EXHIBIT 1
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MASTER RESTRUCTURING AGREEMENT
Dated as of September 8, 1999
Among
RECOTON CORPORATION,
Certain of its Subsidiaries,
the Existing Creditors identified herein
and
THE CHASE MANHATTAN BANK,
as Collateral Agent
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.......................................................1
Section 1.1 Definitions of Certain Terms..............................1
Section 1.2 Terms Generally...........................................1
SECTION 2. CONSENT TO LIFO OBLIGATIONS; RESTRUCTURE AND MODIFICATION OF
EXISTING OBLIGATIONS
Section 2.1 LIFO Obligations; Consent to LIFO Obligations.............2
Section 2.2 Restructure and Modification of the Existing Bank
Obligations and the Chase Obligations.....................2
Section 2.3 Restructure of and Modification of the Senior Notes.......4
Section 2.4 Modification of 1999 Note Obligations.....................4
Section 2.5 Modification of Chase Mortgage Agreements.................5
Section 2.6 Reallocation of Interest..................................6
Section 2.7 Prepayment Warrants.......................................6
Section 2.8 Override of the Existing Agreements; Limitations on
Amendments and Modifications of Existing Agreements.......7
Section 2.9 Substitution of Security.................................10
SECTION 3. SUBORDINATION....................................................10
Section 3.1 Subordination............................................10
Section 3.2 Turnover of Payments and Collections.....................12
Section 3.3 Rights in Collateral.....................................13
Section 3.4 Subrogation..............................................13
Section 3.5 Consent of Subordinated Creditors........................14
Section 3.6 Negative Covenants of Subordinated Creditors.............15
Section 3.7 Priority of LIFO Obligations Unconditional...............15
Section 3.8 Existing L/C Obligation Reduction True-Up................15
Section 3.9 Sharing Among Existing Senior Creditors; Sharing
Agreement................................................16
Section 3.10 Survival of Subordination of 1999 Notes.................17
SECTION 4. APPLICATION OF PAYMENTS AND PROCEEDS.............................17
Section 4.1 Collateral Accounts......................................17
Section 4.2 Investment of Funds Deposited in Collateral Accounts.....18
Section 4.3 Application of Payments and Proceeds.....................18
SECTION 5. REPRESENTATIONS AND WARRANTIES...................................19
Section 5.1 Representations and Warranties of the Loan Parties.......19
Section 5.2 Representations and Warranties of the Collateral
Agent and the Creditors..................................20
SECTION 6. CONCERNING THE COLLATERAL AGENT..................................20
Section 6.1 Appointment of Collateral Agent..........................20
Section 6.2 Actions Under Security Documents.........................21
Section 6.3 Limitations on Responsibility of Collateral Agent........21
Section 6.4 Reliance by Collateral Agent; Indemnity Against
Liabilities; etc.........................................22
Section 6.5 Resignation or Removal of the Collateral Agent...........23
Section 6.6 Expenses and Indemnification by Borrower.................24
Section 6.7 Expenses and Indemnification by Secured Creditors........24
Section 6.8 Collateral Agent's Lien..................................24
Section 6.9 Records..................................................24
Section 6.10 Release of Collateral...................................25
SECTION 7. CONDITIONS PRECEDENT.............................................25
SECTION 8. MISCELLANEOUS....................................................27
Section 8.1 No Individual Action.....................................27
Section 8.2 Provisions Applicable After Bankruptcy...................27
Section 8.3 Invalidated Payments.....................................28
Section 8.4 Payment of Expenses......................................28
Section 8.5 Successors and Assigns...................................29
Section 8.6 Notices..................................................29
Section 8.7 Termination..............................................29
Section 8.8 Further Assurances, etc..................................29
Section 8.9 APPLICABLE LAW...........................................30
Section 8.10 Modification of Agreement................................30
Section 8.11 Waiver of Rights.........................................30
Section 8.12 Severability.............................................30
Section 8.13 Counterparts.............................................30
Section 8.14 Section Headings.........................................30
Section 8.15 Complete Agreement.......................................30
Section 8.16 Confidentiality..........................................30
Section 8.17 Additional Loan Parties..................................31
APPENDICES
Appendix A Definitions
Appendix B Uniform Covenants
Appendix C Uniform Events of Default
SCHEDULES:
Schedule 2.2(a) Existing Term Loans
Schedule 2.2(b) Existing L/C Commitment Percentages
Schedule 2.8(h) Benchmark Financial Covenants for 1999 Notes
Upon Refinancing of the LIFO Obligations
and Existing Obligations
Schedule 8.6 Addresses for Notices
EXHIBITS
Exhibit A Form of LIFO Credit Agreement
Exhibit B Form of 1999 Replacement Warrant
Exhibit C Form of Closing Certificate
Exhibit D Form of Legal Opinion of Stroock & Stroock & Xxxxx L.L.P.,
Counsel to Certain Loan Parties
Exhibit E Form of Prepayment Warrant
Exhibit F Form of Registration Rights Agreement
Exhibit G Form of Assumption Agreement
CONFORMED COPY
MASTER RESTRUCTURING AGREEMENT dated as of September 8, 1999, among
Recoton Corporation, a New York corporation (the "BORROWER"), the Subsidiaries
of the Borrower listed on the signature pages hereto under the heading
"Subsidiaries' (collectively with the Borrower, the "LOAN PARTIES'), the
Existing Creditors (as defined below), and The Chase Manhattan Bank, as
collateral agent (the "COLLATERAL AGENT") for the Secured Creditors (as defined
below).
W I T N E S S E T H
WHEREAS, the Existing Creditors (such term, and the other capitalized
terms used in these Recitals, having the meanings hereinafter referred to) and
the Loan Parties have engaged in negotiations to effect a restructuring of the
Loan Parties' obligations under the Existing Agreements and the provision of
additional working capital to the Borrower which culminated in the execution by
the Existing Creditors and the Borrower of the Agreement Regarding Summary Term
Sheet dated as of August 16, 1999 (the "SUMMARY TERM SHEET");
WHEREAS, the Loan Parties have requested, and the Existing Creditors
are agreeable, that the obligations of the Loan Parties under the Existing
Agreements be restructured and modified and that certain of the Existing
Creditors provide the Borrower additional working capital, all as contemplated
by the Summary Term Sheet, this Agreement and certain other agreements;
NOW, THEREFORE, the parties hereto hereby agrees as follows:
SECTION 1. DEFINITIONS
Section 1.1 DEFINITIONS OF CERTAIN TERMS. Unless otherwise defined
herein, the terms defined in Appendix A hereto shall have the respective
meanings set forth in such Appendix A.
Section 1.2 TERMS GENERALLY. The definitions in Appendix A shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, subsection, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
SECTION 2. CONSENT TO LIFO OBLIGATIONS; RESTRUCTURE AND
MODIFICATION OF EXISTING OBLIGATIONS
Section 2.1 LIFO OBLIGATIONS; CONSENT TO LIFO OBLIGATIONS. (a) Subject
to the terms and conditions hereof and of the LIFO Credit Agreement, the LIFO
Lenders shall make available up to $50,000,0000 of LIFO Loans on and after the
Restructuring Effective Date.
(b) Subject to the terms and conditions hereof, each Existing Creditor
hereby consents to the incurrence of the LIFO Obligations, the execution and
delivery of the LIFO Credit Agreement and the other LIFO Loan Documents by each
of the Loan Parties party thereto and the granting of Liens in favor of the
Collateral Agent for the benefit of the Secured Creditors.
Section 2.2 RESTRUCTURE AND MODIFICATION OF THE EXISTING BANK
OBLIGATIONS AND THE CHASE OBLIGATIONS. Effective on the Restructuring Effective
Date, the Existing Credit Agreement shall be modified and the Chase Term Loans
and Chase Letters of Credit shall be restructured as follows:
(a) (i) on the Restructuring Effective Date, Chase will be deemed
to make a new "Term Loan" under and pursuant to the Existing Credit
Agreement (as modified hereby) in an amount equal to the principal
amount of the Domestic Chase Term Loan and the Borrower shall cause
the Domestic Chase Term Loan to be paid in full (including all amounts
owing thereon in respect of accrued but unpaid interest);
(ii) upon the request of the Borrower made within five Business
Days of the Restructuring Effective Date, Chase will make a new "Term
Loan" under and pursuant to the Existing Credit Agreement (as modified
hereby) in an amount equal to the Dollar equivalent of the Far East
Term Loan; and
(iii) after giving effect to the foregoing, the Term Loans under
the Existing Credit Agreement of each Existing Bank shall be the
amount set forth opposite its name on Schedule 2.2(a);
(b) On the Restructuring Effective Date, the Chase Letters of
Credit shall be deemed to be Existing Letters of Credit under and
pursuant to the terms of the Existing Credit Agreement (as modified
hereby). After giving effect thereto, the Existing L/C Commitment
Percentage of each Existing Bank shall be the percentage set forth
opposite its name on Schedule 2.2(b);
(c) The "Termination Date" under the Existing Credit Agreement
shall be extended to June 30, 2001. The outstanding Existing Loans
shall be due and payable on June 30, 2001 (except to the extent such
Existing Loans become due and payable on an earlier date in accordance
with the Existing Credit Agreement and the terms hereof);
(d) From and after the Restructuring Effective Date (and after
giving effect to the transactions contemplated by paragraphs (a) and
(b) of this Section), the Borrower shall not have the right to request
the making of any "Revolving Credit Loans" as defined in and under the
Existing Credit Agreement and any such Revolving Credit Loans repaid
after the Restructuring Effective Date shall not be available for
reborrowing. Amounts received by the Existing Agent for application to
the Existing Loans shall be applied ratably based on the aggregate
amount of Existing Loans outstanding on the date of any such
prepayment, without any priority of "Revolving Credit Loans" over
"Term Loans" (as each is defined in the Existing Credit Agreement) or
vice versa;
(e) From and after the Restructuring Effective Date, the Borrower
shall not have the right to request the conversion or continuation of
any Existing Loan as a Eurodollar Loan (as defined in the Existing
Credit Agreement). Notwithstanding the Type (as defined in the
Existing Credit Agreement) of any Existing Loan outstanding on the
Restructuring Effective Date, all such outstanding Existing Loans
shall bear interest at a rate equal to ABR (as defined in the LIFO
Credit Agreement) plus 3.77%. Existing Reimbursement Obligations shall
bear interest at a rate equal to ABR plus 3.77%. From and after the
Restructuring Effective Date, (i) the Borrower shall pay a letter of
credit fee with respect to Existing Letters of Credit that are
commercial letters of credit, computed at the rate per annum equal to
1.50% payable in arrears on the last day of each of March, June,
September and December, on the average daily amount from time to time
available to be drawn under all such Existing Letters of Credit and
(ii) a letter of credit fee with respect to each Existing Letter of
Credit that is a standby letter of credit, computed at the rate per
annum equal to 3.50%, payable in arrears on the last day of each of
March, June, September and December, on the aggregate amount from time
to time available to be drawn under each such Existing Letter of
Credit. Subject to the provisions of Section 3 hereof, all such
interest and fees shall be payable (i) in cash and (ii) to the
Existing Agent for the ratable benefit of each Existing Bank in
accordance with its Existing L/C Commitment Percentage; and
(f) Existing Letters of Credit (including deemed Existing Letters
of Credit in accordance with paragraph (b) of this Section) shall
remain outstanding in accordance with their terms. Except as modified
hereby, Section 3 of the Existing Credit Agreement and all other
subsections of the Existing Credit Agreement to the extent applicable
to Section 3 thereof shall be deemed to be in full force and effect
with respect to the rights and obligations of the Existing Issuing
Bank, the Existing Banks, the Borrower and the Existing Guarantors in
respect of Existing Letters of Credit until such time as no Existing
Letter of Credit is outstanding. Notwithstanding anything to the
contrary contained in Section 3 of the Existing Credit Agreement, at
any time after the Restructuring Effective Date, (i) the Existing
Issuing Bank shall have no obligation to issue any Existing Letter of
Credit if, after giving effect to such issuance (a) the Existing L/C
Obligations would exceed the Existing L/C Commitment or (b) the
Aggregate L/C Obligations would exceed $24,000,000 and (ii) the
Existing Issuing Bank shall not issue any Existing Letter of Credit
with an expiration date later than the LIFO Termination Date unless
prior to the issuance thereof the Borrower has deposited cash in an
amount equal to 105% of the face amount of the requested Existing
Letter of Credit in the Existing L/C Cash Collateral Account to be
held as collateral for the Secured Obligations. In the event that
Existing Letters of Credit are drawn upon and honored by the Existing
Issuing Bank, the Borrower shall have the right to pay Existing
Reimbursement Obligations from available cash or, to the extent credit
is available therefor, borrowings under the LIFO Credit Agreement. Any
such payment of Existing Reimbursement Obligations shall restore an
equivalent amount of Existing L/C Availability; PROVIDED that the
failure by the Borrower so to pay any Existing Reimbursement
Obligation shall not constitute a Default or Event of Default.
