real Property
Schedule 5.1 Consents
Schedule 5.2(a) States of Qualification and Good Standing
Schedule 5.2(b) Subsidiaries
Schedule 5.4 Federal Tax Identification Number
Schedule 5.5(c) Changes in Financial Condition
Schedule 5.6 Prior Names
Schedule 5.7 Environmental
Schedule 5.8(b) Litigation
Schedule 5.8(d) Plans
Schedule 5.9 Intellectual Property, Source Code Escrow
Agreements
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
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REVOLVING CREDIT
AND
SECURITY AGREEMENT
Revolving Credit and Security Agreement dated as of April 26, 2004
among BRIGHTSTAR CORP., a corporation organized under the laws of the State of
Delaware ("Brightstar"), BRIGHTSTAR US, INC., a corporation organized under the
laws of the State of Florida ("Brightstar US"), BRIGHTSTAR PUERTO RICO, INC., a
corporation organized under the laws of the Commonwealth of Puerto Rico
("Brightstar PR") (Brightstar, Brightstar US and Brightstar PR, each a
"BORROWER", and collectively "BORROWERS"), the financial institutions which are
now or which hereafter become a party hereto (collectively, the "LENDERS" and
individually a "LENDER"), PNC BANK, NATIONAL ASSOCIATION ("PNC"), as
administrative agent and lead arranger for Lenders (PNC, in such capacity, the
"AGENT") and STANDARD FEDERAL BANK NATIONAL ASSOCIATION (by and through its
agent LASALLE BUSINESS CREDIT, LLC) as documentation agent for Lenders.
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Borrowers, Lenders and Agent hereby agree as follows:
I. DEFINITIONS.
1.1. ACCOUNTING TERMS. As used in this Agreement, the Other Documents
or any certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrowers for the Fiscal Year ended December 31,
2003.
1.2. GENERAL TERMS. For purposes of this Agreement the following terms
shall have the following meanings:
"ACCOUNTANTS" shall have the meaning set forth in Section 9.7
hereof.
"ADVANCES" shall mean and include the Revolving Advances and
Letters of Credit.
"ADVANCE RATES" shall have the meaning set forth in Section
2.1(a) hereof.
"AFFILIATE" of any Person shall mean (a) any Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person, or (b) any Person who is a director, managing member,
general partner or officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect,
(x) to vote 5% or
more of the Equity Interests having ordinary voting power for the election of
directors of such Person or other Persons performing similar functions for any
such Person, or (y) to direct or cause the direction of the management and
policies of such Person whether by ownership of Equity Interests, contract or
otherwise.
"AGENT" shall have the meaning set forth in the preamble to
this Agreement and shall include its successors and assigns.
"AGREEMENT" shall mean this Revolving Credit and Security
Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per
annum equal to the higher of (i) the Base Rate in effect on such day and (ii)
the Federal Funds Open Rate in effect on such day plus 1/2 of 1%.
"ANTI-TERRORISM LAWS" shall mean any Applicable Laws relating
to terrorism or money laundering, including Executive Order No. 13224, the USA
Patriot Act, the Applicable Laws comprising or implementing the Bank Secrecy
Act, and the Applicable Laws administered by the United States Treasury
Department's Office of Foreign Asset Control (as any of the foregoing Applicable
Laws may from time to time be amended, renewed, extended, or replaced).
"APPLICABLE LAW" shall mean all laws, rules and regulations
applicable to the Person, conduct, transaction, covenant, Other Document or
contract in question, including all applicable common law and equitable
principles; all provisions of all applicable state, federal and foreign
constitutions, statutes, rules, regulations and orders of any Governmental Body,
and all orders, judgments and decrees of all courts and arbitrators.
"APPLICABLE MARGIN" shall mean as of the Closing Date, an
amount equal to 2.0%. Thereafter, on a quarterly basis, commencing with the
fiscal quarter ending September 30, 2004, the Applicable Margin shall be
adjusted as determined by PNCBC, if necessary, effective as of the first day of
the next fiscal quarter, to the applicable percent set forth in the pricing
table set forth below corresponding to the Average Undrawn Availability for such
quarter:
Level Average Undrawn Availability Eurodollar Rate
----- ---------------------------- ---------------
1 $32,500,001 or more 1.750%
2 $25,000,001 to and including 1.875%
$32,500,000
3 $17,500,001 to and including 2.000%
$25,000,000
4 $10,000,001 to and including 2.125%
$17,500,000
5 $10,000,000 or less 2.250%
"AUTHORITY" shall have the meaning set forth in Section
4.19(d).
2
"AVERAGE UNDRAWN AVAILABILITY" shall mean, for each calendar
month of Borrowers, the average daily amount of Undrawn Availability for such
month with the Formula Amount utilized being based upon the weekly Borrowing
Base Certificates prepared by Borrowers in accordance with Section 9.2 of this
Agreement, PROVIDED, HOWEVER, that if a Borrowing Base Certificate for any week
during such month is not timely delivered to Agent, Undrawn Availability for
such month shall be deemed to be $0 until such time as a Borrowing Base
Certificate is so delivered.
"BASE RATE" shall mean the base commercial lending rate of PNC
as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by PNC as a
means of pricing some loans to its customers and is neither tied to any external
rate of interest or index nor does it necessarily reflect the lowest rate of
interest actually charged by PNC to any particular class or category of
customers of PNC.
"BLOCKED ACCOUNTS" shall have the meaning set forth in Section
4.15(h).
"BLOCKED ACCOUNT BANK" shall have the meaning set forth in
Section 4.15(h).
"BLOCKED PERSON" shall have the meaning set forth in Section
5.24(b) hereof.
"BORROWER" or "BORROWERS" shall have the meaning set forth in
the preamble to this Agreement and shall extend to all permitted successors and
assigns of such Persons.
"BORROWERS ON A CONSOLIDATED BASIS" shall mean the
consolidation in accordance with GAAP of the accounts or other items of
Brightstar and its respective Subsidiaries.
"BORROWERS ON A COMBINED BASIS" shall mean the combination in
accordance with GAAP of the accounts or other items of Borrowers in accordance
with GAAP.
"BORROWERS' ACCOUNT" shall have the meaning set forth in
Section 2.7.
"BORROWING AGENT" shall mean Brightstar.
"BORROWING BASE CERTIFICATE" shall mean a certificate in
substantially the form of Exhibit 1.2 duly executed by the President, Chief
Financial Officer or Controller of the Borrowing Agent and delivered to the
Agent, appropriately completed, by which such officer shall certify to Agent the
Formula Amount and calculation thereof as of the date of such certificate.
"BRIGHTSTAR" shall have the meaning set forth in the Preamble
hereto.
"BRIGHTSTAR MEXICO" shall mean Brightstar de Mexico, S.A. de
C.V., a corporation organized under the laws of Mexico.
"BRIGHTSTAR PR" shall have the meaning set forth in the
Preamble hereto.
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"BRIGHTSTAR PR'S BORROWING BASE" shall mean as of the date of
determination thereof, with respect to Brightstar PR, an amount equal to (a) up
to the Receivables Advance Rate of Eligible Receivables of Brightstar PR minus
(b) such reserves as Agent may deem necessary from time to time.
"BRIGHTSTAR PR'S MAXIMUM REVOLVING AMOUNT" shall mean an
amount equal to $5,000,000.
"BRIGHTSTAR US" shall have the meaning set forth in the
Preamble hereto.
"BUSINESS DAY" shall mean any day other than Saturday or
Sunday or a legal holiday on which commercial banks are authorized or required
by law to be closed for business in East Brunswick, New Jersey and, if the
applicable Business Day relates to any Eurodollar Rate Loans, such day must also
be a day on which dealings are carried on in the London interbank market.
"CAPITAL EXPENDITURES" shall mean expenditures made or
liabilities incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful life of
more than one year, including the total principal portion of Capitalized Lease
Obligations, which, in accordance with GAAP, would be classified as capital
expenditures.
"CAPITALIZED LEASE OBLIGATION" shall mean any Indebtedness of
any Borrower represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.ss.9601 et seq.
"CHANGE OF CONTROL" shall mean (a) prior to the occurrence of
the IPO, the occurrence of any event (whether in one or more transactions) which
results in a transfer of control of Brightstar to a Person who is not an
Original Owner, (b) after the occurrence of the IPO, any person or group of
persons (within the meaning of the Exchange Act) other than the Original Owners
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the SEC under the Exchange Act) of 30% or more of the issued and
outstanding shares of Equity Interests of Brightstar having the right to vote
for the election of directors of Brightstar under ordinary circumstances, (c) at
any time, any merger or consolidation of or with any Borrower or sale of all or
substantially all of the property or assets of any Borrower, (d) the occurrence
of a "Change of Control" under and as defined in the Subordinated Loan
Documentation or (e) at any time, Brightstar ceases to own and control (i) one
hundred percent (100%) of the economic and voting rights associated with the
outstanding Equity Interests of Brightstar PR and (ii) ninety percent (90%) of
the economic and voting rights associated with the outstanding Equity Interests
of Brightstar US. For purposes of this definition, "control of Borrower" shall
mean the power, direct or indirect (x) to vote 50% or more of the Equity
Interests having ordinary voting power for the election of directors (or the
individuals
4
performing similar functions) of any Borrower or (y) to direct or cause the
direction of the management and policies of any Borrower by contract or
otherwise.
"CHARGES" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including all net income, gross income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, profits, inventory,
capital stock, license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation and property taxes, custom
duties, fees, assessments, liens, claims and charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts, imposed by any taxing or other authority, domestic or foreign
(including the Pension Benefit Guaranty Corporation or any environmental agency
or superfund), upon the Collateral, any Borrower or any of its Affiliates.
"CLOSING DATE" shall mean April 26, 2004 or such other date as
may be agreed to by the parties hereto.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated thereunder.
"COLLATERAL" shall mean and include:
(a) all Receivables;
(b) all General Intangibles;
(c) all Inventory;
(d) all of each Borrower's right, title and interest
in and to, whether now owned or hereafter acquired and wherever located, (i) its
respective goods and other property including, but not limited to, all
merchandise returned or rejected by Customers, relating to or securing any of
the Receivables; (ii) all of each Borrower's rights as a consignor, a consignee,
an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in
transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all
additional amounts due to any Borrower from any Customer relating to the
Receivables; (iv) other property, including warranty claims, relating to any
goods securing the Obligations; (v) all of each Borrower's contract rights,
rights of payment which have been earned under a contract right, instruments
(including promissory notes), documents, chattel paper (including electronic
chattel paper), warehouse receipts, deposit accounts, letters of credit and
money; (vi) all commercial tort claims (whether now existing or hereafter
arising); (vii) if and when obtained by any Borrower, all real and personal
property of third parties in which such Borrower has been granted a lien or
security interest as security for the payment or enforcement of Receivables;
(viii) all letter-of-credit-rights (whether or not the respective letter of
credit is evidenced by a writing); (ix) all supporting obligations; and (x) any
other goods, personal property or real property now owned or hereafter acquired
in which any Borrower has expressly granted a security interest or may in the
future grant a security interest to Agent hereunder, or in any amendment or
supplement hereto or thereto, or under any other agreement between Agent and any
Borrower;
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(e) all of each Borrower's ledger sheets, ledger
cards, files, correspondence, records, books of account, business papers,
computers, computer software (owned by any Borrower or in which it has an
interest), computer programs, tapes, disks and documents relating to (a), (b),
(c) and (d) of this Paragraph; and
(f) all proceeds and products of (a), (b), (c), (d)
and (e) in whatever form, including, but not limited to: cash, deposit accounts
(whether or not comprised solely of proceeds), certificates of deposit,
insurance proceeds (including hazard, flood and credit insurance), negotiable
instruments and other instruments for the payment of money, chattel paper,
security agreements, documents, eminent domain proceeds, condemnation proceeds
and tort claim proceeds.
"COMMITMENT AMOUNT" of any Lender shall mean the amount set
forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 16.3 hereof.
"COMMITMENT PERCENTAGE" of any Lender shall mean the
percentage set forth below such Lender's name on the signature page hereof as
same may be adjusted upon any assignment by a Lender pursuant to Section 16.3(b)
hereof.
"COMMITMENT TRANSFER SUPPLEMENT" shall mean a document in the
form of Exhibit 16.3 hereto, properly completed and otherwise in form and
substance satisfactory to Agent by which the Purchasing Lender purchases and
assumes a portion of the obligation of Lenders to make Advances under this
Agreement.
"COMPLIANCE CERTIFICATE" shall mean a compliance certificate
to be signed by the Chief Financial Officer or Controller of each Borrower,
which shall state that, based on an examination sufficient to permit such
officer to make an informed statement, no Default or Event of Default exists, or
if such is not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps being taken by
Borrowers with respect to such default and, such certificate shall have appended
thereto calculations which set forth Borrowers' compliance with the requirements
or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.11.
"CONSENTS" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Bodies and other third parties, domestic or foreign, necessary to carry on any
Borrower's business or necessary (including to avoid a conflict or breach under
any agreement, instrument, other document, license, permit or other
authorization) for the execution, delivery or performance of this Agreement, the
Other Documents, the Subordinated Loan Documentation, or the Intercreditor
Agreement, including any Consents required under all applicable federal, state,
commonwealth or other applicable law.
"CONSIGNED INVENTORY" shall mean Inventory of any Borrower
that is in the possession of another Person on a consignment, sale or return, or
other basis that does not constitute a final sale and acceptance of such
Inventory.
6
"CONTROLLED GROUP" shall mean, at any time, any Borrower and
all members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control and all other entities which,
together with any Borrower, are treated as a single employer under Section 414
of the Code.
"CUSTOMER" shall mean and include the account debtor with
respect to any Receivable and/or the prospective purchaser of goods, services or
both with respect to any contract or contract right, and/or any party who enters
into or proposes to enter into any contract or other arrangement with any
Borrower, pursuant to which such Borrower is to deliver any personal property or
perform any services.
"DEFAULT" shall mean an event, circumstance or condition
which, with the giving of notice or passage of time or both, would constitute an
Event of Default.
"DEFAULT RATE" shall have the meaning set forth in Section 3.1
hereof.
"DEFAULTING LENDER" shall have the meaning set forth in
Section 2.22(a) hereof.
"DEPOSITORY ACCOUNTS" shall have the meaning set forth in
Section 4.15(h) hereof.
"DOCUMENTS" shall have the meaning set forth in Section 8.1(c)
hereof.
"DOLLAR" and the sign "$" shall mean lawful money of the
United States of America.
"DOMESTIC RATE LOAN" shall mean any Advance that bears
interest based upon the Alternate Base Rate.
"DOMESTIC SUBSIDIARIES" shall mean any Subsidiaries organized
under the laws of any state of the United States of America and any
protectorates thereof and shall include Brightstar PR.
"DRAWING DATE" shall have the meaning set forth in Section
2.11(b) hereof.
"EARNINGS BEFORE INTEREST AND TAXES" shall mean for any period
the sum of (i) net income (or loss) of Borrowers on a consolidated basis for
such period excluding extraordinary gains and losses, plus (ii) all interest
expense of Borrowers on a consolidated basis for such period, plus (iii) all
charges against income of Borrowers on a consolidated basis for such period for
federal, state and local taxes actually paid.
"EBITDA" shall mean for any period the sum of (i) Earnings
Before Interest and Taxes for such period plus (ii) depreciation expenses for
such period, plus (iii) amortization expenses for such period.
7
"ELIGIBLE FOREIGN CUSTOMER" shall mean each of TelCel, C.A.,
Abiatar-Moviam, Telefonica Communcaciones Personales, CTI, Telecom Personal, S.A
and Movicom, S.A. If there is a change in ownership of any Parent of any
Eligible Foreign Customer, then such Customer shall no longer be deemed an
Eligible Foreign Customer unless Required Lenders otherwise consent in writing.
Borrowers shall notify Agent if there is a change in ownership of any Parent
with respect to any of the foregoing companies within five (5) Business Days of
such change.
"ELIGIBLE FOREIGN RECEIVABLES" shall mean all Receivables
which Agent would otherwise deem to be Eligible Receivables except due to clause
(f) of the definition thereof so long as (a) such Receivables are not Eligible
Insured Foreign Receivables, (b) the amount of each such Receivable shall not
exceed $5,000,000 for each country and $5,000,000 for each Customer, (c) the
Parent of such Customer must be rated BBB (or its equivalent) or better by
either Xxxxx'x, S&P or another rating agency acceptable to Agent in its sole
discretion, (d) each Customer must be an Eligible Foreign Customer and (e) such
Receivables are not Receivables due from TelCel, C.A. subject to a financing
arrangement with Amex Bank or any other financial institution or any other
Receivables subject to a similar financing arrangement.
"ELIGIBLE INSURED FOREIGN RECEIVABLES" shall mean all Foreign
Receivables which Agent would otherwise deem to be Eligible Receivables except
due to clause (f) of the definition thereof which are (a) guaranteed by the
Export-Import Bank of the United States in favor of Agent for its benefit and
for the ratable benefit of Lenders or (b) credit insured with an insurance
carrier in an amount and on terms acceptable to Agent naming Agent as
beneficiary or loss payee, as applicable, thereof and (c) such Receivables are
not Eligible Foreign Receivables; PROVIDED, HOWEVER, that only such portion of
such Receivables which is covered by any such guaranty or insurance coverage
shall be included in the calculation of Eligible Insured Foreign Receivables.
"ELIGIBLE INVENTORY" shall mean and include Inventory with
respect to each Borrower valued at the lower of cost or market value, determined
on a first-in-first-out basis, which is not, in Agent's opinion, obsolete, slow
moving or unmerchantable and which Agent, in its sole discretion, shall not deem
ineligible Inventory, based on such considerations as Agent may from time to
time deem appropriate including whether the Inventory is subject to a perfected,
first priority security interest in favor of Agent and no other Lien (other than
a Permitted Encumbrance). In addition, Inventory shall not be Eligible Inventory
if it (i) does not conform to all standards imposed by any Governmental Body
which has regulatory authority over such goods or the use or sale thereof, (ii)
is in transit, (iii) is located outside the continental United States or at a
location that is not otherwise in compliance with this Agreement, (iv)
constitutes Consigned Inventory, (v) is the subject of an Intellectual Property
Claim; (vi) is subject to a License Agreement or other agreement that limits,
conditions or restricts any Borrower's or Agent's right to sell or otherwise
dispose of such Inventory, unless Agent is a party to a Licensor/Agent Agreement
with the Licensor under such License Agreement; or (vii) or is situated at a
location not owned by a Borrower unless the owner or occupier of such location
has executed in favor of Agent a Lien Waiver Agreement.
8
"ELIGIBLE RECEIVABLES" shall mean and include with respect to
each Borrower, each Receivable of such Borrower arising in the Ordinary Course
of Business and which Agent, in its sole credit judgment, shall deem to be an
Eligible Receivable, based on such considerations as Agent may from time to time
deem appropriate. A Receivable shall not be deemed eligible unless such
Receivable is subject to Agent's first priority perfected security interest and
no other Lien (other than Permitted Encumbrances), and is evidenced by an
invoice payable in Dollars or other documentary evidence satisfactory to Agent.
In addition, no Receivable shall be an Eligible Receivable if:
(a) it arises out of a sale made by any Borrower to
an Affiliate of any Borrower or to a Person controlled by an Affiliate of any
Borrower;
(b) it is due or unpaid after the earlier of (i)
ninety (90) days after the original due date, or (ii) one hundred twenty (120)
days after the original invoice date;
(c) fifty percent (50%) or more of the Receivables
from such Customer are not deemed Eligible Receivables hereunder pursuant to
clause (b) above, in which event all Receivables due from such Customer shall be
deemed ineligible hereunder.
(d) any covenant, representation or warranty
contained in this Agreement with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property or call a meeting of its creditors, (ii) admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease
operations of its present business, (iii) make a general assignment for the
benefit of creditors, (iv) commence a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt
or insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, any petition which is filed against it in any involuntary case under
such bankruptcy laws, or (viii) take any action for the purpose of effecting any
of the foregoing;
(f) the sale is to a Customer outside the continental
United States of America or Puerto Rico;
(g) the sale to the Customer is on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment or any other
repurchase or return basis or is evidenced by chattel paper;
(h) Agent believes, in its sole judgment, that
collection of such Receivable is insecure or that such Receivable may not be
paid by reason of the Customer's financial inability to pay;
(i) the Customer is the United States of America, any
state or any department, agency or instrumentality of any of them, unless the
applicable Borrower assigns its
9
right to payment of such Receivable to Agent pursuant to the Assignment of
Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C.
Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes
or ordinances;
(j) the goods giving rise to such Receivable have not
been delivered to and accepted by the Customer or the services giving rise to
such Receivable have not been performed by the applicable Borrower and accepted
by the Customer or the Receivable otherwise does not represent a final sale;
(k) the Receivable is subject to any offset,
deduction, defense, dispute, or counterclaim, the Customer is also a creditor or
supplier of a Borrower or the Receivable is contingent in any respect or for any
reason;
(l) the applicable Borrower has made any agreement
with any Customer for any deduction therefrom, except for discounts or
allowances made in the Ordinary Course of Business for prompt payment, all of
which discounts or allowances are reflected in the calculation of the face value
of each respective invoice related thereto;
(m) any return, rejection or repossession of the
merchandise has occurred or the rendition of services has been disputed but only
to the extent of the portion of the Receivable related to the returned, rejected
or repossessed merchandise or dispute;
(n) such Receivable is not payable to a Borrower; or
(o) such Receivable is not otherwise satisfactory to
Agent as determined in good faith by Agent in the exercise of its discretion in
a reasonable manner.
"ENVIRONMENTAL COMPLAINT" shall have the meaning set forth in
Section 4.19(d) hereof.
"ENVIRONMENTAL LAWS" shall mean all federal, state,
commonwealth and local environmental, land use, zoning, health, chemical use,
safety and sanitation laws, statutes, ordinances and codes relating to the
protection of the environment and/or governing the use, storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Substances and the rules, regulations, policies, guidelines,
interpretations, decisions, orders and directives of federal, state,
commonwealth and local governmental agencies and authorities with respect
thereto.
"EQUIPMENT" shall mean and include as to each Borrower all of
such Borrower's goods (other than Inventory) whether now owned or hereafter
acquired and wherever located including all equipment, machinery, apparatus,
motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories
and all replacements and substitutions therefor or accessions thereto.
"EQUITY INTERESTS" of any Person shall mean any and all
shares, rights to purchase, options, warrants, general, limited or limited
liability partnership interests, member interests, participation or other
equivalents of or interest in (regardless of how designated) equity of such
10
Person, whether voting or nonvoting, including common stock, preferred stock,
convertible securities or any other "equity security" (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under
the Exchange Act).
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"ERISA GROUP" shall mean, at any time, each Borrower and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control and all other entities which,
together with any Borrower, are treated as a single employer under Section 414
of the Internal Revenue Code.
"EURODOLLAR RATE" shall mean for any Eurodollar Rate Loan for
the then current Interest Period relating thereto the interest rate per annum
determined by Agent by dividing (the resulting quotient rounded upwards, if
necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest
determined by Agent in accordance with its usual procedures (which determination
shall be conclusive absent manifest error) to be the average of the London
interbank offered rates for U.S. Dollars quoted by the British Bankers'
Association as set forth on Moneyline Telerate (or appropriate successor or, if
British Banker's Association or its successor ceases to provide such quotes, a
comparable replacement determined by Agent) display page 3750 (or such other
display page on the Moneyline Telerate system as may replace display page 3750)
two (2) Business Days prior to the first day of such Interest Period for an
amount comparable to such Eurodollar Rate Loan and having a borrowing date and a
maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus
the Reserve Percentage. The Eurodollar Rate may also be expressed by the
following formula:
Average of London interbank offered rates quoted by BBA as shown on
Eurodollar Rate = Moneyline Telerate Service display
page 3750 or appropriate successor
----------------------------------------------------
1.00 - Reserve Percentage.
"EURODOLLAR RATE LOAN" shall mean an Advance at any time that
bears interest based on the Eurodollar Rate.
"EVENT OF DEFAULT" shall have the meaning set forth in Article
X hereof.
"EXCHANGE ACT" shall have the mean the Securities Exchange Act
of 1934, as amended.
"EXECUTIVE ORDER NO. 13224" shall mean the Executive Order No.
13224 on Terrorist Financing, effective September 24, 2001, as the same has
been, or shall hereafter be, renewed, extended, amended or replaced.
"FEDERAL FUNDS EFFECTIVE RATE" for any day shall mean the rate
per annum (based on a year of 360 days and actual days elapsed and rounded
upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New
York (or any successor) on such day as being the weighted average of the rates
on overnight federal funds transactions arranged by federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve
11
Bank (or any successor) in substantially the same manner as such Federal Reserve
Bank computes and announces the weighted average it refers to as the "Federal
Funds Effective Rate" as of the date of this Agreement; PROVIDED, if such
Federal Reserve Bank (or its successor) does not announce such rate on any day,
the "Federal Funds Effective Rate" for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced.
"FEDERAL FUNDS OPEN RATE" shall mean the rate per annum
determined by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the "open" rate
for federal funds transactions as of the opening of business for federal funds
transactions among members of the Federal Reserve System arranged by federal
funds brokers on such day, as quoted by Xxxxxx Guybutler, any successor entity
thereto, or any other broker selected by the Agent, as set forth on the
applicable Telerate display page; provided, however; that if such day is not a
Business Day, the Federal Funds Open Rate for such day shall be the "open" rate
on the immediately preceding Business Day, or if no such rate shall be quoted by
a Federal funds broker at such time, such other rate as determined by the Agent
in accordance with its usual procedures.
"FEE LETTER" shall mean the fee letter dated as of the date
hereof among Borrowers and PNC.
"FISCAL YEAR" shall mean the fiscal year of Borrowers.
"FIXED CHARGE COVERAGE RATIO" shall mean and include, with
respect to any fiscal period, the ratio of (a) EBITDA minus the sum of (x)
non-financed Capital Expenditures made during such period plus (y) cash taxes
paid during such period plus (z) permitted cash dividends paid on the Equity
Interests of any Borrower during such period to (b) all Senior Debt Payments
plus all Subordinated Debt Payments plus required payments under Capitalized
Lease Obligations made during such period.
"FOREIGN RECEIVABLES" shall mean all Receivables due from a
Customer outside the United States of America.
"FOREIGN SUBSIDIARY" of any Person, shall mean any Subsidiary
of such Person that is not organized or incorporated in the United States or any
State or territory thereof.
"FORMULA AMOUNT" shall have the meaning set forth in Section
2.1(a).
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"GENERAL INTANGIBLES" shall mean and include as to each
Borrower all of such Borrower's general intangibles, whether now owned or
hereafter acquired, including all payment intangibles, all choses in action,
causes of action, corporate or other business records, inventions, designs,
patents, patent applications, equipment formulations, manufacturing procedures,
quality control procedures, trademarks, trademark applications, service marks,
trade secrets, goodwill, copyrights, design rights, software, computer
information, source codes, codes, records and
12
updates, registrations, licenses, franchises, customer lists, tax refunds, tax
refund claims, computer programs, all claims under guaranties, security
interests or other security held by or granted to such Borrower to secure
payment of any of the Receivables by a Customer (other than to the extent
covered by Receivables) all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).
"GOVERNMENTAL ACTS" shall have the meaning set forth in
Section 2.16.
"GOVERNMENTAL BODY" shall mean any nation or government, any
state, commonwealth, territory or other political subdivision thereof or any
entity, authority, agency, division or department exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"GUARANTY" shall mean any guaranty of the obligations of
Borrowers executed by a guarantor in favor of Agent for its benefit and for the
ratable benefit of Lenders.
"HAZARDOUS DISCHARGE" shall have the meaning set forth in
Section 4.19(d) hereof.
"HAZARDOUS SUBSTANCE" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"HAZARDOUS WASTES" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
"HEDGE LIABILITIES" shall have the meaning provided in the
definition of "Lender-Provided Interest Rate Hedge".
"INDEBTEDNESS" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness of
such Person resulting from the acquisition by such Person of any assets subject
to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby,
whether or not actually so created, assumed or incurred.
13
"INELIGIBLE SECURITY" shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
"INTELLECTUAL PROPERTY" shall mean property constituting under
any Applicable Law a patent, patent application, copyright, trademark, service
xxxx, trade name, mask work, trade secret or license or other right to use any
of the foregoing.
"INTELLECTUAL PROPERTY CLAIM" shall mean the assertion by any
Person of a claim (whether asserted in writing, by action, suit or proceeding or
otherwise) that Borrower's ownership, use, marketing, sale or distribution of
any Inventory, Equipment, Intellectual Property or other property or asset is
violative of any ownership of or right to use any Intellectual Property of such
Person.
"INTERCREDITOR AGREEMENT" shall mean that certain
Intercreditor Agreement dated as of the date hereof between Motorola and Agent.
"INTEREST PERIOD" shall mean the period provided for any
Eurodollar Rate Loan pursuant to Section 2.2(b).
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations thereunder,
as from time to time in effect.
"INTEREST RATE HEDGE" shall mean an interest rate exchange,
collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar
agreements entered into by any Borrower or its Subsidiaries in order to provide
protection to, or minimize the impact upon, such Borrower, any Guarantor and/or
their respective Subsidiaries of increasing floating rates of interest
applicable to Indebtedness.
"INVENTORY" shall mean and include as to each Borrower all of
such Borrower's now owned or hereafter acquired goods, merchandise and other
personal property, wherever located, to be furnished under any consignment
arrangement, contract of service or held for sale or lease, all raw materials,
work in process, finished goods and materials and supplies of any kind, nature
or description which are or might be used or consumed in such Borrower's
business or used in selling or furnishing such goods, merchandise and other
personal property, and all documents of title or other documents representing
them.
"INVENTORY ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a)(y)(ii) hereof.
