SECOND AMENDMENT TO CREDIT AND GUARANTY AGREEMENT
EXHIBIT 10.73(a)
SECOND AMENDMENT TO CREDIT AND GUARANTY AGREEMENT
SECOND AMENDMENT, dated as of February 14, 2008 (this “Amendment”), to the Credit and Guaranty
Agreement, dated as of October 26, 2007, by and among SYNTAX-BRILLIAN CORPORATION, a Delaware
corporation (“Company”), SYNTAX-BRILLIAN SPE, INC., a Delaware corporation (“SPV”, and together
with the Company, each a “Borrower” and collectively, the “Borrowers”) and CERTAIN SUBSIDIARIES OF
COMPANY, as Guarantors, the Lenders party hereto from time to time and SILVER POINT FINANCE, LLC
(“Silver Point”), as Administrative Agent (in such capacity, “Administrative Agent”), Collateral
Agent (in such capacity, “Collateral Agent”), and Lead Arranger (in such capacity, the “Lead
Arranger”).
At the request of Credit Parties, Agents and Lenders have agreed to amend certain provisions
of the Credit Agreement, subject to the terms and conditions set forth herein.
1. Definitions. All terms used herein which are defined in the Credit Agreement and
not otherwise defined herein are used herein as defined therein.
2. Amendments to Credit Agreement.
(a) Section 1.1 of the Credit Agreement is hereby amended by adding the definitions of
the following terms thereto, in appropriate alphabetical order, to read in their entirety as
follows:
“‘Budget’ as defined in Section 5.23.”
“‘Operational Advisor’ means collectively, an operational
advisor to Company, together with its supporting staff, which
operational advisor and supporting staff are satisfactory to Agents;
provided that FTI Consulting, Inc. shall be deemed satisfactory to
Agents.”
“‘Second Amendment’ means the Second Amendment to Credit and
Guaranty Agreement, dated as of February 14, 2008, by and among the
Credit Parties, the Lenders and the Agents.”
“‘Second Amendment Effective Date’ has the meaning ascribed
to the term ‘Amendment Effective Date’ in the Second Amendment.”
“‘Second Amendment Fee Letter’ means the letter agreement
dated as of the Second Amendment Effective Date between Company and
Administrative Agent.”
“‘Specified Deposit Account’ as defined in Section 6.17.”
“‘Third Amendment’ means an amendment to this Agreement in
form and substance satisfactory to the Agents and the Credit
Parties, which may take the form of an amended and restated credit
agreement, and which shall include, but not be limited to, a
covenant requiring compliance with the Borrowing Base and certain
excess Availability requirements, which covenant shall be
satisfactory to Administrative Agent.”
(b) Section 1.1 of the Credit Agreement is hereby amended by amending and restating the
definition of the term “Applicable Margin” contained therein to read in its entirety as
follows:
“‘Applicable Margin” means (i) with respect to LIBOR Rate
Loans, a percentage, per annum, equal to nine percent (9.0%); and
(ii) with respect to Base Rate Loans, a percentage, per annum, equal
to eight percent (8.0%).”
(c) Section 1.1 of the Credit Agreement is hereby amended by adding the phrase “Second
Amendment Fee Letter,” immediately following the phrase “Fee Letter,” in the definition of
the term “Credit Documents” contained therein.
(d) Section 2.2(a) of the Credit Agreement is hereby amended by adding the following
sentence to the end thereof, to read in its entirety as follows:
“Notwithstanding anything to the contrary contained herein or in any
other Credit Document, on and after the Second Amendment Effective
Date, (x) each of (i) Collateral Agent, and (ii) Requisite Class
Lenders with respect to the Class of Lenders having Tranche A Term
Loan Exposure and/or Tranche A-1 Term Loan Exposure, shall have
provided prior written consent (which consent may be provided or
withheld in each such Person’s sole discretion) to the making of any
Revolving Loans or the issuance of any Letters of Credit hereunder,
(y) each Revolving Lender shall have provided its written consent
(which consent may be provided or withheld in the sole discretion of
such Revolving Lender) to the making of the first Revolving Loan to
be made or the first Letter of Credit to be issued (it being
understood that Revolving Loans may be made and Letters of Credit
may be issued without the prior written consent of 100% of the
Revolving Lenders, but that no Revolving Lender shall be required to
make any Revolving Loan or participate in any Letter of Credit
without the prior written consent of such Revolving Lender), and (z)
the Unused Line Fee (as defined in the Fee Letter) shall cease to
accrue until such time as the consents described in clause (x) above
(and to the extent that the consents in clause (y)) are delivered;
provided, that for the avoidance of doubt, to the extent any
Revolving Lender does not provide the consent described in clause
(y) above within two (2) Business Days following the date on which
the consents described in clause (x) above are provided, such
Revolving Lender’s Revolving Commitment shall be deemed to be
terminated on such date and the aggregate amount of the Revolving
Commitments shall be
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reduced by the amount of such non-consenting Revolving Lender’s
Revolving Commitment.”
(e) Section 2.7(a) of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
“(a) Except as otherwise set forth herein, each Class of Loan shall
bear interest on the unpaid principal amount thereof from the date
made through repayment (whether by acceleration or otherwise)
thereof as follows:
(i) if a Base Rate Loan, at the greater of (A) the Base
Rate plus the Applicable Margin, and (B) 15.5%; or
(ii) if a LIBOR Rate Loan, at the greater of (A) the
Adjusted LIBOR Rate plus the Applicable Margin, and
(B) 13.5%.”