Section 2.3 RESTRUCTURE OF AND MODIFICATION OF THE SENIOR NOTES.
Effective on the Restructuring Effective Date, the Senior Note Agreements and
the Senior Notes shall be modified as follows:
(a) The Senior Notes shall mature and be due and payable on June
30, 2001 (except to the extent such Senior Notes become due and
payable on an earlier date in accordance with the terms of the
respective Senior Note Agreements and the terms hereof);
(b) Notwithstanding paragraph 4G of each of the Senior Note
Agreements, from and after the Restructuring Effective Date, interest
on the unpaid principal balance of (i) the 1997 Notes shall be at the
rate of 12.75% per annum and (ii) the 1998 Notes shall be at the rate
of 12.52% per annum; and
(c) Any Premium Obligation (including any Premium Obligation
arising by reason of the payment of the Senior Notes in full on or
before June 30, 2001) shall be calculated in accordance with the
interest rates and maturity dates as in effect immediately prior to
the Restructuring Effective Date under the respective Senior Note
Agreement under which such Premium Obligation arises and shall be due
and payable at the time of the prepayment giving rise thereto;
PROVIDED, that Premium Obligations arising from the first $50,000,000
of prepayments of the principal amount of the Existing Senior
Obligations shall be payable on June 30, 2001 (or any earlier date on
which the principal amount of the Existing Senior Obligations become
due and payable), together with interest thereon for the period from
the date such Premium Obligations would have been payable but for this
proviso to the date of payment thereof at a rate per annum equal to
the rate (or rates) applicable to the respective Senior Notes during
such period.
Section 2.4 MODIFICATION OF 1999 NOTE OBLIGATIONS. Effective on the
Restructuring Effective Date, the 1999 Securities Purchase Agreement, the 1999
Notes and the 1999 Original Warrants shall be modified as follows:
(a) Notwithstanding paragraph 4G of the 1999 Securities Purchase
Agreement, interest on the unpaid principal balance of the 1999 Notes
shall be at the rate of (i) 13.5% per annum during the period from the
Restructuring Effective Date to and including November 4, 1999, (ii)
14.5% per annum during the period from November 5, 1999 to and
including February 4, 2000, (iii) 15.0% per annum during the period
from February 5, 2000 to and including May 4, 2000, and (iv) 15.5% per
annum from and after May 5, 2000;
(b) The Initial Exercise Price of the 1999 Original Warrants
shall be an amount equal to the average Market Price (as defined in
1999 Original Warrants) for the ten Business Days immediately
preceding the Restructuring Effective Date; and
(c) In substitution for and in lieu of the "Additional Warrants"
to be issued pursuant to Paragraph 4G of the 1999 Securities Purchase
Agreement, the Borrower shall issue to the holders of the 1999 Notes
on the Restructuring Effective Date, warrants (the "1999 REPLACEMENT
WARRANTS") to purchase an aggregate of 100,000 shares of the
Borrower's common stock, to expire on fifth anniversary of the
Restructuring Effective Date and to be substantially in the form of
Exhibit B.
Section 2.5 MODIFICATION OF CHASE MORTGAGE AGREEMENTS. Effective on
the Restructuring Effective Date, the Chase Mortgages and the Related Mortgage
Documents shall be modified as follows:
(a) To the extent that there is any inconsistency between any
covenant set forth in Sections 1 or 2 of MRA Appendix B and any
covenant set forth in the Chase Mortgages or the Related Mortgage
Documents, the covenant set forth in the Chase Mortgages or any such
Related Mortgage Documents is hereby amended in its entirety to be
consistent with the covenants set forth in Sections 1 or 2 of MRA
Appendix B;
(b) any amendment, supplement, modification, consent or waiver in
respect of the observance or performance of the covenants set forth in
MRA Appendix B shall be binding on Chase and shall be deemed an
amendment, supplement, modification, consent or waiver of or to each
of the Chase Mortgages and the Related Mortgage Documents if such
amendment, supplement, modification, consent or waiver is (x) prior to
the occurrence of the LIFO Repayment Date, executed and delivered in
accordance with the terms of Section 10.1 of the LIFO Credit Agreement
and (y) thereafter, in writing and executed and delivered by the
Borrower and the Required Existing Senior Creditors;
(c) The Events of Default set forth in paragraph 22 of each of
the Chase Mortgages are hereby deleted in their entirety and the
Events of Default are substituted in lieu thereof as "Events of
Default" under the Chase Mortgages and the Related Mortgage Documents,
PROVIDED that, except to the extent modified by the terms of this
Master Restructuring Agreement, the rights and remedies of Chase upon
the occurrence and continuance of an Event of Default shall be
governed by the terms of the Chase Mortgages and the Related Mortgage
Documents;
(d) any waiver of the occurrence of an Event of Default shall be
binding on Chase, and shall be deemed an amendment, supplement,
modification, consent or waiver of or to each of the Chase Mortgages
and the Related Mortgage Documents, if such waiver is (x) prior to the
occurrence of the LIFO Repayment Date, executed and delivered in
accordance with the terms of Section 10.1 of the LIFO Credit Agreement
and (y) thereafter, in writing and executed and delivered by the
Borrower and the Required Existing Senior Creditors, PROVIDED that no
such waiver shall be effective to waive a Payment Default in respect
of any of the Chase Mortgages without the written consent of Chase;
and
(e) Except as otherwise expressly provided above, the Chase
Mortgages and the Related Mortgage Documents and the rights and
remedies of the parties thereto shall not be amended or modified in
any respect (it being understood and agreed that Chase shall continue
to receive monthly payments of principal and interest in respect of
the Chase Mortgages in an aggregate amount of $36,369).
Section 2.6 REALLOCATION OF INTEREST. Any Existing Senior Creditor
that is not also a LIFO Lender (a "NON-PARTICIPATING SENIOR CREDITOR") shall not
receive the incremental interest payable pursuant hereto from and after the
Restructuring Effective Date on its portion of the Existing Senior Obligations.
Accordingly, on each date that any such interest would otherwise be payable to
such Non-Participating Senior Creditor but for the provisions of this Section,
the Borrower shall pay to each Existing Senior Creditor that is a LIFO Lender
(each a "PARTICIPATING SENIOR CREDITOR") an amount equal to the product of (a)
the amount of interest (calculated at the interest rate(s) set forth herein for
the applicable Existing Senior Obligation following the Restructuring) that
would be payable to all Non-Participating Senior Creditors on account of their
respective Existing Senior Obligations but for the first sentence of this
Section TIMES a fraction, the numerator of which is the outstanding Existing
Senior Obligations of such Participating Senior Creditor and the denominator of
which is the outstanding Existing Senior Obligations of all Participating Senior
Creditors. For purposes hereof, an Existing Senior Creditor that is not a LIFO
Lender shall nonetheless be deemed to be a "Participating Senior Creditor" if
the aggregate LIFO Commitment Percentages of such Existing Senior Creditor and
any of its affiliates equals the aggregate Existing Senior Creditor Percentages
of such affiliated Existing Senior Creditors.
Section 2.7 PREPAYMENT WARRANTS. If the principal amount of the
Existing Senior Obligations has not been permanently reduced from the amount
outstanding on the Restructuring Effective Date by a cumulative amount of at
least (x) $5,000,000 on or before September 30, 2000, (y) $10,000,000 on or
before December 31, 2000 and (z) $15,000,000 on or before March 31, 2001, the
Borrower shall issue warrants (the "PREPAYMENT WARRANTS") on each such date,
exercisable for 25,000 shares of the Borrower's common stock, to be dated the
date of issue thereof, to expire on the fifth anniversary of the date of
issuance thereof and to be substantially in the form of Exhibit E. The
Prepayment Warrants shall be issued ratably to each Participating Senior
Creditor in accordance with its LIFO Commitment Percentage. The holders of the
Prepayment Warrants shall have the benefits of a registration rights agreement
to be executed by the Borrower on the Restructuring Effective Date substantially
in the form of Exhibit F.