"INVESTOR AFFILIATE" shall mean each of Falcon Mezzanine
Partners, L.P., Prudential Capital Partners, L.P. and Prudential Capital
Partners Management Fund, L.P.
"IPO" shall mean an initial public offering of the capital
stock of Brightstar on a nationally recognized trading exchange.
14
"ISSUER" shall mean any Person who issues a Letter of Credit
and/or accepts a draft pursuant to the terms hereof.
"LENDER" and "LENDERS" shall have the meaning ascribed to such
term in the preamble to this Agreement and shall include each Person which
becomes a transferee, successor or assign of any Lender.
"LENDER-PROVIDED INTEREST RATE HEDGE" shall mean an Interest
Rate Hedge which is provided by any Lender or any direct or indirect Subsidiary
or Affiliate of any Lender and with respect to which the Agent confirms meets
the following requirements: such Interest Rate Hedge (i) is documented in a
standard International Swap Dealer Association Agreement, (ii) provides for the
method of calculating the reimbursable amount of the provider's credit exposure
in a reasonable and customary manner, and (iii) is entered into for hedging
(rather than speculative) purposes. The liabilities of any Borrower to the
provider of any Lender-Provided Interest Rate Hedge (the "HEDGE LIABILITIES")
shall be "Obligations" hereunder and otherwise treated as Obligations for
purposes of each of the Other Documents. The Liens securing the Hedge
Liabilities shall be PARI PASSU with the Liens securing all other Obligations
under this Agreement and the Other Documents.
"LETTER OF CREDIT FEES" shall have the meaning set forth in
Section 3.2.
"LETTER OF CREDIT BORROWING" shall have the meaning set forth
in Section 2.11(d).
"LETTER OF CREDIT SUBLIMIT" shall mean $20,000,000.
"LETTERS OF CREDIT" shall have the meaning set forth in
Section 2.8.
"LIEN" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including any conditional sale or
other title retention agreement, any lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction.
"LICENSE AGREEMENT" shall mean any agreement between any
Borrower and a Licensor pursuant to which such Borrower is authorized to use any
Intellectual Property in connection with the manufacturing, marketing, sale or
other distribution of any Inventory of such Borrower or otherwise in connection
with such Borrower's business operations.
"LICENSOR" shall mean any Person from whom any Borrower
obtains the right to use (whether on an exclusive or non-exclusive basis) any
Intellectual Property in connection with such Borrower's manufacture, marketing,
sale or other distribution of any Inventory or otherwise in connection with such
Borrower's business operations.
15
"LICENSOR/AGENT AGREEMENT" shall mean an agreement between
Agent and a Licensor, in form and content satisfactory to Agent, by which Agent
is given the unqualified right, vis-a-vis such Licensor, to enforce Agent's
Liens with respect to and to dispose of any Borrower's Inventory with the
benefit of any Intellectual Property applicable thereto, irrespective of such
Borrower's default under any License Agreement with such Licensor.
"LIEN WAIVER AGREEMENT" shall mean an agreement which is
executed in favor of Agent by a Person who owns or occupies premises at which
any Collateral may be located from time to time and by which such Person shall
waive any Lien that such Person may ever have with respect to any of the
Collateral and shall authorize Agent from time to time to enter upon the
premises to inspect or remove the Collateral from such premises or to use such
premises to store or dispose of such Inventory.
"MARCH FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 5.5(a) hereof.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on (a) the condition (financial or otherwise), results of operations, assets,
business, properties or prospects of any Borrower, (b) any Borrower's ability to
duly and punctually pay or perform the Obligations in accordance with the terms
thereof, (c) the value of the Collateral, or Agent's Liens on the Collateral or
the priority of any such Lien or (d) the practical realization of the benefits
of Agent's and each Lender's rights and remedies under this Agreement and the
Other Documents.
"MAXIMUM FACE AMOUNT" shall mean with respect to any Letter of
Credit, the face amount of such Letter of Credit including all automatic
increases provided for in such Letter of Credit, whether or not any such
automatic increase has become effective.
"MAXIMUM INVENTORY SUBLIMIT" shall mean an amount equal to
$35,000,000, PROVIDED, HOWEVER, that this amount may be permanently increased to
$40,000,000 at the discretion of Required Lenders based upon annual projections
delivered by Borrowers to Agent, which projections are in form and substance
satisfactory to Required Lenders.
"MAXIMUM REVOLVING ADVANCE AMOUNT" shall mean $70,000,000.
"MAXIMUM UNDRAWN AMOUNT" shall mean with respect to any
outstanding Letter of Credit, the amount of such Letter of Credit that is or may
become available to be drawn, including all automatic increases provided for in
such Letter of Credit, whether or not any such automatic increase has become
effective.
"MEXICAN DEBT INFUSION PROJECT" shall mean the project by
which Ernst & Young is assisting Brightstar with the introduction of
intercompany leverage in order to minimize its worldwide effective tax rate.
Intercompany debt will be infused into Brightstar Mexico's operations through a
holding company structure that will allow planning opportunities for
Brightstar's worldwide operations in the future. The holding company structure
will be implemented through a newly created U.S. corporation which will be
converted into a limited liability company that will then migrate its tax
residence to Switzerland. Ultimately, Brightstar
16
Mexico's operations will incur an intercompany debt obligation that will
generate interest expense for Brightstar Mexico on an accrual basis with a
corresponding interest income inclusion in a jurisdiction having low or no
taxes.
"MOODY'S" shall mean Xxxxx'x Investors Service, Inc.
"MOTOROLA" shall mean Motorola, Inc., a Delaware corporation
and its successors and assigns.
"MOTOROLA DISTRIBUTION AGREEMENTS" shall mean, collectively,
(i) the Amended and Restated Distribution Agreement effective as of October 9,
2003 among Motorola and Brightstar and (ii) the United States Distribution
Agreement for Cellular Phones and Accessories dated October 1, 2003 by and
between Motorola and Brightstar US.
"MOTOROLA DOCUMENTS" shall mean the Motorola Distribution
Agreements, the Motorola Security Agreements and the Motorola Guaranties.
"MOTOROLA GUARANTIES" shall mean the (i) Amended and Restated
Unconditional Guaranty dated as of the date hereof by Brightstar in favor of
Motorola, (ii) Amended and Restated Unconditional Guaranty dated as of the date
hereof by Brightstar US in favor of Motorola, (iii) Unconditional Guaranty dated
as of the date hereof by the Foreign Subsidiaries in favor of Motorola, (iv)
Amended and Restated Personal Guaranty dated as of the date hereof by Xxxxx X.
Xxxxxxxx and Xxxxxx Xxxxxxxx in favor of Motorola, and (v) Amended and Restated
Personal Guaranty dated as of the date hereof by Xxxx X. Xxxxxx and Xxxxxxxx
Xxxxxx in favor of Motorola.
"MOTOROLA SECURITY AGREEMENTS" shall mean (i) the Amended and
Restated Security Agreement dated as of the date hereof, executed by Brightstar
in favor of Motorola, (ii) the Amended and Restated Security Agreement dated as
of the date hereof executed by Brightstar US in favor of Motorola, (iii) the
Security Agreement dated as of the date hereof executed by Brightstar PR in
favor of Motorola, (iv) Amended and Restated Stock Pledge and Security Agreement
dated as of the date hereof executed by Brightstar in favor of Motorola, (v)
Amended and Restated Stock Pledge and Security Agreement dated as of the date
hereof executed by Xxxx X. Xxxxxx and Xxxxx X. Xxxxxxxx in favor of Motorola,
and (vi) Amended and Restated Stock Pledge and Security Agreement dated as of
the date hereof executed by Xxxxxx Xxxxxx in favor of Motorola and (vii)
Security Agreement dated as of the date hereof by the Foreign Subsidiaries
(including Brightstar PR) in favor of Motorola.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as
defined in Sections 3(37) and 4001(a)(3) of ERISA.
"MULTIPLE EMPLOYER PLAN" shall mean a Plan which has two or
more contributing sponsors (including any Borrower or any member of the
Controlled Group) at least two of whom are not under common control, as such a
plan is described in Section 4023 and 4064 of ERISA.
"OBLIGATIONS" shall mean and include any and all loans,
advances, debts,
17
liabilities, obligations, covenants and duties owing by Borrowers to Lenders or
Agent or to any other direct or indirect Subsidiary or Affiliate of Agent or any
Lender of any kind or nature, present or future (including any interest accruing
thereon after maturity, or after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding relating
to any Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether or not evidenced by any note,
guaranty or other instrument, whether arising under any agreement, instrument or
document, (including this Agreement and the Other Documents) whether or not for
the payment of money, whether arising by reason of an extension of credit,
opening of a letter of credit, loan, equipment lease or guarantee, under any
interest or currency swap, future, option or other similar agreement, or in any
other manner, whether arising out of overdrafts or deposit or other accounts or
electronic funds transfers (whether through automated clearing houses or
otherwise) or out of the Agent's or any Lenders non-receipt of or inability to
collect funds or otherwise not being made whole in connection with depository
transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated, regardless of how
such indebtedness or liabilities arise or by what agreement or instrument they
may be evidenced or whether evidenced by any agreement or instrument, including,
but not limited to, any and all of any Borrower's Indebtedness and/or
liabilities under this Agreement, the Other Documents or under any other
agreement between Agent or Lenders and any Borrower and any amendments,
extensions, renewals or increases and all costs and expenses of Agent and any
Lender incurred in the documentation, negotiation, modification, enforcement,
collection or otherwise in connection with any of the foregoing, including but
not limited to reasonable attorneys' fees and expenses and all obligations of
any Borrower to Agent or Lenders to perform acts or refrain from taking any
action.
"ORDINARY COURSE OF BUSINESS" shall mean with respect to any
Borrower, the ordinary course of such Borrower's business as conducted on the
Closing Date.
"ORIGINAL OWNERS" shall mean, with respect to (a) Brightstar,
collectively, R. Xxxxxxx Xxxxxx, his spouse, children or other lineal
descendants (whether adoptive or biological) and any revocable or irrevocable
inter vivos trust or testamentary trust or the probate estate of any such
individual, so long as one or more of the foregoing individuals is the principal
beneficiary of such trust or probate estate and (b) with respect to Brightstar
US and Brightstar PR, Brightstar.
"OTHER DOCUMENTS" shall mean the Revolving Credit Note, the
Questionnaire, the Fee Letter, any Lender-Provided Interest Rate Hedge, the
Intercreditor Agreement and any and all other agreements, instruments and
documents, including guaranties, pledges, powers of attorney, consents, interest
or currency swap agreements or other similar agreements and all other writings
heretofore, now or hereafter executed by any Borrower and/or delivered to Agent
or any Lender in respect of the transactions contemplated by this Agreement.
"OUT-OF-FORMULA LOANS" shall have the meaning set forth in
Section 16.2(b).
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"PARENT" of any Person shall mean a corporation or other
entity owning, directly or indirectly at least 50% of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.
"PARTICIPANT" shall mean each Person who shall be granted the
right by any Lender to participate in any of the Advances and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender.
"PARTICIPATION ADVANCE" shall have the meaning set forth in
Section 2.11(d).
"PARTICIPATION COMMITMENT" shall mean each Lender's obligation
to buy a participation of the Letters of Credit issued hereunder.
"PAYMENT OFFICE" shall mean initially Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000; thereafter, such other office of
Agent, if any, which it may designate by notice to Borrowing Agent and to each
Lender to be the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any successor.
"PERMITTED ENCUMBRANCES" shall mean (a) Liens in favor of
Agent for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or
other governmental charges not delinquent or being contested in good faith and
by appropriate proceedings and with respect to which proper reserves have been
taken by Borrowers; provided, that, the Lien shall have no effect on the
priority of the Liens in favor of Agent or the value of the assets in which
Agent has such a Lien and a stay of enforcement of any such Lien shall be in
effect; (c) Liens disclosed in the financial statements referred to in Section
5.5, the existence of which Agent has consented to in writing; (d) deposits or
pledges to secure obligations under worker's compensation, social security or
similar laws, or under unemployment insurance; (e) deposits or pledges to secure
bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the Ordinary Course of Business; (f) Liens arising by
virtue of the rendition, entry or issuance against any Borrower or any
Subsidiary, or any property of any Borrower or any Subsidiary, of any judgment,
writ, order, or decree for so long as each such Lien (a) is in existence for
less than 20 consecutive days after it first arises or is being Properly
Contested and (b) is at all times junior in priority to any Liens in favor of
Agent; (g) mechanics', workers', materialmen's or other like Liens arising in
the Ordinary Course of Business with respect to obligations which are not due or
which are being contested in good faith by the applicable Borrower; (h) Liens
placed upon fixed assets hereafter acquired to secure a portion of the purchase
price thereof, provided that (x) any such lien shall not encumber any other
property of the Borrowers and (y) the aggregate amount of Indebtedness secured
by such Liens incurred as a result of such purchases during any Fiscal Year
shall not exceed the amount provided for in Section 7.6; (i) Liens in favor of
Motorola in the Collateral which are subordinated to the Liens in favor of Agent
pursuant to the terms of the Intercreditor Agreement; and (j) Liens disclosed on
Schedule 1.2.
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"PERSON" shall mean any individual, sole proprietorship,
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization, association, limited liability company, limited
liability partnership, institution, public benefit corporation, joint venture,
entity or Governmental Body (whether federal, state, county, city, municipal or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"PLAN" shall mean at any time any employee pension benefit
plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the Controlled Group for employees of any member of the Controlled
Group; or (ii) has at any time within the preceding five years been maintained
by any entity which was at such time a member of the Controlled Group for
employees of any entity which was at such time a member of the Controlled Group.
"PNC" shall have the meaning set forth in the preamble to this
Agreement and shall extend to all of its successors and assigns.
"PNCBC" shall mean PNC Business Credit.
"PR OBLIGATIONS" shall mean and include any and all
"Obligations" of Brightstar PR.
"PROJECTIONS" shall have the meaning set forth in Section
5.5(b) hereof.
"PROPERLY CONTESTED" shall mean, in the case of any
Indebtedness of any Person (including any taxes) that is not paid as and when
due or payable by reason of such Person's bona fide dispute concerning its
liability to pay same or concerning the amount thereof, (i) such Indebtedness is
being properly contested in good faith by appropriate proceedings promptly
instituted and diligently conducted; (ii) such Person has established
appropriate reserves as shall be required in conformity with GAAP; (iii) the
non-payment of such Indebtedness will not have a Material Adverse Effect and
will not result in the forfeiture of any assets of such Person; (iv) no Lien is
imposed upon any of such Person's assets with respect to such Indebtedness
unless such Lien is at all times junior and subordinate in priority to the Liens
in favor of the Agent (except only with respect to property taxes that have
priority as a matter of applicable state law) and enforcement of such Lien is
stayed during the period prior to the final resolution or disposition of such
dispute; (v) if such Indebtedness results from, or is determined by the entry,
rendition or issuance against a Person or any of its assets of a judgment, writ,
order or decree, enforcement of such judgment, writ, order or decree is stayed
pending a timely appeal or other judicial review; and (vi) if such contest is
abandoned, settled or determined adversely (in whole or in part) to such Person,
such Person forthwith pays such Indebtedness and all penalties, interest and
other amounts due in connection therewith.
"PURCHASE AGREEMENT" shall mean the Purchase Agreement dated
as of December 29, 2003 among Brightstar, the guarantors named therein and
Subordinated Lender, as amended pursuant to an amendment dated as of the date
hereof.
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"PURCHASED PREFERRED STOCK" shall have the meaning set forth
in the Subordinated Loan Documentation as in effect on the date hereof.
"PURCHASING LENDER" shall have the meaning set forth in
Section 16.3(c) hereof.
"QUESTIONNAIRE" shall mean the Documentation Information
Questionnaire and the responses thereto provided by Borrowers and delivered to
Agent.
"RCRA" shall mean the Resource Conservation and Recovery Act,
42 U.S.C.ss.ss.6901 et seq., as same may be amended from time to time.
"REAL PROPERTY" shall mean all of each Borrower's right, title
and interest in and to the owned and leased premises identified on Schedule 4.19
hereto.
"RECEIVABLES" shall mean and include, as to each Borrower, all
of such Borrower's accounts, contract rights, instruments (including those
evidencing indebtedness owed to Borrowers by their Affiliates), documents,
chattel paper (including electronic chattel paper), general intangibles relating
to accounts, drafts and acceptances, credit card receivables and all other forms
of obligations owing to such Borrower arising out of or in connection with the
sale or lease of Inventory or the rendition of services, all supporting
obligations, guarantees and other security therefor, whether secured or
unsecured, now existing or hereafter created, and whether or not specifically
sold or assigned to Agent hereunder.
"RECEIVABLES ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a)(y)(i) hereof.
"REIMBURSEMENT OBLIGATION" shall have the meaning set forth in
Section 2.11(b)hereof.
"RELEASE" shall have the meaning set forth in Section
5.7(c)(i) hereof.
"REPORTABLE EVENT" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder.
"REQUIRED LENDERS" shall mean Lenders holding at least sixty
six and two thirds percent (66.67%) of the Advances and, if no Advances are
outstanding, shall mean Lenders holding at least sixty six and two thirds
percent (66.67%) of the Commitment Percentages; PROVIDED, HOWEVER, if there are
fewer than three (3) Lenders, Required Lenders shall mean all Lenders.
"RESERVE PERCENTAGE" shall mean as of any day the maximum
percentage in effect on such day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
"Eurocurrency Liabilities".
21
"REVOLVING ADVANCES" shall mean Advances made other than
Letters of Credit.
"REVOLVING CREDIT NOTE" shall mean, collectively, the
promissory notes referred to in Section 2.1(a) hereof.
"REVOLVING INTEREST RATE" shall mean an interest rate per
annum equal to (a) the Alternate Base Rate with respect to Domestic Rate Loans
and (b) the sum of the Eurodollar Rate plus the Applicable Margin with respect
to Eurodollar Rate Loans.
"S&P" shall mean Standard & Poors Ratings Group.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"SECTION 20 SUBSIDIARY" shall mean the Subsidiary of the bank
holding company controlling PNC, which Subsidiary has been granted authority by
the Federal Reserve Board to underwrite and deal in certain Ineligible
Securities.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SENIOR DEBT PAYMENTS" shall mean and include all cash
actually expended by Borrowers to make (a) interest payments on any Advances
hereunder, plus (b) payments for all fees, commissions and charges set forth
herein and with respect to any Advances, plus (c) capitalized lease payments,
plus (d) payments with respect to any other Indebtedness for borrowed money
other than Subordinated Debt Payments.
"SETTLEMENT DATE" shall mean the Closing Date and thereafter
Wednesday or Thursday of each week or more frequently if Agent deems appropriate
unless such day is not a Business Day in which case it shall be the next
succeeding Business Day.
"SUBORDINATED DEBT PAYMENTS" shall mean and include all cash
actually expended to make payments of principal and interest on the Subordinated
Note.
"SUBORDINATED LENDER" shall mean, collectively, the
"purchasers" under the Subordinated Loan Documentation.
"SUBORDINATED LOAN" shall mean the loan evidenced by the
Subordinated Loan Documentation.
"SUBORDINATED LOAN DOCUMENTATION" shall mean the Purchase
Agreement together with the Subordinated Note and all other documents,
instruments, security agreements and other agreements executed in connection
therewith.
"SUBORDINATED NOTE" shall mean the subordinated promissory
notes issued pursuant to the Purchase Agreement.
22
"SUBSIDIARY" of any Person shall mean a corporation or other
entity of whose Equity Interests having ordinary voting power (other than Equity
Interests having such power only by reason of the happening of a contingency) to
elect a majority of the directors of such corporation, or other Persons
performing similar functions for such entity, are owned, directly or indirectly,
by such Person.
"TERM" shall have the meaning set forth in Section 13.1
hereof.
"TERMINATION EVENT" shall mean (i) a Reportable Event with
respect to any Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower
or any member of the Controlled Group from a Plan or Multiemployer Plan during a
plan year in which such entity was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (v) any event or condition (a) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of any Borrower or any member of the Controlled Group
from a Multiemployer Plan.
"TOXIC SUBSTANCE" shall mean and include any material present
on the Real Property or the Leasehold Interests which has been shown to have
significant adverse effect on human health or which is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C. xx.xx. 2601 et seq.,
applicable state law, or any other applicable Federal or state laws now in force
or hereafter enacted relating to toxic substances. "Toxic Substance" includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.
"TRADE RESERVE" shall mean a reserve established by Agent from
time to time against availability under Section 2.1(a) in an amount equal to the
aggregate amount of trade credit of Borrowers which is more than sixty (60) days
past due.
"TRADING WITH THE ENEMY ACT" shall mean the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) and any enabling legislation or executive order
relating thereto.
"TRANSFEREE" shall have the meaning set forth in Section
16.3(c) hereof.
"UNDRAWN AVAILABILITY" at a particular date shall mean an
amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum
Revolving Advance Amount, minus (b) the sum of (i) the outstanding amount of
Advances plus (ii) all amounts due and owing to Borrowers' trade creditors (x)
which are outstanding more than sixty (60) days past the stated due date
thereof, (y) the payment of which has not otherwise been extended on formal
terms or (z) where an agreement has been entered into with stipulated terms and
conditions, plus (iii) fees and expenses for which Borrowers are liable but
which have not been paid or charged to Borrowers' Account.
23
"UNIFORM COMMERCIAL CODE" shall have the meaning set forth in
Section 1.3 hereof.
"USA PATRIOT ACT" shall mean the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall
hereafter be, renewed, extended, amended or replaced.
"US BORROWERS" shall mean, jointly and severally, Brightstar
and Brightstar US.
"WEEK" shall mean the time period commencing with the opening
of business on a Wednesday and ending on the end of business the following
Tuesday.
1.3. UNIFORM COMMERCIAL CODE TERMS. All terms used herein and defined
in the Uniform Commercial Code as adopted in the State of New York from time to
time (the "UNIFORM COMMERCIAL CODE") shall have the meaning given therein unless
otherwise defined herein. To the extent the definition of any category or type
of Collateral is expanded by any amendment, modification or revision to the
Uniform Commercial Code, such expanded definition will apply automatically as of
the date of such amendment, modification or revision.
1.4. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any instruments or agreements to which Agent is a party, including
references to any of the Other Documents, shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof. All references herein to the time of day shall mean the time in New
York, New York. Unless otherwise provided, all financial calculations shall be
performed with Inventory valued on a first-in, first-out basis. Whenever the
words "including" or "include" shall be used, such words shall be understood to
mean "including, without limitation" or "include, without limitation". A Default
or Event of Default shall be deemed to exist at all times during the period
commencing on the date that such Default or Event of Default occurs to the date
on which such Default or Event of Default is waived in writing pursuant to this
Agreement or, in the case of a Default, is cured within any period of cure
expressly provided for in this Agreement; and an Event of Default shall
"continue" or be "continuing" until such Event of Default has been waived in
writing by the Required Lenders. Any Lien referred to in this Agreement or any
of the Other Documents as having been created in favor of Agent, any agreement
entered into by Agent pursuant to this Agreement or any of the Other Documents,
any payment made by or to or funds received by Agent pursuant to or as
contemplated by this Agreement or any of the Other Documents, or any act taken
or omitted to be taken by Agent, shall, unless otherwise expressly provided, be
created, entered into, made or received, or taken or omitted, for the benefit or
account of Agent and Lenders. Wherever the phrase "to the best of Borrowers'
knowledge" or words of similar import relating to the knowledge or the awareness
of any Borrower are used in this Agreement or Other Documents, such phrase shall
mean and refer
24
to (i) the actual knowledge of a senior officer of any Borrower or (ii) the
knowledge that a senior officer would have obtained if he had engaged in good
faith and diligent performance of his duties, including the making of such
reasonably specific inquiries as may be necessary of the employees or agents of
such Borrower and a good faith attempt to ascertain the existence or accuracy of
the matter to which such phrase relates. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or otherwise within the limitations of, another covenant shall not avoid the
occurrence of a default if such action is taken or condition exists. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will
not affect the incorrectness of a breach of a representation or warranty
hereunder.
II. ADVANCES, PAYMENTS.
2.1. (a) REVOLVING ADVANCES. Subject to the terms and conditions set
forth in this Agreement including Section 2.1(b), each Lender, severally and not
jointly, will make Revolving Advances to US Borrowers in aggregate amounts
outstanding at any time equal to such Lender's Commitment Percentage of the
lesser of (x) the Maximum Revolving Advance Amount less the aggregate Maximum
Undrawn Amount of outstanding Letters of Credit less the aggregate outstanding
Revolving Advances made to Brightstar PR or (y) an amount equal to the sum of:
(i) the sum of (a) up to 85%, subject to the provisions of
Section 2.1(b) hereof ("RECEIVABLES ADVANCE RATE"), of Eligible
Receivables of US Borrowers, plus (b) up to the lesser of (x) up to the
Receivables Advance Rate of Eligible Foreign Receivables of US
Borrowers and (y) $10,000,000, plus (c) up to the lesser of (x) up to
the Receivables Advance Rate of Eligible Insured Foreign Receivables of
US Borrowers and (y) $10,000,000, plus
(ii) up to the lesser of (A) 65%, subject to the provisions of
Section 2.1(b) hereof, of the value of the Eligible Inventory, (B) 85%
of the appraised net orderly liquidation value of Eligible Inventory
(as evidenced by an Inventory appraisal satisfactory to Agent in its
sole discretion exercised in good faith) or (C) the Maximum Inventory
Sublimit in the aggregate at any one time ("INVENTORY ADVANCE RATE" and
together with the Receivables Advance Rate, collectively, the "ADVANCE
RATES"), minus
(iii) the aggregate Maximum Undrawn Amount of outstanding
Letters of Credit, minus
(iv) the outstanding Revolving Advances made to Brightstar PR,
minus
(v) such reserves as Agent may reasonably deem proper and
necessary from time to time, including, without limitation, the Trade
Reserve.
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The amount derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii)
minus (y) Section 2.1 (a)(y)(v) at any time and from time to time shall be
referred to as the "FORMULA AMOUNT". The Revolving Advances shall be evidenced
by one or more secured promissory notes (collectively, the "REVOLVING CREDIT
NOTE") substantially in the form attached hereto as EXHIBIT 2.1(A).
(b) DISCRETIONARY RIGHTS. The Advance Rates may be increased
or decreased by Agent at any time and from time to time in the exercise of its
reasonable business judgment exercised in good faith. Each Borrower consents to
any such increases or decreases and acknowledges that decreasing the Advance
Rates or increasing or imposing reserves may limit or restrict Advances
requested by Borrowing Agent. Agent shall give Borrowing Agent thirty (30) days
prior written notice of its intention to decrease the Advance Rates. The rights
of Agent under this subsection are subject to the provisions of Section 16.2(b).
(c) PR ADVANCES. Each Lender, severally and not jointly, will
make Revolving Advances to Brightstar PR in an aggregate amount outstanding at
any time not greater than such Lender's Commitment Percentage of the lesser of
(x) Brightstar PR's Maximum Revolving Amount or (y) Brightstar PR's Borrowing
Base.
2.2. PROCEDURE FOR REVOLVING ADVANCES BORROWING.
(a) Borrowing Agent on behalf of any Borrower may notify Agent
prior to 10:00 a.m. on a Business Day of a Borrower's request to incur, on that
day, a Revolving Advance hereunder. Should any amount required to be paid as
interest hereunder, or as fees or other charges under this Agreement or any
other agreement with Agent or Lenders, or with respect to any other Obligation,
become due, same shall be deemed a request for a Revolving Advance as of the
date such payment is due, in the amount required to pay in full such interest,
fee, charge or Obligation under this Agreement or any other agreement with Agent
or Lenders, and such request shall be irrevocable.
(b) Notwithstanding the provisions of subsection (a) above, in
the event any Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent
shall give Agent at least three (3) Business Days' prior written notice on or
before 10:00 a.m., specifying (i) the date of the proposed borrowing (which
shall be a Business Day), (ii) the type of borrowing and the amount on the date
of such Advance to be borrowed, which amount shall be an integral multiple of
$1,000,000 and increments of $500,000 thereafter, and (iii) the duration of the
first Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall
be for one, two or three months; provided, if an Interest Period would end on a
day that is not a Business Day, it shall end on the next succeeding Business Day
unless such day falls in the next succeeding calendar month in which case the
Interest Period shall end on the next preceding Business Day. No Eurodollar Rate
Loan shall be made available to any Borrower during the continuance of a Default
or an Event of Default. After giving effect to each requested Eurodollar Rate
Loan, including those which are converted from a Domestic Rate Loan under
Section 2.2(d), there shall not be outstanding more than five (5) Eurodollar
Rate Loans, in the aggregate.
26
(c) Each Interest Period of a Eurodollar Rate Loan shall
commence on the date such Eurodollar Rate Loan is made and shall end on such
date as Borrowing Agent may elect as set forth in subsection (b)(iii) above
provided that the exact length of each Interest Period shall be determined in
accordance with the practice of the interbank market for offshore Dollar
deposits and no Interest Period shall end after the last day of the Term.
Borrowing Agent shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(d), as the case may be. Borrowing Agent shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If Agent does
not receive timely notice of the Interest Period elected by Borrowing Agent,
Borrowers shall be deemed to have elected to convert to a Domestic Rate Loan
subject to Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and
be continuing, any Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any
Business Day with respect to Domestic Rate Loans, convert any such loan into a
loan of another type in the same aggregate principal amount provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business Day
of the then current Interest Period applicable to such Eurodollar Rate Loan. If
a Borrower desires to convert a loan, Borrowing Agent shall give Agent not less
than three (3) Business Days' prior written notice on or before 10:00 a.m. to
convert from a Domestic Rate Loan to a Eurodollar Rate Loan or one (1) Business
Day's prior written notice to convert from a Eurodollar Rate Loan to a Domestic
Rate Loan, specifying the date of such conversion, the loans to be converted and
if the conversion is from a Domestic Rate Loan to any other type of loan, the
duration of the first Interest Period therefor.