(f) Section 2.13(i) of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
“(i) Proceeds from Factor. Any funds received by Borrowing
Base Agent from (i) Factor, pursuant to the Factoring Agreement, or
(ii) in connection with any receivables management agreement or
other similar arrangement that Credit Parties may enter into from
time to time, shall be applied to reduce the Revolving Loans on a
daily basis; provided, that if an Event of Default shall
have occurred and be continuing, such funds shall be applied
pursuant to Section 2.15(h); provided further, that
(x) prior to the effective date of the Third Amendment, if no
Revolving Loans are outstanding Borrowing Base Agent shall retain
such funds on behalf of Collateral Agent until such time as
Collateral Agent instructs Borrowing Base Agent to transfer all or a
portion of such funds to an account designated by Collateral Agent,
whereupon Borrowing Base Agent agrees to transfer such funds in
accordance with the instructions provided by Collateral Agent (it
being understood and agreed by each Credit Party, each Lender and
each Agent that Collateral Agent shall be entitled to apply such
funds to the Obligations or to retain such funds as cash collateral
or to release such funds to the Credit Parties in its sole
discretion) and (y) after the effective date of the Third Amendment,
all such funds shall be applied in accordance with the terms of the
Third Amendment.”
(g) Section 2.13 of the Credit Agreement is hereby amended by adding the following new
section to the end thereto to read in its entirety as follows:
“(k) On February 19, 2008, the Company shall be required to prepay
the Term Loans in an amount sufficient to cause the
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principal amount of the Term Loans to be not more than an amount
equal to (i) $120,000,000 minus (ii) an amount up to the amount of
any principal payments made on or after the Second Amendment
Effective Date (other than certain payments that Collateral Agent
and Company have agreed to exclude from such calculation), such
prepayment to be made together with the Make-Whole Amount as
required pursuant to the terms of the Fee Letter (it being
understood that on the date on which the Third Amendment becomes
effective, the Lenders having Tranche A Term Loan Exposure and
Tranche A-1 Term Loan Exposure will provide a revolving facility to
the Company in the aggregate principal amount of $20,000,000,
subject to the terms and conditions contained in the Third
Amendment).”
(h) Section 5.1(a) of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
“(a) Monthly Reports. As soon as available, and in any
event within thirty (30) days after the end of each month (or in the
case of reports required to be delivered between the Second
Amendment Effective Date and the date that is 180 days following the
Second Amendment Effective Date, for any month that is also the end
of a quarter, within forty-five (45) days after the end of such
month), the consolidated and consolidating balance sheet of Company
and its Subsidiaries as at the end of such month and the related
consolidated (and with respect to statements of income,
consolidating) statements of income, stockholders’ equity and cash
flows of Company and its Subsidiaries for such month and for the
period from the beginning of the then current Fiscal Year to the end
of such month, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous
Fiscal Year (commencing with the comparison of the 2009 Fiscal Year
to the 2008 Fiscal Year of the Company and its Subsidiaries) and the
corresponding figures from the Financial Plan for the current Fiscal
Year, all in reasonable detail, together with a Financial Officer
Certification and a Narrative Report with respect thereto and any
other operating reports prepared by management for such period.”
(i) Section 5.1(u)(D) of the Credit Agreement is hereby amended and restated in its
entirety as follows:
“(D) provide the Administrative Agent and its third party
consultants within two (2) Business Days of a request by the
Administrative Agent or such third party consultants such other
information and data with respect to Company or any of its
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Subsidiaries as from time to time may be reasonably requested by
Administrative Agent or such third party consultant.”
(j) Section 5.1 of the Credit Agreement is hereby amended by adding the following new
clauses to the end thereof to read in their entirety as follows:
“(v) Reconciliations with Budget. At all times on and
after February 19, 2008, on Wednesday of each week, in each case,
after review and approval of the Operational Advisor and in form and
substance satisfactory to the Administrative Agent provide (i) a
reconciliation of the actual cash receipts, disbursements, net cash,
and Availability of Credit Parties for the most recently-ended week
(on a weekly and cumulative basis) to the amount set forth in each
budgeted line item in the Budget for such week (and on a cumulative
basis), (ii) a narrative detailing any discrepancies between the
actual results for such week (and on a cumulative basis) and the
Budget for such week (and on a cumulative basis), and (iii) an
outline of actions to be taken by Credit Parties to eliminate any
adverse discrepancies, if any, and to return to compliance with the
Budget.”
(w) Weekly Cash Reports. At all times on and after
February 19, 2008, on Wednesday of each week (or, more frequently if
so requested by Administrative Agent), a report which has been
reviewed and approved by the Operational Advisor, and is in form and
substance satisfactory to Administrative Agent, identifying (i) the
funds received into and disbursed from each Deposit Account
maintained by any Credit Party during the immediately preceding
week, and (ii) the total amount of funds on deposit in each such
Deposit Account as of the last Business Day of such immediately
preceding week.”
(k) Section 5.6 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
“5.6 Books and Records; Inspections. Each Credit Party will, and
will cause each of its Subsidiaries to, (a) keep adequate books of
record and accounts in which full, true and correct entries are made
of all dealings and transactions in relation to its business and
activities and (b) permit any representatives designated by
Administrative Agent or any Lender (including employees of
Administrative Agent, any Lender or any consultants, auditors,
accountants, lawyers and appraisers retained by Administrative
Agent) to visit and inspect any of the properties of any Credit
Party and any of its respective Subsidiaries, to conduct audits,
valuations and/or field examinations of any Credit Party and any of
its respective Subsidiaries, to inspect, copy and take extracts from
its
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and their financial and accounting records, and to discuss its and
their affairs, finances and accounts with its and their officers and
independent accountants, auditors and advisors, in each case,
promptly upon the request of Collateral Agent (and in any event, not
less than one Business Day following any such request) and as often
as may be requested and by this provision the Credit Parties
authorize such accountants, auditors and advisors to discuss with
Administrative Agent and Lender and such representatives the
affairs, finances and accounts of Company and its Subsidiaries. The
Credit Parties agree to pay the (i) the examiner’s out-of-pocket
costs and expenses incurred in connection with all such visits,
audits, inspections, valuations and field examinations and (ii) the
costs of all visits, audits, inspections, valuations and field
examinations conducted by a third party on behalf of the Agents,
Borrowing Base Agent and the Lenders. The Credit Parties
acknowledge that Administrative Agent, after exercising its rights
of inspection, may prepare and distribute to the Lenders certain
reports pertaining to the Credit Parties and their assets for
internal use by Administrative Agent and the Lenders. After the
occurrence and during the continuance of any Event of Default, each
Credit Party shall provide Administrative Agent and each Lender with
access to its customers and suppliers. Promptly upon the request of
Collateral Agent (and in any event, not less than one Business Day
following any such request), each Credit Party shall provide
Collateral Agent (and each representative of Collateral Agent, and
all advisors, whether retained by Agents or by one or more Credit
Parties at the request of any Agent) with access to its customers
and suppliers (it being understood that other than during the
continuance of a Default or an Event of Default, a representative of
Company shall be given the opportunity to be present for any
communication with customers and suppliers).”