Section 2.8 OVERRIDE OF THE EXISTING AGREEMENTS; LIMITATIONS ON
AMENDMENTS AND MODIFICATIONS OF EXISTING AGREEMENTS. Effective on the
Restructuring Effective Date (and after giving effect to the transactions
contemplated hereby and by the other Restructuring Documents), each Existing
Creditor agrees that, except as otherwise expressly provided herein and
notwithstanding anything to the contrary contained in any Existing Agreement to
which it is a party:
(a) the Existing Senior Obligations shall mature and become due
and payable on June 30, 2001;
(b) each of the Existing Agreements is hereby amended to delete
any scheduled reduction of the principal amount of the Existing
Obligations thereunder, whether by direct payment, sinking fund
payment or otherwise;
(c) none of the Existing Obligations may be accelerated except as
a result of a Payment Default in respect thereof or upon acceleration
of the LIFO Obligations;
(d) Paragraphs 5 and 6 of each of the Senior Note Agreements,
Paragraphs 5 and 6 of the 1999 Securities Purchase Agreement and
Sections 6 and 7 of the Existing Credit Agreement are hereby deemed
amended in their entirety to be consistent with the covenants set
forth in Sections 1 and 2, respectively, of MRA Appendix B, except
that the Borrower shall remain obligated to comply with its
obligations under (i) Paragraph 5B of each of the Senior Note
Agreements and the 1999 Securities Purchase Agreement in accordance
with the terms thereof and (ii) Paragraph 6L of the 1999 Securities
Purchase Agreement, PROVIDED that (i) the "Subsidiary Guaranty"
referred to in said Paragraph 6L (the "1999 NOTES SUBSIDIARY
GUARANTEE") shall be executed and delivered by only the Existing
Guarantors as of the Guaranty Date (as defined in the 1999 Securities
Purchase Agreement) (but in any event excluding any Hong Kong
Subsidiary), (ii) to the extent that any Existing Guarantor is
released at any time from its obligations under the Existing
Guarantees (other than by payment in full of the Existing Senior
Obligations), such Existing Guarantor shall be released automatically
from the 1999 Notes Subsidiary Guarantee and (iii) the obligations of
any Existing Guarantor under the 1999 Notes Subsidiary Guarantee shall
be subordinate and junior in right of payment to such Existing
Guarantor's obligations under the Guarantees as provided in Section 3;
(e) any amendment, supplement, modification, consent or waiver in
respect of the observance or performance of the covenants set forth in
MRA Appendix B shall be binding on each of the parties hereto and
shall be deemed an amendment, supplement, modification, consent or
waiver of or to each of the Operative Agreements if such amendment
supplement, modification, consent or waiver is (x) prior to the
occurrence of the LIFO Repayment Date, executed and delivered in
accordance with the terms of Section 10.1 of the LIFO Credit Agreement
and (y) thereafter, in writing and executed and delivered by the
Borrower and the Required Existing Senior Creditors, PROVIDED that
without the written consent of the "Required Holders" (under and as
defined in the 1999 Securities Purchase Agreement) no such amendment,
supplement, modification, consent or waiver shall consent to,
authorize or otherwise permit any Asset Sale by the Borrower or any of
its Subsidiaries unless (A) the purchase price for such assets is an
amount that is not less than the Fair Market Value thereof and (B)
except for an aggregate of up to $5,000,000 of the Net Cash Proceeds
from such Asset Sales, all of the Net Cash Proceeds are applied to
permanently reduce the LIFO Commitment or the Existing Senior
Obligations;
(f) clauses (i) through (xvi) of Paragraph 7A of each of the
Senior Note Agreements and the 1999 Securities Purchase Agreement and
paragraphs (a) through (j) of Section 8 of the Existing Credit
Agreement are hereby deleted in their entirety and the Events of
Default are substituted in lieu thereof as "Events of Default" under
each of the Existing Agreements, PROVIDED that, except to the extent
modified by the terms of this Agreement, the rights and remedies of
the holders of the Existing Obligations upon the occurrence and
continuance of an Event of Default shall be governed by the respective
Existing Agreement giving rise to such holders' Existing Obligations;
(g) any waiver of the occurrence of an Event of Default shall be
binding on each of the parties hereto and shall be deemed an
amendment, supplement, modification, consent or waiver of or to each
of the Operative Agreements if such amendment, supplement,
modification, consent or waiver is (x) prior to the occurrence of the
LIFO Repayment Date, executed and delivered in accordance with the
terms of Section 10.1 of the LIFO Credit Agreement and (y) thereafter,
in writing and executed and delivered by the Borrower and the Required
Existing Senior Creditors, PROVIDED that no such wavier shall be
effective to waive a Payment Default in respect of any Creditor's
Existing Obligations without the written consent of such Creditor;
(h) the consent of the 1999 Noteholders shall not be required in
connection with any refinancing, refunding, renewal or extension of
the LIFO Obligations and/or the Existing Senior Obligations and the
granting of any Liens in connection therewith so long as the terms of
any such refinancing, refunding, renewal or extension do not (i)
reduce the stated rate (including scheduled increases in such rate) or
the scheduled date for payment of any interest payable in respect of
the 1999 Notes, (ii) extend the maturity date of any 1999 Note or
otherwise modify the payment of interest on or principal of the 1999
Notes, (iii) modify the terms or conditions of the warrants originally
issued in connection with the issuance of the 1999 Notes or the 1999
Replacement Warrants, in each case, without the consent of each holder
of the 1999 Notes or any such warrants affected thereby, or (iv)
provide for more than $275,000,000 of maximum principal amount of
borrowings (less an amount equal to the sum of any permanent
reductions of the LIFO Commitments and reductions of the Existing
Senior Obligations resulting from the application of the Net Cash
Proceeds of Asset Sales but inclusive of any Existing Senior
Obligations remaining outstanding after giving effect to such
refinancing, refunding, renewal or extension) that would be entitled
to the benefits of the subordination provisions of Paragraph 12 of the
1999 Securities Purchase Agreement; PROVIDED that if the maximum
principal amount of any such refinancing, refunding, renewal or
extension (inclusive of any Existing Senior Obligations remaining
outstanding after giving effect thereto) exceeds $262,000,000, the
Borrower shall issue to the holders of the 1999 Notes at such time,
warrants to purchase an aggregate of 20,000 shares of the Borrower's
common stock, to expire on the fifth anniversary of the date of
issuance thereof, to be immediately exercisable at a price equal to
the average Market Price (as defined in the 1999 Replacement Warrants)
for the ten Business Days immediately preceding the date of issuance
thereof and otherwise to be substantially in the form of the 1999
Replacement Warrants, PROVIDED, FURTHER, that upon the satisfaction of
the foregoing conditions and the issuance of such warrants, the
holders of the 1999 Notes shall agree to covenants and events of
default consistent with any covenants and events of default contained
in any agreement providing for such refinancing, refunding, renewal or
extension (the "REFINANCING AGREEMENT") with appropriate adjustments
to reflect the 1999 Notes' subordinated status (it being understood
that the waiver or modification of any such covenants or events of
default pursuant to the terms of the Refinancing Agreement (other than
a payment default in respect of the 1999 Notes) shall constitute a
waiver or modification of the corresponding covenant or event of
default with respect to the 1999 Notes) and, to the extent such
covenants do not include, or are less restrictive than, the covenants
set forth on Schedule 2.8(h), then (aa) the Borrower shall pay in cash
an aggregate amount equal to $875,000 to the holders of the 1999
Notes, to be shared among such holders ratably in accordance with
their respective share of the aggregate principal amount of the 1999
Notes and (bb) the rate of interest on the unpaid principal balance of
the 1999 Notes shall be increased by 1.0% per annum (which increase
shall be additive to all increases of such interest rate as provided
in Section 2.4 (a)).
(i) Paragraphs 4A and 4E of the 1999 Securities Purchase
Agreement are hereby deleted in their entirety;
(j) except as otherwise provided herein, no amendment, supplement
or other modification to any Operative Agreement shall be effective
unless such amendment, supplement or other modification (i) is
executed and delivered in accordance with the applicable provisions of
the relevant Operative Agreement and (ii) is consented to in writing
by (y) prior to the LIFO Repayment Date, the Required LIFO Lenders and
(y) thereafter, the Required Existing Senior Creditors; PROVIDED that
no such amendment, supplement or other modification that would (x)
increase the amount of the LIFO Commitments shall be effective without
the consent of all of the Existing Senior Creditors or (y) increase
the principal amount of any of the Existing Obligations, modify the
fees or interest rates specified in any of the Operative Agreements or
modify the terms of any warrants issued in connection with any of the
Operative Agreements shall be effective without the consent of each
Existing Creditor.
(k) no Participating Senior Creditor may assign or transfer
(including by way of participating interest) all or any part of its
rights and obligations under the Existing Senior Creditor Agreements
to which it is a party and the Notes (as defined in the Existing
Credit Agreement) or the Senior Notes, as applicable, in accordance
with Section 8.5 or otherwise unless such Participating Senior
Creditor also assigns to the same Person a corresponding percentage
amount of such Participating Senior Creditor's rights and obligations
under the LIFO Credit Agreement and LIFO Commitment.
Section 2.9 SUBSTITUTION OF SECURITY. Effective as of the date that is
91 days after the compliance by the Borrower with its obligations under
subsection 1.13(c) of MRA Appendix B to take all actions necessary to provide
the Collateral Agent with valid and enforceable, perfected Liens on not less
than 65% of each class of the Capital Stock of Far East and to deliver all
agreements and opinions required by such subsection 1.13(c) with respect to the
pledge of the Capital Stock of Far East, so long as no Default or Event of
Default shall have occurred and be continuing on such 91st day, each of the
Existing Senior Creditors shall automatically release and discharge each of the
Hong Kong Subsidiaries party to the Existing Guarantees from its obligations
thereunder, effective as of the date each such Existing Guarantee was executed,
without the need for any further action on the part of any Existing Senior
Creditor; PROVIDED that if the date of the Borrower's compliance with its
obligations under subsection 1.13(c) of MRA Appendix B referred to above is
within ten days of the Restructuring Effective Date, such compliance shall be
deemed to have occurred on the Restructuring Effective Date.
SECTION 3. SUBORDINATION
Section 3.1 SUBORDINATION. (a) Notwithstanding anything to the
contrary contained in any Existing Agreement, each Loan Party and each of the
Creditors, for itself and each future holder of the Obligations held by it,
agrees that (i) each of the Second Priority Obligations, the Third Priority
Obligations and the Fourth Priority Obligations are expressly "subordinate and
junior in right of payment" (as that phrase is defined in Section 3.1(b)) to the
LIFO Obligations.