(e) At its option and upon three (3) Business Days' prior
written notice on or before 10:00 a.m., any Borrower may prepay the Eurodollar
Rate Loans in whole at any time or in part from time to time with accrued
interest on the principal being prepaid to the date of such repayment. Such
Borrower shall specify the date of prepayment of Advances which are Eurodollar
Rate Loans and the amount of such prepayment. In the event that any prepayment
of a Eurodollar Rate Loan is required or permitted on a date other than the last
Business Day of the then current Interest Period with respect thereto, such
Borrower shall indemnify Agent and Lenders therefor in accordance with Section
2.2(f) hereof.
(f) Each Borrower shall indemnify Agent and Lenders and hold
Agent and Lenders harmless from and against any and all losses or expenses that
Agent and Lenders may sustain or incur as a consequence of any prepayment,
conversion of or any default by any Borrower in the payment of the principal of
or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a
borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan
after notice thereof has been given, including, but not limited to, any interest
payable by Agent or Lenders to lenders of funds obtained by it in order to make
or maintain its Eurodollar Rate Loans hereunder. A certificate as to any
additional amounts payable pursuant to
27
the foregoing sentence submitted by Agent or any Lender to Borrowing Agent shall
be conclusive absent manifest error.
(g) Notwithstanding any other provision hereof, if any
applicable law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain
its Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate
Loans hereunder shall forthwith be cancelled and Borrowers shall, if any
affected Eurodollar Rate Loans are then outstanding, promptly upon request from
Agent, either pay all such affected Eurodollar Rate Loans or convert such
affected Eurodollar Rate Loans into loans of another type. If any such payment
or conversion of any Eurodollar Rate Loan is made on a day that is not the last
day of the Interest Period applicable to such Eurodollar Rate Loan, Borrowers
shall pay Agent, upon Agent's request, such amount or amounts as may be
necessary to compensate Lenders for any loss or expense sustained or incurred by
Lenders in respect of such Eurodollar Rate Loan as a result of such payment or
conversion, including (but not limited to) any interest or other amounts payable
by Lenders to lenders of funds obtained by Lenders in order to make or maintain
such Eurodollar Rate Loan. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall
be conclusive absent manifest error.
2.3. DISBURSEMENT OF ADVANCE PROCEEDS. All Advances shall be disbursed
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrowers to Agent or Lenders,
shall be charged to Borrowers' Account on Agent's books. During the Term,
Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Advance requested by Borrowing Agent on behalf of any
Borrower or deemed to have been requested by any Borrower under Section 2.2(a)
hereof shall, with respect to requested Revolving Advances to the extent Lenders
make such Revolving Advances, be made available to the applicable Borrower on
the day so requested by way of credit to such Borrower's operating account at
PNC, or such other bank as Borrowing Agent may designate following notification
to Agent, in immediately available federal funds or other immediately available
funds or, with respect to Revolving Advances deemed to have been requested by
any Borrower, be disbursed to Agent to be applied to the outstanding Obligations
giving rise to such deemed request.
2.4. MAXIMUM ADVANCES. The aggregate balance of Advances outstanding at
any time shall not exceed the lesser of (a) the Maximum Revolving Advance Amount
or (b) the Formula Amount, in each case less the aggregate Maximum Undrawn
Amount of Letters of Credit less the aggregate outstanding Revolving Advances
made to Brightstar PR.
2.5. REPAYMENT OF ADVANCES.
(a) The Advances shall be due and payable in full on the last
day of the Term subject to earlier prepayment as herein provided.
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(b) Each Borrower recognizes that the amounts evidenced by
checks, notes, drafts or any other items of payment relating to and/or proceeds
of Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrowers' Account as
of the Business Day on which Agent receives those items of payment, each
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by Agent on account of the Obligations one
(1) Business Day after (i) the Business Day Agent receives such payments via
wire transfer or electronic depository check or (ii) in the case of payments
received by Agent in any other form, the Business Day such payment constitutes
good funds in Agent's account. Agent is not, however, required to credit
Borrowers' Account for the amount of any item of payment which is unsatisfactory
to Agent and Agent may charge Borrowers' Account for the amount of any item of
payment which is returned to Agent unpaid.
(c) All payments of principal, interest and other amounts
payable hereunder, or under any of the Other Documents shall be made to Agent at
the Payment Office not later than 1:00 P.M. (New York time) on the due date
therefor in lawful money of the United States of America in federal funds or
other funds immediately available to Agent. Agent shall have the right to
effectuate payment on any and all Obligations due and owing hereunder by
charging Borrowers' Account or by making Advances as provided in Section 2.2
hereof.
(d) Borrowers shall pay principal, interest, and all other
amounts payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.6. REPAYMENT OF EXCESS ADVANCES. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.7. STATEMENT OF ACCOUNT. Agent shall maintain, in accordance with its
customary procedures, a loan account ("BORROWERS' ACCOUNT") in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; provided,
however, the failure by Agent to record the date and amount of any Advance shall
not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrowing Agent a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Agent and Borrowers during such month. The monthly statements shall be deemed
correct and binding upon Borrowers in the absence of manifest error and shall
constitute an account stated between Lenders and Borrowers unless Agent receives
a written statement of Borrowers' specific exceptions thereto within thirty (30)
days after such statement is received by Borrowing Agent. The records of Agent
with respect to the loan account shall be conclusive evidence absent manifest
error of the amounts of Advances and other charges thereto and of payments
applicable thereto.
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2.8. LETTERS OF CREDIT. Subject to the terms and conditions hereof,
Agent shall issue or cause the issuance of standby and/or trade Letters of
Credit ("LETTERS OF CREDIT") for the account of any US Borrower; provided,
however, that Agent will not be required to issue or cause to be issued any
Letters of Credit to the extent that the issuance thereof would then cause the
sum of (i) the outstanding Revolving Advances plus (ii) the Maximum Undrawn
Amount of outstanding Letters of Credit plus (iii) the aggregate outstanding
Revolving Advances made to Brightstar PR to exceed the lesser of (x) the Maximum
Revolving Advance Amount or (y) the Formula Amount. The Maximum Undrawn Amount
of outstanding Letters of Credit shall not exceed in the aggregate at any time
the Letter of Credit Sublimit. All disbursements or payments related to Letters
of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving
Advances and shall bear interest at the applicable Revolving Interest Rate for
Domestic Rate Loans; Letters of Credit that have not been drawn upon shall not
bear interest.
2.9. ISSUANCE OF LETTERS OF CREDIT.
(a) Borrowing Agent, on behalf of US Borrowers, may request
Agent upon five (5) days' prior written notice submitted on or before 10:00 a.m.
to issue or cause the issuance of a Letter of Credit by delivering to Agent, at
the Payment Office, Agent's form of Letter of Credit Application (the "LETTER OF
CREDIT APPLICATION") completed to the satisfaction of Agent; and, such other
certificates, documents and other papers and information as Agent may reasonably
request. Borrowing Agent, on behalf of US Borrowers, also has the right to give
instructions and make agreements with respect to any application, any applicable
letter of credit and security agreement, any applicable letter of credit
reimbursement agreement and/or any other applicable agreement, any letter of
credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any amendment, extension or renewal of any Letter
of Credit.
(b) Each Letter of Credit shall, among other things, (i)
provide for the payment of sight drafts, other written demands for payment, or
acceptances of usance drafts when presented for honor thereunder in accordance
with the terms thereof and when accompanied by the documents described therein
and (ii) have an expiry date not later than twenty-four (24) months after such
Letter of Credit's date of issuance and in no event later than the last day of
the Term. Each standby Letter of Credit shall be subject either to the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, and any amendments or revision thereof
adhered to by the Issuer ("UCP 500") or the International Standby Practices
(ISP98-International Chamber of Commerce Publication Number 590) ("ISP98
RULES"), as determined by Agent, and each trade Letter of Credit shall be
subject to UCP 500.
(c) Agent shall use its reasonable efforts to notify Lenders
of the request by Borrowing Agent for a Letter of Credit hereunder.
2.10. REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT. Borrowing Agent
shall authorize and direct any Issuer to name the applicable US Borrower as the
"Applicant" or "Account Party" of each Letter of Credit. If Agent is not the
Issuer of any Letter of Credit, Borrowing Agent shall authorize and direct the
Issuer to deliver to Agent all instruments, documents, and other writings
30
and property received by the Issuer pursuant to the Letter of Credit and to
accept and rely upon Agent's instructions and agreements with respect to all
matters arising in connection with the Letter of Credit or the application
therefor.
2.11. DISBURSEMENTS, REIMBURSEMENT.
(a) Immediately upon the issuance of each Letter of Credit,
each Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from Agent a participation in such Letter of Credit and each
drawing thereunder in an amount equal to such Lender's Commitment Percentage of
the Maximum Face Amount of such Letter of Credit and the amount of such drawing,
respectively.
(b) In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, Agent will promptly notify
Borrowing Agent. Provided that they shall have received such notice, the
Borrowers shall reimburse (such obligation to reimburse Agent shall sometimes be
referred to as a "REIMBURSEMENT OBLIGATION") Agent prior to 12:00 Noon, New York
time on each date that an amount is paid by Agent under any Letter of Credit
(each such date, a "DRAWING DATE") in an amount equal to the amount so paid by
Agent. In the event Borrowers fail to reimburse Agent for the full amount of any
drawing under any Letter of Credit by 12:00 Noon, New York time on the Drawing
Date, Agent will promptly notify each Lender thereof, and Borrowers shall be
deemed to have requested that a Domestic Rate Loan be made by the Lenders to be
disbursed on the Drawing Date under such Letter of Credit, subject to the amount
of the unutilized portion of the lesser of Maximum Revolving Advance Amount or
the Formula Amount and subject to Section 8.2. Any notice given by Agent
pursuant to this Section 2.11(b) may be oral if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
(c) Each Lender shall upon any notice pursuant to Section
2.11(b) make available to Agent an amount in immediately available funds equal
to its Commitment Percentage of the amount of the drawing, whereupon the
participating Lenders shall (subject to Section 2.11(d)) each be deemed to have
made a Domestic Rate Loan to Borrowers in that amount. If any Lender so notified
fails to make available to Agent the amount of such Lender's Commitment
Percentage of such amount by no later than 2:00 p.m., New York time on the
Drawing Date, then interest shall accrue on such Lender's obligation to make
such payment, from the Drawing Date to the date on which such Lender makes such
payment (i) at a rate per annum equal to the Federal Funds Rate during the first
three days following the Drawing Date and (ii) at a rate per annum equal to the
rate applicable to Domestic Rate Loans on and after the fourth day following the
Drawing Date. Agent will promptly give notice of the occurrence of the Drawing
Date, but failure of Agent to give any such notice on the Drawing Date or in
sufficient time to enable any Lender to effect such payment on such date shall
not relieve such Lender from its obligation under this Section 2.11(c), provided
that such Lender shall not be obligated to pay interest as provided in Section
2.11(c) (i) and (ii) until and commencing from the date of receipt of notice
from Agent of a drawing. Each Lender's Participation Commitment shall continue
until the last to occur of any of the following events: (A) Agent ceases to be
obligated to issue or cause to be issued Letters of Credit hereunder; (B) no
Letter of Credit issued or created hereunder remains outstanding and uncancelled
and (C) all Persons (other
31
than the applicable US Borrower) have been fully reimbursed for all payments
made under or relating to Letters of Credit.
(d) With respect to any unreimbursed drawing that is not
converted into a Domestic Rate Loan to US Borrowers in whole or in part as
contemplated by Section 2.11(b), because of Borrowers' failure to satisfy the
conditions set forth in Section 8.2 (other than any notice requirements) or for
any other reason, US Borrowers shall be deemed to have incurred from Agent a
borrowing (each a "LETTER OF CREDIT BORROWING") in the amount of such drawing.
Such Letter of Credit Borrowing shall be due and payable on demand (together
with interest) and shall bear interest at the rate per annum applicable to a
Domestic Rate Loan. Each Lender's payment to Agent pursuant to Section 2.11(c)
shall be deemed to be a payment in respect of its participation in such Letter
of Credit Borrowing and shall constitute a "Participation Advance" from such
Lender in satisfaction of its Participation Commitment under this Section 2.11.
(e) Each Lender's Participation Commitment shall continue
until the last to occur of any of the following events: (x) Agent ceases to be
obligated to issue or cause to be issued Letters of Credit hereunder; (y) no
Letter of Credit issued or created hereunder remains outstanding and uncancelled
and (z) all Persons (other than the applicable Borrower) have been fully
reimbursed for all payments made under or relating to Letters of Credit.
2.12. REPAYMENT OF PARTICIPATION ADVANCES.
(a) Upon (and only upon) receipt by Agent for its account of
immediately available funds from Borrowers (i) in reimbursement of any payment
made by the Agent under the Letter of Credit with respect to which any Lender
has made a Participation Advance to Agent, or (ii) in payment of interest on
such a payment made by Agent under such a Letter of Credit, Agent will pay to
each Lender, in the same funds as those received by Agent, the amount of such
Lender's Commitment Percentage of such funds, except Agent shall retain the
amount of the Commitment Percentage of such funds of any Lender that did not
make a Participation Advance in respect of such payment by Agent.
(b) If Agent is required at any time to return to any
Borrower, or to a trustee, receiver, liquidator, custodian, or any official in
any insolvency proceeding, any portion of the payments made by Borrowers to
Agent pursuant to Section 2.12(a) in reimbursement of a payment made under the
Letter of Credit or interest or fee thereon, each Lender shall, on demand of
Agent, forthwith return to Agent the amount of its Commitment Percentage of any
amounts so returned by Agent plus interest at the Federal Funds Effective Rate.
2.13. DOCUMENTATION. Each US Borrower agrees to be bound by the terms
of the Letter of Credit Application and by Agent's interpretations of any Letter
of Credit issued for any US Borrower's account and Agent's written regulations
and customary practices relating to letters of credit, though Agent's
interpretations may be different from such US Borrower's own. In the event of a
conflict between the Letter of Credit Application and this Agreement, this
Agreement shall govern. It is understood and agreed that, except in the case of
gross negligence or willful misconduct, Agent shall not be liable for any error,
negligence and/or mistakes, whether of
32
omission or commission, in following the Borrowing Agent's and any US Borrower's
instructions or those contained in the Letters of Credit or any modifications,
amendments or supplements thereto.
2.14. DETERMINATION TO HONOR DRAWING REQUEST. In determining whether to
honor any request for drawing under any Letter of Credit by the beneficiary
thereof, Agent shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit and that any other drawing condition appearing on the face of
such Letter of Credit has been satisfied in the manner so set forth.
2.15. NATURE OF PARTICIPATION AND REIMBURSEMENT OBLIGATIONS. Each
Lender's obligation in accordance with this Agreement to make the Revolving
Advances or Participation Advances as a result of a drawing under a Letter of
Credit, and the obligations of US Borrowers to reimburse Agent upon a draw under
a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with the terms of this Section 2.15 under
all circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other
right which such Lender may have against Agent, any Borrower or any other Person
for any reason whatsoever;
(ii) the failure of any US Borrower or any other Person to
comply, in connection with a Letter of Credit Borrowing, with the conditions set
forth in this Agreement for the making of a Revolving Advance, it being
acknowledged that such conditions are not required for the making of a Letter of
Credit Borrowing and the obligation of the Lenders to make Participation
Advances under Section 2.11;
(iii) any lack of validity or enforceability of any Letter of
Credit;
(iv) any claim of breach of warranty that might be made by any
US Borrower or any Lender against the beneficiary of a Letter of Credit, or the
existence of any claim, set-off, recoupment, counterclaim , crossclaim, defense
or other right which any US Borrower or any Lender may have at any time against
a beneficiary, any successor beneficiary or any transferee of any Letter of
Credit or the proceeds thereof (or any Persons for whom any such transferee may
be acting), Agent or any Lender or any other Person, whether in connection with
this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between any US Borrower or any
Subsidiaries of such US Borrower and the beneficiary for which any Letter of
Credit was procured);
(v) the lack of power or authority of any signer of (or any
defect in or forgery of any signature or endorsement on) or the form of or lack
of validity, sufficiency, accuracy, enforceability or genuineness of any draft,
demand, instrument, certificate or other document presented under or in
connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or
provisions of services relating to a Letter of Credit, in each case even if the
Agent or any of Agent's Affiliates has been notified thereof;
33
(vi) payment by Agent under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(vii) the solvency of, or any acts or omissions by, any
beneficiary of any Letter of Credit, or any other Person having a role in any
transaction or obligation relating to a Letter of Credit, or the existence,
nature, quality, quantity, condition, value or other characteristic of any
property or services relating to a Letter of Credit;
(viii) any failure by the Agent or any of Agent's Affiliates
to issue any Letter of Credit in the form requested by any US Borrower, unless
the Agent has received written notice from such US Borrower of such failure
within three Business Days after the Agent shall have furnished such US Borrower
a copy of such Letter of Credit and such error is material and no drawing has
been made thereon prior to receipt of such notice;
(ix) any Material Adverse Effect on any Borrower or any
Guarantor;
(x) any breach of this Agreement or any Other Document by any
party thereto;
(xi) the occurrence or continuance of an insolvency proceeding
with respect to any Borrower or any Guarantor;
(xii) the fact that a Default or Event of Default shall have
occurred and be continuing;
(xiii) the fact that the Term shall have expired or this
Agreement or the Obligations hereunder shall have been terminated; and
(xiv) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing.
2.16. INDEMNITY. In addition to amounts payable as provided in Section
16.5 hereof, each Borrower hereby agrees to protect, indemnify, pay and save
harmless the Agent and any of Agent's Affiliates that have issued a Letter of
Credit from and against any and all claims, demands, liabilities, damages,
taxes, penalties, interest, judgments, losses, costs, charges and expenses
(including reasonable fees, expenses and disbursements of counsel and allocated
costs of internal counsel) which the Agent or any of Agent's Affiliates may
incur or be subject to as a consequence, direct or indirect, of the issuance of
any Letter of Credit, other than as a result of (A) the gross negligence or
willful misconduct of the Agent as determined by a final judgment of a court of
competent jurisdiction or (b) the wrongful dishonor by the Agent or any of
Agent's Affiliates of a proper demand for payment made under any Letter of
Credit, except if such dishonor resulted from any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto Governmental
Body (all such acts or omissions herein called "Governmental Acts").
34
2.17. LIABILITY FOR ACTS AND OMISSIONS. As between Borrowers and Agent
and Lenders, each Borrower assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit by, the respective beneficiaries of such Letters
of Credit. In furtherance and not in limitation of the respective foregoing,
Agent shall not be responsible for: (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for an issuance of any such Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged (even if Agent shall have been
notified thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) the
failure of the beneficiary of any such Letter of Credit, or any other party to
which such Letter of Credit may be transferred, to comply fully with any
conditions required in order to draw upon such Letter of Credit or any other
claim of any Borrower against any beneficiary of such Letter of Credit, or any
such transferee, or any dispute between or among any Borrower and any
beneficiary of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of Agent, including any Governmental Acts, and
none of the above shall affect or impair, or prevent the vesting of, any of
Agent's rights or powers hereunder. Nothing in the preceding sentence shall
relieve Agent from liability for Agent's gross negligence or willful misconduct
in connection with actions or omissions described in such clauses (i) through
(viii) of such sentence. In no event shall Agent or Agent's Affiliates be liable
to any Borrower for any indirect, consequential, incidental, punitive, exemplary
or special damages or expenses (including without limitation attorneys' fees),
or for any damages resulting from any change in the value of any property
relating to a Letter of Credit.
Without limiting the generality of the foregoing, Agent and
each of its Affiliates (i) may rely on any oral or other communication believed
in good faith by Agent or such Affiliate to have been authorized or given by or
on behalf of the applicant for a Letter of Credit; (ii) may honor any
presentation if the documents presented appear on their face substantially to
comply with the terms and conditions of the relevant Letter of Credit; (iii) may
honor a previously dishonored presentation under a Letter of Credit, whether
such dishonor was pursuant to a court order, to settle or compromise any claim
of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to
the same extent as if such presentation had initially been honored, together
with any interest paid by Agent or its Affiliates; (iv) may honor any drawing
that is payable upon presentation of a statement advising negotiation or
payment, upon receipt of such statement (even if such statement indicates that a
draft or other document is being delivered separately), and shall not be liable
for any failure of any such draft or other document to arrive, or to conform in
any way with the relevant Letter of Credit; (v) may pay any paying or
negotiating bank claiming that it rightfully honored under the laws or
35
practices of the place where such bank is located; and (vi) may settle or adjust
any claim or demand made on Agent or its Affiliate in any way related to any
order issued at the applicant's request to an air carrier, a letter of guarantee
or of indemnity issued to a carrier or any similar document (each an "Order")
and honor any drawing in connection with any Letter of Credit that is the
subject of such Order, notwithstanding that any drafts or other documents
presented in connection with such Letter of Credit fail to conform in any way
with such Letter of Credit.
In furtherance and extension and not in limitation of the
specific provisions set forth above, any action taken or omitted by Agent under
or in connection with the Letters of Credit issued by it or any documents and
certificates delivered thereunder, if taken or omitted in good faith and without
gross negligence, shall not put Agent under any resulting liability to Borrowers
or any Lender.
2.18. ADDITIONAL PAYMENTS. Any sums expended by Agent or any Lender due
to any Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including any Borrower's obligations under
Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrowers'
Account as a Revolving Advance and added to the Obligations.
2.19. MANNER OF BORROWING AND PAYMENT.
(a) Each borrowing of Revolving Advances shall be advanced
according to the applicable Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrowers on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of Lenders. Except as expressly provided herein, all
payments (including prepayments) to be made by any Borrower on account of
principal, interest and fees shall be made without set off or counterclaim and
shall be made to Agent on behalf of the Lenders to the Payment Office, in each
case on or prior to 1:00 P.M., New York time, in Dollars and in immediately
available funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.19(a) and (b) hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by any Borrower on account of Revolving
Advances shall be applied first to those Revolving Advances advanced by Agent.
On or before 1:00 P.M., New York time, on each Settlement Date commencing with
the first Settlement Date following the Closing Date, Agent and Lenders shall
make certain payments as follows: (I) if the aggregate amount of new Revolving
Advances made by Agent during the preceding Week (if any) exceeds the aggregate
amount of repayments applied to outstanding Revolving Advances during such
preceding Week, then each Lender shall provide Agent with funds in an amount
equal to its applicable Commitment Percentage of the difference between (w) such
Revolving Advances and (x) such repayments and (II) if the aggregate amount of
repayments applied to outstanding Revolving Advances during such Week exceeds
the aggregate amount of new Revolving Advances made during such Week, then Agent
36
shall provide each Lender with funds in an amount equal to its applicable
Commitment Percentage of the difference between (y) such repayments and (z) such
Revolving Advances.
(ii) Each Lender shall be entitled to earn interest
at the applicable Revolving Interest Rate on outstanding Advances which it has
funded.
(iii) Promptly following each Settlement Date, Agent
shall submit to each Lender a certificate with respect to payments received and
Advances made during the Week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or Participant (a "BENEFITED LENDER") shall
at any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefited
Lender shall purchase for cash from the other Lenders a participation in such
portion of each such other Lender's Advances, or shall provide such other Lender
with the benefits of any such Collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including rights of
set-off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
(e) Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that such Lender will not make the amount
which would constitute its applicable Commitment Percentage of the Advances
available to Agent, Agent may (but shall not be obligated to) assume that such
Lender shall make such amount available to Agent on the next Settlement Date
and, in reliance upon such assumption, make available to Borrowers a
corresponding amount. Agent will promptly notify Borrowers of its receipt of any
such notice from a Lender. If such amount is made available to Agent on a date
after such next Settlement Date, such Lender shall pay to Agent on demand an
amount equal to the product of (i) the daily average Federal Funds Rate
(computed on the basis of a year of 360 days) during such period as quoted by
Agent, times (ii) such amount, times (iii) the number of days from and including
such Settlement Date to the date on which such amount becomes immediately
available to Agent. A certificate of Agent submitted to any Lender with respect
to any amounts owing under this paragraph (e) shall be conclusive, in the
absence of manifest error. If such amount is not in fact made available to Agent
by such Lender within three (3) Business Days after such Settlement Date, Agent
shall be entitled to recover such an amount, with interest thereon at the rate
per annum then applicable to such Revolving Advances hereunder, on demand from
Borrowers; provided, however, that Agent's right to such recovery shall not
prejudice or otherwise adversely affect Borrowers' rights (if any) against such
Lender.
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2.20. MANDATORY PREPAYMENTS. Subject to Section 4.3 hereof, when any
Borrower sells or otherwise disposes of any Collateral other than Inventory in
the Ordinary Course of Business, Borrowers shall repay the Advances in an amount
equal to the net proceeds of such sale (I.E., gross proceeds less the reasonable
costs of such sales or other dispositions), such repayments to be made promptly
but in no event more than one (1) Business Day following receipt of such net
proceeds, and until the date of payment, such proceeds shall be held in trust
for Agent. The foregoing shall not be deemed to be implied consent to any such
sale otherwise prohibited by the terms and conditions hereof. Such repayments
shall be applied to the Advances in such order as Agent may determine, subject
to Borrower's ability to reborrow Revolving Advances in accordance with the
terms hereof
2.21. USE OF PROCEEDS. (a) Borrowers shall apply the proceeds of
Advances to (i) on the Closing Date, (x) repay existing indebtedness owed to
General Electric Capital Corporation and Ocean Bank in full, (y) pay fees and
expenses relating to this transaction, and (z) make a dividend to each of
Xxxxxxx Xxxxxx and Xxxx Xxxxxxxx on the Closing Date in an aggregate amount not
to exceed $5,870,000 and (ii) provide for its working capital needs and
reimburse drawings under Letters of Credit.
(b) Without limiting the generality of Section 2.21(a) above,
neither the Borrowers nor any other Person which may in the future become party
to this Agreement or the Other Documents as a Borrower intends to use nor shall
they use any portion of the proceeds of the Advances, directly or indirectly,
for any purpose in violation of the Trading with the Enemy Act.
2.22. DEFAULTING LENDER.
(a) Notwithstanding anything to the contrary contained herein,
in the event any Lender (x) has refused (which refusal constitutes a breach by
such Lender of its obligations under this Agreement) to make available its
portion of any Advance or (y) notifies either Agent or Borrowing Agent that it
does not intend to make available its portion of any Advance (if the actual
refusal would constitute a breach by such Lender of its obligations under this
Agreement) (each, a "LENDER DEFAULT"), all rights and obligations hereunder of
such Lender (a "DEFAULTING LENDER") as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.22 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"NON-DEFAULTING LENDERS") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default nor shall any Non-Defaulting
Lender be obligated to find any Advances in excess of its Commitment Amount.
Amounts received in respect of principal of any type of Advances shall be
applied to reduce the applicable Advances of each Lender pro rata based on the
aggregate of the outstanding Advances of that type of all Lenders at the time of
such application; provided, that, such amount shall not be applied to any
Advances of a Defaulting Lender at any time when, and to the extent that, the
38
aggregate amount of Advances of any Non-Defaulting Lender exceeds such
Non-Defaulting Lender's Commitment Percentage of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the Other Documents. All amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition
of "Required Lenders", a Defaulting Lender shall be deemed not to be a Lender
and not to have Advances outstanding.
(d) Other than as expressly set forth in this Section 2.22,
the rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this Section 2.22 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to
the satisfaction of Agent the breach which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.
III. INTEREST AND FEES.
3.1. INTEREST. Interest on Advances shall be payable monthly in arrears
on the first day of each month with respect to Domestic Rate Loans and, with
respect to Eurodollar Rate Loans, at the end of each Interest Period. Interest
charges shall be computed on the actual principal amount of Advances outstanding
during the month at a rate per annum equal to with respect to Revolving
Advances, the applicable Revolving Interest Rate. Whenever, subsequent to the
date of this Agreement, the Alternate Base Rate is increased or decreased, the
applicable Revolving Interest Rate for Domestic Rate Loans shall be similarly
changed without notice or demand of any kind by an amount equal to the amount of
such change in the Alternate Base Rate during the time such change or changes
remain in effect. The Eurodollar Rate shall be adjusted with respect to
Eurodollar Rate Loans without notice or demand of any kind on the effective date
of any change in the Reserve Percentage as of such effective date. Upon and
after the occurrence of an Event of Default, and during the continuation
thereof, at the option of Agent or at the direction of Required Lenders, the
Obligations shall bear interest at the applicable Revolving Interest Rate plus
two (2%) percent per annum (the "DEFAULT RATE").
3.2. LETTER OF CREDIT FEES.
(a) Borrowers shall pay (x) to Agent, for the ratable benefit
of Lenders, fees for each Letter of Credit for the period from and excluding the
date of issuance of same to and including the date of expiration or termination,
equal to the average daily face amount of each outstanding Letter of Credit
multiplied by the then effective Applicable Margin, such fees to be
39
calculated on the basis of a 360-day year for the actual number of days elapsed
and to be payable quarterly in arrears on June 30, September 30, December 31 and
March 31 of each calendar year and on the last day of the Term, and (y) to the
Issuer, a fronting fee of one quarter of one percent (0.25%) per annum, together
with any and all administrative, issuance, amendment, payment and negotiation
charges with respect to Letters of Credit and all fees and expenses as agreed
upon by the Issuer and the Borrowing Agent in connection with any Letter of
Credit, including in connection with the opening, amendment or renewal of any
such Letter of Credit and any acceptances created thereunder and shall reimburse
Agent for any and all fees and expenses, if any, paid by Agent to the Issuer
(all of the foregoing fees, the "LETTER OF CREDIT AND ACCEPTANCE FEES"). All
such charges shall be deemed earned in full on the date when the same are due
and payable hereunder and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason. Any such charge in effect at the
time of a particular transaction shall be the charge for that transaction,
notwithstanding any subsequent change in the Issuer's prevailing charges for
that type of transaction. All Letter of Credit Fees and Acceptance Fees payable
hereunder shall be deemed earned in full on the date when the same are due and
payable hereunder and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason.