(l) Clause (b) of Section 5.15 of the Credit Agreement is hereby amended by adding the
following sentence to the end thereof to read in its entirety as follows:
“Notwithstanding anything to the contrary contained herein or in any
other Credit Document, each Credit Party requests, and each Lender
and each Agent hereby acknowledges that (x) on the Second Amendment
Effective Date, (A) the Collateral Agent shall direct that all funds
in the Company’s Deposit Account No. 4121652663 maintained at Xxxxx
Fargo Bank, National Association be sent to the Collateral Agent (it
being understood that none of the funds in the Company’s Deposit
Account No. 4121652440 or 4121668487 maintained at Xxxxx Fargo Bank,
National Association shall be sent to Collateral Agent on the Second
Amendment Effective Date), (B) the Borrowing Base
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Agent shall transfer to Collateral Agent all funds received from
Factor pursuant to the Factoring Agreement (excluding $2,000,000,
which may remain with Factor), and all funds in Borrowing Base
Agent’s Deposit Account No. 304-670588 located at JPMorgan Chase
Bank to the Collateral Agent, and (C) all funds received by the
Collateral Agent pursuant to clauses (A) and (B) above shall be
applied as follows (except in the case of clauses (1) and (3), to
the extent previously paid): (1) in the amount of $4,540,625 for
application to the payment of interest due and payable in respect of
the Term Loans, (2) in the amount necessary to pay the Initial
Payment (as defined in the Second Amendment Fee Letter) for
application to the Amendment Fee (as defined in the Second Amendment
Fee Letter) in accordance with the terms of the Second Amendment Fee
Letter, (3) in the amount of $254,286.71 for out of pocket expenses
incurred by the Collateral Agent, (4) in the amount necessary to
cash collateralize any Letters of Credit, if any, outstanding on the
Second Amendment Effective Date, and (5) the remainder to repay
principal of the Term Loans and the Make-Whole Amount as required in
connection with such repayment pursuant to the terms of the Fee
Letter and (y) all other funds received by Borrowing Base Agent
whether received from a Credit Party, in respect of Collateral, or
otherwise, including, from Xxxxx Fargo Bank, National Association
and Factor pursuant to the Factoring Agreement following the Second
Amendment Date shall be retained or transferred by Borrowing Base
Agent pursuant to the terms contained in Section 2.13(i), and (z)
Collateral Agent may instruct any financial institution maintaining
a Deposit Account on behalf of any Credit Party to transfer such
funds to Collateral Agent, whereupon Collateral Agent may transfer
all or a portion of such funds to Company, retain all or a portion
of such funds as cash collateral, and/or apply all or a portion of
such funds to the Obligations, in each case, at such times and in
such amounts as Collateral Agent may deem appropriate in its
business judgment). Following the making of the transfers described
in clauses (A) and (B) above, and the application of such funds in
accordance with the terms of clause (C) above on the Second
Amendment Effective Date, the Collateral Agent shall make an Agent
Advance to the Company in the amount of $2,730,000 (it being
understood and agreed that (1) the making of such Agent Advance (or
any other Agent Advance) or the release of any cash collateral
(whether on the Second Amendment Effective Date or on any other
occasion) shall not obligate any Agent or any Lender to make any
further Agent Advances or to release any cash collateral to any
Credit Party, and (2) the Agents and the Lenders reserve all rights
in connection with the making of any and all Agent Advances and the
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release of any and all cash collateral and with respect to all
Defaults and Events of Default.”
(m) Section 5.17 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
“5.17 Post Closing Matters. Company shall, and shall cause each of
the Credit Parties to, satisfy each of the following requirements
(that were originally set forth on Schedule 5.17) by the date
specified in each item below:
a. Satisfactory evidence of the release of all Liens of record on file in
the Patent and Trademark Office in favor of Xxxxx Fargo Foothill, Inc. with
respect to certain of the Company’s intellectual property by not later than
February 19, 2008.
b. Merger of Syntax Corporation into Syntax Groups Corporation by not later
than February 19, 2008.
c. Pledge of 65% of the shares of each of Vivitar France S.A. and Vivitar
(Asia) Limited (Hong Kong) and delivery of stock certificate(s) evidencing
such shares by not later than February 19, 2008.
d. Either (a) dissolve Vivitar (Europe) Limited (U.K.), or (b) pledge 65% of
the shares of Vivitar (Europe) Limited (U.K.) and deliver stock
certificate(s) evidencing such shares by not later than February 19, 2008.
e. Dissolution of Vivitar Japan Co., Ltd. (Japan) by not later than May 31,
2008.
f. Delivery of liability insurance policy endorsements in favor of
Collateral Agent, in form and substance satisfactory to Collateral Agent by
not later than February 19, 2008.
g. Delivery of Landlord Subordination Agreements in favor of the Collateral
Agent from each landlord, with respect to each lease listed on Schedule
4.13, except for such property located at 0000 Xxxxxxxxx Xxxxx, Xxxxxxx, XX
00000, by not later than February 19, 2008.
h. Delivery of the resignations, letters of authority and undertaking and
resolutions required by Schedules 3, 4 and 5 of the Hong Kong Share Charge
by not later than February 19, 2008.”