(b) "SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT" means that:
(i) with respect to any Subordinated Obligation in relation to
any LIFO Obligation, no part of the Subordinated Obligations shall
have any claim to the assets of any Loan Party on a parity with or
prior to the claim of such LIFO Obligation; and
(ii) prior to the payment in full of all LIFO Obligations,
without the express prior written consent of all of the holders of
such LIFO Obligations, no Subordinated Creditor will take, demand or
receive from any Loan Party, and no Loan Party will make, give or
permit, directly or indirectly, by set-off, redemption, purchase or in
any other manner, any payment of or security (other than the Liens
granted to secure the Second Priority Obligations and Third Priority
Obligations pursuant to the Security Documents) for the whole or any
part of its Subordinated Obligations, including any letter of credit
or similar credit support facility to support payment of any of its
Subordinated Obligations.
(c) Notwithstanding anything to the contrary contained in Section
3.1(b) hereof, holders of Subordinated Obligations may receive and retain
Permitted Payments except (x) following the occurrence and during continuance of
a LIFO Payment Default or (y) during a Blockage Period; PROVIDED that, following
the occurrence and during the continuance of any such LIFO Payment Default or
during a Blockage Period, any Permitted Payments not paid to the holders of the
Subordinated Obligations in accordance with this sentence shall continue to
accrue as against the Borrower and the other Loan Parties. Upon the termination
of the Blockage Period and if all then existing LIFO Payment Defaults have been
cured or waived or shall have ceased to exist, the right of the holders of the
Subordinated Obligations to receive Permitted Payments as provided herein shall
be reinstated, and the Borrower may resume making such Permitted Payments in
accordance with the terms of the respective Existing Agreements. All accrued
Permitted Payments shall be paid on the first Business Day following such
reinstatement PROVIDED, in each case, that, as to any Subordinated Obligations,
no new LIFO Payment Default shall have occurred and be continuing on such
Business Day.
(d) No LIFO Obligation Non-Payment Default which existed on the date
any Blockage Notice was given shall be the basis for giving any subsequent
Blockage Notice, unless such LIFO Obligation Non-Payment Default shall have been
cured or waived or otherwise ceased to exist for a period of not less than 90
consecutive days after the date such Blockage Notice was given.
(e) No more than one Blockage Notice may be given within any
consecutive 365-day period.
(f) The expressions "prior payment in full," "payment in full," "paid
in full" and any other similar terms or phrases when used herein with respect to
the LIFO Obligations shall mean the indefeasible payment in full, in immediately
available funds, of all such LIFO Obligations.
Section 3.2 TURNOVER OF PAYMENTS AND COLLECTIONS. (a) Each holder of
Subordinated Obligations and each Loan Party agree that, except for the payment
of Permitted Payments as provided in Section 3.1(c), (i) all LIFO Obligations
shall be paid in full (or in the case of LIFO Letters of Credit then
outstanding, cash collateralized in full) before any direct or indirect payment
or distribution is made with respect to any Subordinated Obligation and (ii) any
payment or distribution of assets of any Loan Party, whether in cash, property
or securities, to which any Subordinated Creditor would be entitled except for
the provisions hereof, shall be paid or delivered by the Borrower or other Loan
Party, or any receiver, trustee in bankruptcy, liquidating trustee, disbursing
agent or other Person making such payment or distribution, directly to the
Collateral Agent, for the account of the holders of the LIFO Obligations, to the
extent necessary to pay in full all such LIFO Obligations as set forth in
Section 4.3, before any payment or distribution shall be made to any
Subordinated Creditor on account of any Subordinated Obligations held by such
Subordinated Creditor.
The foregoing provisions shall be applicable prior to and after the
occurrence of a Bankruptcy Event.
(b) Upon the occurrence of any Bankruptcy Event:
(i) each Subordinated Creditor irrevocably authorizes and
empowers the Collateral Agent, as agent for the LIFO Creditors: (A) to
demand, xxx for, collect and receive every payment or distribution on
account of the Subordinated Obligations payable or deliverable to such
Subordinated Creditor in connection with such event or proceeding and
give acquittance therefor, and (B) to file claims and proofs of claim
in any statutory or non-statutory proceeding if such Subordinated
Creditor does not file such claims or proofs of claim in any such
proceeding at least five Business Days prior to any bar date set by a
court of competent jurisdiction for the filing in such proceeding of
claims or proofs of claims, and to take such other actions, in its own
name as the Collateral Agent, or in the name of such Subordinated
Creditor or otherwise, as the Collateral Agent may deem necessary or
advisable for the enforcement of the provisions of this Agreement;
PROVIDED, HOWEVER, that the foregoing authorization and empowerment
(1) imposes no obligation on the Collateral Agent to take any such
action and (2) shall not entitle the Collateral Agent to vote any
claims or proofs of claims in respect of any Subordinated Obligations
on any plan of reorganization filed in any such proceeding, unless (x)
such claims or proofs of claims were filed by the Collateral Agent
under the circumstances set forth in clause (B) of this sentence or
(y) the holder of such Subordinated Obligations fails to vote any
claims or proofs of claims (filed by such Subordinated Creditor) at
least five Business Days prior to any date fixed by a court of
competent jurisdiction as the last date to vote such claims or proofs
of claims; and
(ii) each Subordinated Creditor shall execute and deliver such
powers of attorney, assignments or proofs of claim or other
instruments as the Collateral Agent may request to enable the
Collateral Agent to enforce any and all claims in respect of the
Subordinated Obligations held by such Subordinated Creditor and to
collect and receive any and all payments and distributions which may
be payable or deliverable at any time upon or in respect of the
Subordinated Obligations held by such Subordinated Creditor.
(c) If any direct or indirect payment or distribution, whether
consisting of money, property or securities, shall be collected or received by
any Subordinated Creditor in respect of the Subordinated Obligations, except
Permitted Payments as provided in Section 3.1(c), such Subordinated Creditor
forthwith shall deliver the same to the Collateral Agent for the account of the
holders of the LIFO Obligations, in the form received, duly indorsed to the
Collateral Agent, if required, to be applied to the payment or prepayment of the
LIFO Obligations until such LIFO Obligations are paid in full. Until so
delivered, such payment or distribution shall be held in trust by such
Subordinated Creditor as the property of the LIFO Creditors, segregated from
other funds and property held by such Subordinated Creditor.
Section 3.3 RIGHTS IN COLLATERAL. Notwithstanding anything to the
contrary contained in any Operative Agreement and irrespective of:
(i) the time, order or method of attachment or perfection of the
Liens created by any Security Document,
(ii) the time or order of filing or recording of financing
statements or other documents filed or recorded to perfect Liens in
any Collateral,
(iii) anything contained in any filing or agreement to which the
Collateral Agent, any LIFO Creditor or any Subordinated Creditor now
or hereafter may be a party and
(iv) the rules for determining priority under the Uniform
Commercial Code or any other law governing the relative priorities of
secured creditors,
any security interest in any Collateral granted to secure any LIFO Obligation
pursuant to any Security Document or otherwise has and shall have priority, to
the extent of any unpaid LIFO Obligations, over any security interest in such
Collateral granted to secure any Subordinated Obligations; provided that the
Fourth Priority Obligations are not Secured Obligations and the holders of such
Fourth Priority Obligations have no beneficial interest in the Liens granted to
the Collateral Agent or any rights in or to the Collateral.
Section 3.4 SUBROGATION. Subject to the payment in full of the LIFO
Obligations, the Subordinated Creditors shall be subrogated to the rights of the
holders of the LIFO Obligations to receive payments or distributions of assets
of the Borrower or any other Loan Party in respect of such LIFO Obligations
until such LIFO Obligations shall be paid in full. For the purposes of such
subrogation, payments or distributions to the Collateral Agent, for the account
of the holders of the LIFO Obligations, of any money, property or securities to
which any Subordinated Creditor would be entitled except for the provisions of
this Agreement shall be deemed, as between the Borrower and each Loan Party and
their respective creditors other than the holders of LIFO Obligations and such
Subordinated Creditor, to be a payment by the Borrower or such Loan Party to or
on account of such Subordinated Creditor's Subordinated Obligations, it being
understood that the provisions of this Section 3 are, and are intended solely,
for the purpose of defining the relative rights of the Subordinated Creditors,
on the one hand, and the holders of LIFO Obligations, on the other hand.
Section 3.5 CONSENT OF SUBORDINATED CREDITORS. (a) Each Subordinated
Creditor consents that, without the necessity of any reservation of rights
against any Subordinated Creditor, and without notice to or further assent by
any Subordinated Creditor:
(i) any demand for payment of any LIFO Obligations made by the
Collateral Agent, the LIFO Agent or any LIFO Creditor with respect to
its LIFO Obligations may be rescinded in whole or in part by the party
making such demand or the holder of the LIFO Obligations, and subject
to Section 2.8, any LIFO Obligation may be continued, and the LIFO
Obligations, or the liability of the Borrower or any Loan Party or any
other party upon or for any part thereof, or any collateral security
or guarantee therefor or right of offset with respect thereto, or any
obligation or liability of the Borrower or any other Loan Party with
respect to the LIFO Obligations may, from time to time, in whole or in
part, be renewed, extended, modified, accelerated, compromised,
waived, surrendered, or released by the LIFO Creditor holding such
LIFO Obligations; and
(ii) subject to Section 2.8, the Operative Agreements under which
the LIFO Obligations arise, may be amended, modified, supplemented or
terminated, in whole or in part, as the LIFO Creditors party thereto
may deem advisable from time to time, and any collateral security at
any time held by the Collateral Agent, or any LIFO Creditor for the
payment of such LIFO Obligations may be sold, exchanged, waived,
surrendered or released,
in each case all without notice to or further assent by any Subordinated
Creditor, which will remain bound under this Agreement, and all without
impairing, abridging, releasing or affecting the subordination provided for
herein.
(b) Each Subordinated Creditor waives any and all notice of the
creation, renewal, extension or accrual of any of the LIFO Obligations and
notice of or proof of reliance by the LIFO Creditors upon this Agreement. The
LIFO Obligations, and any of them, shall be deemed conclusively to have been
created, contracted or incurred in reliance upon this Agreement, and all
dealings between the Borrower, the other Loan Parties and the LIFO Creditors
shall be deemed to have been consummated in reliance upon this Agreement. Each
Subordinated Creditor acknowledges and agrees that the LIFO Creditors have
relied upon the subordination provided for herein in entering into the LIFO
Credit Agreement and in making funds available to the Borrower thereunder. Each
Subordinated Creditor waives notice of or proof of reliance on this Agreement
and protest, demand for payment and notice of default.