(b) On demand, Borrowers will cause cash to be deposited and
maintained in an account with Agent, as cash collateral, in an amount equal to
one hundred and five percent (105%) of the outstanding Letters of Credit, and
each Borrower hereby irrevocably authorizes Agent, in its discretion, on such
Borrower's behalf and in such Borrower's name, to open such an account and to
make and maintain deposits therein, or in an account opened by such Borrower, in
the amounts required to be made by such Borrower, out of the proceeds of
Receivables or other Collateral or out of any other funds of such Borrower
coming into any Lender's possession at any time. Agent will invest such cash
collateral (less applicable reserves) in such short-term money-market items as
to which Agent and such Borrower mutually agree and the net return on such
investments shall be credited to such account and constitute additional cash
collateral. No Borrower may withdraw amounts credited to any such account except
upon the occurrence of all of the following: payment and performance in full of
all Obligations, the termination of this Agreement and the expiration of all
Letters of Credit.
3.3. (a) FEE LETTER. Borrowers shall pay the amounts required to be
paid in the Fee Letter in the manner and at the times required by the Fee
Letter.
(b) FACILITY FEE. If, for any calendar quarter during the
Term, the average daily unpaid balance of the Revolving Advances and undrawn
amount of any outstanding Letters of Credit for each day of such calendar
quarter does not equal the Maximum Revolving Advance Amount, then Borrowers
shall pay to Agent for the ratable benefit of Lenders a fee at a rate equal to
the applicable rate set forth below corresponding to the Average Undrawn
Availability for such quarter on the amount by which the Maximum Revolving
Advance Amount exceeds such average daily unpaid balance. Such fee shall be
payable to Agent quarterly in arrears on June 30, September 30, December 31 and
March 31 of each calendar quarter.
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Level Average Undrawn Availability Unused Line Fee
----- ----------------------------- ---------------
1 $32,500,001 or more .50%
2 $25,000,001 to and including .375%
$32,500,000
3 $17,500,001 to and including .375%
$25,000,000
4 $10,000,001 to and including .25%
$17,500,000
5 $10,000,000 or less .25%
3.4. COMPUTATION OF INTEREST AND FEES. Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable Revolving Interest Rate for Domestic Rate Loans during such
extension.
3.5. MAXIMUM CHARGES. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrowers, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrowers and the provisions hereof
shall be deemed amended to provide for such permissible rate.
3.6. INCREASED COSTS. In the event that any applicable law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.6, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Other Document or change the
basis of taxation of payments to Agent or any Lender of principal, fees,
interest or any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the overall net income of Agent or any
Lender by the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Agent or any Lender, including pursuant to Regulation D of the Board
of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement or any
Other Document;
41
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrowers shall promptly pay Agent or such Lender, upon its demand,
such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the
Eurodollar Rate, as the case may be. Agent or such Lender shall certify the
amount of such additional cost or reduced amount to Borrowers, and such
certification shall be conclusive absent manifest error. Notwithstanding the
foregoing, no Borrower shall be required to compensate Agent or any Lender
pursuant to this section for any increased costs or reductions incurred more
than 180 days prior to the date Agent or such Lender notifies Borrowing Agent of
the events giving rise to such increased costs or reductions and of Agent's or
such Lender's intention to claim compensation therefor, provided further that,
if the events giving rise to such increased costs or reductions are retroactive,
then the 180 day period referred to above shall be extended to include the
period of retroactive effect thereof.
3.7. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. In the
event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the
Eurodollar Rate applicable pursuant to Section 2.2 hereof for any Interest
Period; or
(b) Dollar deposits in the relevant amount and for the
relevant maturity are not available in the London interbank Eurodollar market,
with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate
Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate
Loan,
then Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be cancelled or made as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans
shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall
notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business
Days prior to the last Business Day of the then current Interest Period
applicable to such affected Eurodollar Rate Loan, shall be converted into an
unaffected type of Eurodollar Rate Loan, on the last Business Day of the then
current Interest Period for such affected Eurodollar Rate Loans. Until such
notice has been withdrawn, Lenders shall have no obligation to make an affected
type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate
Loans and no Borrower shall have the right to
42
convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into
an affected type of Eurodollar Rate Loan.
3.8. CAPITAL ADEQUACY.
(a) In the event that Agent or any Lender shall have
determined that any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Body, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.8, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any Eurodollar Rate Loans with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on Agent or any Lender's capital as a
consequence of its obligations hereunder to a level below that which Agent or
such Lender could have achieved but for such adoption, change or compliance
(taking into consideration Agent's and each Lender's policies with respect to
capital adequacy) by an amount deemed by Agent or any Lender to be material,
then, from time to time, Borrowers shall pay upon demand to Agent or such Lender
such additional amount or amounts as will compensate Agent or such Lender for
such reduction. In determining such amount or amounts, Agent or such Lender may
use any reasonable averaging or attribution methods. The protection of this
Section 3.8 shall be available to Agent and each Lender regardless of any
possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition. Notwithstanding the foregoing, no
Borrower shall be required to compensate Agent or any Lender pursuant to this
section for any such reduction incurred more than 180 days prior to the date
Agent or such Lender notifies Borrowing Agent of the events giving rise to such
reduction and of Agent's or such Lender's intention to claim compensation
therefor, provided further that, if the events giving rise to such reduction are
retroactive, then the 180 day period referred to above shall be extended to
include the period of retroactive effect thereof.
(b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.8(a) hereof when delivered to Borrowers shall be conclusive
absent manifest error.
3.9. GROSS UP FOR TAXES. If any Borrower shall be required by
Applicable Law to withhold or deduct any taxes from or in respect of any sum
payable under this Agreement or any of the Other Documents to the Agent, or any
Lender, assignee of any Lender, or Participant (each, individually, a "PAYEE"
and collectively, the "PAYEES"), (a) the sum payable to such Payee or Payees, as
the case may be, shall be increased as may be necessary so that, after making
all required withholding or deductions, the applicable Payee or Payees receives
an amount equal to the sum it would have received had no such withholding or
deductions been made (the "GROSS-UP PAYMENT"), (b) such Borrower shall make such
withholding or deductions, and (c) such Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with Applicable Law. Notwithstanding the foregoing, no Borrower shall
be obligated to make any portion of the Gross-Up Payment that is attributable to
any
43
withholding or deductions that would not have been paid or claimed had the
applicable Payee or Payees properly claimed a complete exemption with respect
thereto pursuant to Section 3.10 hereof.
3.10. WITHHOLDING TAX EXEMPTION. (a) Each Payee that is not
incorporated under the Laws of the United States of America or a state thereof
(and, upon the written request of Agent, each other Payee) agrees that it will
deliver to Borrowing Agent and Agent two (2) duly completed appropriate valid
Withholding Certificates (as defined under ss.1.1441-1(c)(16) of the Income Tax
Regulations ("REGULATIONS")) certifying its status (I.E., U.S. or foreign
person) and, if appropriate, making a claim of reduced, or exemption from, U.S.
withholding tax on the basis of an income tax treaty or an exemption provided by
the Internal Revenue Code. The term "WITHHOLDING CERTIFICATE" means a Form W-9;
a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and
certifications as required under ss.1.1441-1(e)(2) and/or (3) of the
Regulations; a statement described in ss.1.871-14(c)(2)(v) of the Regulations;
or any other certificates under the Code or Regulations that certify or
establish the status of a payee or beneficial owner as a U.S. or foreign person.
(b) Each Payee required to deliver to Borrowing Agent and
Agent a valid Withholding Certificate pursuant to Section 3.10(a) hereof shall
deliver such valid Withholding Certificate as follows: (A) each Payee which is a
party hereto on the Closing Date shall deliver such valid Withholding
Certificate at least five (5) Business Days prior to the first date on which any
interest or fees are payable by any Borrower hereunder for the account of such
Payee; (B) each Payee shall deliver such valid Withholding Certificate at least
five (5) Business Days before the effective date of such assignment or
participation (unless Agent in its sole discretion shall permit such Payee to
deliver such Withholding Certificate less than five (5) Business Days before
such date in which case it shall be due on the date specified by Agent). Each
Payee which so delivers a valid Withholding Certificate further undertakes to
deliver to Borrowing Agent and Agent two (2) additional copies of such
Withholding Certificate (or a successor form) on or before the date that such
Withholding Certificate expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent Withholding Certificate so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by Borrowing Agent or Agent.
(c) Notwithstanding the submission of a Withholding
Certificate claiming a reduced rate of or exemption from U.S. withholding tax
required under Section 3.10(b) hereof, Agent shall be entitled to withhold
United States federal income taxes at the full 30% withholding rate if in its
reasonable judgment it is required to do so under the due diligence requirements
imposed upon a withholding agent under ss.1.1441-7(b) of the Regulations.
Further, Agent is indemnified under ss.1.1461-1(e) of the Regulations against
any claims and demands of any Payee for the amount of any tax it deducts and
withholds in accordance with regulations under ss.1441 of the Internal Revenue
Code.
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IV. COLLATERAL: GENERAL TERMS
4.1. SECURITY INTEREST IN THE COLLATERAL. (a) To secure the prompt
payment and performance to Agent and each Lender of the Obligations, each US
Borrower hereby assigns, pledges and grants to Agent for its benefit and for the
ratable benefit of each Lender a continuing security interest in and to and Lien
on all of its Collateral, whether now owned or existing or hereafter acquired or
arising and wheresoever located.
(b) To secure the prompt payment and performance to Agent and
each Lender of the PR Obligations, Brightstar PR hereby assigns, pledges and
grants to Agent for its benefit and for the ratable benefit of each Lender a
continuing security interest in and to and Lien on all of its Collateral,
whether now owned or existing or hereafter acquired or arising and wheresoever
located.
(c) Each Borrower shall xxxx its books and records as may be
necessary or appropriate to evidence, protect and perfect Agent's security
interest and shall cause its financial statements to reflect such security
interest. Each Borrower shall promptly provide Agent with written notice of all
commercial tort claims, such notice to contain the case title together with the
applicable court and a brief description of the claim(s). Upon delivery of each
such notice, such Borrower shall be deemed to hereby grant to Agent a security
interest and lien in and to such commercial tort claims and all proceeds
thereof.
4.2. PERFECTION OF SECURITY INTEREST. Each Borrower shall take all
action that may be necessary or desirable, or that Agent may request, so as at
all times to maintain the validity, perfection, enforceability and priority of
Agent's security interest in and Lien on the Collateral or to enable Agent to
protect, exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to, (i) immediately discharging all Liens other than
Permitted Encumbrances, (ii) obtaining Lien Waiver Agreements, (iii) delivering
to Agent, endorsed or accompanied by such instruments of assignment as Agent may
specify, and stamping or marking, in such manner as Agent may specify, any and
all chattel paper, instruments, letters of credits and advices thereof and
documents evidencing or forming a part of the Collateral, (iv) entering into
warehousing, lockbox and other custodial arrangements satisfactory to Agent, and
(v) executing and delivering financing statements, control agreements,
instruments of pledge, mortgages, notices and assignments, in each case in form
and substance satisfactory to Agent, relating to the creation, validity,
perfection, maintenance or continuation of Agent's security interest and Lien
under the Uniform Commercial Code or other applicable law. Agent is hereby
authorized to file financing statements signed by Agent instead of the
applicable Borrower in accordance with the Uniform Commercial Code. By its
signature hereto, each Borrower hereby authorizes Agent to file against such
Borrower, one or more financing, continuation or amendment statements pursuant
to the Uniform Commercial Code in form and substance satisfactory to Agent
(which statements may have a description of collateral which is broader than
that set forth herein). All charges, expenses and fees Agent may incur in doing
any of the foregoing, and any local taxes relating thereto, shall be charged to
Borrowers' Account as a Revolving Advance of a Domestic Rate Loan and added to
the Obligations, or, at Agent's option, shall be paid to Agent for its benefit
and for the ratable benefit of Lenders immediately upon demand.
45
4.3. DISPOSITION OF COLLATERAL. Each Borrower will safeguard and
protect all Collateral for Agent's general account and make no disposition
thereof whether by sale, lease or otherwise except (a) the sale of Inventory in
the Ordinary Course of Business and (b) the sale of other Collateral not to
exceed $100,000 per disposition or $500,000 in the aggregate in any Fiscal Year,
in each case so long as the proceeds of such disposition are remitted to Agent
in accordance with Section 2.19 hereof.
4.4. PRESERVATION OF COLLATERAL. Following the occurrence and during
the continuation of a Default or Event of Default in addition to the rights and
remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such
steps as Agent deems necessary to protect Agent's interest in and to preserve
the Collateral, including the hiring of such security guards or the placing of
other security protection measures as Agent may deem appropriate; (b) may employ
and maintain at any of any Borrower's premises a custodian who shall have full
authority to do all acts necessary to protect Agent's interests in the
Collateral; (c) may lease warehouse facilities to which Agent may move all or
part of the Collateral; (d) may use any Borrower's owned or leased lifts,
hoists, trucks and other facilities or equipment for handling or removing the
Collateral; and (e) shall have, and is hereby granted, a right of ingress and
egress to the places where the Collateral is located, and may proceed over and
through any of Borrower's owned or leased property. Each Borrower shall
cooperate fully with all of Agent's efforts to preserve the Collateral and will
take such actions to preserve the Collateral as Agent may direct. All of Agent's
expenses of preserving the Collateral, including any expenses relating to the
bonding of a custodian, shall be charged to Borrowers' Account as a Revolving
Advance and added to the Obligations.
4.5. OWNERSHIP OF COLLATERAL. (a) With respect to the Collateral, at
the time the Collateral becomes subject to Agent's security interest: (i) each
Borrower shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first priority security interest in each and
every item of the its respective Collateral to Agent; and, except for Permitted
Encumbrances the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (ii) each document and agreement executed by each
Borrower or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (iii) all signatures and endorsements
of each Borrower that appear on such documents and agreements shall be genuine
and each Borrower shall have full capacity to execute same; and (iv) each
Borrower's Equipment and Inventory shall be located as set forth on SCHEDULE 4.5
and shall not be removed from such location(s) without the prior written consent
of Agent except with respect to the sale of Inventory in the Ordinary Course of
Business.
(b) (i) There is no location at which any Borrower has any
Inventory (except for Inventory in transit) other than those locations listed on
SCHEDULE 4.5; (ii) SCHEDULE 4.5 hereto contains a correct and complete list, as
of the Closing Date, of the legal names and addresses of each warehouse at which
Inventory of any Borrower is stored; none of the receipts received by any
Borrower from any warehouse states that the goods covered thereby are to be
delivered to bearer or to the order of a named Person or to a named Person and
such named Person's assigns; (iii) SCHEDULE 4.5 hereto sets forth a correct and
complete list as of the Closing Date of (A) each place of business of each
Borrower and (B) the chief executive office of each Borrower; and (iv) SCHEDULE
4.5 hereto sets forth a correct and complete list as of the Closing Date of the
location,
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by state and street address, of all Real Property owned or leased by each
Borrower, together with the names and addresses of any landlords.
4.6. DEFENSE OF AGENT'S AND LENDERS' INTERESTS. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Required Lender's interests in the Collateral shall continue in full
force and effect. During such period no Borrower shall, without Agent's prior
written consent, pledge, sell (except Inventory in the Ordinary Course of
Business), assign, transfer, create or suffer to exist a Lien upon or encumber
or allow or suffer to be encumbered in any way except for Permitted
Encumbrances, any part of the Collateral. Each Borrower shall defend Agent's
interests in the Collateral against any and all Persons whatsoever. At any time
following demand by Agent for payment of all Obligations in accordance with the
terms of this Agreement, Agent shall have the right to take possession of the
indicia of the Collateral and the Collateral in whatever physical form
contained, including: labels, stationery, documents, instruments and advertising
materials. If Agent exercises this right to take possession of the Collateral,
Borrowers shall, upon demand, assemble it in the best manner possible and make
it available to Agent at a place reasonably convenient to Agent. In addition,
with respect to all Collateral, Agent and Lenders shall be entitled to all of
the rights and remedies set forth herein and further provided by the Uniform
Commercial Code or other applicable law. Each Borrower shall, and Agent may, at
its option, instruct all suppliers, carriers, forwarders, warehousers or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver same to Agent and/or subject to
Agent's order and if they shall come into any Borrower's possession, they, and
each of them, shall be held by such Borrower in trust as Agent's trustee, and
such Borrower will immediately deliver them to Agent in their original form
together with any necessary endorsement.
4.7. BOOKS AND RECORDS. Each Borrower shall (a) keep proper books of
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including by reason of enumeration, accruals for
premiums, if any, due on required payments and accruals for depreciation,
obsolescence, or amortization of properties), which should be set aside from
such earnings in connection with its business. All determinations pursuant to
this subsection shall be made in accordance with, or as required by, GAAP
consistently applied in the opinion of such independent public accountant as
shall then be regularly engaged by Borrowers.
4.8. FINANCIAL DISCLOSURE. Each Borrower hereby irrevocably authorizes
and directs all accountants and auditors employed by such Borrower at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
any Borrower's financial statements, trial balances or other accounting records
of any sort in the accountant's or auditor's possession, and to disclose to
Agent and each Lender any information such accountants may have concerning such
Borrower's financial status and business operations. Each Borrower hereby
authorizes all Governmental Bodies to furnish to Agent and each Lender copies of
reports or examinations relating to such Borrower, whether made by such Borrower
or otherwise; however, Agent and
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each Lender will attempt to obtain such information or materials directly from
such Borrower prior to obtaining such information or materials from such
accountants or Governmental Bodies.
4.9. COMPLIANCE WITH LAWS. Each Borrower shall comply in all material
respects with all Applicable Laws with respect to the Collateral or any part
thereof or to the operation of such Borrower's business the non-compliance with
which could reasonably be expected to have a Material Adverse Effect on such
Borrower. The assets of Borrowers at all times shall be maintained in accordance
with the requirements of all insurance carriers which provide insurance with
respect to the assets of Borrowers so that such insurance shall remain in full
force and effect.
4.10. INSPECTION OF PREMISES AND APPRAISALS. At all reasonable times
Agent and each Lender shall have full access to and the right to audit, check,
inspect and make abstracts and copies from each Borrower's books, records,
audits, correspondence and all other papers relating to the Collateral and the
operation of each Borrower's business. Agent, any Lender and their agents may
enter upon any of each Borrower's premises at any time during business hours and
at any other reasonable time, and from time to time, for the purpose of
inspecting the Collateral and any and all records pertaining thereto and the
operation of such Borrower's business. Agent shall be permitted in its
discretion to perform appraisals of the Inventory at Borrowers' expense,
PROVIDED, HOWEVER, that absent the occurrence of an Event of Default, Borrowers
shall not be obligated to pay for more than two (2) appraisals performed in any
calendar year.
4.11. INSURANCE. The assets and properties of each Borrower at all
times shall be maintained in accordance with the requirements of all insurance
carriers which provide insurance with respect to the assets and properties of
such Borrower so that such insurance shall remain in full force and effect. Each
Borrower shall bear the full risk of any loss of any nature whatsoever with
respect to the Collateral. At each Borrower's own cost and expense in amounts
and with carriers acceptable to Agent, each Borrower shall (a) keep all its
insurable properties and properties in which each Borrower has an interest
insured against the hazards of fire, flood, sprinkler leakage, those hazards
covered by extended coverage insurance and such other hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to such Borrower's including business interruption insurance; (b) maintain a
bond in such amounts as is customary in the case of companies engaged in
businesses similar to such Borrower insuring against larceny, embezzlement or
other criminal misappropriation of insured's officers and employees who may
either singly or jointly with others at any time have access to the assets or
funds of such Borrower either directly or through authority to draw upon such
funds or to direct generally the disposition of such assets; (c) maintain public
and product liability insurance against claims for personal injury, death or
property damage suffered by others; (d) maintain all such worker's compensation
or similar insurance as may be required under the laws of any state or
jurisdiction in which such Borrower is engaged in business; (e) maintain foreign
credit insurance and political risk insurance on Borrowers' Foreign Receivables
in an amount and on terms acceptable to Agent; (f) furnish Agent with (i) copies
of all policies and evidence of the maintenance of such policies by the renewal
thereof at least thirty (30) days before any expiration date, and (ii)
appropriate loss payable endorsements in form and substance satisfactory to
Agent, naming Agent as a co-insured and loss payee as its interests may appear
with respect to all insurance coverage referred to in clauses (a), (c) and (f)
above, and providing
48
(A) that all proceeds thereunder shall be payable to Agent, (B) no such
insurance shall be affected by any act or neglect of the insured or owner of the
property described in such policy, and (C) that such policy and loss payable
clauses may not be cancelled, amended or terminated unless at least thirty (30)
days' prior written notice is given to Agent. In the event of any loss
thereunder, the carriers named therein hereby are directed by Agent and the
applicable Borrower to make payment for such loss to Agent and not to such
Borrower and Agent jointly. If any insurance losses are paid by check, draft or
other instrument payable to any Borrower and Agent jointly, Agent may endorse
such Borrower's name thereon and do such other things as Agent may deem
advisable to reduce the same to cash. Agent is hereby authorized to adjust and
compromise claims under insurance coverage referred to in clauses (a) and (b)
above. All loss recoveries received by Agent upon any such insurance may be
applied to the Obligations in accordance with Section 11.5 hereof. Any surplus
shall be paid by Agent to Borrowers or applied as may be otherwise required by
law. Any deficiency thereon shall be paid by Borrowers to Agent, on demand.
4.12. FAILURE TO PAY INSURANCE. If any Borrower fails to obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects, may obtain such insurance and pay the premium therefor on behalf of
such Borrower, and charge Borrowers' Account therefor as a Revolving Advance of
a Domestic Rate Loan and such expenses so paid shall be part of the Obligations.
4.13. PAYMENT OF TAXES. Each Borrower will pay, when due, all taxes,
assessments and other Charges lawfully levied or assessed upon such Borrower or
any of the Collateral including real and personal property taxes, assessments
and charges and all franchise, income, employment, social security benefits,
withholding, and sales taxes. If any tax by any Governmental Body is or may be
imposed on or as a result of any transaction between any Borrower and Agent or
any Lender which Agent or any Lender may be required to withhold or pay or if
any taxes, assessments, or other Charges remain unpaid after the date fixed for
their payment, or if any claim shall be made which, in Agent's or any Lender's
opinion, may possibly create a valid Lien on the Collateral, Agent may without
notice to Borrowers pay the taxes, assessments or other Charges and each
Borrower hereby indemnifies and holds Agent and each Lender harmless in respect
thereof. The amount of any payment by Agent under this Section 4.13 shall be
charged to Borrowers' Account as a Revolving Advance and added to the
Obligations and, until Borrowers shall furnish Agent with an indemnity therefor
(or supply Agent with evidence satisfactory to Agent that due provision for the
payment thereof has been made), Agent may hold without interest any balance
standing to Borrowers' credit and Agent shall retain its security interest in
and Lien on any and all Collateral held by Agent.
4.14. PAYMENT OF LEASEHOLD OBLIGATIONS. Each Borrower shall at all
times pay, when and as due, its rental obligations under all leases under which
it is a tenant, and shall otherwise comply, in all material respects, with all
other terms of such leases and keep them in full force and effect and, at
Agent's request will provide evidence of having done so.
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4.15. RECEIVABLES.
(a) NATURE OF RECEIVABLES. Each of the Receivables shall be a
bona fide and valid account representing a bona fide indebtedness incurred by
the Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of a Borrower, or work, labor or services theretofore
rendered by a Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with the applicable Borrower's standard terms of
sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Borrowers to Agent.
(b) SOLVENCY OF CUSTOMERS. Each Customer, to the best of each
Borrower's knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of any Borrower who are not
solvent such Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.
(c) LOCATION OF BORROWERS. Brightstar's chief executive office
is located at 0000 XX 00xx Xxxxxx, Xxxxx, Xxxxxxx 00000. Brightstar US' chief
executive office is located at 000 Xxxxxx Xxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxx
00000. Brightstar PR's chief executive office is located at 189 Km. 2.6 Sector
Xxxxx, Xxxxxx Caguas, Puerto Rico. Until written notice is given to Agent by
Borrowing Agent of any other office at which any Borrower keeps its records
pertaining to Receivables, all such records shall be kept at such executive
office.
(d) COLLECTION OF RECEIVABLES. Until any Borrower's authority
to do so is terminated by Agent (which notice Agent may give at any time
following the occurrence of an Event of Default or a Default or when Agent in
its sole discretion deems it to be in Lenders' best interest to do so), each
Borrower will, at such Borrower's sole cost and expense, but on Agent's behalf
and for Agent's account, collect as Agent's property and in trust for Agent all
amounts received on Receivables, and shall not commingle such collections with
any Borrower's funds or use the same except to pay Obligations. Each Borrower
shall deposit in the Blocked Account or, upon request by Agent, deliver to
Agent, in original form and on the date of receipt thereof, all checks, drafts,
notes, money orders, acceptances, cash and other evidences of Indebtedness.
(e) NOTIFICATION OF ASSIGNMENT OF RECEIVABLES. At any time
following the occurrence and during the continuation of an Event of Default or a
Default, Agent shall have the right to send notice of the assignment of, and
Agent's security interest in and Lien on, the Receivables to any and all
Customers or any third party holding or otherwise concerned with any of the
Collateral. Thereafter, Agent shall have the sole right to collect the
Receivables, take possession of the Collateral, or both. Agent's actual
collection expenses, including, but not limited to, stationery and postage,
telephone and telegraph, secretarial and clerical expenses and the salaries of
any collection personnel used for collection, may be charged to Borrowers'
Account and added to the Obligations.
(f) POWER OF AGENT TO ACT ON BORROWERS' BEHALF. Agent shall
have the right to receive, endorse, assign and/or deliver in the name of Agent
or any Borrower any and all checks, drafts and other instruments for the payment
of money relating to the Receivables, and
50
each Borrower hereby waives notice of presentment, protest and non-payment of
any instrument so endorsed. Each Borrower hereby constitutes Agent or Agent's
designee as such Borrower's attorney with power (i) to endorse such Borrower's
name upon any notes, acceptances, checks, drafts, money orders or other
evidences of payment or Collateral; (ii) to sign such Borrower's name on any
invoice or xxxx of lading relating to any of the Receivables, drafts against
Customers, assignments and verifications of Receivables; (iii) to send
verifications of Receivables to any Customer; (iv) to sign such Borrower's name
on all financing statements or any other documents or instruments deemed
necessary or appropriate by Agent to preserve, protect, or perfect Agent's
interest in the Collateral and to file same; (v) to demand payment of the
Receivables; (vi) to enforce payment of the Receivables by legal proceedings or
otherwise; (vii) to exercise all of Borrowers' rights and remedies with respect
to the collection of the Receivables and any other Collateral; (viii) to settle,
adjust, compromise, extend or renew the Receivables; (ix) to settle, adjust or
compromise any legal proceedings brought to collect Receivables; (x) to prepare,
file and sign such Borrower's name on a proof of claim in bankruptcy or similar
document against any Customer; (xi) to prepare, file and sign such Borrower's
name on any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with the Receivables; and (xii) to do all other acts and
things necessary to carry out this Agreement. All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission nor for any error of
judgment or mistake of fact or of law, unless done maliciously or with gross
(not mere) negligence; this power being coupled with an interest is irrevocable
while any of the Obligations remain unpaid. Agent shall not exercise its powers
with respect to clauses (v), (vi), (vii), (viii) or (ix) unless an Event of
Default has occurred and is continuing. Agent shall have the right at any time
following the occurrence and during the continuation of an Event of Default or
Default, to change the address for delivery of mail addressed to any Borrower to
such address as Agent may designate and to receive, open and dispose of all mail
addressed to any Borrower.
(g) NO LIABILITY. Neither Agent nor any Lender shall, under
any circumstances or in any event whatsoever, have any liability for any error
or omission or delay of any kind occurring in the settlement, collection or
payment of any of the Receivables or any instrument received in payment thereof,
or for any damage resulting therefrom. Following the occurrence and during the
continuation of an Event of Default or Default Agent may, without notice or
consent from any Borrower, xxx upon or otherwise collect, extend the time of
payment of, compromise or settle for cash, credit or upon any terms any of the
Receivables or any other securities, instruments or insurance applicable thereto
and/or release any obligor thereof. Agent is authorized and empowered to accept
following the occurrence and during the continuation of an Event of Default or
Default the return of the goods represented by any of the Receivables, without
notice to or consent by any Borrower, all without discharging or in any way
affecting any Borrower's liability hereunder.
(h) ESTABLISHMENT OF A LOCKBOX ACCOUNT, DOMINION ACCOUNT. All
proceeds of Collateral shall be deposited by Borrowers into either (i) a lockbox
account, dominion account or such other "blocked account" ("BLOCKED ACCOUNTS")
established at a bank or banks (each such bank, a "BLOCKED ACCOUNT BANK")
pursuant to an arrangement with such Blocked Account Bank as may be selected by
Borrowers and be acceptable to Agent or (ii) depository accounts ("DEPOSITORY
ACCOUNTS") established at the Agent for the deposit of such proceeds. Borrowers,
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Agent and each Blocked Account Bank shall enter into a deposit account control
agreement in form and substance satisfactory to Agent directing such Blocked
Account Bank to transfer such funds so deposited to Agent, either to any account
maintained by Agent at said Blocked Account Bank or by wire transfer to
appropriate account(s) of Agent. All funds deposited in such Blocked Accounts
shall immediately become the property of Agent and Borrowers shall obtain the
agreement by such Blocked Account Bank to waive any offset rights against the
funds so deposited. Neither Agent nor any Lender assumes any responsibility for
such blocked account arrangement, including any claim of accord and satisfaction
or release with respect to deposits accepted by any Blocked Account Bank
thereunder. All deposit accounts and investment accounts of each Borrower and
its Subsidiaries are set forth on Schedule 4.15(h).