(n) Section 5.18 of the Credit Agreement is hereby amended and restated in its entirety
to read as follows:
“5.18 Key Man Insurance. Commencing on February 19, 2008, Company
shall maintain with one or more responsible insurance
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companies “key man” life insurance with respect to Xxxxx Xxxxx Hua
Li (or any individual who may replace him is his capacity as an
officer of the Company) in the amount of (i) at least $10,000,000 by
the Second Amendment Effective Date, and (ii) such other amount that
is reasonably acceptable to the Collateral Agent (up to $25,000,000
in the aggregate) that can be obtained through use of the Company’s
reasonable best efforts by March 15, 2008, in each case, pursuant to
policies reasonably satisfactory to the Collateral Agent and with
proceeds payable to Collateral Agent, pursuant to collateral
assignments of life insurance policies, in form and substance
acceptable to Collateral Agent.
(o) Section 5.20 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
“5.20 Projections. By not later than March 7, 2008, Company shall
deliver to Agents the Projections of Company and its Subsidiaries
for the period of Fiscal Year 2008 through and including Fiscal Year
2010, including monthly projections for each month from February
2008 through June 2009, which Projections shall (i) have been
reviewed and approved by Operational Advisor, (ii) be consistent
with the Budget and demonstrate the absence of any Default or Event
of Default, and (iii) be in form and substance satisfactory to
Agents in their sole discretion. Such Projections shall be
accompanied by a certificate of an Authorized Officer of Company
(which certificate shall have been reviewed and approved by
Operational Advisor and which shall be in form and substance
satisfactory to Agents), certifying that such Projections are
consistent with the Budget and the 26-week cash flow projections of
Credit Parties.”
(p) Article V of the Credit Agreement is hereby amended by adding the following new
sections to the end thereto to read in their entirety as follows:
“5.22 Operational Advisor. (a) By not later than February 15,
2008, Company shall have (i) entered into an amended and restated
written retention agreement with the Operational Advisor, in form
and substance satisfactory to Agents, including, without limitation,
with respect to the Operational Advisor’s duties, rights and
responsibilities, which shall include oversight authority on the
cash management of the Credit Parties on a day-to-day basis, and
(ii) delivered a fully-executed copy of such agreement to
Administrative Agent. Company shall continue the retention of the
Operational Advisor until such time as Company receives the prior
written consent of Agents to discontinue such retention.
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(b) Company shall cause Operational Advisor and members of the
management of the Credit Parties to (i) participate in weekly
telephone meetings with Collateral Agent to discuss the affairs,
financial performance, operational performance, customers and
suppliers, finances and accounts of the Credit Parties, the Budget,
compliance issues and other matters requested by Collateral Agent,
and (ii) promptly respond to questions from Collateral Agent and
otherwise promptly meet (by telephone or otherwise) with Collateral
Agent upon request to discuss matters involving Credit Parties
and/or the Credit Documents.
5.23 Budget. Credit Parties shall provide to Administrative Agent
a weekly budget, which budget shall have been reviewed and approved
by Operational Advisor, and which shall be in form and substance
satisfactory to Administrative Agent in its sole discretion, (a) for
the period from February 8, 2008 through March 31, 2008 (the
“Initial Budget”) by February 15, 2008, and (b) for the period from
April 1, 2008 through the date that is one month following the date
on which such weekly budget reflects that Availability will be at
least $15,000,000 (the “Additional Budget”, and together with the
Initial Budget, each a “Budget”, and collectively, the “Budgets”) by
February 22, 2008, which Budgets shall be accompanied by a
certificate of an Authorized Officer of Company stating that such
Budget has been prepared on a reasonable basis and in good faith and
is based on assumptions believed by Company and Operational Advisor
to be reasonable at the time made and from the best information then
available to Company and Operational Advisor.
5.24 In-Transit Inventory. By not later than February 19, 2008,
Credit Parties shall take all actions necessary to cause title to
all Inventory purchased outside the United States to transfer to
Credit Parties at the location from which such Inventory is shipped,
and shall take all actions necessary, or requested by Collateral
Agent, to grant and to perfect a First Priority Lien in favor of
Collateral Agent, for the benefit of Secured Parties, in all such
Inventory commencing on the date such Inventory is shipped to Credit
Parties. Without limiting the foregoing, all negotiable bills of
lading shall be consigned to the order of Silver Point Finance, LLC.
5.25 Security Interests. By not later than February 19, 2008,
Credit Parties shall take all actions necessary, or requested by
Collateral Agent, to grant and to perfect a First Priority Lien in
favor of Collateral Agent, for the benefit of Secured Parties, in
all insurance policies of any Credit Party, and shall have provided
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evidence thereof to Collateral Agent, which evidence shall be
satisfactory to Collateral Agent.
5.26 Reworked Inventory. All Inventory that Credit Parties have
advised Collateral Agent has been or will be recovered from SCHOT
related sales and Olevia Far East related sales and re-worked by
Taiwan Kolin Co. Ltd. for sale into the United States, as set forth
on Schedule 5.26 (the “Reworked Inventory”), shall (i) be
converted for use in the United States and delivered to a common
carrier for transport to the United States on or before March 4,
2008 and (ii) be delivered to the Credit Parties at a location in
the United States on or before March 31, 2008.
5.27 Foreign Accounts Receivable. Use commercially reasonable
efforts to collect all accounts receivable owing from Account
Debtors located outside of the United States on or before March 4,
2008.
5.28 Factoring Agreements and other Material Contracts. Company and
each of its Subsidiaries shall comply, with all provisions of the
Factoring Agreement, including, without limitation, taking all
necessary steps so that all payments and remittance information with
respect to factored accounts are remitted to Factor, and all other
Material Contracts.
5.29 Third Amendment. On or before February 19, 2008, Credit
Parties shall enter into the Third Amendment and any other documents
reasonably requested by Agents and consistent with this Agreement in
connection with such amendment; provided that each of Credit
Parties, Agents and Lenders shall use commercially reasonable
efforts to enter into the Third Amendment and such other documents
by February 15, 2008.