Section 3.6 NEGATIVE COVENANTS OF SUBORDINATED CREDITORS. So long as
any LIFO Obligations are outstanding, no Subordinated Creditor shall, without
the prior written consent of the Required LIFO Lenders:
(a) sell, assign, or otherwise transfer, in whole or in part, the
Subordinated Obligations or any interest therein except as provided
Sections 2.8(k) and 8.5 hereof; or
(b) permit any of the Operative Agreements to be amended,
modified or otherwise supplemented except as provided herein.
Section 3.7 PRIORITY OF LIFO OBLIGATIONS UNCONDITIONAL. The
subordination of the Existing Obligations to the LIFO Obligations and the
relative priority of the Liens securing the LIFO Obligations to the Liens
(if any) securing the Subordinated Obligations, and all agreements and
obligations of the Subordinated Creditors, the Borrower and each other Loan
Party hereunder in respect thereof shall remain in full force and effect
irrespective of:
(a) any lack of validity or enforceability of any Security
Documents;
(b) subject to Sections 2.8(e), (g), (h) and (j), any change in
the time, manner or place of payment of, or in any other term of, all
or any of the LIFO Obligations, or any amendment or waiver or other
modification, whether by course of conduct or otherwise, of the terms
of the Operative Agreements giving rise to such LIFO Obligations;
(c) any exchange, release or nonperfection of any security
interest in any Collateral, or any release, amendment, waiver or other
modification, whether in writing or by course of conduct or otherwise,
of all or any of the LIFO Obligations or any guarantee thereof; or
(d) any other circumstances which otherwise might constitute a
defense available to, or a discharge of, the Borrower or any Guarantor
in respect of the LIFO Obligations, or of any Subordinated Creditor,
the Borrower or any other Loan Party in respect of this Agreement.
Section 3.8 EXISTING L/C OBLIGATION REDUCTION TRUE-UP. (a) In the
event that the Term Lender Purchase Amount is greater than zero as of the date
of an Acceleration Date or any later date on which the aggregate amount of the
Existing L/C Obligations is reduced, then no later than 30 days after written
request from any Existing Senior Creditor to the Existing Agent each Existing
Bank shall severally purchase at par from each other Existing Senior Creditor
(including Existing Banks to the extent that they hold Existing Bank Obligations
arising out of the Term Loans made under the Existing Credit Agreement) a PARI
PASSU UNDIVIDED participating interest in the Existing Senior Obligations (other
than Existing L/C Obligations) of such other Existing Senior Creditor by paying
to such other Existing Senior Creditor an amount equal to the product of (i)
such Existing Bank's Existing L/C Commitment Percentage of the Term Lender
Purchase Amount TIMES (ii) a fraction, the numerator of which is the outstanding
Existing Senior Obligations of such other Existing Senior Creditor and the
denominator of which is the outstanding Existing Senior Obligations of all
Existing Senior Creditors, in each case without regard to Existing L/C
Obligations.
(b) In any bankruptcy proceeding in which the Borrower is a debtor, if
any Existing Bank finds that it is unable to enforce in such proceeding its
participating interests in the Senior Notes or the Existing Bank Obligations of
other Existing Banks, each Existing Senior Creditor agrees to enforce such
participating interests to the same extent that it enforces its own rights in
the Senior Notes or Existing Bank Obligations, as the case may be. At the
request of the Existing Agent, each Existing Senior Creditor will prepare
appropriate proofs of claim covering such participating interests. Nothing in
this paragraph shall be interpreted as an admission that the Existing Banks may
not enforce any participating interests in the Senior Notes or Existing Bank
Obligations, as applicable, nor shall it be deemed a relinquishment of any such
interests or rights.
Section 3.9 SHARING AMONG EXISTING SENIOR CREDITORS; SHARING
AGREEMENT. (a) Notwithstanding anything to the contrary contained in any
Existing Senior Agreement, each Existing Senior Creditor, for itself and for any
future holder of the Obligations held by it, agrees that, subject to (i) the
prior satisfaction of the LIFO Obligations and (ii) the right to retain
Permitted Payments prior to the occurrence and during the continuance of a
Secured Obligation Payment Default, any payment of any kind (including any
payment resulting from setoff, any realization upon all or any part of the
Collateral and any payment or direct or indirect distribution of any money,
property or securities in a proceeding of the type described in the definition
of "Bankruptcy Event") from or on behalf of any Loan Party or otherwise in
respect of the Existing Senior Obligations is to be distributed among the
Existing Senior Creditors equally and ratably in accordance with the respective
amounts of the Existing Senior Obligations then held by each of them, without
any priority of any one over any other. In order to implement such sharing, each
Existing Senior Creditor forthwith upon receipt of any such payment shall
deliver the same to the Collateral Agent as provided in Section 3.2 hereof
notwithstanding the occurrence of the LIFO Repayment Date for distribution in
accordance with Section 4.3, in the form received, duly indorsed to the
Collateral Agent, if required. Until so delivered, such payment or distribution
shall be held in trust by such Existing Senior Creditor for the benefit of all
of the Existing Senior Creditors, segregated from other funds and property held
by such Existing Senior Creditor.
(b) Any Existing Senior Creditor that has remitted any payment to the
Collateral Agent in accordance with subsection 3.9(a) after the LIFO Repayment
Date shall, to the extent of such remittance, be subrogated to the rights of the
other Existing Senior Creditors to receive payments or distributions of assets
of the Borrower or any Subsidiary Guarantor in respect of the Existing Senior
Obligations owed to such other Existing Senior Creditors until all Existing
Senior Obligations shall be paid in full. For the purposes of such subrogation,
payments or distributions to the Collateral Agent, for the account of the other
Existing Senior Creditors, of any money, property or securities to which the
remitting Existing Senior Creditor would be entitled except for the operation of
Section 3.9(a) hereof, shall be deemed, as between the applicable Loan Party and
its respective creditors other than the remitting Existing Senior Creditor, to
be a payment by the Borrower or any Guarantor or any of them to or on account of
the Existing Senior Obligations of such remitting Existing Senior Creditor, it
being understood that the provisions of this Section 3.9(b) are, and are
intended solely, for the purpose of defining the relative rights of the Existing
Senior Creditors.
(c) Effective as of the Restructuring Effective Date, the Sharing
Agreement is hereby superseded and terminated by the provisions hereof.
Section 3.10 SURVIVAL OF SUBORDINATION OF 1999 NOTES. Nothing
contained in this Section 3 is intended or shall be construed to modify the
provisions of Paragraph 12 of the 1999 Securities Purchase Agreement or the
priority or the rights of the holders of the Existing Senior Obligations in
relation to the holders of the 1999 Notes.
SECTION 4. APPLICATION OF PAYMENTS AND PROCEEDS
Section 4.1 COLLATERAL ACCOUNTS. As such times as it deems
appropriate, the Collateral Agent shall establish and, at all times thereafter
until this Agreement shall have terminated, maintain at its principal banking
office in New York City the following three accounts: (i) the LIFO L/C Cash
Collateral Account, (ii) the Existing L/C Cash Collateral Account and (iii) a
collateral account (the "PRIMARY COLLATERAL ACCOUNT"; collectively with the LIFO
L/C Cash Collateral Account, and the Existing L/C Cash Collateral Account, the
"COLLATERAL ACCOUNTS"). The Collateral Agent shall deposit into (x) the LIFO
L/C Cash Collateral Account all amounts (1) received by it and designated for
such purpose in accordance with subsection 3.5 or Section 8 of the LIFO Credit
Agreement or (2) distributed by it in respect of First Priority Obligations
constituting outstanding LIFO Letters of Credit on the applicable Distribution
Date pursuant to clause "SECOND" of Section 4.3(b); (y) the Existing L/C Cash
Collateral Account all amounts (1) received by it and designated for such
purpose in accordance with Section 2.2(f) of this Agreement or Section 8 of the
Existing Credit Agreement or (2) distributed by it in respect of Second Priority
Obligations constituting outstanding Existing Letters of Credit on the
applicable Distribution Date pursuant to clause "THIRD" of Section 4.3(b) and
(z) except as provided in the preceding clauses (x) and (y), the Primary
Collateral Account all amounts received by it in its capacity as Collateral
Agent (and not in any other capacity) in respect of the Collateral, including
all monies received on account of any sale of or other realization upon any of
the Collateral pursuant to any Security Document, as a result of the enforcement
of rights and remedies under the Security Documents, as a result of the turnover
obligations contained in Section 3.2 hereof or otherwise. All amounts deposited
in the Collateral Accounts shall be held by the Collateral Agent subject to the
terms hereof and of the Security Documents. Neither the Borrower nor any
Guarantor shall have any rights with respect to, and the Collateral Agent shall
have exclusive dominion and control over, the Collateral Accounts; PROVIDED that
so long as no Default or Event of Default shall have occurred and be continuing,
the Collateral Agent shall pay to the Borrower interest accrued on amounts on
deposit in the Existing L/C Cash Collateral Account and the LIFO L/C Cash
Collateral Account on the last day of each month
Section 4.2 INVESTMENT OF FUNDS DEPOSITED IN COLLATERAL ACCOUNTS. The
Collateral Agent may, but is under no obligation to, invest and reinvest moneys
on deposit in the Collateral Accounts at any time in Cash Equivalents. Except to
the extent provided in the last sentence of Section 4.1, all such investments
and the interest and income received thereon and the net proceeds realized on
the sale or redemption thereof shall be held in the Collateral Accounts for the
benefit of the Secured Creditors. The Collateral Agent shall not be responsible
for any diminution in funds resulting from such investments or any liquidation
prior to maturity.
Section 4.3 APPLICATION OF PAYMENTS AND PROCEEDS. (a) The Collateral
Agent shall have the right at any time to apply moneys held by it in the Primary
Collateral Account to the payment of due and unpaid Collateral Agent Expenses.