(i) ADJUSTMENTS. No Borrower will, without Agent's consent,
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any additional discounts, allowances
or credits thereon except for those compromises, adjustments, returns,
discounts, credits and allowances as have been heretofore customary in the
business of such Borrower.
4.16. INVENTORY. To the extent Inventory held for sale or lease has
been produced by any Borrower, it has been and will be produced by such Borrower
in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder.
4.17. MAINTENANCE OF EQUIPMENT. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved. No
Borrower shall use or operate the Equipment in violation of any law, statute,
ordinance, code, rule or regulation.
4.18. EXCULPATION OF LIABILITY. Nothing herein contained shall be
construed to constitute Agent or any Lender as any Borrower's agent for any
purpose whatsoever, nor shall Agent or any Lender be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof
unless due to the gross (not mere) negligence or willful misconduct of Agent or
such Lender. Neither Agent nor any Lender, whether by anything herein or in any
assignment or otherwise, assume any of any Borrower's obligations under any
contract or agreement assigned to Agent or such Lender, and neither Agent nor
any Lender shall be responsible in any way for the performance by any Borrower
of any of the terms and conditions thereof.
4.19. ENVIRONMENTAL MATTERS. (a) Borrowers shall ensure that the Real
Property and all operations and businesses conducted thereon remains in
compliance with all Environmental Laws and they shall not place or permit to be
placed any Hazardous Substances on any Real Property except as permitted by
applicable law or appropriate governmental authorities.
(b) Borrowers shall establish and maintain a system to assure
and monitor continued compliance with all applicable Environmental Laws which
system shall include periodic reviews of such compliance.
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(c) Borrowers shall (i) employ in connection with the use of
the Real Property appropriate technology necessary to maintain compliance with
any applicable Environmental Laws and (ii) dispose of any and all Hazardous
Waste generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Borrowers shall use their best efforts to obtain certificates of disposal, such
as hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Borrowers in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.
(d) In the event any Borrower obtains, gives or receives
notice of any Release or threat of Release of a reportable quantity of any
Hazardous Substances at the Real Property (any such event being hereinafter
referred to as a "HAZARDOUS DISCHARGE") or receives any notice of violation,
request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at the Real Property,
demand letter or complaint, order, citation, or other written notice with regard
to any Hazardous Discharge or violation of Environmental Laws affecting the Real
Property or any Borrower's interest therein (any of the foregoing is referred to
herein as an "ENVIRONMENTAL COMPLAINT") from any Person, including any state
agency responsible in whole or in part for environmental matters in the state in
which the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "AUTHORITY"), then Borrowing
Agent shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which any Borrower is aware giving rise to
the Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in and Lien on the Real
Property and the Collateral and is not intended to create nor shall it create
any obligation upon Agent or any Lender with respect thereto.
(e) Borrowers shall promptly forward to Agent copies of any
request for information, notification of potential liability, demand letter
relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances at any other site owned, operated or used by any
Borrower to dispose of Hazardous Substances and shall continue to forward copies
of correspondence between any Borrower and the Authority regarding such claims
to Agent until the claim is settled. Borrowers shall promptly forward to Agent
copies of all documents and reports concerning a Hazardous Discharge at the Real
Property that any Borrower is required to file under any Environmental Laws.
Such information is to be provided solely to allow Agent to protect Agent's
security interest in and Lien on the Real Property and the Collateral.
(f) Borrowers shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral or
Real Property to any Lien. If any Borrower shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint or any Borrower shall fail to
comply with any of the requirements of any Environmental Laws, Agent on behalf
of Lenders may, but without the obligation to do so, for the sole purpose of
protecting Agent's interest in the Collateral: (A) give such notices or (B)
enter onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by
Agent) deem reasonably necessary or advisable, to clean up, remove,
53
mitigate or otherwise deal with any such Hazardous Discharge or Environmental
Complaint. All reasonable costs and expenses incurred by Agent and Lenders (or
such third parties) in the exercise of any such rights, including any sums paid
in connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by Borrowers, and until paid shall be added to and become a
part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and any Borrower.
(g) Promptly upon the written request of Agent from time to
time, Borrowers shall provide Agent, at Borrowers' expense, with an
environmental site assessment or environmental audit report prepared by an
environmental engineering firm acceptable in the reasonable opinion of Agent, to
assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and the potential costs in connection with abatement, cleanup and
removal of any Hazardous Substances found on, under, at or within the Real
Property. Any report or investigation of such Hazardous Discharge proposed and
acceptable to an appropriate Authority that is charged to oversee the clean-up
of such Hazardous Discharge shall be acceptable to Agent. If such estimates,
individually or in the aggregate, exceed $100,000, Agent shall have the right to
require Borrowers to post a bond, letter of credit or other security reasonably
satisfactory to Agent to secure payment of these costs and expenses.
(h) Borrowers shall defend and indemnify Agent and Lenders and
hold Agent, Lenders and their respective employees, agents, directors and
officers harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by Agent or Lenders under or on account of any Environmental Laws,
including the assertion of any Lien thereunder, with respect to any Hazardous
Discharge, the presence of any Hazardous Substances affecting the Real Property,
whether or not the same originates or emerges from the Real Property or any
contiguous real estate, including any loss of value of the Real Property as a
result of the foregoing except to the extent such loss, liability, damage and
expense is attributable to any Hazardous Discharge resulting from actions on the
part of Agent or any Lender. Borrowers' obligations under this Section 4.19
shall arise upon the discovery of the presence of any Hazardous Substances at
the Real Property, whether or not any federal, state, or local environmental
agency has taken or threatened any action in connection with the presence of any
Hazardous Substances. Borrowers' obligation and the indemnifications hereunder
shall survive the termination of this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to
Real Property shall be deemed to include all of Borrowers' right, title and
interest in and to its owned and leased premises.
4.20. FINANCING STATEMENTS. Except as respects the financing statements
filed by Agent and the financing statements described on SCHEDULE 1.2, no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.
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V. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as follows:
5.1. AUTHORITY. Each Borrower has full power, authority and legal right
to enter into this Agreement and the Other Documents and to perform all its
respective Obligations hereunder and thereunder. This Agreement, the
Intercreditor Agreement and the Other Documents have been duly executed and
delivered by such Borrower, and this Agreement, the Intercreditor Agreement and
the Other Documents constitute the legal, valid and binding obligation of such
Borrower enforceable in accordance with their terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally. The execution,
delivery and performance of this Agreement and of the Other Documents (a) are
within such Borrower's corporate powers, have been duly authorized by all
necessary corporate action, are not in contravention of law or the terms of such
Borrower's by-laws, certificate of incorporation or other applicable documents
relating to such Borrower's formation or to the conduct of such Borrower's
business or of any material agreement or undertaking to which such Borrower is a
party or by which such Borrower is bound, including the Subordinated Loan
Documentation, (b) will not conflict with or violate any law or regulation, or
any judgment, order or decree of any Governmental Body, (c) will not require the
Consent of any Governmental Body or any other Person, except those Consents set
forth on SCHEDULE 5.1 hereto, all of which will have been duly obtained, made or
compiled prior to the Closing Date and which are in full force and effect and
(d) will not conflict with, nor result in any breach in any of the provisions of
or constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Borrower under the provisions of
any agreement, charter document, instrument, by-law or other instrument to which
such Borrower is a party or by which it or its property is a party or by which
it may be bound, including under the provisions of the Subordinated Loan
Documentation and the Motorola Documents.
5.2. FORMATION AND QUALIFICATION. (a) Each Borrower is duly
incorporated and in good standing under the laws of the state listed on SCHEDULE
5.2(A) and is qualified to do business and is in good standing in the states
listed on SCHEDULE 5.2(A) which constitute all states in which qualification and
good standing are necessary for such Borrower to conduct its business and own
its property and where the failure to so qualify could reasonably be expected to
have a Material Adverse Effect on such Borrower. Each Borrower has delivered to
Agent true and complete copies of its certificate of incorporation and by-laws
and will promptly notify Agent of any amendment or changes thereto.
(b) The only Subsidiaries of each Borrower are listed on
SCHEDULE 5.2(B).
5.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of such Borrower contained in this Agreement and the Other
Documents shall be true at the time of such Borrower's execution of this
Agreement and the Other Documents, and shall survive the execution, delivery and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.
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5.4. TAX RETURNS. Each Borrower's federal tax identification number is
set forth on SCHEDULE 5.4. Each Borrower has filed all federal, state and local
tax returns and other reports each is required by law to file and has paid all
taxes, assessments, fees and other governmental charges that are due and
payable. Federal, state and local income tax returns of each Borrower have been
examined and reported upon by the appropriate taxing authority or closed by
applicable statute and satisfied for all Fiscal Years prior to and including the
Fiscal Year ending December 31, 1998. The provision for taxes on the books of
each Borrower are adequate for all years not closed by applicable statutes, and
for its current Fiscal Year, and no Borrower has any knowledge of any deficiency
or additional assessment in connection therewith not provided for on its books.
5.5. FINANCIAL STATEMENTS.
(a) The balance sheet of Borrowers on a consolidated and
consolidating basis and statements of income and stockholders' equity and cash
flow of Borrowers on a consolidated and consolidating basis for the month of
March 2004 ("March Financial Statements") were prepared by the Chief Financial
Officer of Brightstar in accordance with GAAP, consistently applied. The March
Financial Statements have been certified as accurate, complete and correct in
all material respects by the President and Chief Financial Officer of
Brightstar. All financial statements referred to in this subsection 5.5(a),
including the related schedules and notes thereto, have been prepared, in
accordance with GAAP, except as may be disclosed in such financial statements.
(b) The twelve-month cash flow projections of Borrowers on a
consolidated basis and their projected balance sheets as of the Closing Date,
copies of which are annexed hereto as EXHIBIT 5.5(B) (the "PROJECTIONS") were
prepared by the Chief Financial Officer of Brightstar, are based on underlying
assumptions which provide a reasonable basis for the projections contained
therein and reflect Borrowers' judgment based on present circumstances of the
most likely set of conditions and course of action for the projected period.
(c) The consolidated and consolidating balance sheets of
Borrowers, their Subsidiaries and such other Persons described therein
(including the accounts of all Subsidiaries for the respective periods during
which a subsidiary relationship existed) as of December 31, 2003, and the
related statements of income, changes in stockholder's equity, and changes in
cash flow for the period ended on such date (the "FINANCIAL STATEMENTS"), all
accompanied by reports thereon containing opinions without qualification by
independent certified public accountants, copies of which have been delivered to
Agent, have been prepared in accordance with GAAP, consistently applied (except
for changes in application in which such accountants concur) and present fairly
the financial position of Borrowers and their Subsidiaries at such date and the
results of their operations for such period. Since December 31, 2003 there has
been no change in the condition, financial or otherwise, of Borrowers or their
Subsidiaries as shown on the consolidated balance sheet as of such date and no
change in the aggregate value of machinery, equipment and Real Property owned by
Borrowers and their respective Subsidiaries, except changes in the Ordinary
Course of Business and except as otherwise set forth on Schedule 5.5(c), none of
which individually or in the aggregate has been materially adverse.
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5.6. ENTITY NAMES. No Borrower has been known by any other corporate
name in the past five years and does not sell Inventory under any other name
except as set forth on SCHEDULE 5.6, nor has any Borrower been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5) years.
5.7. O.S.H.A. AND ENVIRONMENTAL COMPLIANCE.
(a) Each Borrower has duly complied with, and its facilities,
business, assets, property, leaseholds, Real Property and Equipment are in
compliance in all material respects with, the provisions of the Federal
Occupational Safety and Health Act, the Environmental Protection Act, RCRA and
all other Environmental Laws; there have been no outstanding citations, notices
or orders of non-compliance issued to any Borrower or relating to its business,
assets, property, leaseholds or Equipment under any such laws, rules or
regulations.
(b) Each Borrower has been issued all required federal, state
and local licenses, certificates or permits relating to all applicable
Environmental Laws.
(c) (i) There are no visible signs of releases, spills,
discharges, leaks or disposal (collectively referred to as "RELEASES") of
Hazardous Substances at, upon, under or within any Real Property; (ii) to the
best of any Borrower's knowledge after diligent inquiry, there are no
underground storage tanks or polychlorinated biphenyls on the Real Property;
(iii) to the best of any Borrower's knowledge after diligent inquiry, the Real
Property has never been used as a treatment, storage or disposal facility of
Hazardous Waste; and (iv) to the best of any Borrower's knowledge after diligent
inquiry, no Hazardous Substances are present on the Real Property or any
premises leased by any Borrower, excepting such quantities as are handled in
accordance with all applicable manufacturer's instructions and governmental
regulations and in proper storage containers and as are necessary for the
operation of the commercial business of any Borrower or of its tenants.
5.8. SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT.
(a) After giving effect to the making of the initial Advances
and the use of the proceeds thereof, Borrowers will be solvent, able to pay
their debts as they mature, will have capital sufficient to carry on their
business and all businesses in which they are about to engage, and (i) as of the
Closing Date, the fair present saleable value of their assets, calculated on a
going concern basis, is in excess of the amount of their liabilities, including
all known contingent liabilities and (ii) subsequent to the Closing Date, the
fair saleable value of their assets (calculated on a going concern basis) will
be in excess of the amount of their liabilities, including all known contingent
liabilities.
(b) Except as disclosed in SCHEDULE 5.8(B), no Borrower has
(i) any pending or threatened litigation, arbitration, actions or proceedings
which involve the possibility of having a Material Adverse Effect on such
Borrower, and (ii) any liabilities nor indebtedness for borrowed money other
than the Obligations.
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(c) No Borrower is in violation of any applicable statute,
law, rule, regulation or ordinance in any respect which could reasonably be
expected to have a Material Adverse Effect on such Borrower, nor is any Borrower
in violation of any order of any court, Governmental Body or arbitration board
or tribunal.
(d) No Borrower nor any member of the Controlled Group
maintains or contributes to any Plan other than those listed on SCHEDULE 5.8(D)
hereto. Except as set forth in SCHEDULE 5.8(D), (i) no Plan has incurred any
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and each Borrower and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) no
Borrower nor any member of the Controlled Group has incurred any liability to
the PBGC other than for the payment of premiums, and there are no premium
payments which have become due which are unpaid, (iv) no Plan has been
terminated by the plan administrator thereof nor by the PBGC, and there is no
occurrence which would cause the PBGC to institute proceedings under Title IV of
ERISA to terminate any Plan, (v) at this time, the current value of the assets
of each Plan exceeds the present value of the accrued benefits and other
liabilities of such Plan and no Borrower nor any member of the Controlled Group
knows of any facts or circumstances which would materially change the value of
such assets and accrued benefits and other liabilities, (vi) no Borrower nor any
member of the Controlled Group has breached any of the responsibilities,
obligations or duties imposed on it by ERISA with respect to any Plan, (vii) no
Borrower nor any member of a Controlled Group has incurred any liability for any
excise tax arising under Section 4972 or 4980B of the Code, and no fact exists
which could give rise to any such liability, (viii) no Borrower nor any member
of the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has
engaged in a "prohibited transaction" described in Section 406 of the ERISA or
Section 4975 of the Code nor taken any action which would constitute or result
in a Termination Event with respect to any such Plan which is subject to ERISA,
(ix) each Borrower and each member of the Controlled Group has made all
contributions due and payable with respect to each Plan, (x) there exists no
event described in Section 4043(b) of ERISA, for which the thirty (30) day
notice period contained in 29 CFR ss.2615.3 has not been waived, (xi) no
Borrower nor any member of the Controlled Group has any fiduciary responsibility
for investments with respect to any plan existing for the benefit of persons
other than employees or former employees of any Borrower and any member of the
Controlled Group, and (xii) no Borrower nor any member of the Controlled Group
has withdrawn, completely or partially, from any Multiemployer Plan so as to
incur liability under the Multiemployer Pension Plan Amendments Act of 1980.
5.9. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. All patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by any Borrower are
set forth on SCHEDULE 5.9, are valid and (other than tradenames) have been duly
registered or filed with all appropriate Governmental Bodies and constitute all
of the intellectual property rights which are necessary for the operation of its
business; there is no objection to or pending challenge to the validity of any
such patent,
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trademark, copyright, design rights, tradename, trade secret or license and no
Borrower is aware of any grounds for any challenge, except as set forth in
SCHEDULE 5.9 hereto. Each patent, patent application, patent license, trademark,
trademark application, trademark license, service xxxx, service xxxx
application, service xxxx license, design rights, copyright, copyright
application and copyright license owned or held by any Borrower and all trade
secrets used by any Borrower consist of original material or property developed
by such Borrower or was lawfully acquired by such Borrower from the proper and
lawful owner thereof. Each of such items has been maintained so as to preserve
the value thereof from the date of creation or acquisition thereof. With respect
to all software used by any Borrower (other than software licensed from
Motorola), such Borrower is in possession of all source and object codes related
to each piece of software or is the beneficiary of a source code escrow
agreement, each such source code escrow agreement being listed on SCHEDULE 5.9
hereto.
5.10. LICENSES AND PERMITS. Except as set forth in SCHEDULE 5.10, each
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state,
provincial, commonwealth or local law, rule or regulation for the operation of
its business in each jurisdiction wherein it is now conducting or proposes to
conduct business and where the failure to procure such licenses or permits could
have a Material Adverse Effect on such Borrower.
5.11. DEFAULT OF INDEBTEDNESS. No Borrower is in default in the payment
of the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12. NO DEFAULT. No Borrower is in default in the payment or
performance of any of its contractual obligations and no Default or Event of
Default has occurred.
5.13. NO BURDENSOME RESTRICTIONS. No Borrower is party to any contract
or agreement the performance of which could have a Material Adverse Effect. Each
Borrower has heretofore delivered to Agent true and complete copies of all
material contracts to which it is a party or to which it or any of its
properties is subject. No Borrower has agreed or consented to cause or permit in
the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien which
is not a Permitted Encumbrance.
5.14. NO LABOR DISPUTES. No Borrower is involved in any labor dispute;
there are no strikes or walkouts or union organization of any Borrower's
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on SCHEDULE 5.14 hereto.
5.15. MARGIN REGULATIONS. No Borrower is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as
59
now and from time to time hereafter in effect. No part of the proceeds of any
Advance will be used for "purchasing" or "carrying" "margin stock" as defined in
Regulation U of such Board of Governors.
5.16. INVESTMENT COMPANY ACT. No Borrower is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.17. DISCLOSURE. No representation or warranty made by any Borrower in
this Agreement, the Subordinated Loan Documentation or in any financial
statement, report, certificate or any other document furnished in connection
herewith or therewith contains any untrue statement of a material fact or omits
to state any material fact necessary to make the statements herein or therein
not misleading. There is no fact known to Borrowers or which reasonably should
be known to Borrowers which Borrowers have not disclosed to Agent in writing
with respect to the transactions contemplated by the Subordinated Loan
Documentation or this Agreement which could reasonably be expected to have a
Material Adverse Effect on any Borrower.
5.18. DELIVERY OF SUBORDINATED LOAN DOCUMENTATION AND MOTOROLA
DOCUMENTS. Agent has received complete copies of the Subordinated Loan
Documentation and Motorola Documents (including all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant thereto, if any)
and all amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof. None of such documents and agreements
has been amended or supplemented, nor have any of the provisions thereof been
waived, except pursuant to a written agreement or instrument which has
heretofore been delivered to Agent. The Motorola Distribution Agreements are the
sole distribution and supply agreements between Borrowers and Motorola.
5.19. SWAPS. No Borrower is a party to, nor will it be a party to, any
swap agreement whereby such Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that payments upon termination
following an event of default thereunder are payable on an unlimited "two-way
basis" without regard to fault on the part of either party.
5.20. CONFLICTING AGREEMENTS. No provision of any mortgage, indenture,
contract, agreement, judgment, decree or order binding on any Borrower or
affecting the Collateral conflicts with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.
5.21. APPLICATION OF CERTAIN LAWS AND REGULATIONS. No Borrower nor any
Affiliate of any Borrower is subject to any law, statute, rule or regulation
which regulates the incurrence of any Indebtedness, including laws, statutes,
rules or regulations relative to common or interstate carriers or to the sale of
electricity, gas, steam, water, telephone, telegraph or other public utility
services.
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5.22. BUSINESS AND PROPERTY OF BORROWERS. Upon and after the Closing
Date, Borrowers do not propose to engage in any business other than the
distribution of wireless telecommunications equipment, providing supply chain
management services to major telecommunications equipment manufacturers and
activities necessary to conduct the foregoing. On the Closing Date, each
Borrower will own all the property and possess all of the rights and Consents
necessary for the conduct of the business of such Borrower.
5.23. SECTION 20 SUBSIDIARIES. Borrowers do not intend to use and shall
not use any portion of the proceeds of the Advances, directly or indirectly, to
purchase during the underwriting period, or for 30 days thereafter, Ineligible
Securities being underwritten by a Section 20 Subsidiary.
5.24. ANTI-TERRORISM LAWS.
(a) GENERAL. No Borrower nor any Affiliate of any Borrower is
in violation of any Anti-Terrorism Law or engages in or conspires to engage in
any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.
(b) EXECUTIVE ORDER NO. 13224. No Borrower nor any Affiliate
of any Borrower or their respective agents acting or benefiting in any capacity
in connection with the Advances or other transactions hereunder, is any of the
following (each a "BLOCKED PERSON"):
(i) a Person that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order No. 13224;
(ii) a Person owned or controlled by, or acting for
or on behalf of, any Person that is listed in the annex to, or is otherwise
subject to the provisions of, the Executive Order No. 13224;
(iii) a Person or entity with which any Lender is
prohibited from dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law;
(iv) a Person or entity that commits, threatens or
conspires to commit or supports "terrorism" as defined in the Executive Order
No. 13224;
(v) a Person or entity that is named as a "specially
designated national" on the most current list published by the U.S. Treasury
Department Office of Foreign Asset Control at its official website or any
replacement website or other replacement official publication of such list, or
(vi) a Person or entity who is affiliated or
associated with a Person or entity listed above.
No Borrower or to the knowledge of any Borrower, any of its agents acting in any
capacity in connection with the Advances or other transactions hereunder (i)
conducts any business or
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engages in making or receiving any contribution of funds, goods or services to
or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages
in any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order No. 13224.
5.25. TRADING WITH THE ENEMY. No Borrower has engaged, nor does it
intend to engage, in any business or activity prohibited by the Trading with the
Enemy Act.
5.26. FEDERAL SECURITIES LAWS. No Borrower nor any of its Subsidiaries
(i) is required to file periodic reports under the Exchange Act, (ii) has any
securities registered under the Exchange Act or (iii) has filed a registration
statement that has not yet become effective under the Securities Act.
VI. AFFIRMATIVE COVENANTS.
Each Borrower shall, until payment in full of the Obligations and
termination of this Agreement:
6.1. PAYMENT OF FEES. Pay to Agent on demand all usual and customary
fees and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may,
without making demand, charge Borrowers' Account for all such fees and expenses.
6.2. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including all licenses, patents, copyrights, design rights,
tradenames, trade secrets and trademarks and take all actions necessary to
enforce and protect the validity of any intellectual property right or other
right included in the Collateral; (b) keep in full force and effect its
existence and comply in all material respects with the laws and regulations
governing the conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect on such Borrower; and
(c) make all such reports and pay all such franchise and other taxes and license
fees and do all such other acts and things as may be lawfully required to
maintain its rights, licenses, leases, powers and franchises under the laws of
the United States or any political subdivision thereof where the failure to do
so could reasonably be expected to have a Material Adverse Effect on such
Borrower.
6.3. VIOLATIONS. Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Borrower which could reasonably be expected to
have a Material Adverse Effect on any Borrower.
6.4. GOVERNMENT RECEIVABLES. Take all steps necessary to protect
Agent's interest in the Collateral under the Federal Assignment of Claims Act,
the Uniform Commercial Code and
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all other applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between any Borrower and the United States,
any state or any department, agency or instrumentality of any of them.
6.5. (a) LEVERAGE RATIO. Commencing on June 30, 2004, cause to be
maintained as of the end of each quarter with respect to the four fiscal
quarters then ended for Borrowers on a consolidated basis, a ratio of (i) the
sum of the aggregate amount of the outstanding Obligations plus the aggregate
amount of all outstanding Indebtedness (including, without limitation all
Indebtedness with respect to Capitalized Lease Obligations and Indebtedness
under the Subordinated Loan Documentation but exclusive of trade debt including,
without limitation, all obligations to Motorola under the Motorola documents) to
(ii) EBITDA of not greater than 3.5 to 1.0.
(b) FIXED CHARGE COVERAGE RATIO.
(i) Commencing on June 30, 2004, cause to be
maintained as of the end of each quarter with respect to the four fiscal
quarters then ended for Borrowers on a consolidated basis, a Fixed Charge
Coverage Ratio of not less than 2.5 to 1.0.
(ii) In the event Average Undrawn Availability during
any calendar month in any fiscal quarter is less than $10,000,000, then
Borrowers on a combined basis must maintain a Fixed Charge Coverage Ratio of not
less than 1.1 to 1.0 for such fiscal quarter with respect to the four fiscal
quarters then ended.
6.6. EXECUTION OF SUPPLEMENTAL INSTRUMENTS. Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement may be carried into effect.
6.7. PAYMENT OF INDEBTEDNESS. Pay, discharge or otherwise satisfy at or
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and each Borrower shall have provided for such reserves as Agent may
reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Lenders.
6.8. STANDARDS OF FINANCIAL STATEMENTS. Cause all financial statements
referred to in Sections 9.7, 9.8, 9.11 and 9.12 as to which GAAP is applicable
to be complete and correct in all material respects (subject, in the case of
interim financial statements, to normal year-end audit adjustments) and to be
prepared in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein (except as concurred in by such
reporting accountants or officer, as the case may be, and disclosed therein).
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6.9. TAX SHELTER REGULATIONS. Not treat the Advances and related
transactions as being a "reportable transaction" (within the meaning of Treasury
Regulation Section 1.6011-4). In the event any Borrower determines to take any
action inconsistent with such intention, such Borrower will promptly (1) notify
the Agent thereof, and (2) deliver to the Agent a duly completed copy of IRS
Form 8886 or any successor form. If any Borrower so notifies the Agent, each
Borrower acknowledges that one or more of the Lenders may treat its Advances as
part of a transaction that is subject to Treasury Regulation Section 301.6112-1,
and such Lender or Lenders, as applicable, will maintain the lists and other
records required by such Treasury Regulation.
6.10. FEDERAL SECURITIES LAWS. Promptly notify Agent in writing if any
Borrower or any of its Subsidiaries (i) is required to file periodic reports
under the Exchange Act, (ii) registers any securities under the Exchange Act or
(iii) files a registration statement under the Securities Act.
VII. NEGATIVE COVENANTS.
No Borrower shall, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1. MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS.
(a) (i) Enter into any merger, consolidation or other
reorganization with or into any other Person or (ii) acquire all or a
substantial portion of the assets of any Person; PROVIDED however that,
Borrowers shall be permitted to acquire assets of another Person so long as
after giving effect to any such acquisitions (1) Borrowers shall have Undrawn
Availability of at least $10,000,000, (2) no Default or Event of Default shall
have occurred or be continuing (3) the aggregate amount utilized by Borrowers to
make such acquisitions shall not exceed the aggregate amount of $10,000,000
(inclusive of all investments made pursuant to clauses, (e) and (f) of Section
7.4), (4) any assets purchased in such acquisitions shall be included in the
Collateral pledged hereunder and (5) any assets purchased in such acquisitions
shall not be deemed to be Eligible Receivables or Eligible Foreign Receivables
or Eligible Inventory hereunder, or (iii) acquire all or a substantial portion
of the Equity Interests of another Person except as otherwise permitted pursuant
to Section 7.4(e) and (f) or (iv) permit any other Person to consolidate with or
merge with it.
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except (i) dispositions of Collateral to the extent
expressly permitted by Section 4.3, and (ii) any other sales or dispositions
expressly permitted by this Agreement.
7.2. CREATION OF LIENS. Create or suffer to exist any Lien or transfer
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.
7.3. GUARANTEES. Become liable upon the obligations or liabilities of
any Person by assumption, endorsement or guaranty thereof or otherwise (other
than to Lenders) except (a) the cross guarantee provisions of this Agreement,
(b) cross corporate guarantees made in the
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Ordinary Course of Business with vendors and in connection with other trade
payable financing incurred by any Borrower or any Subsidiary of any Borrower
(including, without limitation, with respect to any obligation to Motorola under
the Motorola Documents), (c) the endorsement of checks in the Ordinary Course of
Business, and (d) the guaranty to be executed by Brightstar with respect to a
lease to be executed by Brightstar US so long as the lease payments under such
lease are not prohibited by Section 7.11.
7.4. INVESTMENTS. Purchase or acquire obligations or Equity Interests
of, or any other interest in, any Person, except (a) obligations issued or
guaranteed by the United States of America or any agency thereof, (b) commercial
paper with maturities of not more than 180 days and a published rating of not
less than A-1 or P-1 (or the equivalent rating), (c) certificates of time
deposit and bankers' acceptances having maturities of not more than 180 days and
repurchase agreements backed by United States government securities of a
commercial bank if (i) such bank has a combined capital and surplus of at least
$500,000,000, or (ii) its debt obligations, or those of a holding company of
which it is a Subsidiary, are rated not less than A (or the equivalent rating)
by a nationally recognized investment rating agency, (d) U.S. money market funds
that invest solely in obligations issued or guaranteed by the United States of
America or an agency thereof, (e) initial capital investments by a Borrower in
any Foreign Subsidiary or joint venture entered into by such Borrower not to
exceed $2,500,000 in any such Foreign Subsidiary or joint venture so long as
prior to and after giving effect to any such investment (i) Borrowers shall have
Undrawn Availability of at least $10,000,000, and (ii) no Default or Event of
Default shall have occurred and be continuing or would occur as a result
thereof, and (f) investments in Domestic Subsidiaries and Affiliates of a
Borrower not to exceed the aggregate amount of $10,000,000 (inclusive of all
investments made pursuant to clause (e) of this section and all acquisitions
made pursuant to Section 7.1(a) hereof) in any calendar year so long as prior to
and after giving effect to any such investment (i) Borrowers shall have Undrawn
Availability of at least $10,000,000 and (ii) no Default or Event of Default
shall have occurred and be continuing.