5.30 Inventory Appraisal and Audit. (a) Credit Parties shall have
(i) provided Agents and their consultants, appraisers and auditors
with sufficient information and/or access to conduct the audits,
appraisals and inspections described in clause (c) below, and (ii)
delivered to Agents, by not later than February 19, 2008, (A) a
detailed list of the “kit” inventory located in Asia as of December
31, 2007 , and (B) a summary of the Reworked Inventory (and/or
Inventory that is in the process of being converted into Reworked
Inventory) located in Asia as of February 7, 2008.
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(b) Credit Parties shall (i) arrange for a third party inspector
selected by the Agents to have access to the Inventory of Credit
Parties located in Asia as soon as possible, but in any event, not
later than February 26, 2008, and (ii) cooperate with and use their
best efforts to cause such third party inspector to provide the
written results of such inspection (which results shall be
satisfactory to Agents) to Agents on or before the date that is four
(4) days following the date of such inspection.”
(q) Section 6.7 of the Credit Agreement is hereby amended by adding the following new
clause to the end thereof to read in its entirety as follows:
“(k) Compliance with Budget. Company shall not, and shall
not permit any of its Subsidiaries to, deviate by more than (i) 10%
(A) above the “Aggregate Disbursements” line item set forth in the
Budget tested on a cumulative, weekly basis, or (B) below the “Cash
Receipts”, “Net Cash” or “Availability” line items set forth in the
Budget tested on a cumulative, weekly basis, or (ii) 15% above each
individual disbursement line item comprising of the “Aggregate
Disbursements” line item set forth in the Budget tested on a
cumulative, weekly basis.”
(r) Section 6.17 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
“6.14 Amendments or Waivers of Certain Contractual Obligations. No
Credit Party shall nor shall it permit any of its Subsidiaries to,
(a) agree to any material amendment, restatement, replacement,
refinancing, supplement or other modification to, or waiver or
termination of any of its material rights under any Material
Contract without obtaining the prior written consent of
Administrative Agent and the Requisite Lenders to such amendment,
restatement, replacement, refinancing, supplement or other
modification or waiver or termination, or (b) enter into any
Material Contract unless the funding requirements contained in such
Material Contract are consistent with the Budget (or, following the
termination of the Budget, the Projections). Notwithstanding the
foregoing, the Factoring Agreement may be (i) replaced after
December 31, 2008 with another factoring or cash management
arrangement with a third party pursuant to terms satisfactory to
Administrative Agent in its sole discretion, or (ii) modified upon
the request of Company with the prior written consent of
Administrative Agent (which consent may be provided or withheld in
the sole discretion of Administrative Agent) at any time.
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(s) Section 6.17 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
“6.17 Deposit Accounts. No Credit Party shall establish, maintain
or deposit proceeds in a Deposit Account that is not subject to the
cash management arrangements described in Section 5.15. Company
shall deliver satisfactory evidence to Collateral Agent that each
Deposit Account maintained by any Credit Party (other than the
Deposit Accounts set forth on Part I of Schedule 6.17) (each
such account, other than accounts set forth on Schedule
6.17, being a “Specified Deposit Account”) (a) has
become subject to an irrevocable instruction (acknowledged by the
financial institution maintaining such Specified Deposit Account on
behalf of such Credit Party) to transfer, on a daily basis, all
proceeds deposited in each such Deposit Account to the Deposit
Account specified on Part II of Schedule 6.17 by not later
than February 14, 2008, and (b) has been closed by February 19,
2008. On each Business Day on and after the Second Amendment
Effective Date until such time as each of the Credit Parties’
Deposit Accounts are subject to the exclusive control of the
Collateral Agent (in the case of the Deposit Accounts specified on
Part I of Schedule 6.17) or following the date on which the
irrevocable instructions described in clause (a) of the immediately
preceding sentence are effected (in the case of the Specified
Deposit Accounts), Company shall send, by wire transfer, all funds
on deposit in any Deposit Account maintained by any Credit Party
(other than Company’s Deposit Account No. 4121652440 and 4121668487
maintained at Xxxxx Fargo Bank, National Association) to the Deposit
Account set forth on Part II of Schedule 6.17.”
(t) Section 6.22 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
“6.22 Accounts. At any time (a) that Availability is less than
$15,000,000, or (b) during the occurrence and continuance of a
Default or an Event of Default, no Credit Party shall, or shall
permit any of its Subsidiaries to generate Accounts from sales of
Inventory to Account Debtors, other than Account Debtors located in
the United States that are acceptable to Agents.”