(b) In order to implement the subordination of the Subordinated
Obligations established pursuant to this Agreement to the LIFO Obligations and
the relative priority of the Liens (if any) securing such Subordinated
Obligations to the Liens securing such LIFO Obligations, and the sharing of
payments among the Existing Senior Creditors contemplated by Section 3.9, the
Creditors, the Borrower and each other Loan Party agree that, any money,
property, securities or other direct or indirect distributions of any nature
whatsoever, regardless of whether such money, property, securities or other
distributions are received directly or indirectly from the sale, disposition or
other realization upon all or any part of the Collateral, or from any other
source, and regardless of whether received in connection with any proceeding
referred to in the definition of "Bankruptcy Event" or otherwise, received by
the Collateral Agent, or any Creditor in respect of any of the Obligations
(other than Permitted Payments in accordance with Section 3.1(c) and after the
occurrence of the LIFO Repayment Date, in accordance with Section 3.9(a)) shall,
in each case, be delivered to the Collateral Agent in the form received, duly
indorsed to the Collateral Agent, if required, and applied as follows:
FIRST, to the payment in full of all unpaid Collateral Agent
Expenses;
SECOND, to the payment in full of all First Priority Obligations,
including the cash collateralization in full of any LIFO Letters of
Credit then outstanding to the extent not cash collateralized in an
amount equal to 105% of the outstanding amount thereof, and, if such
moneys shall be insufficient to pay such amounts in full, then ratably
(without priority of any one over any other) to the holders of such
First Priority Obligations in proportion to the unpaid amounts thereof
on such Distribution Date;
THIRD, to the payment in full of all Premium Obligations that are
Second Priority Obligations (if any), the payment of which was
deferred in accordance with the proviso to Section 2.3(c), plus
accrued but unpaid interest on such Premium Obligations as set forth
in such proviso;
FOURTH, to the payment in full of all unpaid Second Priority
Obligations, including the cash collateralization in full of any
Existing Letters of Credit then outstanding to the extent not cash
collateralized in an amount equal to 105% of the outstanding amount
thereof and, if such moneys shall be insufficient to pay such amounts
in full, then ratably (without priority of any one over any other) to
the holders of such Second Priority Obligations in proportion to the
unpaid amounts thereof on such Distribution Date;
FIFTH, to the payment in full of all Third Priority Obligations
and if such moneys shall be insufficient to pay such amounts in full,
then ratably (without priority of any one over any other) to the
holders of such Third Priority Obligations in proportion to the unpaid
amounts thereof on such Distribution Date; and
LAST, to pay to the Borrower or the applicable Loan Party, or its
representative or as a court of competent jurisdiction may direct, any
surplus then remaining.
(c) On the thirtieth day following any expiration or cancellation of
any outstanding LIFO Letter of Credit or Existing Letter of Credit, or any other
reduction in the amount outstanding thereunder (other than as a result of a
drawing on any such LIFO Letter of Credit or Existing Letter of Credit that is
honored), the amount of funds in the LIFO L/C Cash Collateral Account or
Existing L/C Cash Collateral Account, as applicable, with respect to such LIFO
Letter of Credit or Existing Letter of Credit (or, in the case of any partial
reduction in the outstanding amount thereunder, a pro rata portion of such
funds) shall be released from the LIFO L/C Cash Collateral Account or Existing
L/C Cash Collateral Account, as applicable, and the funds so released shall be
deposited in the Primary Collateral Account and retained therein by the
Collateral Agent pending distribution in accordance with Section 4.3(b) on the
next Distribution Date.
SECTION 5. REPRESENTATIONS AND WARRANTIES
Section 5.1 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES. To
induce the Existing Creditors to enter into this Agreement and to modify and
restructure the Existing Obligations, the Borrower and each other Loan Party
represents and warrant to the Existing Creditors that:
(a) the execution, delivery and performance of this Agreement (i)
have been duly authorized by all requisite corporate action on its
part and (ii) will not contravene any provision of its charter or
by-laws or any order of any court or other governmental authority
having applicability to it or any applicable law;
(b) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid, enforceable and binding obligation
against such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law);
(c) the Existing Credit Agreement is in full force and effect and
the aggregate principal amount of the Existing Bank Obligations (after
giving effect to the transactions described in Sections 2.2(a) and (b)
hereof) is $101,700,505;
(d) except as otherwise provided in Section 2.9, the Existing
Guarantees are in full force and effect;
(e) the Senior Note Agreements are in full force and effect and
the aggregate principal amount of the Senior Notes is $100,000,000;
and
(f) the 1999 Securities Purchase Agreement is in full force and
effect and the aggregate principal amount of the 1999 Notes is
$35,000,000.
Section 5.2 REPRESENTATIONS AND WARRANTIES OF THE COLLATERAL AGENT AND
THE CREDITORS. The Collateral Agent and each Creditor represent and warrant to
each of the other parties hereto that (a) the execution, delivery and
performance of this Agreement (i) have been duly authorized by all requisite
corporate action on its part and (ii) will not contravene any provision of its
charter or by-laws or any order of any court or other Governmental Authority
having applicability to it or any applicable law, and (b) this Agreement has
been duly executed and delivered by it and constitutes its legal, valid,
enforceable and binding obligation, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
SECTION 6. CONCERNING THE COLLATERAL AGENT
Section 6.1 APPOINTMENT OF COLLATERAL AGENT. Each of the Secured
Creditors appoints Chase to act as Collateral Agent pursuant to the terms of the
Security Documents and this Agreement, and Chase agrees to act as Collateral
Agent for such Secured Creditors, pursuant to the terms of the Security
Documents and this Agreement.
Section 6.2 ACTIONS UNDER SECURITY DOCUMENTS. (a) The Collateral Agent
shall not be obligated to take any action under this Agreement or any of the
Security Documents except for the performance of such duties as are specifically
set forth herein or therein. Subject to the provisions of Sections 6.3 and 6.4,
the Collateral Agent shall take any action under or with respect to the Security
Documents which is requested by the Directing Party and which is not
inconsistent with or contrary to the provisions of this Agreement or the
Operative Agreements. At any time when a Notice of Secured Obligation Payment
Default shall have been given and shall be outstanding, the Collateral Agent
shall, subject in all cases to the provisions of Sections 6.3 and 6.4, exercise
or refrain from exercising all such rights, powers and remedies as shall be
available to it under the Security Documents or any of them in accordance with
any written instructions received from the Directing Party. Absent written
instructions from the Directing Party, the Collateral Agent may take, but shall
have no obligation to take, any and all such actions under the Security
Documents or any of them or otherwise as it shall deem to be in the best
interests of the Secured Creditors in order to maintain the Collateral and
protect and preserve the Collateral and the rights of the Secured Creditors;
PROVIDED that, except as provided in paragraph (b) below, in the absence of
written instructions (which may relate to the exercise of specific remedies or
to the exercise of remedies in general) from the Directing Party the Collateral
Agent shall not foreclose any Lien on the Collateral or exercise any other
remedies available to it under any Security Documents with respect to the
Collateral or any part thereof.
(b) If the Collateral Agent has requested instructions from the
Directing Party at a time when a Notice of Secured Obligation Payment Default
shall be in effect and the Directing Party has not responded to such request
within 10 days thereafter, the Collateral Agent may take, but shall have no
obligation to take, any and all actions under the Security Documents or any of
them or otherwise, including foreclosure of any Lien or any other exercise of
remedies, as the Collateral Agent, in good faith, shall determine to be in the
interests of the Secured Creditors and to maximize both the value of the
Collateral and the present value of the recovery by each of the Secured
Creditors on their Obligations; PROVIDED that, if instructions are thereafter
received from the Directing Party, then the actions of the Collateral Agent
shall be subject to paragraph (a) above.
(c) When the Collateral Agent receives a Notice of Secured Obligation
Payment Default, the Collateral Agent shall give prompt notice thereof to the
Creditors.
Section 6.3 LIMITATIONS ON RESPONSIBILITY OF COLLATERAL AGENT. The
Collateral Agent shall not be responsible in any manner whatsoever for the
correctness of any recitals, statements, representations or warranties contained
herein or in any other Operative Agreement, except for those expressly made by
it herein. The Collateral Agent makes no representation as to the value or
condition of the Collateral or any part thereof, as to the title of the Grantors
to the Collateral, as to the security afforded by this Agreement or any Security
Document, except as expressly set forth in Section 5.2, as to the validity,
execution, enforceability, legality or sufficiency of this Agreement or any
other Operative Agreement, and the Collateral Agent shall incur no liability or
responsibility in respect of any such matters. The Collateral Agent shall not be
responsible for insuring the Collateral, for the payment of taxes, charges,
assessments or liens upon the Collateral or otherwise as to the maintenance of
the Collateral, except as provided in the immediately following sentence when
the Collateral Agent has possession of the Collateral. The Collateral Agent
shall have no duty to the Grantors or to the Secured Creditors as to any
Collateral in its possession or control or in the possession or control of any
agent or nominee of the Collateral Agent or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto, except the duty to accord such of the Collateral as may be in its
possession substantially the same care as it accords its own assets and the duty
to account for monies received by it. The Collateral Agent shall not be required
to ascertain or inquire as to the performance by the Borrower or the other Loan
Parties of any of the covenants or agreements contained herein or in the other
Operative Agreements. Neither the Collateral Agent nor any officer, agent or
representative thereof shall be personally liable for any action taken or
omitted to be taken by any such Person in connection with this Agreement or any
other Operative Agreement except for its or such Person's own gross negligence
or wilful misconduct. Neither the Collateral Agent nor any officer, agent or
representative thereof shall be personally liable for any action taken by it or
any such Person in accordance with any notice given by the Directing Party
hereunder entitled to give such notice, even if, at the time such action is
taken by it or any such Person, the Directing Party which gave the notice to
take such action is no longer the Directing Party and if the Collateral Agent
has not received written notice of such fact. The Collateral Agent may execute
any of the powers granted under this Agreement or any of the Security Documents
and perform any duty hereunder or thereunder either directly or by or through
agents or attorneys-in-fact, and shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it without gross
negligence or wilful misconduct.