7.5. LOANS. Make advances, loans or extensions of credit to any Person,
including any Parent, Subsidiary or Affiliate except with respect to (a) the
extension of commercial trade credit in connection with the sale of Inventory in
the Ordinary Course of Business and (b) intercompany loans among US Borrowers so
long as such loans are evidenced by a promissory note and such note is pledged
and endorsed to Agent.
7.6. CAPITAL EXPENDITURES. Contract for, purchase or make any
expenditure or commitments for Capital Expenditures in any Fiscal Year in an
aggregate amount for all Borrowers in excess of $5,500,000.
7.7. DIVIDENDS. Declare, pay or make any dividend or distribution on
any shares of the common stock or preferred stock of any Borrower (other than
dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock) or apply any of its funds, property or assets to
the purchase, redemption or other retirement of any common or preferred stock,
or of any options to purchase or acquire any such shares of common or preferred
stock of any Borrower except that (i) Borrowers shall be permitted to make the
dividends set forth in Section 2.21, (ii) Borrowers shall be permitted to make
dividends (other than dividends
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described in clause (i) of this Section 7.7) so long as (a) a notice of
termination with regard to this Agreement shall not be outstanding, (b) no Event
of Default or Default shall have occurred or would occur as a result thereof,
(c) the purpose for such dividend shall be as set forth in writing to Agent at
least ten (10) days prior to such dividend and such dividend shall in fact be
used for such purpose, (d) EBITDA is in excess of $30,000,000 as of the end of
the month immediately preceding such dividend payment calculated as of the
twelve months then ended and calculated assuming that such dividend was made
during such twelve month period, (e) such dividend was unanimously approved by
the Board of Directors of Brightstar and (f) immediately after giving effect to
the payment of such dividend, Borrowers shall have Undrawn Availability of at
least $10,000,000, and (iii) Brightstar shall be permitted to redeem shares of
the Purchased Preferred Stock in accordance with the terms thereof as in effect
on the Closing Date for an aggregate price (together with the amount permitted
to be paid under Section 7.21 by Brightstar on account of the Subordinated
Notes) of $30,000,000 payable solely out of the proceeds of the IPO and provided
that the remaining outstanding Purchased Preferred Stock after giving effect to
such redemption shall be converted to common stock of Brightstar.
7.8. INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt including, without limitation, all
obligations to Motorola under the Motorola Documents) except in respect of (i)
Indebtedness to Lenders; (ii) Indebtedness incurred for Capital Expenditures
permitted under Section 7.6 hereof (which amount shall include Indebtedness for
Capitalized Lease Obligations included in clause (iv) of this Section); (iii)
Indebtedness due under the Subordinated Loan Documentation; and (iv)
Indebtedness not to exceed the aggregate amount of (i) $50,000,000 during the
period commencing on the Closing Date and ending on the six month anniversary
thereof and (ii) $30,000,000 at any time thereafter $30,000,000 consisting of
unsecured lines of credit and Capitalized Lease Obligations (which amount shall
include all Indebtedness under clause (ii) of this Section).
7.9. NATURE OF BUSINESS. Substantially change the nature of the
business in which it is presently engaged, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property
other than in the Ordinary Course of Business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
7.10. TRANSACTIONS WITH AFFILIATES. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise enter into any transaction or deal with, any Affiliate, except
transactions disclosed to the Agent, which are in the Ordinary Course of
Business, on an arm's-length basis on terms and conditions no less favorable
than terms and conditions which would have been obtainable from a Person other
than an Affiliate except that Borrowers shall be permitted to make the
investments set forth in Section 7.4(e) and (f) hereof.
7.11. LEASES. Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property would exceed $2,500,000 in any one Fiscal Year in the aggregate for all
Borrowers.
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7.12. SUBSIDIARIES.
(a) Form any Domestic Subsidiary unless (i) such Domestic
Subsidiary expressly joins in this Agreement as a borrower or a guarantor and
becomes jointly and severally liable for the obligations of Borrowers hereunder,
under the Revolving Credit Notes, and under any other agreement between any
Borrower and Lenders and (ii) Agent shall have received all documents, including
legal opinions, it may reasonably require to establish compliance with each of
the foregoing conditions, PROVIDED, HOWEVER, that the aggregate amount of the
annual investment in any such Domestic Subsidiary shall be in compliance with
Section 7.4(f) hereof and PROVIDED, FURTHER, that Brightstar shall be permitted
to form a domestic Subsidiary in connection with the Mexican Debt Infusion
Project and compliance with clauses (i) and (ii) hereof shall not be required so
long as such Subsidiary is a holding company formed solely to acquire the
capital stock of Brightstar Mexico owned by Brightstar and such Subsidiary is
thereafter merged with and into Brightstar Mexico.
(b) Nothing set forth in clause (a) of this Section shall
prohibit Borrowers from entering into any partnership, joint venture or similar
arrangement or forming any Foreign Subsidiary, PROVIDED, HOWEVER, that the
aggregate amount of the initial investment in any such joint venture, similar
arrangement or Foreign Subsidiary shall not exceed the amount set forth in
Section 7.4(e) hereof and shall be in compliance with Section 7.4(f) hereof.
7.13. FISCAL YEAR AND ACCOUNTING CHANGES. Change its Fiscal Year from
December 31 or make any change (i) in accounting treatment and reporting
practices except as required by GAAP or (ii) in tax reporting treatment except
as required by law.
7.14. PLEDGE OF CREDIT. Now or hereafter pledge Agent's or any Lender's
credit on any purchases or for any purpose whatsoever or use any portion of any
Advance in or for any business other than such Borrower's business as conducted
on the date of this Agreement.
7.15. AMENDMENT OF ARTICLES OF INCORPORATION AND BY-LAWS. Amend, modify
or waive any term or material provision of its Articles of Incorporation or
By-Laws unless required by law or in connection with the IPO solely to permit
the occurrence of the IPO.
7.16. COMPLIANCE WITH ERISA. (i) (x) Maintain, or permit any member of
the Controlled Group to maintain, or (y) become obligated to contribute, or
permit any member of the Controlled Group to become obligated to contribute, to
any Plan, other than those Plans disclosed on SCHEDULE 5.8(D), (ii) engage, or
permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction", as that term is defined in section 406 of ERISA and
Section 4975 of the Code, (iii) incur, or permit any member of the Controlled
Group to incur, any "accumulated funding deficiency", as that term is defined in
Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any
member of the Controlled Group to terminate, any Plan where such event could
result in any liability of any Borrower or any member of the Controlled Group or
the imposition of a lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any
member of the
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Controlled Group to assume, any obligation to contribute to any Multiemployer
Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any member of the
Controlled Group to incur, any withdrawal liability to any Multiemployer Plan;
(vii) fail promptly to notify Agent of the occurrence of any Termination Event,
(viii) fail to comply, or permit a member of the Controlled Group to fail to
comply, with the requirements of ERISA or the Code or other applicable laws in
respect of any Plan, (ix) fail to meet, or permit any member of the Controlled
Group to fail to meet, all minimum funding requirements under ERISA or the Code
or postpone or delay or allow any member of the Controlled Group to postpone or
delay any funding requirement with respect of any Plan.
7.17. PREPAYMENT OF INDEBTEDNESS. Except as permitted pursuant to
Section 7.21 hereof, at any time, directly or indirectly, prepay any
Indebtedness (other than to Lenders), or repurchase, redeem, retire or otherwise
acquire any Indebtedness of any Borrower except that Borrowers shall be
permitted to prepay trade payables (including, without limitation, any
obligations to Motorola under the Motorola Documents) in order to obtain a
discount on such payables.
7.18. ANTI-TERRORISM LAWS. No Borrower shall, until satisfaction in
full of the Obligations and termination of this Agreement, nor shall it permit
any Affiliate or agent to:
(a) Conduct any business or engage in any transaction or
dealing with any Blocked Person, including the making or receiving any
contribution of funds, goods or services to or for the benefit of any Blocked
Person.
(b) Deal in, or otherwise engage in any transaction relating
to, any property or interests in property blocked pursuant to the Executive
Order No. 13224.
(c) Engage in or conspire to engage in any transaction that
evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in the Executive Order No. 13224, the
USA Patriot Act or any other Anti-Terrorism Law. Borrower shall deliver to
Lenders any certification or other evidence requested from time to time by any
Lender in its sole discretion, confirming Borrower's compliance with this
Section.
7.19. INTENTIONALLY OMITTED.
7.20. TRADING WITH THE ENEMY ACT. Engage in any business or activity in
violation of the Trading with the Enemy Act.
7.21. SUBORDINATED NOTE. At any time, directly or indirectly, pay,
prepay, repurchase, redeem, retire or otherwise acquire, or make any payment on
account of any principal of, interest on or premium payable in connection with
the repayment or redemption of the Subordinated Note, except (i) Brightstar
shall be permitted to prepay, repurchase, redeem, retire or otherwise acquire
the Subordinated Notes for an aggregate price (together with the amount
permitted to be paid under Section 7.7 by Brightstar on account of the Purchased
Preferred Stock) not to exceed $30,000,000 payable solely out of the proceeds of
the IPO and (ii) as expressly permitted by the terms of the Subordinated Loan
Documentation as in effect on the Closing Date.
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7.22. OTHER AGREEMENTS. Enter into any material amendment, waiver or
modification of the Subordinated Loan Documentation, the Motorola Documents or
any agreements related to any of the foregoing.
VIII. CONDITIONS PRECEDENT.
8.1. CONDITIONS TO INITIAL ADVANCES. The agreement of Lenders to make
the initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:
(a) REVOLVING CREDIT NOTE. Agent shall have received the
Revolving Credit Note duly executed and delivered by an authorized officer of
each Borrower;
(b) FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including any Uniform Commercial Code financing statement) required by this
Agreement, any related agreement or under law or reasonably requested by the
Agent to be filed, registered or recorded in order to create, in favor of Agent,
a perfected security interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested, and Agent shall
have received an acknowledgment copy, or other evidence satisfactory to it, of
each such filing, registration or recordation and satisfactory evidence of the
payment of any necessary fee, tax or expense relating thereto;
(c) CORPORATE PROCEEDINGS OF BORROWERS. Agent shall have
received a copy of the resolutions in form and substance reasonably satisfactory
to Agent, of the Board of Directors of each Borrower authorizing (i) the
execution, delivery and performance of this Agreement, the Revolving Credit
Notes, any related agreements (collectively the "DOCUMENTS") and (ii) the
granting by each Borrower of the security interests in and liens upon the
Collateral in each case certified by the Secretary or an Assistant Secretary of
each Borrower as of the Closing Date; and, such certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded as of the date of such certificate;
(d) INCUMBENCY CERTIFICATES OF BORROWERS. Agent shall have
received a certificate of the Secretary or an Assistant Secretary of each
Borrower, dated the Closing Date, as to the incumbency and signature of the
officers of each Borrower executing this Agreement, the Other Documents, any
certificate or other documents to be delivered by it pursuant hereto, together
with evidence of the incumbency of such Secretary or Assistant Secretary;
(e) CERTIFICATES. Agent shall have received a copy of the
Articles or Certificate of Incorporation, each Borrower, and all amendments
thereto, certified by the Secretary of State or other appropriate official of
its jurisdiction of incorporation together with copies of the By-Laws of each
Borrower and all agreements of each Borrower's shareholders certified as
accurate and complete by the Secretary of each Borrower;
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(f) GOOD STANDING CERTIFICATES. Agent shall have received good
standing certificates for each Borrower dated not more than thirty days prior to
the Closing Date, issued by the Secretary of State or other appropriate official
of each Borrower's jurisdiction of incorporation and each jurisdiction where the
conduct of each Borrower's business activities or the ownership of its
properties necessitates qualification;
(g) LEGAL OPINION. Agent shall have received the executed
legal opinion of Xxxxxxxxxxx and Xxxxxxxx in form and substance satisfactory to
Agent which shall cover such matters incident to the transactions contemplated
by this Agreement, the Revolving Credit Notes, the Other Documents and related
agreements as Agent may reasonably require and each Borrower hereby authorizes
and directs such counsel to deliver such opinions to Agent and Lenders;
(h) NO LITIGATION. (i) No litigation, investigation or
proceeding before or by any arbitrator or Governmental Body shall be continuing
or threatened against any Borrower or against the officers or directors of any
Borrower (A) in connection with this Agreement, the Other Documents, the
Subordinated Loan Documents or any of the transactions contemplated thereby and
which, in the reasonable opinion of Agent, is deemed material or (B) which
could, in the reasonable opinion of Agent, have a Material Adverse Effect on any
Borrower; and (ii) no injunction, writ, restraining order or other order of any
nature materially adverse to any Borrower or the conduct of its business or
inconsistent with the due consummation of the Transactions shall have been
issued by any Governmental Body;
(i) FINANCIAL CONDITION CERTIFICATES. Agent shall have
received an executed Financial Condition Certificate in the form of EXHIBIT
8.1(K);
(j) COLLATERAL EXAMINATION. Agent shall have completed
Collateral examinations and received appraisals, the results of which shall be
satisfactory in form and substance to Lenders, of the Receivables, Inventory and
General Intangibles of each Borrower and all books and records in connection
therewith and Agent shall have obtained satisfactory trade references. In
furtherance of the foregoing, Agent shall have performed due diligence on
Receivables due from Customers outside of the United States, including, without
limitation, the arrangement between TelCel and Borrowers with respect to
unsecured loans incurred or to be incurred by Borrowers;
(k) FEES. Agent shall have received all fees payable to Agent
and Lenders on or prior to the Closing Date hereunder, including pursuant to
Article III hereof;
(l) FINANCIAL STATEMENTS. Agent shall have received a copy of
the March Financial Statements, the audited Financial Statements and Projections
which shall be satisfactory in all respects to Lenders and such March Financial
Statements shall not materially differ from the internally prepared statements
provided to Agent prior to the Closing Date. Additionally, Agent shall have
received and be satisfied with the accrued expense account of Borrowers on a
combined basis as of March 31, 2004;
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(m) INTERCREDITOR AGREEMENT. Agent shall have entered into an
Intercreditor Agreement with Motorola, Brightstar, Brightstar US and Brightstar
PR and which shall set forth the basis upon which Motorola may exercise remedies
against the Collateral in which it has a second priority lien therein;
(n) INSURANCE. Agent shall have received in form and substance
satisfactory to Agent, certified copies of Borrowers' casualty insurance
policies, together with loss payable endorsements on Agent's standard form of
loss payee endorsement naming Agent as loss payee, and certified copies of
Borrowers' liability insurance policies, together with endorsements naming Agent
as a co-insured;
(o) PAYMENT INSTRUCTIONS. Agent shall have received written
instructions from Borrowers directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(p) BLOCKED ACCOUNTS. Agent shall have received duly executed
agreements establishing the Blocked Accounts or Depository Accounts with
financial institutions acceptable to Agent for the collection or servicing of
the Receivables and proceeds of the Collateral;
(q) CONSENTS. Agent shall have received any and all Consents
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Agent shall have received such Consents
and waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary;
(r) NO ADVERSE MATERIAL CHANGE. (i) since December 31, 2003,
there shall not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect and (ii) no
representations made or information supplied to Agent or Lenders shall have been
proven to be inaccurate or misleading in any material respect;
(s) LEASEHOLD AGREEMENTS. Agent shall have received landlord,
mortgagee or warehouseman agreements satisfactory to Agent with respect to all
premises leased by Borrowers at which Inventory and books and records are
located;
(t) THIRD PARTY DOCUMENTATION. Agent shall have received final
executed copies of the Motorola Documents and the Subordinated Loan
Documentation (including an amendment thereto pursuant to which the amount of
the "Senior Obligations" and the "Guarantor Senior Obligations" defined therein
is increased to at least $100,000,000) which shall contain terms and provisions,
including subordination terms, satisfactory to Agent;
(u) OTHER DOCUMENTS. Agent shall have received the executed
Other Documents, all in form and substance satisfactory to Agent;
(v) CONTRACT REVIEW. Agent shall have reviewed all material
contracts of Borrowers including leases, union contracts, labor contracts,
vendor supply contracts, license agreements, distributorship agreements and
warranty and employment agreements and such contracts and agreements shall be
satisfactory in all respects to Agent;
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(w) CLOSING CERTIFICATE. Agent shall have received a closing
certificate signed by the Chief Financial Officer of each Borrower dated as of
the date hereof, stating that (i) all representations and warranties set forth
in this Agreement and the Other Documents are true and correct on and as of such
date, (ii) Borrowers are on such date in compliance with all the terms and
provisions set forth in this Agreement and the Other Documents and (iii) on such
date no Default or Event of Default has occurred or is continuing;
(x) BORROWING BASE. Agent shall have received evidence from
Borrowers that the aggregate amount of Eligible Receivables, Eligible Foreign
Receivables, Eligible Insured Foreign Receivables and Eligible Inventory is
sufficient in value and amount to support Advances in the amount requested by
Borrowers on the Closing Date;
(y) UNDRAWN AVAILABILITY. After giving effect to the initial
Advances hereunder, Borrowers shall have Undrawn Availability of at least
$10,000,000;
(z) COMPLIANCE WITH LAWS. Agent shall be reasonably satisfied
that each Borrower is in compliance with all pertinent federal, state, local or
territorial regulations, including those with respect to the Federal
Occupational Safety and Health Act, the Environmental Protection Act, ERISA and
the Trading with the Enemy Act; and
(aa) OTHER. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
Transactions shall be satisfactory in form and substance to Agent and its
counsel.
8.2. CONDITIONS TO EACH ADVANCE. The agreement of Lenders to make any
Advance requested to be made on any date (including the initial Advance), is
subject to the satisfaction of the following conditions precedent as of the date
such Advance is made:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by any Borrower in or pursuant to this
Agreement, the Other Documents and any related agreements to which it is a
party, and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement, the Other Documents or any related
agreement shall be true and correct in all material respects on and as of such
date as if made on and as of such date;
(b) NO DEFAULT. No Event of Default or Default shall have
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date and, in the case of the initial
Advance, after giving effect to the consummation of the transactions
contemplated by the Acquisition Agreement; provided, however that Agent, in its
sole discretion, may continue to make Advances notwithstanding the existence of
an Event of Default or Default and that any Advances so made shall not be deemed
a waiver of any such Event of Default or Default; and
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(c) MAXIMUM ADVANCES. In the case of any type of Advance
requested to be made, after giving effect thereto, the aggregate amount of such
type of Advance shall not exceed the maximum amount of such type of Advance
permitted under this Agreement.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO BORROWERS.
Each Borrower shall, until satisfaction in full of the Obligations and
the termination of this Agreement:
9.1. DISCLOSURE OF MATERIAL MATTERS. Immediately upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral, including any Borrower's
reclamation or repossession of, or the return to any Borrower of, a material
amount of goods or claims or disputes asserted by any Customer or other obligor.
9.2. SCHEDULES. Deliver to Agent on or before the fifteenth (15th) day
of each month as and for the prior month (a) accounts receivable ageings
inclusive of reconciliations to the general ledger, (b) accounts payable
schedules inclusive of reconciliations to the general ledger and (c) Inventory
reports, PROVIDED, however, that if Average Undrawn Availability is less than
$10,000,000 with respect to any calendar month, Borrowers shall be required to
report sales, cash remittances and credits on Friday of each week as and for the
week ending on the close of business on the immediately preceding Thursday.
Additionally, Borrowers shall deliver to Agent on Friday of each week as and for
the week ending on the close of business on the immediately preceding Thursday,
a Borrowing Base Certificate in form and substance satisfactory to Agent (which
shall be calculated as of the last day of the prior week and which shall not be
binding upon Agent or restrictive of Agent's rights under this Agreement). In
addition, each Borrower will deliver to Agent at such intervals as Agent may
require: (i) confirmatory assignment schedules, (ii) copies of Customer's
invoices, (iii) evidence of shipment or delivery, and (iv) such further
schedules, documents and/or information regarding the Collateral as Agent may
require including trial balances and test verifications. Agent shall have the
right to confirm and verify all Receivables by any manner and through any medium
it considers advisable and do whatever it may deem reasonably necessary to
protect its interests hereunder. The items to be provided under this Section are
to be in form satisfactory to Agent and executed by each Borrower and delivered
to Agent from time to time solely for Agent's convenience in maintaining records
of the Collateral, and any Borrower's failure to deliver any of such items to
Agent shall not affect, terminate, modify or otherwise limit Agent's Lien with
respect to the Collateral.
9.3. ENVIRONMENTAL REPORTS. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.8, with a
certificate signed by the President of each Borrower stating, to the best of his
knowledge, that each Borrower is in compliance in all
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material respects with all federal, state and local Environmental Laws. To the
extent any Borrower is not in compliance with the foregoing laws, the
certificate shall set forth with specificity all areas of non-compliance and the
proposed action such Borrower will implement in order to achieve full
compliance.
9.4. LITIGATION. Promptly notify Agent in writing of any claim,
litigation, suit or administrative proceeding affecting any Borrower, whether or
not the claim is covered by insurance, and of any litigation, suit or
administrative proceeding, which in any such case affects the Collateral or
which could reasonably be expected to have a Material Adverse Effect on any
Borrower.
9.5. MATERIAL OCCURRENCES. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event of default
under the Subordinated Loan Documentation; (c) any event which with the giving
of notice or lapse of time, or both, would constitute an event of default under
the Subordinated Loan Documentation or the Motorola Security Documents; (d) any
event, development or circumstance whereby any financial statements or other
reports furnished to Agent fail in any material respect to present fairly, in
accordance with GAAP consistently applied, the financial condition or operating
results of any Borrower as of the date of such statements; (e) any accumulated
retirement plan funding deficiency which, if such deficiency continued for two
plan years and was not corrected as provided in Section 4971 of the Code, could
subject any Borrower to a tax imposed by Section 4971 of the Code; (f) each and
every default by any Borrower which might result in the acceleration of the
maturity of any Indebtedness, including the names and addresses of the holders
of such Indebtedness with respect to which there is a default existing or with
respect to which the maturity has been or could be accelerated, and the amount
of such Indebtedness; and (g) any other development in the business or affairs
of any Borrower which could reasonably be expected to have a Material Adverse
Effect; in each case describing the nature thereof and the action Borrowers
propose to take with respect thereto.
9.6. GOVERNMENT RECEIVABLES. Notify Agent immediately if any of its
Receivables arise out of contracts between any Borrower and the United States,
any state, or any department, agency or instrumentality of any of them.
9.7. ANNUAL FINANCIAL STATEMENTS. Furnish Agent and Lenders within
ninety (90) days after the end of each Fiscal Year of Borrowers, financial
statements of Borrowers on a consolidating and consolidated basis including, but
not limited to, statements of income and stockholders' equity and cash flow from
the beginning of the current Fiscal Year to the end of such Fiscal Year and the
balance sheet as at the end of such Fiscal Year, all prepared in accordance with
GAAP applied on a basis consistent with prior practices, and in reasonable
detail and reported upon without qualification by an independent certified
public accounting firm selected by Borrowers and satisfactory to Agent (the
"ACCOUNTANTS"). The report of the Accountants shall be accompanied by a
statement of the Accountants certifying that (i) they have caused this Agreement
to be reviewed, (ii) in making the examination upon which such report was based
either no information came to their attention which to their knowledge
constituted an Event of Default or a Default under this Agreement or any related
agreement or, if such information came to their attention, specifying any such
Default or Event of Default, its nature,
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when it occurred and whether it is continuing, and such report shall contain or
have appended thereto calculations which set forth Borrowers' compliance with
the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7,
7.8 and 7.11 hereof. In addition, the reports shall be accompanied by a
Compliance Certificate.
9.8. MONTHLY FINANCIAL STATEMENTS. Furnish Agent and Lenders within
thirty (30) days after the end of each month, an unaudited balance sheet of
Borrowers on a consolidated and consolidating basis and unaudited statements of
income and stockholders' equity and cash flow of Borrowers on a consolidated and
consolidating basis reflecting results of operations from the beginning of the
Fiscal Year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal and recurring year end adjustments that individually
and in the aggregate are not material to Borrowers' business. The reports shall
be accompanied by a Compliance Certificate.
9.9. OTHER REPORTS. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as each Borrower shall send to its
stockholders and (ii) copies of all notices, reports, financial statements and
other materials sent pursuant to the Subordinated Loan Documentation.
9.10. ADDITIONAL INFORMATION. Furnish Agent with such additional
information as Agent shall reasonably request in order to enable Agent to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Revolving Credit Notes have been complied with by Borrowers
including, without the necessity of any request by Agent, (a) copies of all
environmental audits and reviews, (b) at least thirty (30) days prior thereto,
notice of any Borrower's opening of any new office or place of business or any
Borrower's closing of any existing office or place of business, and (c) promptly
upon any Borrower's learning thereof, notice of any labor dispute to which any
Borrower may become a party, any strikes or walkouts relating to any of its
plants or other facilities, and the expiration of any labor contract to which
any Borrower is a party or by which any Borrower is bound.
9.11. PROJECTED OPERATING BUDGET. Furnish Agent and Lenders, for each
Fiscal Year no later than February 15 of such Fiscal Year commencing with Fiscal
Year 2005, a month by month projected operating budget and cash flow of
Borrowers on a consolidated and consolidating basis for such Fiscal Year
(including an income statement for each month and a balance sheet as at the end
of the last month in each fiscal quarter), such projections to be accompanied by
a certificate signed by the President or Chief Financial Officer of each
Borrower to the effect that such projections have been prepared on the basis of
sound financial planning practice consistent with past budgets and financial
statements and that such officer has no reason to question the reasonableness of
any material assumptions on which such projections were prepared.
9.12. VARIANCES FROM OPERATING BUDGET. Furnish Agent, concurrently with
the delivery of the financial statements referred to in Section 9.7 and each
quarterly report, a written report summarizing all material variances from
budgets submitted by Borrowers pursuant to Section 9.11 and a discussion and
analysis by management with respect to such variances.
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9.13. NOTICE OF SUITS, ADVERSE EVENTS. Furnish Agent with prompt
written notice of (i) any lapse or other termination of any Consent issued to
any Borrower by any Governmental Body or any other Person that is material to
the operation of any Borrower's business, (ii) any refusal by any Governmental
Body or any other Person to renew or extend any such Consent; and (iii) copies
of any periodic or special reports filed by any Borrower with any Governmental
Body or Person, if such reports indicate any material change in the business,
operations, affairs or condition of any Borrower, or if copies thereof are
requested by Lender, and (iv) copies of any material notices and other
communications from any Governmental Body or Person which specifically relate to
any Borrower.
9.14. ERISA NOTICES AND REQUESTS. Furnish Agent with immediate written
notice in the event that (i) any Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which such Borrower or any member of the Controlled Group has taken, is taking,
or proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) any Borrower or any member of the Controlled Group knows
or has reason to know that a prohibited transaction (as defined in Sections 406
of ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which such Borrower or any member of
the Controlled Group has taken, is taking or proposes to take with respect
thereto, (iii) a funding waiver request has been filed with respect to any Plan
together with all communications received by any Borrower or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Borrower or any member of the Controlled
Group was not previously contributing shall occur, (v) any Borrower or any
member of the Controlled Group shall receive from the PBGC a notice of intention
to terminate a Plan or to have a trustee appointed to administer a Plan,
together with copies of each such notice, (vi) any Borrower or any member of the
Controlled Group shall receive any favorable or unfavorable determination letter
from the Internal Revenue Service regarding the qualification of a Plan under
Section 401(a) of the Code, together with copies of each such letter; (vii) any
Borrower or any member of the Controlled Group shall receive a notice regarding
the imposition of withdrawal liability, together with copies of each such
notice; (viii) any Borrower or any member of the Controlled Group shall fail to
make a required installment or any other required payment under Section 412 of
the Code on or before the due date for such installment or payment; (ix) any
Borrower or any member of the Controlled Group knows that (a) a Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC
has instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan.
9.15. TAX SHELTER PROVISIONS. Furnish Agent promptly after any Borrower
determines that it intends to treat any of the Advances or related transactions
as being a "reportable transaction" as provided in Section 6.9 with
(1) a written notice of such intention to the Agent; and
(2) a duly completed copy of IRS Form 8886 or any successor form.
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9.16. ADDITIONAL DOCUMENTS. Execute and deliver to Agent, upon request,
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.