(u) Section 8.1(c) of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
“(c) Breach of Certain Covenants. Failure of any Credit
Party to perform or comply with any term or condition contained in
Section 2.5, Sections 5.1, 5.2, 5.3, 5.5, 5.6, 5.8, 5.9, 5.15, 5.16,
5.17, 5.18,
13
5.19, 5.20, 5.21, 5.22, 5.23, 5.24, 5.25, 5.26, 5.27, 5.28, 5.29 or
5.30 or Section 6; or”
(v) Section 8.1 of the Credit Agreement is hereby amended by adding the following new
section to the end thereto to read in its entirety as follows:
“(q) Factoring Agreements. (i) a breach, default or event of default shall
occur under the Factoring Agreement if the effect of such breach, default or event of
default is to permit the Factor to terminate the Factor Agreement, (ii) the Factoring
Agreement or Factoring Assignment Agreement shall terminate for any reason (other than by
expiration of its scheduled term), or (iii) the Factor shall exercise any remedies under the
Factoring Agreement; provided, that the Factoring Agreement may be (A) replaced
after December 31, 2008 with another factoring or cash management arrangement with a third
party pursuant to terms reasonably satisfactory to Administrative Agent in its sole
discretion, or (B) modified upon the request of Company with the prior written consent of
Administrative Agent (which consent may be provided or withheld in the sole discretion of
Administrative Agent) at any time, and, to the extent the Factoring Agreement is so replaced
or modified, each reference to the term “Factoring Agreement” and “Factoring Assignment
Agreement” contained in this Event of Default shall be deemed to apply to such replacement
agreement or modified agreement, as applicable, and each reference to the term “Factor”
contained in this Event of Default shall be deemed to apply to the factor under such
replacement agreement or modified agreement, as applicable;
(w) Section 10.2(e) of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
“(e) all the actual costs and fees, expenses and disbursements of
any auditors, accountants, consultants, appraisers, advisors and
agents, whether internal or external, including, any research data
firm which provides industry or other similar information on the
Company’s industry;”
(x) Section 9.8 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
“(c) Agent Advances. Subject to the terms of any separate written
agreement among the Agents and the Lenders, Collateral Agent may
from time to time make such disbursements and advances (“Agent
Advances”) in an amount not to exceed the lesser of (x) $10,000,000,
and (y) 10.0% of the Borrowing Base (at the time such Agent Advance
is made), in the aggregate, which Collateral Agent, in its sole
discretion, deems necessary or desirable to preserve, protect,
prepare for sale or lease or dispose of the Collateral or any
portion thereof, to enhance the likelihood or maximize the amount of
repayment by the Applicable Borrowers of the Loans, Letter of Credit
usage and other Obligations or to pay any other amount chargeable to
the
14
Applicable Borrowers pursuant to the terms of this Agreement,
including, without limitation, costs, fees and expenses as described
in Section 10.2 and Section 10.3. The Agent Advances shall be
repayable by the Borrowers on demand and be secured by the
Collateral and shall bear interest at a rate per annum equal to the
rate then applicable to Base Rate Loans. The Agent Advances shall
constitute Obligations hereunder. Without limitation to its
obligations pursuant to Section 9.3, each Lender agrees that it
shall make available to Collateral Agent, upon Collateral Agent’s
demand, in Dollars in immediately available funds, the amount equal
to such Lender’s Pro Rata Share of each such Agent Advance. If such
funds are not made available to Collateral Agent by such Lender,
Collateral Agent shall be entitled to recover such funds on demand
from such Lender, together with interest thereon for each day from
the date such payment was due until the date such amount is paid to
Collateral Agent, at the Federal Funds Rate for 3 Business Days and
thereafter at the Base Rate. Notwithstanding anything to the
contrary contained in this Section 9.8(c), (i) Collateral Agent and
Lenders may make alternative arrangements with respect to the
reimbursement by Lenders of Agent Advances made by Collateral Agent,
and (ii) until such time as a Revolving Lender has provided the
consent described in clause (y) of the final sentence of Section
2.2(a), such Revolving Lender shall have no obligation to comply
with Collateral Agent’s demand for reimbursement of any Agent
Advance.”
(y) The Credit Agreement is hereby amended by adding a new Schedule 5.26 thereto, to
read in its entirety as set forth on Annex I hereto, and by adding a new Schedule 6.17
thereto, to read in its entirety as set forth on Annex II hereto.
3. Conditions to Effectiveness. This Amendment shall become effective (the
“Amendment Effective Date”) upon satisfaction in full of the following conditions
precedent:
(a) Immediately after giving effect to this Amendment, (i) the representations and
warranties contained in this Amendment, the Credit Agreement and the other Credit Documents
shall be correct on and as of the date of this Amendment as though made on and as of such
date (except where such representations and warranties relate to an earlier date in which
case such representations and warranties shall be true and correct as of such earlier date)
and (ii) no Default or Event of Default (other than the Events of Default specified on
Schedule A hereto (such Events of Default, the “Specified Events of Default”) shall
have occurred and be continuing (or would result from this Amendment becoming effective in
accordance with its terms).
(b) Administrative Agent shall have received counterparts of this Amendment that bear
the signatures of each Credit Party, each Agent and each Lender.
15
(c) Administrative Agent shall have received a copy of the Second Amendment Fee Letter,
duly executed by Company and Administrative Agent.
(d) Borrowing Base Agent shall have completed the funds transfers specified in clause
(x) of the final sentence of Section 5.15(b) (as amended by this Amendment).
(e) Borrowers shall have paid to Administrative Agent, in immediately available funds,
all amounts due and owing to any Agent or any Lender in connection with the Credit
Documents, including, without limitation, all amounts then due and payable under the Second
Amendment Fee Letter.
4. Credit Parties’ Representations and Warranties. Each Credit Party represents and
warrants to Agents and Lenders as follows:
(a) Such Credit Party (i) is duly organized, validly existing and in good standing
under the laws of the state of its organization and (ii) has all requisite power, authority
and legal right to execute, deliver and perform this Amendment and to perform the Credit
Agreement, as amended hereby.
(b) The execution, delivery and performance by such Credit Party of this Amendment and
the performance by such Credit Party of the Credit Agreement, as amended hereby (i) have
been duly authorized by all necessary action, (ii) do not and will not violate or create a
default under such Credit Party’s organizational documents, any applicable law or any
contractual restriction binding on or otherwise affecting such Credit Party or any of such
Credit Party’s properties, and (iii) except as provided in the Credit Documents, do not and
will not result in or require the creation of any Lien, upon or with respect to such Credit
Party’s property.
(c) No authorization or approval or other action by, and no notice to or filing with,
any governmental authority is required in connection with the due execution, delivery and
performance by such Credit Party of this Amendment or the performance by such Credit Party
of the Credit Agreement, as amended hereby.
(d) This Amendment and the Credit Agreement, as amended hereby, constitute the legal,
valid and binding obligations of such Credit Party, enforceable against such Credit Party in
accordance with their terms except to the extent the enforceability thereof may be limited
by any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws from
time to time in effect affecting generally the enforcement of creditors’ rights and remedies
and by general principles of equity.
(e) Immediately after giving effect to this Amendment, (i) the representations and
warranties contained in the Credit Agreement are correct on and as of the date of this
Amendment as though made on and as of the date hereof (except where such representations and
warranties relate to an earlier date in which case such representations and warranties shall
be true and correct as of such earlier date), and (ii) no Default or Event of Default (other
than the Specified Events of Default) has occurred and
16
is continuing (or would result from this Amendment becoming effective in accordance
with its terms).