Section 6.4 RELIANCE BY COLLATERAL AGENT; INDEMNITY AGAINST
LIABILITIES; ETC. (a) Whenever in the performance of its duties under this
Agreement the Collateral Agent shall deem it necessary or desirable that a
matter be proved or established with respect to any Loan Party or other Person
in connection with the taking, suffering or omitting of any action hereunder by
the Collateral Agent, such matter may be conclusively deemed to be proved or
established by a certificate purporting to be executed by an officer of such
Person or, in the case of any Loan Party, an executive officer of the Borrower,
and the Collateral Agent shall have no liability with respect to any action
taken, suffered or omitted in reliance thereon. Whenever the Collateral Agent is
required to determine the existence or amount of any of the Secured Obligations
or any portion thereof or the existence of any Secured Obligation Payment
Default for any purposes of this Agreement, it shall be entitled to make such
determination on the basis of one or more certificates of any Secured Creditor
(with respect to the Secured Obligations owed to such Secured Creditor), the
Existing Agent (with respect to the Existing Bank Obligations, owed to the
Existing Banks, or any of them) or the LIFO Agent (with respect to the LIFO
Obligations owed to the LIFO Lenders, or any of them); PROVIDED, that if,
notwithstanding the request of the Collateral Agent, any Secured Creditor shall
fail or refuse within five Business Days of such request to certify as to the
existence or amount of any Secured Obligations owed to it, the Collateral Agent
shall be entitled to determine such existence or amount by such method as the
Collateral Agent may, in its sole discretion, determine, including by reliance
upon a certificate of the Borrower; PROVIDED, FURTHER, that, promptly following
determination of any such amount pursuant to the foregoing proviso, the
Collateral Agent shall notify such Secured Creditor of such determination and
thereafter shall correct any error that such Secured Creditor brings to the
attention of the Collateral Agent. The Collateral Agent may rely conclusively,
and shall be fully protected in so relying, on any determination made by it in
accordance with the provisions of the preceding sentence (or as otherwise
directed by a court of competent jurisdiction) and shall have no liability to
the Borrower or any other Grantor or Guarantor, any Secured Creditor or any
other Person as a result of any action taken by the Collateral Agent based upon
such determination prior to receipt of notice of any error in such
determination. Upon any request of the Collateral Agent, the Borrower shall, as
promptly as practicable, furnish a certificate to the Collateral Agent as to the
existence or amount of any Existing Obligation or any Secured Obligation or as
to the existence of any Priority Obligation Payment Default.
(b) The Collateral Agent may consult with counsel and shall be fully
protected in taking any action hereunder in accordance with any advice of such
counsel. The Collateral Agent shall have the right but not the obligation at any
time to seek instructions concerning the administration of this Agreement, the
duties created hereunder or the Collateral from any court of competent
jurisdiction.
(c) If the Collateral Agent has been requested to take any specific
action pursuant to any provision of this Agreement, the Collateral Agent shall
not be under any obligation to exercise any of the rights or powers vested in it
by this Agreement in the manner so requested unless it shall have been provided
indemnity satisfactory to it against the costs, expenses and liabilities which
may be incurred by it in compliance with such request or direction.
Section 6.5 RESIGNATION OR REMOVAL OF THE COLLATERAL AGENT. The
Collateral Agent may at any time (a) by giving 30 days' prior written notice to
the Borrower and each Secured Creditor, resign and be discharged from the
responsibilities hereby created, or (b) if the Directing Party concludes that
the Collateral Agent shall have acted under and in respect of this Agreement in
a manner which constitutes wilful misconduct or gross negligence, be removed
from its position as Collateral Agent by the Directing Party, such resignation
or removal to become effective upon the earlier of (i) the acceptance of the
appointment of a successor pursuant to the next sentence of this Section or (ii)
the appointment of a successor by the Directing Party and the acceptance of such
appointment by such successor. If no successor shall be appointed and approved
pursuant to clause (ii) above within 30 days after the date of any such
resignation, the Collateral Agent may apply to any court of competent
jurisdiction to appoint a successor to act until a successor shall have been
appointed by the Directing Party as above provided or may, on behalf of the
Secured Creditors, appoint a successor Collateral Agent. Any successor
Collateral Agent shall be a bank organized under the laws of the United States
or any State thereof, with an office in New York, New York, having a combined
capital and surplus of at least $500,000,000 that is authorized to perform the
functions of the Collateral Agent hereunder.
Section 6.6 EXPENSES AND INDEMNIFICATION BY BORROWER. The Borrower and
each other Loan Party agree (i) to reimburse the Collateral Agent, on demand,
for any expenses incurred by the Collateral Agent, including reasonable counsel
fees and compensation of agents, arising out of, in any way connected with, or
as a result of, the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby or thereby or the performance by the parties
hereto or thereto of their respective obligations hereunder or thereunder or in
connection with the enforcement or protection of the rights of the Collateral
Agent and the Secured Creditors under this Agreement and the Security Documents
and (ii) to indemnify and hold harmless the Collateral Agent and its directors,
officers, employees and agents, on demand, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against the Collateral Agent in
its capacity as the Collateral Agent or any of them in any way relating to or
arising out of this Agreement or any Security Document or any action taken or
omitted by them under this Agreement or any Operative Agreement; PROVIDED that
the Borrower shall not be liable to the Collateral Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or wilful
misconduct of the Collateral Agent or any of its directors, officers, employees
or agents.
Section 6.7 EXPENSES AND INDEMNIFICATION BY SECURED CREDITORS. Each
Secured Creditor agrees (i) to reimburse the Collateral Agent, on demand, in the
amount of its pro rata share (based on the amount of the Secured Obligations
held by it as compared to the aggregate of all Secured Obligations), for any
expenses referred to in Section 6.6 which shall not have been reimbursed by the
Borrower or any other Loan Party or paid from the proceeds of Collateral as
provided herein and (ii) to indemnify and hold harmless the Collateral Agent and
its directors, officers, employees and agents, on demand, in the amount of such
pro rata share, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
referred to in Section 6.6, to the extent the same shall not have been
reimbursed by the Borrower or any other Grantor or any Guarantor or paid from
the proceeds of Collateral as provided herein; PROVIDED that no Secured Creditor
shall be liable to the Collateral Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or wilful
misconduct of the Collateral Agent or any of its directors, officers, employees
or agents.
Section 6.8 COLLATERAL AGENT'S LIEN. Notwithstanding anything to the
contrary in this Agreement, as security for the payment of Collateral Agent
Expenses (a) the Collateral Agent is hereby granted a lien upon all Collateral
and (b) the Collateral Agent shall have the right to use and apply any of the
funds held by the Collateral Agent in the Primary Collateral Account to cover
such Collateral Agent Expenses.
Section 6.9 RECORDS. The Collateral Agent shall maintain records
regarding directions by the Directing Party, determinations of the amounts of
the Obligations for any purpose, the allocation of deposits to the Collateral
Accounts and any distributions therefrom. The information contained in such
records shall be made available to any Secured Creditor upon request.
Section 6.10 RELEASE OF COLLATERAL. The Collateral Agent's rights with
respect to the Collateral include the right to release any or all of the
Collateral from the Liens of any Security Document in connection with the sale
of such Collateral, notwithstanding that the net proceeds of any such sale may
not be sufficient to pay in full all of the Secured Obligations. Each of the
Creditors hereby agrees that if the Collateral Agent (acting at the direction of
the Directing Party) shall reasonably determine, in connection with any sale of
Collateral, that the release of the Liens on such Collateral securing any
Secured Obligations is necessary or advisable, each Secured Creditor shall
execute such release documents and instruments and shall take such further
actions as the Collateral Agent shall request. Each Secured Creditor hereby
irrevocably constitutes and appoints the Collateral Agent and any officer or
agent of the Collateral Agent, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Secured Creditor and in the name of such Secured Creditor or
in the Collateral Agent's own name, from time to time in the Collateral Agent's
discretion (or if directed by the Directing Party, when so directed), for the
purpose of carrying out the terms of this paragraph, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this paragraph,
including, without limitation, any financing statements, endorsements,
assignments or other instruments of transfer or release. Each Secured Creditor
hereby ratifies all that said attorneys shall lawfully do or cause to be done
pursuant to the power of attorney granted in this paragraph.
SECTION 7. CONDITIONS PRECEDENT
The agreement of each Existing Creditor to modify and restructure its
Existing Obligations is subject to the satisfaction (unless otherwise waived to
the extent permitted pursuant to Section 8.10) immediately prior to or
concurrently with such modification and restructuring on the Restructuring
Effective Date, of the following conditions precedent:
(a) RESTRUCTURING AGREEMENTS. The Collateral Agent shall have received
the following agreements (the "RESTRUCTURING AGREEMENTS"), each executed and
delivered by a duly authorized officer of each of the parties thereto, with a
counterpart for each party hereto:
(i) this Master Restructuring Agreement;
(ii) the LIFO Credit Agreement, substantially in the form of
Exhibit A, together with the LIFO Loan Documents required to be
executed and delivered as a condition to the occurrence of the
"Closing Date" thereunder; and
(iii) the 1999 Replacement Warrants, substantially in the form of
Exhibit B, with respect to each holder of the 1999 Notes;
(b) RELATED AGREEMENTS. The Collateral Agent shall have received,
with a copy for each Existing Creditor, such other documents or
instruments as may be reasonably requested by the Collateral Agent,
including, without limitation, a copy of any debt instrument, security
agreement or other material contract to which the Borrower or any
other Loan Party may be a party;
(c) CLOSING CERTIFICATE; CORPORATE PROCEEDINGS. The Collateral
Agent shall have received, with a copy for each Existing Creditor, a
certificate of the Borrower and each Loan Party party hereto as of the
Restructuring Effective Date dated the Restructuring Effective Date,
substantially in the form of Exhibit C, with appropriate insertions
and attachments including (i) a copy of the resolutions, in form and
substance satisfactory to the Collateral Agent, of the Board of
Directors of the Borrower and each Subsidiary that is a party hereto
as of the Restructuring Effective Date authorizing (A) the execution,
delivery and performance of each of the agreements being delivered on
the Restructuring Effective Date to which it is a party and (B) the
modification, restructuring and recapitalization contemplated
hereunder and under the LIFO Credit Agreement, each certified by the
Secretary or an Assistant Secretary of the Borrower or other Loan
Party as of the Closing Date, and (ii) a copy of the Borrower's
strategic Business Plan as approved by the Borrower's Board of
Directors, satisfactory in form and substance to the Collateral Agent,
which certificate shall otherwise be in form and substance
satisfactory to the Collateral Agent, shall state that the resolutions
thereby certified have not been amended, modified, revoked or
rescinded and shall be executed by the President or any Vice President
and the Secretary or any Assistant Secretary of the Borrower or such
Loan Party;
(d) LEGAL OPINION. The Collateral Agent shall have received, with
a copy for each Existing Creditor, the executed legal opinion of
Stroock & Stroock & Xxxxx L.L.P., counsel to the Borrower and certain
of the other Loan Parties, substantially in the form of Exhibit D;
(e) NO DEFAULT. After giving effect to the modifications and
restructuring contemplated hereby and prior waivers relating thereto,
no Default or Event of Default shall have occurred and be continuing
under any of the Existing Agreements;
(f) FEES AND EXPENSES. The Borrower shall have paid (i) to the
Collateral Agent, for the benefit of each Existing Senior Creditor
entitled thereto, the Restructuring Fee payable to each such Existing
Senior Creditor and (ii) shall have reimbursed, with respect to
invoices received at least one Business Day prior to the Closing Date,
each Existing Creditor and the Existing Agent for all its reasonable
costs and expenses, including, without limitation, the reasonable fees
and disbursements of counsel to each Existing Creditor and the
Existing Agent (including the allocated fees and expenses of in-house
counsel) as provided in Section 8.4; PROVIDED that with respect to
invoices received by the Borrower on or after the Closing Date, the
Borrower shall reimburse the entity submitting such invoice in
accordance with this Agreement as soon as practicable thereafter; and
(g) ADDITIONAL MATTERS. All corporate and other proceedings, and
all documents, instruments and other legal matters in connection with
the transactions contemplated by this Agreement and the LIFO Loan
Documents shall be reasonably satisfactory in form and substance to
the Collateral Agent, and the Collateral Agent shall have received
such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it
shall reasonably request.