9.17. ELIGIBLE FOREIGN RECEIVABLES. Provide Agent with prior written
notice of its intention to obtain credit insurance (including any Ex-Im Bank
guaranty) on any Eligible Foreign Receivables.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1. failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any Other Document;
10.2. any representation or warranty made or deemed made by any
Borrower in this Agreement, any Other Document or any related agreement or in
any certificate, document or financial or other statement furnished at any time
in connection herewith or therewith shall prove to have been misleading in any
material respect on the date when made or deemed to have been made;
10.3. failure by any Borrower to (i) furnish financial information when
due or when requested which is unremedied for a period of five (5) days with
respect to all weekly reporting and fifteen (15) days with respect to all other
reporting, or (ii) permit the inspection of its books or records;
10.4. issuance of a notice of Lien, levy, assessment, injunction or
attachment against any Borrower's Inventory or Receivables or against a material
portion of any Borrower's other property which is not stayed or lifted within
thirty (30) days;
10.5. except as otherwise provided for in Sections 10.1, 10.3 and
10.5(ii), (i) failure or neglect of any Borrower to perform, keep or observe any
term, provision, condition or covenant, contained in Sections 4.2, 4.3, 4.4,
4.5, 4.6, 4.9, 4.10, 4.11, 4.15(h), 6.5 or Article VII, or (ii) failure or
neglect of any Borrower to perform, keep or observe any other term, provision,
condition, covenant herein contained, or contained in any Other Document or any
other agreement or arrangement, now or hereafter entered into between any
Borrower and Agent or any Lender (to the extent such breach is not otherwise
embodied in any other provision of this Article X for which a different grace or
cure period is specified or which would constitute an immediate Event of Default
under this Agreement or any Other Document), which is not cured within thirty
(30) days from the occurrence of such failure or neglect;
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10.6. any judgment or judgments are rendered against any Borrower for
an aggregate amount in excess of $1,000,000 and (i) enforcement proceedings
shall have been commenced by a creditor upon such judgment, (ii) there shall be
any period of thirty (30) consecutive days during which a stay of enforcement of
such judgment, by reason of a pending appeal or otherwise, shall not be in
effect, or (iii) any such judgment results in the creation of a Lien upon any of
the Collateral (other than a Permitted Encumbrance);
10.7. any Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days,
any petition filed against it in any involuntary case under such bankruptcy
laws, or (vii) take any action for the purpose of effecting any of the
foregoing;
10.8. any Borrower shall admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business;
10.9. any Affiliate (other than an Investor Affiliate) or any
Subsidiary of any Borrower, shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) admit in writing its inability, or be generally unable, to pay
its debts as they become due or cease operations of its present business, (iii)
make a general assignment for the benefit of creditors, (iv) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing;
10.10. any change in any Borrower's results of operations or condition
(financial or otherwise) which in Agent's opinion has a Material Adverse Effect;
10.11. any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest;
10.12. (a) an event of default has occurred and been declared under the
Subordinated Loan Documentation, which default shall not have been cured or
waived within any applicable grace period or (b) Motorola has provided any
Borrower with notice of the termination of any Motorola Distribution Agreement
or any Motorola Distribution Agreement is terminated or any amendments,
modifications or revisions are made to the Motorola Documents which in Agent's
opinion has a Material Adverse Effect;
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10.13. a default of the obligations of any Borrower under any other
agreement to which it is a party shall occur which could reasonably be expected
to result in a Material Adverse Effect which default is not cured within any
applicable grace period;
10.14. any Change of Control shall occur;
10.15. any material provision of this Agreement or any Other Document
shall, for any reason, cease to be valid and binding on Borrower, or any
Borrower shall so claim in writing to Agent or any Lender;
10.16. (i) any Governmental Body shall (A) revoke, terminate, suspend
or adversely modify any license, permit, patent trademark or tradename of any
Borrower or (B) commence proceedings to suspend, revoke, terminate or adversely
modify any such license, permit, trademark, tradename or patent and such
proceedings shall not be dismissed or discharged within sixty (60) days, or (c)
schedule or conduct a hearing on the renewal of any license, permit, trademark,
tradename or patent necessary for the continuation of any Borrower's business
and the staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of such
license, permit, trademark, tradename or patent; (ii) any agreement which is
necessary or material to the operation of any Borrower's business shall be
revoked or terminated and not replaced by a substitute acceptable to Agent
within thirty (30) days after the date of such revocation or termination, and
such revocation or termination and non-replacement would reasonably be expected
to have a Material Adverse Effect on any Borrower;
10.17. any portion of the Collateral in excess of $1,000,000 shall be
seized or taken by a Governmental Body, or any Borrower or the title and rights
of any Borrower or any Original Owner which is the owner of any material portion
of the Collateral shall have become the subject matter of claim, litigation,
suit or other proceeding which might, in the opinion of Agent, upon final
determination, result in impairment or loss of the security provided by this
Agreement or the Other Documents;
10.18. any event of default has occurred under any Motorola Documents;
or
10.19. an event or condition specified in Sections 7.16 or 9.14 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Borrower or
any member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect on any
Borrower.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. RIGHTS AND REMEDIES. (a) Upon the occurrence of (i) an Event of
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; and, (ii) any of the other Events of Default and at any
time thereafter (such default not having
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previously been cured), at the option of Required Lenders all Obligations shall
be immediately due and payable and Lenders shall have the right to terminate
this Agreement and to terminate the obligation of Lenders to make Advances and
(iii) a filing of a petition against any Borrower in any involuntary case under
any state or federal bankruptcy laws, all Obligations shall be immediately due
and payable and the obligation of Lenders to make Advances hereunder shall be
terminated other than as may be required by an appropriate order of the
bankruptcy court having jurisdiction over such Borrower. Upon the occurrence and
during the continuation of any Event of Default, Agent shall have the right to
exercise any and all rights and remedies provided for herein, under the Other
Documents, under the Uniform Commercial Code and at law or equity generally,
including the right to foreclose the security interests granted herein and to
realize upon any Collateral by any available judicial procedure and/or to take
possession of and sell any or all of the Collateral with or without judicial
process. Agent may enter any of any Borrower's premises or other premises
without legal process and without incurring liability to any Borrower therefor,
and Agent may thereupon, or at any time thereafter, in its discretion without
notice or demand, take the Collateral and remove the same to such place as Agent
may deem advisable and Agent may require Borrowers to make the Collateral
available to Agent at a convenient place. With or without having the Collateral
at the time or place of sale, Agent may sell the Collateral, or any part
thereof, at public or private sale, at any time or place, in one or more sales,
at such price or prices, and upon such terms, either for cash, credit or future
delivery, as Agent may elect. Except as to that part of the Collateral which is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Agent shall give Borrowers reasonable notification
of such sale or sales, it being agreed that in all events written notice mailed
to Borrowers at least ten (10) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid for and become the
purchaser, and Agent, any Lender or any other purchaser at any such sale
thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and all such
claims, rights and equities are hereby expressly waived and released by each
Borrower. In connection with the exercise of the foregoing remedies, including
the sale of Inventory, Agent is granted a perpetual nonrevocable, royalty free,
nonexclusive license and Agent is granted permission to use all of each
Borrower's (a) trademarks, trade styles, trade names, patents, patent
applications, copyrights, service marks, licenses, franchises and other
proprietary rights which are used or useful in connection with Inventory for the
purpose of marketing, advertising for sale and selling or otherwise disposing of
such Inventory and (b) Equipment for the purpose of completing the manufacture
of unfinished goods. The cash proceeds realized from the sale of any Collateral
shall be applied to the Obligations in the order set forth in Section 11.5
hereof. Noncash proceeds will only be applied to the Obligations as they are
converted into cash. If any deficiency shall arise, Borrowers shall remain
liable to Agent and Lenders therefor.
(b) To the extent that applicable law imposes duties on the
Agent to exercise remedies in a commercially reasonable manner, each Borrower
acknowledges and agrees that it is not commercially unreasonable for the Agent
(i) to fail to incur expenses reasonably deemed significant by the Agent to
prepare Collateral for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for disposition, (ii)
to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or
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disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against Customers or other Persons obligated on
Collateral or to remove Liens on or any adverse claims against Collateral, (iv)
to exercise collection remedies against Customers and other Persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other Persons, whether or not in the
same business as any Borrower, for expressions of interest in acquiring all or
any portion of such Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
Collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed return from
the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral. Each Borrower acknowledges
that the purpose of this Section 11.1(b) is to provide non-exhaustive
indications of what actions or omissions by the Agent would not be commercially
unreasonable in the Agent's exercise of remedies against the Collateral and that
other actions or omissions by the Agent shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section 11.1(b).
Without limitation upon the foregoing, nothing contained in this Section11.1(b)
shall be construed to grant any rights to any Borrower or to impose any duties
on Agent that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section 11.1(b).
11.2. AGENT'S DISCRETION. Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.
11.3. SETOFF. Subject to Section 14.12, in addition to any other rights
which Agent or any Lender may have under applicable law, upon the occurrence of
an Event of Default hereunder, Agent and such Lender shall have a right,
immediately and without notice of any kind, to apply any Borrower's property
held by Agent and such Lender to reduce the Obligations.
11.4. RIGHTS AND REMEDIES NOT EXCLUSIVE. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any rights or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
11.5. ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT. Notwithstanding
any other provisions of this Agreement to the contrary, after the occurrence and
during the continuance of an Event of Default, all amounts collected or received
by the Agent on account of the
81
Obligations or any other amounts outstanding under any of the Other Documents or
in respect of the Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees) of the Agent in connection with
enforcing its rights and the rights of the Lenders under this Agreement and the
Other Documents and any protective advances made by the Agent with respect to
the Collateral under or pursuant to the terms of this Document;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees) of each of the Lenders in
connection with enforcing its rights under this Agreement and the Other
Documents or otherwise with respect to the Obligations owing to such Lender;
FOURTH, to the payment of all of the Obligations consisting of accrued
fees and interest;
FIFTH, to the payment of the outstanding principal amount of the
Obligations (including the payment or cash collateralization of any outstanding
Letters of Credit);
SIXTH, to all other Obligations and other obligations which shall have
become due and payable under the Other Documents or otherwise and not repaid
pursuant to clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses "FOURTH", "FIFTH" and "SIXTH" above; and (iii) to the extent that any
amounts available for distribution pursuant to clause "FIFTH" above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Agent in a cash collateral account and applied
(A) first, to reimburse the Issuer from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses "FIFTH" and
"SIXTH" above in the manner provided in this Section 11.5.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. WAIVER OF NOTICE. Each Borrower hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all
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instruments, notice of acceptance hereof, notice of loans or advances made,
credit extended, Collateral received or delivered, or any other action taken in
reliance hereon, and all other demands and notices of any description, except
such as are expressly provided for herein.
12.2. DELAY. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any Default or Event of Default.
12.3. JURY WAIVER. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. TERM. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
Borrower, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until October 21, 2008 (the "TERM")
unless sooner terminated as herein provided. Borrowers may terminate this
Agreement at any time upon ninety (90) days' prior written notice upon payment
in full of the Obligations.
13.2. TERMINATION. The termination of the Agreement shall not affect
any Borrower's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully and
indefeasibly paid, disposed of, concluded or liquidated. The security interests,
Liens and rights granted to Agent and Lenders hereunder and the financing
statements filed hereunder shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that Borrowers'
Account may from time to time be temporarily in a zero or credit position, until
all of the Obligations of each Borrower have been indefeasibly paid and
performed in full after the termination of this Agreement or each Borrower has
furnished Agent and Lenders with an indemnification satisfactory to Agent and
Lenders with respect thereto. Accordingly, each
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Borrower waives any rights which it may have under the Uniform Commercial Code
to demand the filing of termination statements with respect to the Collateral,
and Agent shall not be required to send such termination statements to each
Borrower, or to file them with any filing office, unless and until this
Agreement shall have been terminated in accordance with its terms and all
Obligations have been indefeasibly paid in full in immediately available funds.
All representations, warranties, covenants, waivers and agreements contained
herein shall survive termination hereof until all Obligations are indefeasibly
paid and performed in full.
XIV. REGARDING AGENT.
14.1. APPOINTMENT. Each Lender hereby designates PNC to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in the Fee
Letter), charges and collections (without giving effect to any collection days)
received pursuant to this Agreement, for the ratable benefit of Lenders. Agent
may perform any of its duties hereunder by or through its agents or employees.
As to any matters not expressly provided for by this Agreement (including
collection of the Revolving Credit Note) Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders, and such instructions
shall be binding; provided, however, that Agent shall not be required to take
any action which exposes Agent to liability or which is contrary to this
Agreement or the Other Documents or applicable law unless Agent is furnished
with an indemnification reasonably satisfactory to Agent with respect thereto.
14.2. NATURE OF DUTIES. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by any Borrower or any officer
thereof contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any of the
Other Documents or for the value, validity, effectiveness, genuineness, due
execution, enforceability or sufficiency of this Agreement, or any of the Other
Documents or for any failure of any Borrower to perform its obligations
hereunder. 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 of the Other Documents, or
to inspect the properties, books or records of any Borrower. The duties of Agent
as respects the Advances to Borrowers shall be mechanical and administrative in
nature; Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to
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impose upon Agent any obligations in respect of this Agreement except as
expressly set forth herein.
14.3. LACK OF RELIANCE ON AGENT AND RESIGNATION. Independently and
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of each Borrower in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
each Borrower. Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before
making of the Advances or at any time or times thereafter except as shall be
provided by any Borrower pursuant to the terms hereof. Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of any Borrower,
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement, the
Revolving Credit Note, the Other Documents or the financial condition of any
Borrower, or the existence of any Event of Default or any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrowing Agent and upon such resignation, the Required Lenders will
promptly designate a successor Agent in consultation with the Borrowers;
provided, however, Agent reserves the right to remain Agent with respect to
monitoring the Collateral until a successor Agent is designated.
Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent. After any Agent's resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
14.4. CERTAIN RIGHTS OF AGENT. If Agent shall request instructions from
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5. RELIANCE. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-
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fact and shall not be liable for the default or misconduct of any such agents or
attorneys-in-fact selected by Agent with reasonable care.
14.6. NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or a
Borrower referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. 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 Agent shall have received such
directions, 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 Lenders.
14.7. INDEMNIFICATION. To the extent Agent is not reimbursed and
indemnified by Borrowers, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Document; provided that, Lenders shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.
14.8. AGENT IN ITS INDIVIDUAL CAPACITY. With respect to the obligation
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term "Lender" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
any Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
14.9. DELIVERY OF DOCUMENTS. To the extent Agent receives financial
statements required under Sections 9.7, 9.8, 9.11 and 9.12 or Borrowing Base
Certificates from any Borrower pursuant to the terms of this Agreement which any
Borrower is not obligated to deliver to each Lender, Agent will promptly furnish
such documents and information to Lenders.
14.10. BORROWERS' UNDERTAKING TO AGENT. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
each Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro tanto
satisfy the relevant Borrower's obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.
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14.11. NO RELIANCE ON AGENT'S CUSTOMER IDENTIFICATION PROGRAM. Each
Lender acknowledges and agrees that neither such Lender, nor any of its
Affiliates, participants or assignees, may rely on the Agent to carry out such
Lender's, Affiliate's, participant's or assignee's customer identification
program, or other obligations required or imposed under or pursuant to the USA
Patriot Act or the regulations thereunder, including the regulations contained
in 31 CFR 103.121 (as hereafter amended or replaced, the "CIP Regulations"), or
any other Anti-Terrorism Law, including any programs involving any of the
following items relating to or in connection with any Borrower, its Affiliates
or its agents, this Agreement, the Other Documents or the transactions hereunder
or contemplated hereby: (1) any identity verification procedures, (2) any
record-keeping, (3) comparisons with government lists, (4) customer notices or
(5) other procedures required under the CIP Regulations or such other laws.
14.12. OTHER AGREEMENTS. Each of the Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of Agent, set off against the
Obligations, any amounts owing by such Lender to any Borrower or any deposit
accounts of any Borrower now or hereafter maintained with such Lender. Each of
the Lenders further agrees that it shall not, unless specifically requested to
do so by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral the purpose of
which is, or could be, to give such Lender any preference or priority against
the other Lenders with respect to the Collateral.
XV. BORROWING AGENCY.
15.1. BORROWING AGENCY PROVISIONS.
(a) Each Borrower hereby irrevocably designates Borrowing
Agent to be its attorney and agent and in such capacity to borrow, sign and
endorse notes, and execute and deliver all instruments, documents, writings and
further assurances now or hereafter required hereunder, on behalf of such
Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all
loan proceeds hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing
facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. Neither Agent nor
any Lender shall incur liability to Borrowers as a result thereof. To induce
Agent and Lenders to do so and in consideration thereof, each Borrower hereby
indemnifies Agent and each Lender and holds Agent and each Lender harmless from
and against any and all liabilities, expenses, losses, damages and claims of
damage or injury asserted against Agent or any Lender by any Person arising from
or incurred by reason of the handling of the financing arrangements of Borrowers
as provided herein, reliance by Agent or any Lender on any request or
instruction from Borrowing Agent or any other action taken by Agent or any
Lender with respect to this Section 15.1 except due to willful misconduct or
gross (not mere) negligence by the indemnified party (as determined by a court
of competent jurisdiction in a final and non-appealable judgment).
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(c) All Obligations shall be joint and several liabilities of
US Borrowers, and each US Borrower shall make payment (with the understanding
that any payment made by any US Borrower shall be applied to reduce the amount
of the Loans and the remaining payment obligations of all of the Borrowers) upon
the maturity of the Obligations by acceleration or otherwise, and such
obligation and liability on the part of each US Borrower shall in no way be
affected by any extensions, renewals and forbearance granted to Agent or any
Lender to any US Borrower, failure of Agent or any Lender to give any US
Borrower notice of borrowing or any other notice, any failure of Agent or any
Lender to pursue or preserve its rights against any Borrower, the release by
Agent or any Lender of any Collateral now or thereafter acquired from any
Borrower, and such agreement by each US Borrower to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrowers or any Collateral for such Borrower's
Obligations or the lack thereof.
(d) In the event any US Borrower is deemed to be a guarantor
or surety of any other Borrower, then, to the extent such US Borrower is deemed
to be a guarantor or surety, such Borrower hereby (a) agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection and that its obligations shall not be discharged until payment and
performance, in full, of the Obligations has occurred; and (b) waives any and
all suretyship defenses, including, without limitation, with respect to: (1) the
genuineness, validity, regularity, enforceability or any future amendment of, or
change in, this Agreement, any Other Document or any other agreement, document
or instrument to which any Borrower is or may become a party; (2) the absence of
any action to enforce this Agreement or any Other Document or the waiver or
consent by Agent or any Lender with respect to any of the provisions hereof or
thereof; (3) the existence, value or condition of, or failure to perfect its
Lien against, any security for the Obligations or any action, or the absence of
any action, by Agent or any Lender in respect thereof (including the release of
any such security); (4) the insolvency of any Borrower; (5) any change in the
commitment, Advance Rates, Formula Amount, Maximum Revolving Advance Amount,
Brightstar PR's Maximum Revolving Amount or any related provision; (6) the
advance, repayment (including complete repayment) and readvance of Advances from
time to time; (7) any extension or change in the time, manner, place and other
terms and provisions of payment or performance of any of the Obligations; (8)
any waiver, modification, renewal, amendment or restatement of this Agreement or
any Other Document (except as and to the extent expressly modified by such
action); (9) any acceptance by the Agent or any Lender of any partial or late
payment or payment during any default; (10) any surrender, repossession,
foreclosure, sale, leases or other realization, dealing, liquidation, setoff or
disposition respecting any collateral in accordance with this Agreement any
Other Document or applicable law; (11) any investigation, analysis or evaluation
by Agent, any Lender or their respective designees respecting any Borrower or
any other person; or (12) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each US Borrower shall be regarded, and shall be in the same
position, as principal debtor with respect to the Obligations and the PR
Obligations guaranteed hereunder.
(e) In no event shall Brightstar PR be liable for the
repayment of the
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Obligations of US Borrowers nor shall any Collateral pledged by Brightstar PR
secure the Obligations of US Borrowers.
15.2. WAIVER OF SUBROGATION. Each Borrower expressly waives any and all
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which such Borrower may now or hereafter have against the other
Borrowers or other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to the other Borrowers' property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until
termination of this Agreement and repayment in full of the Obligations.
XVI. MISCELLANEOUS.
16.1. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York Any judicial proceeding brought by
or against any Borrower with respect to any of the Obligations, this Agreement,
the Other Documents or any related agreement may be brought in any court of
competent jurisdiction in the State of New York, United States of America, and,
by execution and delivery of this Agreement, each Borrower accepts for itself
and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. Each
Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return
receipt requested) directed to Borrowing Agent at its address set forth in
Section 16.6 and service so made shall be deemed completed five (5) days after
the same shall have been so deposited in the mails of the United States of
America, or, at the Agent's and/or any Lender's option, by service upon
Borrowing Agent which each Borrower irrevocably appoints as such Borrower's
Agent for the purpose of accepting service within the State of New York. Nothing
herein shall affect the right to serve process in any manner permitted by law or
shall limit the right of Agent or any Lender to bring proceedings against any
Borrower in the courts of any other jurisdiction. Each Borrower waives any
objection to jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or based upon
FORUM NON CONVENIENS. Each Borrower waives the right to remove any judicial
proceeding brought against such Borrower in any state court to any federal
court. Any judicial proceeding by any Borrower against Agent or any Lender
involving, directly or indirectly, any matter or claim in any way arising out
of, related to or connected with this Agreement or any related agreement, shall
be brought only in a federal or state court located in the County of New York,
State of New York.
16.2. ENTIRE UNDERSTANDING. (a) (i) This Agreement and the documents
executed concurrently herewith contain the entire understanding between each
Borrower, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and hereinafter
made shall have no force and effect unless in writing, signed by each
Borrower's, Agent's and each Lender's respective officers. Neither this
Agreement nor any portion or
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provisions hereof may be changed, modified, amended, waived, supplemented,
discharged, cancelled or terminated orally or by any course of dealing, or in
any manner other than by an agreement in writing, signed by the party to be
charged. Each Borrower acknowledges that it has been advised by counsel in
connection with the execution of this Agreement and Other Documents and is not
relying upon oral representations or statements inconsistent with the terms and
provisions of this Agreement. (ii) Notwithstanding anything to the contrary set
forth herein, Agent and Lenders agree that Borrowers shall not be charged any
consent or amendment fees by Agent or any Lender in connection with the
execution of two (2) amendments, consents or a combination thereof (for an
aggregate total of two (2) such amendments and/or consents) unless the amendment
and/or consent waives an Event of Default or relates to Sections 6.5, 7.4, 7.6,
7.7, 7.8 or 7.11, or any increases in the Maximum Revolving Advance Amount or
Brightstar PR's Maximum Revolving Amount or any extensions of the Term.
(b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Borrowers may, subject to the provisions of this
Section 16.2 (b), from time to time enter into written supplemental agreements
to this Agreement or the Other Documents executed by Borrowers, for the purpose
of adding or deleting any provisions or otherwise changing, varying or waiving
in any manner the rights of Lenders, Agent or Borrowers thereunder or the
conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:
(i) increase the Commitment Percentage, the
Commitment Amount, the Maximum Revolving Advance Amount or Brightstar PR's
Maximum Revolving Amount.
(ii) extend the maturity of any Revolving Credit Note
or the due date for any amount payable hereunder, or decrease the rate of
interest or any fees or reduce any principal, interest, or fee payable by
Borrowers to Lenders pursuant to this Agreement.
(iii) alter the definition of the term Required
Lenders or alter, amend or modify this Section 16.2(b).
(iv) release any Collateral during any calendar year
(other than in accordance with the provisions of this Agreement) having an
aggregate value in excess of $1,000,000.
(v) change the rights and duties of Agent.
(vi) permit any Revolving Advance to be made if after
giving effect thereto the total of Revolving Advances outstanding hereunder
would exceed the Formula Amount for more than thirty (30) consecutive Business
Days or exceed one hundred and five percent (105%) of the Formula Amount.
(vii) increase the Advance Rates above the Advance
Rates in effect on the Closing Date.
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(viii) release any Borrower or guarantor of the
Obligations.
(ix) increase the Maximum Inventory Sublimit to an
amount greater than $40,000,000.
(x) increase any of the sublimits contained in clause
(b) of the definition of Eligible Foreign Receivables.
(xi) increase any of the sublimits contained in
Section 2.1(a)(y)(i)(b) and (c) hereof.
Any such supplemental agreement shall apply equally to each Lender and
shall be binding upon Borrowers, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
In the event that Agent requests the consent of a Lender pursuant to
this Section 16.2 and such Lender shall not respond or reply to Agent in writing
within ten (10) days of delivery of such request, such Lender shall be deemed to
have consented to the matter that was the subject of the request. In the event
that Agent requests the consent of a Lender pursuant to this Section 16.2 and
such consent is denied, then PNC may, at its option, require such Lender to
assign its interest in the Advances to PNC or to another Lender or to any other
Person designated by the Agent (the "DESIGNATED LENDER"), for a price equal to
the then outstanding principal amount thereof plus accrued and unpaid interest
and fees due such Lender, which interest and fees shall be paid when collected
from Borrowers. In the event PNC elects to require any Lender to assign its
interest to PNC or to the Designated Lender, PNC will so notify such Lender in
writing within forty five (45) days following such Lender's denial, and such
Lender will assign its interest to PNC or the Designated Lender no later than
five (5) days following receipt of such notice pursuant to a Commitment Transfer
Supplement executed by such Lender, PNC or the Designated Lender, as
appropriate, and Agent.
Notwithstanding (a) the existence of a Default or an Event of Default,
(b) that any of the other applicable conditions precedent set forth in Section
8.2 hereof have not been satisfied or (c) any other provision of this Agreement,
Agent may at its discretion and without the consent of the Required Lenders,
voluntarily permit the outstanding Revolving Advances at any time to exceed the
Formula Amount for up to thirty (30) consecutive Business Days (the
"OUT-OF-FORMULA LOANS"). If Agent is willing in its sole and absolute discretion
to make such Out-of-Formula Loans, such Out-of-Formula Loans shall be payable on
demand and shall bear interest at the Default Rate for Revolving Advances
consisting of Domestic Rate Loans; PROVIDED that, if Lenders do make
Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have
changed the limits of Sections 2.1(a), (2.1(c) or 2.4. For purposes of this
paragraph, the discretion granted to Agent hereunder shall not preclude
involuntary overadvances that may result from time to time due to the fact that
the Formula Amount was unintentionally exceeded
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for any reason, including, but not limited to, Collateral previously deemed to
be either "Eligible Receivables", "Eligible Foreign Receivables" or "Eligible
Inventory", as applicable, becomes ineligible, collections of Receivables
applied to reduce outstanding Revolving Advances are thereafter returned for
insufficient funds or overadvances are made to protect or preserve the
Collateral. In the event Agent involuntarily permits the outstanding Revolving
Advances to exceed the Formula Amount by more than five percent (5%), Agent
shall use its efforts to have Borrowers decrease such excess in as expeditious a
manner as is practicable under the circumstances and not inconsistent with the
reason for such excess. Revolving Advances made after Agent has determined the
existence of involuntary overadvances shall be deemed to be involuntary
overadvances and shall be decreased in accordance with the preceding sentence.
No Revolving Advances made pursuant to this paragraph will increase the
Commitment Percentage or Commitment Amount of any Lender.
In addition to (and not in substitution of) the discretionary Revolving
Advances permitted above in this Section 16.2, the Agent is hereby authorized by
Borrowers and the Lenders, from time to time in the Agent's sole discretion, (A)
after the occurrence and during the continuation of a Default or an Event of
Default, or (B) at any time that any of the other applicable conditions
precedent set forth in Section 8.2 hereof have not been satisfied, to make
Revolving Advances to Borrowers on behalf of the Lenders which the Agent, in its
reasonable business judgment, deems necessary or desirable (a) to preserve or
protect the Collateral, or any portion thereof, (b) to enhance the likelihood
of, or maximize the amount of, repayment of the Advances and other Obligations,
or (c) to pay any other amount chargeable to Borrowers pursuant to the terms of
this Agreement; PROVIDED, that at any time after giving effect to any such
Revolving Advances the outstanding Revolving Advances do not exceed one hundred
and five percent (105%) of the Formula Amount. No Revolving Advances made
pursuant to this paragraph will increase the Commitment Percentage or Commitment
Amount of any Lender.
16.3. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS.
(a) This Agreement shall be binding upon and inure to the
benefit of Borrowers, Agent, each Lender, all future holders of the Obligations
and their respective successors and assigns, except that no Borrower may assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of Agent and each Lender.
(b) Each Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"PARTICIPANT"). Each Participant may exercise all rights of payment (including
rights of set-off) with respect to the portion of such Advances held by it or
other Obligations payable hereunder as fully as if such Participant were the
direct holder thereof provided that Borrowers shall not be required to pay to
any Participant more than the amount which it would have been required to pay to
Lender which granted an interest in its Advances or other Obligations payable
hereunder to such Participant had such Lender retained such interest in the
Advances hereunder or other Obligations payable hereunder and in no event shall
Borrowers be required to pay any such amount arising from the same circumstances
and with respect to the same Advances or other Obligations payable hereunder to
both such Lender and such Participant.
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Each Borrower hereby grants to any Participant a continuing security interest in
any deposits, moneys or other property actually or constructively held by such
Participant as security for the Participant's interest in the Advances.
(c) Any Lender may with the consent of Agent which shall not
be unreasonably withheld or delayed sell, assign or transfer all or any part of
its rights under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a "PURCHASING
LENDER", and together with each Participant, each a "TRANSFEREE" and
collectively the "TRANSFEREES"), in minimum amounts of not less than $5,000,000,
pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender,
the transferor Lender, and Agent and delivered to Agent for recording. Upon such
execution, delivery, acceptance and recording, from and after the transfer
effective date determined pursuant to such Commitment Transfer Supplement, (i)
Purchasing Lender thereunder shall be a party hereto and, to the extent provided
in such Commitment Transfer Supplement, have the rights and obligations of a
Lender thereunder with a Commitment Percentage as set forth therein, and (ii)
the transferor Lender thereunder shall, to the extent provided in such
Commitment Transfer Supplement, be released from its obligations under this
Agreement, the Commitment Transfer Supplement creating a novation for that
purpose. Such Commitment Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender of
all or a portion of the rights and obligations of such transferor Lender under
this Agreement and the Other Documents. Each Borrower hereby consents to the
addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender of
all or a portion of the rights and obligations of such transferor Lender under
this Agreement and the Other Documents. Borrowers shall execute and deliver such
further documents and do such further acts and things in order to effectuate the
foregoing.
(d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the "REGISTER")
for the recordation of the names and addresses of each Lender and the
outstanding principal, accrued and unpaid interest and other fees due hereunder.