5. No Waiver. Credit Parties have advised Agents and Lenders that each of the Events
of Default specified on Schedule A hereto has occurred and is continuing on the date hereof (such
Events of Default, the “Specified Events of Default”). Nothing in this Amendment and no
extension of credit, including any Agent Advances, shall constitute a waiver of, or consent to a
departure from, any provision of the Credit Agreement or a wavier of any Default or Event of
Default under the Credit Agreement (including the Specified Events of Default or any future
violation of the provisions of any Credit Document).
6. Continued Effectiveness of Credit Agreement. Each Credit Party hereby (a) confirms
and agrees that the Credit Agreement and each other Credit Document to which it is a party is, and
shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects
except that on and after the Amendment Effective Date all references in any such Credit Document to
(i) “the Credit Agreement”, “hereto”, “hereof”, “hereunder”, “thereto”, “thereof”, “thereunder” or
words of like import referring to the Credit Agreement shall mean the Credit Agreement as amended
by this Amendment, (b) confirms and agrees that to the extent that any such Credit Document
purports to assign or pledge to Collateral Agent, for the ratable benefit of Secured Parties, or to
grant to Collateral Agent, for the ratable benefit of Secured Parties, a security interest in or
Lien on, any Collateral as security for the Obligations of such Credit Party, or any of its
Subsidiaries from time to time existing in respect of the Credit Agreement and the other Credit
Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified
and confirmed in all respects, and (c) confirms and agrees that no amendment of any terms or
provisions of the Credit Agreement, or the amendments granted hereunder shall relieve any Credit
Party from complying with such terms and provisions other than as expressly amended hereby or from
complying with any other term or provision thereof or herein.
7. Release. Each Credit Party hereby acknowledges and agrees that: (a) neither it nor
any of its Affiliates has any claim or cause of action against any Agent or any Lender (or any of
their respective Affiliates, officers, directors, employees, attorneys, consultants or agents) and
(b) each Agent and each Lender has heretofore properly performed and satisfied in a timely manner
all of its obligations to Credit Parties and their Affiliates under the Credit Agreement and the
other Credit Documents. Notwithstanding the foregoing, Credit Parties wish (and Agents and Lenders
agree) to eliminate any possibility that any past conditions, acts, omissions, events or
circumstances would impair or otherwise adversely affect any Agent’s or any Lenders’ rights,
interests, security and/or remedies under the Credit Agreement and the other Credit Documents.
Accordingly, for and in consideration of the agreements contained in this Amendment and other good
and valuable consideration, each Credit Party (for itself and its Affiliates and the successors,
assigns, heirs and representatives of each of the foregoing) (collectively, the
“Releasors”) does hereby fully, finally, unconditionally and irrevocably release and
forever discharge each Agent and each Lender and each of their respective Affiliates, officers,
directors, employees, attorneys, consultants and agents (collectively, the “Released
Parties”) from any and all debts, claims, obligations, damages, costs, attorneys’ fees, suits,
demands, liabilities, actions, proceedings and causes of action, in each case, whether known or
unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and
17
whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor
has heretofore had or now or hereafter can, shall or may have against any Released Party by reason
of any act, omission or thing whatsoever done or omitted to be done, arising out of, connected with
or related in any way to the Credit Agreement or any other Credit Document, or any act, event or
transaction related or attendant thereto, or the agreements of any Agent or any Lender contained
therein, or the possession, use, operation or control of any of the assets of any Credit Party, or
the making of any Loans or other advances, or the management of such Loans or advances or the
Collateral.
8. Miscellaneous.
(a) This Amendment may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of this Amendment by telefacsimile shall be equally as effective as
delivery of an original executed counterpart of this Amendment.
(b) Section and paragraph headings herein are included for convenience of reference
only and shall not constitute a part of this Amendment for any other purpose.
(c) This Amendment shall be governed by, and construed in accordance with, the laws of
the State of New York. Each of the parties to this Amendment hereby irrevocably waives all
rights to trial by jury in any action, proceeding or counterclaim arising out of or relating
to this Amendment.
(d) Borrowers will pay on demand all fees, costs and expenses of Agents and Lenders in
connection with the preparation, execution and delivery of this Amendment or otherwise
payable under the Credit Agreement, including, without limitation, fees disbursements and
other charges of counsel to Agents and Lenders.
(e) This Amendment is a Credit Document executed pursuant to the Credit Agreement and
shall be construed, administered and interpreted in accordance with the terms thereof.
Accordingly, it shall be an Event of Default under the Credit Agreement if any
representation or warranty made or deemed made by any Credit Party under or in connection
with this Amendment shall have been incorrect when made or deemed made or if any Credit
Party fails to perform or comply with any covenant or agreement contained herein.
18
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date first written
above.
| SYNTAX-BRILLIAN CORPORATION |
||||
| By: | /s/ Xxxx X. Xxxxxxx | |||
| Name: | Xxxx X. Xxxxxxx | |||
| Title: | Executive Vice President and Chief Financial Officer | |||
| SYNTAX-BRILLIAN SPE, INC. |
||||
| By: | /s/ Xxxx X. Xxxxxxx | |||
| Name: | Xxxx X. Xxxxxxx | |||
| Title: | Executive Vice President and Chief Financial Officer | |||
| SYNTAX GROUPS CORPORATION |
||||
| By: | /s/ Xxxx X. Xxxxxxx | |||
| Name: | Xxxx X. Xxxxxxx | |||
| Title: | Executive Vice President and Chief Financial Officer | |||
| SYNTAX CORPORATION |
||||
| By: | /s/ Xxxx X. Xxxxxxx | |||
| Name: | Xxxx X. Xxxxxxx | |||
| Title: | Executive Vice President and Chief Financial Officer | |||
| VIVITAR CORPORATION |
||||
| By: | /s/ Xxxx X. Xxxxxxx | |||
| Name: | Xxxx X. Xxxxxxx | |||
| Title: | Executive Vice President and Chief Financial Officer | |||
Signature Page to Second Amendment to Credit and Guaranty Agreement
| SILVER POINT FINANCE, LLC, as Administrative Agent, Lead Arranger and Collateral Agent |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Authorized Signatory | |||
Signature Page to Second Amendment to Credit and Guaranty Agreement
| SPCP GROUP, LLC, as a Lender |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Authorized Signatory | |||
| BROAD POINT I, B.V., as a Lender |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Authorized Signatory | |||
| FIELD POINT III, LTD., as a Lender |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Authorized Signatory | |||
| FIELD POINT I, LTD., as a Lender |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Authorized Signatory | |||
| SPF CDO I, LTD., as a Lender |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Authorized Signatory | |||
Signature Page to Second Amendment to Credit and Guaranty Agreement
| SPCP GROUP III, LLC, as a Lender |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Authorized Signatory | |||
Signature Page to Second Amendment to Credit and Guaranty Agreement
| CITICORP USA, INC., as a Lender |
|||||
| By: | /s/ Xxxxx X. Xxxxxxxx | ||||
| Name: | Xxxxx X. Xxxxxxxx | ||||
| Title: | Director & Vice President | ||||
Schedule A
Specified Events of Default
The Company is in default under Section 2.13(g) due to failure to timely prepay the Loans as
required therein.
The Company is in default under Section 5.1(a) due to failure to provide timely monthly reports for
the month of December.
The Company is in default under Section 5.1(f) due to failure to provide written notice of Defaults
or Events of Default as required therein.
The Company is in default under Section 5.1(q) due to failure to provide Daily Collateral Reporting
as required therein.
The Company is in default under Section 5.8 as a result of the Company’s issuance of the letters to
the Company’s customers regarding remittance of checks.
The Company is in default under Section 5.15(b) for failure to maintain a cash management
arrangement by the dates required therein.
The Company is in default under Section 5.17 for failure to timely complete certain post-closing
obligations by the dates required therein.
The Company is in default under Section 5.18 for failure to obtain and maintain “key man” life
insurance for Xxxxx Xxxxx Xxx Xx in the amount and by the dates required therein.
The Company is in default under Section 5.20 for failure to provide the Projections to the Agents.
The Company is in default under Section 6.7(a) for the Fiscal Quarter ending December 31, 2007.
The Company is in default under Section 6.7(b) for the Fiscal Quarter ending December 31, 2007.
The Company is in default under Section 6.7(c) for the Fiscal Quarter ending December 31, 2007.
The Company is in default under Section 6.7(d) for the Fiscal Quarter ending December 31, 2007.
The Company is in default under Section 6.7(g) for failure to meet the Approved Production
Schedule.
The Company is in default under Section 6.7(h) for failure to meet the requirements of Minimum
Adjusted Working Capital Assets as required therein.
The Company is in default under Section 6.7(i) as of December 1, 2007.
The Company is in default under Section 6.17 as a result of maintaining and depositing proceeds
in a Deposit Account that was not subject to cash management arrangements.
The Company is in default under Section 8.1(a) for failure to make payment when due.
The Company is in default under Section 8.1(b) as a result of the Company’s issuance of a default
under the Factoring Agreement.
Schedule 5.26
Reworked Inventory
Detail
as of February 7, 2008
| Units | ||||||||||||||||
| Sold by Kolin | Received or | |||||||||||||||
| Returned | on Company | In-Transit to | To be | |||||||||||||
| Type | from China | Behalf | Company | Reworked | ||||||||||||
55” LCD
|
9,600 | 2,525 | 3,048 | 4,027 | ||||||||||||
65” LCD
|
9,464 | 1,877 | 962 | 6,625 | ||||||||||||
47” LCD
|
3,780 | 833 | 1,627 | 1,320 | ||||||||||||
42” LCD
|
3,960 | 1,071 | 788 | 2,101 | ||||||||||||
Total
|
26,804 | 6,306 | 6,425 | 14,073 | ||||||||||||
| Cost in Dollars | ||||||||||||||||
| Sold by Kolin | Received or | |||||||||||||||
| Returned | on Company | In-Transit to | To be | |||||||||||||
| Type | from China | Behalf | Company | Reworked | ||||||||||||
55” LCD
|
$ | 21,600,000 | $ | 5,681,250 | $ | 6,858,000 | $ | 9,060,750 | ||||||||
65” LCD
|
31,611,600 | 6,269,545 | 3,213,267 | 22,128,788 | ||||||||||||
47” LCD
|
4,347,000 | 957,950 | 1,871,050 | 1,518,000 | ||||||||||||
42” LCD
|
3,524,400 | 953,190 | 701,320 | 1,869,890 | ||||||||||||
Total
|
$ | 61,083,000 | $ | 13,861,935 | $ | 12,643,637 | $ | 34,577,428 | ||||||||
Schedule 6.17
PART I: Deposit Accounts Subject to Control Agreements
Xxxxx Fargo Bank, National Association
000 X. Xxxxxxxxxx, 25th Floor
MAL. #54101-251
Xxxxxxx, XX 00000
000 X. Xxxxxxxxxx, 25th Floor
MAL. #54101-251
Xxxxxxx, XX 00000
Account Nos.:
|
4121652663 | |
| 4121652440 | ||
| 4121659965 | ||
| 4121668487 |
PART II: Deposit Account to Which Funds are to be Transferred
ACCOUNT NAME:
|
THE CIT GROUP/COMMERCIAL SERVICES, INC. (ABL ACCOUNTS) | |
ACCOUNT NUMBER:
|
304-670588 | |
BANK:
|
X.X. XXXXXX XXXXX | |
| 000 XXXX XXXXXX | ||
| XXX XXXX, XX 00000 | ||
ABA NUMBER:
|
000000000 | |
REFERENCE:
|
SYNTAX |