The entries in the Register shall be conclusive, in the absence of manifest
error, and Borrowers, Agent and Lenders may treat each Person whose name is
recorded in the Register as the owner of the Advance recorded therein for the
purposes of this Agreement. The Register shall be available for inspection by
Borrowers or any Lender at any reasonable time and from time to time upon
reasonable prior notice. Agent shall receive a fee in the amount of $3,500
payable by the applicable Purchasing Lender upon the effective date of each
transfer or assignment to such Purchasing Lender.
(e) Each Borrower authorizes each Lender to disclose to any
Transferee and any prospective Transferee any and all financial information in
such Lender's possession concerning such Borrower which has been delivered to
such Lender by or on behalf of such Borrower pursuant to this Agreement or in
connection with such Lender's credit evaluation of such Borrower.
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16.4. APPLICATION OF PAYMENTS. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any
Borrower makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Borrower's benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
16.5. INDEMNITY. Each Borrower shall indemnify Agent, each Lender, each
direct or indirect Subsidiary or Affiliate of such Lender and each of their
respective officers, directors, Affiliates, attorneys, employees and agents from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including fees and disbursements of counsel) which may be
imposed on, incurred by, or asserted against Agent any Lender or any direct or
indirect Subsidiary or Affiliate of any Lender in any claim, litigation,
proceeding or investigation instituted or conducted by any Governmental Body or
instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the Other Documents, whether or not Agent, any Lender or any direct
or indirect Subsidiary or Affiliate of any Lender is a party thereto, except to
the extent that any of the foregoing arises out of the willful misconduct of the
party being indemnified (as determined by a court of competent jurisdiction in a
final and non-appealable judgment). Without limiting the generality of the
foregoing, this indemnity shall extend to any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
of any kind or nature whatsoever (including fees and disbursements of counsel)
asserted against or incurred by any of the indemnitees described above in this
Section 16.5 by any Person under any Environmental Laws or similar laws by
reason of any Borrower's or any other Person's failure to comply with laws
applicable to solid or hazardous waste materials, including Hazardous Substances
and Hazardous Waste, or other Toxic Substances. Additionally, if any taxes
(excluding taxes imposed upon or measured solely by the net income of Agent and
Lenders, but including any intangibles taxes, stamp tax, recording tax or
franchise tax) shall be payable by Agent, Lenders or Borrowers on account of the
execution or delivery of this Agreement, or the execution, delivery, issuance or
recording of any of the Other Documents, or the creation or repayment of any of
the Obligations hereunder, by reason of any Applicable Law now or hereafter in
effect, Borrowers will pay (or will promptly reimburse Agent and Lenders for
payment of) all such taxes, including interest and penalties thereon, and will
indemnify and hold the indemnitees described above in this Section 16.5 harmless
from and against all liability in connection therewith.
16.6. NOTICE. Any notice or request hereunder may be given to Borrowing
Agent or any Borrower or to Agent or any Lender at their respective addresses
set forth below or at such other address as may hereafter be specified in a
notice designated as a notice of change of address under this Section. Any
notice, request, demand, direction or other communication (for purposes of this
Section 16.6 only, a "NOTICE") to be given to or made upon any party hereto
under any provision of this Loan Agreement shall be given or made by telephone
or in writing
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(which includes by means of electronic transmission (I.E., "e-mail") or
facsimile transmission or by setting forth such Notice on a site on the World
Wide Web (a "WEBSITE POSTING") if Notice of such Website Posting (including the
information necessary to access such site) has previously been delivered to the
applicable parties hereto by another means set forth in this Section 16.6) in
accordance with this Section 16.6. Any such Notice must be delivered to the
applicable parties hereto at the addresses and numbers set forth under their
respective names on Section 16.6 hereof or in accordance with any subsequent
unrevoked Notice from any such party that is given in accordance with this
Section 16.6. Any Notice shall be effective:
(a) In the case of hand-delivery, when delivered;
(b) If given by mail, five days after such Notice is deposited
with the United States Postal Service, with first-class postage prepaid, return
receipt requested;
(c) In the case of a telephonic Notice, when a party is
contacted by telephone, if delivery of such telephonic Notice is confirmed no
later than the next Business Day by hand delivery, a facsimile or electronic
transmission, a Website Posting or an overnight courier delivery of a
confirmatory Notice (received at or before noon on such next Business Day);
(d) In the case of a facsimile transmission, when sent to the
applicable party's facsimile machine's telephone number, if the party sending
such Notice receives confirmation of the delivery thereof from its own facsimile
machine;
(e) In the case of electronic transmission, when actually
received;
(f) In the case of a Website Posting, upon delivery of a
Notice of such posting (including the information necessary to access such site)
by another means set forth in this Section 16.6; and
(g) If given by any other means (including by overnight
courier), when actually received.
Any Lender giving a Notice to Borrowing Agent or any
Borrower shall concurrently send a copy thereof to the Agent, and the Agent
shall promptly notify the other Lenders of its receipt of such Notice.
(A) If to Agent or PNC Bank, National Association
PNC at: 00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to: PNC Bank, National Association
PNC Agency Services
PNC Firstside Center
95
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with an additional
copy to: Xxxx & Hessen LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telephone: 000-000-0000
Facsimile: 212-478-7400
(B) If to a Lender other than Agent, as specified on the
signature pages hereof
(C) If to Borrowing Agent
or any Borrower: Brightstar Corporation
0000 XX 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to: Xxxxxxxxxxx and Xxxxxxxx
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxx, Xx. 00000-0000
Attention: Xxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
16.7. SURVIVAL. The obligations of Borrowers under Sections 2.2(f),
3.6, 3.7, 3.8, 4.19(h), and 16.5 and the obligations of Lenders under Section
14.7, shall survive termination of this Agreement and the Other Documents and
payment in full of the Obligations.
16.8. SEVERABILITY. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
16.9. EXPENSES. All costs and expenses including reasonable attorneys'
fees (including the allocated costs of in house counsel) and disbursements
incurred by Agent on its behalf or on behalf of Lenders and Lenders (a) in all
efforts made to enforce payment of any Obligation or effect collection of any
Collateral, or (b) in connection with the entering into, modification,
amendment, administration and enforcement of this Agreement, the Subordinated
Loan Documentation, the Intercreditor Agreement or any consents or waivers
hereunder and all related
96
agreements, documents and instruments, or (c) in instituting, maintaining,
preserving, enforcing and foreclosing on Agent's security interest in or Lien on
any of the Collateral, or maintaining, preserving or enforcing any of Agent's or
any Lender's rights hereunder, under the Subordinated Loan Documentation, the
Intercreditor Agreement and under all related agreements, documents and
instruments, whether through judicial proceedings or otherwise, or (d) in
defending or prosecuting any actions or proceedings arising out of or relating
to Agent's or any Lender's transactions with any Borrower, any Subordinated
Lender or (e) in connection with any advice given to Agent or any Lender with
respect to its rights and obligations under this Agreement, the Subordinated
Loan Documentation, the Intercreditor Agreement and all related agreements,
documents and instruments, may be charged to Borrowers' Account and shall be
part of the Obligations.
16.10. INJUNCTIVE RELIEF. Each Borrower recognizes that, in the event
any Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, or threatens to fail to perform, observe or
discharge such obligations or liabilities, any remedy at law may prove to be
inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that actual damages are not an adequate remedy.
16.11. CONSEQUENTIAL DAMAGES. Neither Agent nor any Lender, nor any
agent or attorney for any of them, shall be liable to any Borrower (or any
Affiliate of any such Person) for consequential damages arising from any breach
of contract, tort or other wrong relating to the establishment, administration
or collection of the Obligations.
16.12. CAPTIONS. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
16.13. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
16.14. CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
16.15. CONFIDENTIALITY; SHARING INFORMATION. (a) Agent, each Lender and
each Transferee shall hold all non-public information obtained by Agent, such
Lender or such Transferee pursuant to the requirements of this Agreement in
accordance with Agent's, such Lender's and such Transferee's customary
procedures for handling confidential information of this nature; PROVIDED,
HOWEVER, Agent, each Lender and each Transferee may disclose such confidential
information (a) to its examiners, Affiliates, outside auditors, counsel and
other professional advisors, (b) to Agent, any Lender or to any prospective
Transferees, and (c) as required or requested by any Governmental Body or
representative thereof or pursuant to legal process;
97
provided, further that (i) unless specifically prohibited by applicable law or
court order, Agent, each Lender and each Transferee shall use its reasonable
best efforts prior to disclosure thereof, to notify the applicable Borrower of
the applicable request for disclosure of such non-public information (A) by a
Governmental Body or representative thereof (other than any such request in
connection with an examination of the financial condition of a Lender or a
Transferee by such Governmental Body) or (B) pursuant to legal process and (ii)
in no event shall Agent, any Lender or any Transferee be obligated to return any
materials furnished by any Borrower other than those documents and instruments
in possession of Agent or any Lender in order to perfect its Lien on the
Collateral once the Obligations have been paid in full and this Agreement has
been terminated.
(b) Each Borrower acknowledges that from time to time
financial advisory, investment banking and other services may be offered or
provided to such Borrower or one or more of its Affiliates (in connection with
this Agreement or otherwise) by any Lender or by one or more Subsidiaries or
Affiliates of such Lender and each Borrower hereby authorizes each Lender to
share any information delivered to such Lender by such Borrower and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of
such Lender, it being understood that any such Subsidiary or Affiliate of any
Lender receiving such information shall be bound by the provisions of this
Section 16.15 as if it were a Lender hereunder. Such authorization shall survive
the repayment of the other Obligations and the termination of this Agreement.
Notwithstanding anything herein to the contrary, the information
subject to this Section 16.15 shall not include, and the Agent and each Lender
may disclose without limitation of any kind, any information with respect to the
"tax treatment" and "tax structure" (in each case, within the meaning of
Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby
and all materials of any kind (including opinions or other tax analyses) that
are provided to Agent or such Lender relating to such tax treatment and tax
structure; PROVIDED that with respect to any document or similar item that in
either case contains information concerning the tax treatment or tax structure
of the transaction as well as other information, this sentence shall only apply
to such portions of the document or similar item that relate to the tax
treatment or tax structure of the Advances and transactions contemplated hereby.
16.16. PUBLICITY. Each Borrower and each Lender hereby authorizes Agent
to make appropriate announcements of the financial arrangement entered into
among Borrowers, Agent and Lenders, including announcements which are commonly
known as tombstones, in such publications and to such selected parties as Agent
shall in its sole and absolute discretion deem appropriate.
16.17. CERTIFICATIONS FROM BANKS AND PARTICIPANTS; US PATRIOT ACT. Each
Lender or assignee or participant of a Lender that is not incorporated under the
Laws of the United States of America or a state thereof (and is not excepted
from the certification requirement contained in Section 313 of the USA Patriot
Act and the applicable regulations because it is both (i) an affiliate of a
depository institution or foreign bank that maintains a physical presence in the
United States or foreign country, and (ii) subject to supervision by a banking
authority regulating such affiliated depository institution or foreign bank)
shall deliver to the Agent the certification,
98
or, if applicable, recertification, certifying that such Lender is not a "shell"
and certifying to other matters as required by Section 313 of the USA Patriot
Act and the applicable regulations: (1) within 10 days after the Closing Date,
and (2) as such other times as are required under the USA Patriot Act.
16.18. REGARDING DOCUMENTATION AGENT. Standard Federal Bank National
Association (by and through its agent LaSalle Business Credit, LLC) in its
capacity as documentation agent shall not have any duties or responsibilities or
incur any liability under this Agreement or the Other Documents.
99
Each of the parties has signed this Agreement as of the day and year
first above written.
BRIGHTSTAR CORP.
ATTEST:
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
/s/ Xxxxx Xxxxxxxx Name: Xxxxxxx Xxxxxx
------------------------------------ -------------------------------
Title: President & CEO
------------------------------
BRIGHTSTAR US, INC.
ATTEST:
By: /s/ Xxxxxx Xxxxxx
---------------------------------
/s/ Xxxxx Xxxxxxxx Name: Xxxxxx Xxxxxx
------------------------------------ -------------------------------
Title: President & COO
-----------------------------
BRIGHTSTAR PUERTO RICO, INC.
ATTEST:
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
/s/ Xxxxx Xxxxxxxx Name: Xxxxxxx Xxxxxx
------------------------------------ -------------------------------
Title: President & CEO
------------------------------
100
PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
-------------------------------
Title: Vice President
------------------------------
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Commitment Percentage: 35.7142857143%
Commitment Amount: $25,000,000
101
STANDARD FEDERAL BANK
NATIONAL ASSOCIATION
(acting by and through its agent
LaSalle Business Credit, LLC)), as
documentation agent and a Lender
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
-------------------------------
Title: First Vice President
------------------------------
0000 Xxxxxxxxx Xx., Xxxxx 000,
Xxxxxxx, XX, 00000
-------------------------------------
Address
Commitment Percentage: 28.5714285714%
Commitment Amount: $20,000,000
XXXXXX XXXXXXXX
NOTARY PUBLIC
Xxxx County
State of Georgia
Commission expires February 5, 2007
/s/ Xxxxxx Xxxxxxxx
102
U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
-------------------------------
Title: AVP
------------------------------
000 Xxxxxx Xx., Xxxxxxxxxx, XX 00000
-------------------------------------
Address
Commitment Percentage: 17.0000000000%
Commitment Amount: $12,500,000
000
XXXX XXXXXXXX XXXXXX (XXX) INC.,
as a Lender
By: /s/ Xxxx Xxxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxxx
-------------------------------
Title: Vice President
------------------------------
000 Xxxxx Xxxxxx, XX, XX 00000
-------------------------------------
Address
Commitment Percentage: 17.0000000000%
Commitment Amount: $12,500,000
000
XXXXX XX XXX XXXX )
) ss.
COUNTY OF NEW YORK )
On this 23RD day of April, 2004, before me personally came XXXXXXX
XXXXXX, to me known, who, being by me duly sworn, did depose and say that s/he
is the PRESIDENT AND CEO of Brightstar Corp., the corporation described in and
which executed the foregoing instrument; and that s/he signed her/his name
thereto by order of the board of directors of said corporation.
/s/ Xxxxxxx Xxxxxx
-----------------------------------------
Notary Public
Xxxxxxx Xxxxxx
Notary Public, State of New York
Reg. No. 01TA6010553
Qualified in Nassau County
My Commission Expires July 20, 0000
XXXXX XX XXX XXXX )
) ss.
COUNTY OF NEW YORK )
On this 23RD day of April, 2004, before me personally came XXXXXX
XXXXXX, to me known, who, being by me duly sworn, did depose and say that s/he
is the PRESIDENT AND COO of Brightstar US, Inc., the corporation described in
and which executed the foregoing instrument; and that s/he signed her/his name
thereto by order of the board of directors of said corporation.
/s/ Xxxxxxx Xxxxxx
-----------------------------------------
Notary Public
Xxxxxxx Xxxxxx
Notary Public, State of New York
Reg. No. 01TA6010553
Qualified in Nassau County
My Commission Expires July 20, 0000
XXXXX XX XXX XXXX )
) ss.
COUNTY OF NEW YORK )
On this 23RD day of April, 2004, before me personally came XXXXXXX
XXXXXX, to me known, who, being by me duly sworn, did depose and say that s/he
is the PRESIDENT AND CEO of Brightstar Puerto Rico, Inc., the corporation
described in and which executed the foregoing instrument; and that s/he signed
her/his name thereto by order of the board of directors of said corporation.
/s/ Xxxxxxx Xxxxxx
-----------------------------------------
Notary Public
Xxxxxxx Xxxxxx
Notary Public, State of New York
Reg. No. 01TA6010553
Qualified in Nassau County
My Commission Expires July 20, 0000
000
XXXXX XX XXX XXXX )
) ss.
COUNTY OF NEW YORK )
On this 23RD day of April, 2004, before me personally came XXXXXXX X.
XXXXXX, to me known, who, being by me duly sworn, did depose and say that s/he
is the VICE PRESIDENT of PNC BANK, NATIONAL ASSOCIATION, and that s/he was
authorized to sign her/his name thereto.
/s/ Xxxxxxx Xxxxxx
-----------------------------------------
Notary Public
Xxxxxxx Xxxxxx
Notary Public, State of New York
Reg. No. 01TA6010553
Qualified in Nassau County
My Commission Expires July 20, 0000
XXXXX XX XXX XXXX )
) ss.
COUNTY OF NEW YORK )
On this _____ day of April, 2004, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that s/he is the __________________ of STANDARD FEDERAL BANK
NATIONAL ASSOCIATION (acting by and through its agent LaSalle Business Credit,
LLC), and that s/he was authorized to sign her/his name thereto.
-----------------------------------------
Notary Public
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 23RD day of April, 2004, before me personally came XXXXX X.
XXXXXX, to me known, who, being by me duly sworn, did depose and say that s/he
is the AVP of U.S. BANK NATIONAL ASSOCIATION, and that s/he was authorized to
sign her/his name thereto.
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Notary Public
XXXXXXX X. XXXXXX
Notary Public, State of Ohio
My Commission Expires June 11, 2007
[SEAL]
000
XXXXX XX XXX XXXX )
) ss.
COUNTY OF NEW YORK )
On this 23RD day of April, 2004, before me personally came XXXX
XXXXXXXXX, to me known, who, being by me duly sworn, did depose and say that
s/he is the VICE PRESIDENT of HSBC BUSINESS CREDIT (USA) INC., and that s/he was
authorized to sign her/his name thereto.
/s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------------
Notary Public
Xxxxxxxx X. Xxxxxxxx
Notary Public, State of New York
No. 00-0000000
Qualified in Queens County
Certificate Filed in Nassau County
Commission Expires January 12, 2004
107
SCHEDULE 1.2
PERMITTED ENCUMBRANCES
Aside from the existing Liens otherwise permitted in subsections (a) through (i)
under the definition of the term "PERMITTED ENCUMBRANCES," and those of General
Electric Capital Corporation which shall be terminated upon consummation of this
transaction, the Borrowers do not have any outstanding Liens.
SCHEDULE 4.5
EQUIPMENT AND INVENTORY LOCATIONS
Brightstar Corp. maintains equipment and inventory at the following locations:
1) 0000 XX 00xx Xxxxxx, Xxxxx, Xxxxxxx 00000
2) Xxxxxx Customs Brokers, 0000 Xxx Xxxxxxxxx Xxx-0, Xx Xxxx, Xxxxx
00000.
Brightstar US, Inc. maintains equipment and inventory at the following
locations:
1) 000 Xxxxxx Xxxx Xx., Xxxxxx Xxxxx, Xxxxxxxx 00000.
Brightstar Puerto Rico, Inc. maintains equipment and inventory at the following
locations:
1) Xxxx. 000 Xx. 2.6 Sector Mano, Manca Caguas, Puerto Rico.
SCHEDULE 4.15(H)
DEPOSIT AND INVESTMENT ACCOUNTS
Company Bank Name Account Amount Reason
------- --------- ------- ------ ------
Brightstar Corp. Citibank 3400109467 42,094.77 Purchase of Euros
Brightstar Corp. Bank of America 548158844 2,305,077.78 Letter of Credits/FX Trade
Brightstar Corp. Ocean Bank 10103609220 317,240.76 Line Collateral
TOTAL 2,664,413.31
Brightstar Corp. Suntrust 1000005388201 709,099.00 Depository Blocked Account
Brightstar Corp. Ocean Bank 10103609213 488.05 Depository Blocked Account
Brightstar US La Salle 5201154522 833,881.41 Depository Blocked Account
Brightstar PR Citibank 0101638014 443,386.86 Depository Blocked Account
TOTAL 1,986,855.32
SCHEDULE 4.19
REAL PROPERTY
Borrowers maintain the following real property leases:
Miami:
Lease: Industrial Multi-Tenant Lease between AMB HTD - Beacon Centre,
LLC, as Landlord, and Brightstar Corp., as Tenant, at Beacon Centre,
Miami, Florida, dated September 4, 2001.
Location: 0000 XX 00xx Xxxxxx, Xxxxx, Xxxxxxx 00000
Chicago:
Lease: Industrial Building Lease, The Corporate Xxxxx, Vernon Hills,
Illinois, between LaSalle Bank National Association as Successor
Trustee to American National Bank and Trust Company of Chicago, Trust
Agreement No. 100484-03 dated November 4, 1986, as Landlord, and
Brightstar Corporation, as Tenant, dated July 2001.
Location: 000 Xxxxxx Xxxx Xx., Xxxxxx Xxxxx, Xxxxxxxx 00000.
Puerto Rico:
Lease: Contrato de Subarrendamiento between Newcomm Wireless Services,
Inc. h/n/c Movistar and Brightstar Corp., dated as of April 24, 2003.
Location: Xxxx. 000 Xx. 2.6 Sector Mano, Manca Caguas, Puerto Rico.
SCHEDULE 5.1
CONSENTS
o Motorola
SCHEDULE 5.2(A)
STATES OF QUALIFICATION AND GOOD STANDING
1) Brightstar Corp. is duly incorporated and in good standing under the
laws of the State of Delaware and is qualified to do business and in
good standing under the laws of the State of Florida.
2) Brightstar US, Inc. is duly incorporated and in good standing under the
laws of the State of Florida and is qualified to do business and in
good standing under the laws of the State of Illinois.
3) Brightstar Puerto Rico, Inc. is duly incorporated and in good standing
under the laws of the Commonwealth of Puerto Rico.
SCHEDULE 5.2(B)
SUBSIDIARIES
Neither Brightstar US, Inc. nor Brightstar Puerto Rico, Inc. maintains any
subsidiaries. Attached hereto is a list of all of the subsidiaries of Brightstar
Corp.
SCHEDULES 5.4
FEDERAL TAX IDENTIFICATION NUMBER
1) Brightstar Corp.: 00-000-00-00
2) Brightstar US, Inc.: 00-000-00-00
3) Brightstar Puerto Rico, Inc.: 66-06-318-33
SCHEDULE 5.5(C)
CHANGES IN FINANCIAL CONDITION
o Completed $61.75 Private Placement of which $4.5 million was closed
January 14, 2004.
o Xxxx Xxxxxxxx'x redemption of stock payment of $5.85 million paid in
January 2004.
o American Express has advanced up to $20 million in an unsecured bank
line to Brightstar fully guaranteed by Telcel Venezuela (BellSouth) as
an advance payment on the Telcel receivables.
SCHEDULE 5.6
PRIOR NAMES
None.
SCHEDULE 5.8(B)
LITIGATION
PENDING LITIGATION:
XXXXX XXXXX
On or about August 29, 2003, former employee Xxxxx Xxxxx filed an EEOC
Charge of Discrimination against Brightstar Corp. ("Brightstar"). Xx. Xxxxx
asserts that the elimination of his position on June 30, 2003 with BrightStar de
Mexico S.A. de C.V. ("BS Mexico") resulting in the termination of his employment
relationship with Brightstar and Servicios Especializados en Comunicacion y
Logistica, S.A. de C.V. ("SECOLO") was a violation of the federal Age
Discrimination in Employment Act ("ADEA," 29 U.S.C.ss.621, et seq.). Xx. Xxxxx
cross-filed his EEOC Charge with the Florida Commission on Human Relations
asserting that Brightstar also violated the Florida Civil Rights Act of 1992
("FCRA", Florida Statutesss.760.10, et seq.).
On or about October 20, 2003, Brightstar submitted its position
statement to the EEOC denying that it violated the ADEA, asserting legitimate
business reasons for the adverse employment action at issue and asserting other
defenses. Brightstar also responded to the request for information by providing
documentation and other information requested by the EEOC.
The EEOC investigated the Charge of Discrimination, which is docketed
at EEOC Charge No. 000-0000-00000. On or about December 15, 2003, the EEOC
closed the investigation. It found that it is unable to conclude that the
information obtained during the investigation establishes violations of the ADEA
(federal age discrimination statute) by Brightstar. Xx. Xxxxx was provided with
a right to xxx letter, which required him to commence a lawsuit within 90 days
of receipt, or his ADEA claim will be barred. Xx. Xxxxx did not pursue his ADEA
claims.
Instead, on or about February 6, 2004, Xxxxx Xxxxx filed a complaint
against Brightstar in Florida state court. The case is docketed in the Circuit
Court for the Eleventh Judicial Circuit in Miami-Dade County, Florida at Case
No. 04 02927 CA 25. Brightstar was served with process on or about February 9,
2004. The Complaint alleges two claims against Brightstar. The first count
asserts a claim for a violation of the Florida Civil Rights Act for purported
age discrimination. Under this Count, Plaintiff seeks back wages and benefits,
compensatory damages, reinstatement or front pay, punitive damages, and
attorneys' fees and costs. The second count asserts a claim for breach of
contract. Under this claim, Plaintiff seeks $224,000 for his 2002 bonuses and
$217,000 for his 2003 bonus for a total of $441,000.
On March 1, 2004 Brightstar served its Motion to Dismiss or, in the
Alternative, Motion for Summary Judgment, and Motion to Strike. A hearing is set
on April 27, 2004 on Brightstar's Motion to Dismiss and Motion to Strike.
Brightstar vigorously is defending this lawsuit. At this stage of the
litigation, we are unable to predict, with any certainty, the outcome of this
case.
The above claim is covered by our employment practices insurance
policy.
XXXX XXXXXX
BRIGHTSTAR CORP. V. XXXX XXXXXX
-------------------------------
Case No. 02-10360 CA 08 (Dade County Circuit Court)
Xxxx Xxxxxx ("Hassan"), a Dominican Republic resident and
former employee of Brightstar's subsidiary in the Dominican Republic, instituted
legal proceedings in the Dominican Republic to collect unspecified monies and
10,000 shares of preferred stock of Brightstar's subsidiary, Brightstar
Dominicana, allegedly due under a Preferred Stock Issuance and Option Agreement
(the "Agreement").
In April 2002, Brightstar filed suit in Miami-Dade County Circuit Court
against Xxxx Xxxxxx seeking to have the Agreement equitably rescinded and
declared inoperative and unenforceable as a matter of law. Prior to the
litigation, Hassan had demanded performance under the subject Agreement from
both Brightstar and a separate Dominican Republic entity, Dominicana. Notably,
the basis of Brightstar's suit is that Dominicana never signed the Agreement or
otherwise assented to its terms.
In June 2002, Hassan answered the complaint and filed a counterclaim
against Brightstar and Dominicana to enforce the subject Agreement and recover
unspecified monetary damages in connection therewith. In November 2002, the
court, upon a motion of Dominicana to quash service of process and dismiss the
counterclaim for lack of prosecution, dismissed Hassan's counterclaim "without
prejudice" (I.E. allowing Hassan the right to amend and refile the
counterclaim).
In December 2002, Hassan filed an amended counterclaim against
Brightstar and Dominicana that, essentially, is no different from the initial
counterclaim and seeks the same relief.
Brightstar has moved to dismiss Hassan's amended counterclaim.
At this time, Brightstar cannot predict the probability of a favorable
or unfavorable outcome or the potential loss in either of the legal proceedings.
THREATENED LITIGATION:
XXXXXX XXXXXXXX
On or about January 23, 2004, former employee Xxxxxx Xxxxxxxx filed an
EEOC Charge of Discrimination against Brightstar Corp. ("Brightstar"), which is
docketed at EEOC Charge No. 000-0000-00000. Xx. Xxxxxxxx'x position was
eliminated effective December 31, 2003 when his department was reorganized. Xx.
Xxxxxxxx alleges that he was terminated from his position because of his
national origin, Ukrainian American, and age, 51 years old, in violation of
Title VII of the Civil Rights Act of 1964, as amended ("Title VII," 42 U.S.C.
ss. 2000e et seq.) and the Age Discrimination in Employment Act ("ADEA," 29
U.S.C. ss. 621, et seq.). Xx. Xxxxxxxx cross-filed his EEOC Charge with the
Florida Commission on Human Relations ("FCHR") asserting that Brightstar also
violated the Florida Civil Rights Act of 1992 ("FCRA", Florida Statutes ss.
760.10, et seq.). Under the Working Share Agreement with the FCHR, the EEOC is
the primary investigative agency.
On or about Xxxxx 0, 0000, Xxxxxxxxxx submitted its position statement
to the EEOC denying that it violated Title VII and the ADEA. Brightstar asserted
that it had legitimate business reasons for the adverse employment action at
issue and asserted other defenses. Brightstar also responded to the EEOC's
request for information by providing documentation and other information
requested.
Under Title VII, the ADEA and the FCRA, Xx. Xxxxxxxx'x damages can
include, but are not limited to, back pay, reinstatement or front pay, other
actions that will make him whole, compensatory damages, liquidated damages,
punitive damages, attorneys' fees, and court costs.
On or about March 31, 2004, the EEOC closed the investigation. It found
that it is unable to conclude that the information obtained during the
investigation establishes violations of the ADEA (federal age discrimination
statute) or Title VII (national origin discrimination) by Brightstar. Xx.
Xxxxxxxx has been provided with a right to xxx letter, which requires him to
commence a lawsuit within 90 days of receipt, or his ADEA and Title VII claims
will be barred. To date, he has not commenced a lawsuit.
If a lawsuit is filed, Brightstar intends to vigorously defend any
lawsuit. At this stage, we are unable to predict, with any certainty, the
outcome of this threatened litigation nor can we estimate the exposure
Brightstar has.
If the above claim is pursued, it will be covered by our employment
practices insurance policy.
SCHEDULE 5.8(D)
PLANS
Brightstar Corp. sponsored 401k plan.
SCHEDULE 5.9
INTELLECTUAL PROPERTY, SOURCE CODE ESCROW AGREEMENTS
1) Unregistered Tradenames:
Brightstar
Brightstar Corp.
Brightstar US
Brightstar International Corporation
Brightstar International Corp.
Brightstar Corporation
Brightstar [Followed by Country of Organization]
Narbitec
Etaris
2) Logos:
SEE ATTACHED.
SCHEDULE 5.10
LICENSES AND PERMITS
None.
SCHEDULE 5.14
LABOR DISPUTES
None.