SECTION 8. MISCELLANEOUS
Section 8.1 NO INDIVIDUAL ACTION. No Creditor may require the
Collateral Agent to take or refrain from taking any action hereunder or under
any of the Security Documents or with respect to any of the Collateral except as
and to the extent expressly set forth in this Agreement.
Section 8.2 PROVISIONS APPLICABLE AFTER BANKRUPTCY. (a) The provisions
of this Agreement shall continue in full force and effect notwithstanding the
occurrence of any Bankruptcy Event.
(b) To the extent that any Existing Senior Creditor has or acquires
any rights under Section 363 or Section 364 of the Bankruptcy Code with respect
to the security interests in the Collateral securing its Second Priority
Obligations or Third Priority Obligations, such Existing Senior Creditor hereby
agrees that (i) prior to the payment in full of the LIFO Obligations, it will
not assert such rights in a manner inconsistent with the subordination of such
Second Priority Obligations or Third Priority Obligations and the relative
priority of the Liens securing such Second Priority Obligations or Third
Priority Obligations to the priority of the Liens securing the LIFO Obligations
and (ii) at any time, the benefit of the existence, acquisition or assertion of
any such rights (whether consisting of additional or replacement collateral,
payments or otherwise) shall be subject to the terms of this Agreement,
including Sections 3.2 and 4 hereof.
Section 8.3 INVALIDATED PAYMENTS. If any amount distributed by the
Collateral Agent to the Secured Creditors is subsequently required to be
returned or repaid to any Loan Party or their representatives or successors in
interest, whether by court order, settlement or otherwise, each Secured Creditor
shall promptly upon receipt of notice thereof from the Collateral Agent, pay to
the Collateral Agent the pro rata portion received by it of such amount for
payment to the appropriate Loan Party or their representatives or successors in
interest. If such amounts are subsequently recovered by any Secured Creditor
from any Loan Party or their representatives or successors in interest, such
Secured Creditor shall remit such amounts to the Collateral Agent in accordance
with Section 3.2, which amounts shall be redistributed to the Secured Creditors
in accordance with Section 4.
Section 8.4 PAYMENT OF EXPENSES. In addition to their obligations
under Section 6.6 hereof, the Borrower and each other Loan Party agree (a) to
pay or reimburse the Existing Agent and each Existing Creditor for all their
reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of this Agreement and the other
Restructuring Agreements and any other documents prepared in connection herewith
or therewith, including, without limitation, the reasonable fees and
disbursements of professionals to the Existing Agent or counsel to any such
Existing Creditor, (b) to pay or reimburse the Existing Agent, The Prudential
Insurance Company of America and Xxxx Xxxxxxx Mutual Life Insurance Company for
all their reasonable out-of-pocket costs and expenses incurred in connection
with the development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement, the other Restructuring
Agreements and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of professionals to the Existing Agent or counsel to The
Prudential Insurance Company of America and Xxxx Xxxxxxx Mutual Life Insurance
Company, (c) to pay or reimburse the Existing Agent and each Existing Creditor
for all their reasonable costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other
Restructuring Agreements and any such other documents, including, without
limitation, the reasonable fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to the Existing Agent and each
Existing Creditor, (d) to pay, indemnify, and hold the Existing Agent and each
Existing Creditor harmless from, any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Restructuring Agreements and any such other documents,
and (e) to pay, indemnify, and hold the Existing Agent and each Existing
Creditor, their respective officers, directors, employees, affiliates, agents
and controlling persons (each, an "indemnitee") harmless from and against any
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Restructuring Agreements and any
such other documents, including any of the foregoing relating to the violation
of, noncompliance with or liability under, any environmental law applicable to
the operations or properties of the Borrower, any of its Subsidiaries, all the
foregoing in this clause (e), collectively, the "indemnified liabilities"),
PROVIDED, that the Borrower shall have no obligation hereunder to any indemnitee
with respect to indemnified liabilities to the extent such indemnified
liabilities result from the gross negligence or willful misconduct of such
indemnitee. The agreements in this subsection shall survive repayment of the
Obligations and all other amounts payable under the Restructuring Agreements.
Section 8.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding on
and inure to the benefit of each of the parties hereto; PROVIDED, that no Loan
Party may assign its rights or obligations hereunder without the consent of each
Existing Senior Creditor; PROVIDED FURTHER that no Subordinated Creditor may
sell, assign, or otherwise transfer, in whole or in part, the Subordinated
Obligations or any interest therein to any other Person (a "TRANSFEREE") or
create, incur or suffer to exist any security interest, lien, charge or other
encumbrance whatsoever upon the Subordinated Obligations in favor of any
Transferee unless such action is made expressly subject to this Agreement and
the Transferee expressly acknowledges to the Collateral Agent, by a writing in
form and substance satisfactory to the Collateral Agent, the subordination
provided for herein and agrees to be bound by all of the terms hereof.
Section 8.6 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by registered or certified mail,
five days (or ten days, in the case of mailings between locations inside and
outside of the United States) days after being deposited in the mails, postage
prepaid (airmail, in the case of mailings between locations inside and outside
of the United States), or (c) in the case of delivery by facsimile transmission,
when sent and receipt has been confirmed, addressed to each party entitled to
receive such notice as set forth in Schedule 8.6 with respect to such party, or
to such other address as may be hereafter notified by the respective parties
hereto.
Section 8.7 TERMINATION. This Agreement shall terminate automatically
upon the indefeasible payment in full of all of the Existing Senior Obligations;
PROVIDED that Sections 2.4, 2.5, 2.8(h), 6.6, 6.7 and 8.4 shall survive, and
remain operative and in full force and effect, regardless of the termination of
this Agreement.
Section 8.8 FURTHER ASSURANCES, ETC. Each party hereto shall execute
and deliver such other documents and instruments, in form and substance
reasonably satisfactory to the other parties hereto, and shall take such other
action, in each case as any other party hereto may reasonably have requested (at
the cost and expense of the Borrower), to effectuate and carry out the
provisions of this Agreement, including by recording or filing in such places as
the requesting party may deem desirable, this Agreement or such other documents
or instruments.
Section 8.9 APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 8.10 MODIFICATION OF AGREEMENT. This Agreement may not be
amended, supplemented or modified except by a written agreement executed by the
Collateral Agent (at the direction of the Directing Party) and each Creditor and
Loan Party directly affected thereby.
Section 8.11 WAIVER OF RIGHTS. Neither any failure nor any delay on
the part of any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, and a single or partial exercise
thereof shall not preclude any other or further exercise or the exercise of any
other right, power or privilege.
Section 8.12 SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provision.
Section 8.13 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument.
Section 8.14 SECTION HEADINGS. The Section headings used herein are
for convenience of reference only and are not to affect the construction of or
be taken into consideration in interpreting this Agreement.
Section 8.15 COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior representations, negotiations, writings, memoranda and
agreements, including the Sharing Agreement. To the extent any provision of this
Agreement conflicts with any other Operative Agreement, the provisions of this
Agreement shall be controlling.
Section 8.16 CONFIDENTIALITY. Each Existing Creditor agrees to keep
confidential all information provided to it by the Borrower or any Loan Party
pursuant to this Agreement or any Operative Agreement; PROVIDED that nothing
herein shall prevent any Existing Creditor from disclosing any such information
(i) to the Collateral Agent or any other Existing Creditors, (ii) to any
Transferee or prospective Transferee which agrees to comply with the provisions
of this Section, (iii) to such of its employees, directors, agents, attorneys,
accountants and other professional advisors who need to know such information,
who are advised of the obligation to maintain the confidentiality of such
information, and who have agreed to maintain the confidentiality of such
information, (iv) upon the request or demand, or in accordance with the
requirements (including report requirements), of any Governmental Authority
having jurisdiction over such Existing Creditors, (v) in response to any order
or subpoena of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (vi) to the National Association of
Insurance Commissioners, or any similar organization or any nationally
recognized rating agency that requires access to information concerning
investment portfolios, (vii) which has been publicly disclosed other than in
breach of this Agreement, or (viii) in connection with the exercise of any
remedy hereunder.
Section 8.17 ADDITIONAL LOAN PARTIES. Each Subsidiary of the Borrower
that is required to become a party to this Agreement pursuant to Section 1.13 of
MRA Appendix B shall become a Loan Party for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Exhibit G hereto.
IN WITNESS WHEREOF, the Collateral Agent and the Creditors have caused
this Agreement to be duly executed by their duly authorized officers, all as of
the day and year first above written.
RECOTON CORPORATION
By: /S/ STUART MONT
----------------------------
Name: Stuart Mont
Title: Chief Operating Officer
Executive Vice President
SUBSIDIARIES
Christie Design Corporation, a Delaware
corporation
InterAct Accessories, Inc., a Delaware
corporation
Recoton Audio Corporation, a Delaware
corporation
ReCone, Inc., a Delaware corporation
Recoton Home Audio, Inc., a California
corporation
Recoton Japan, Inc., an Illinois corporation
Recoton International Holdings, Inc., a
Delaware corporation
Recoton European Holdings, Inc., a Delaware
corporation
AAMP of Florida, Inc., a Florida corporation
By: /S/ STUART MONT
----------------------------
Name: Stuart Mont
Title: Vice President
Recoton German Holdings GmbH, a German
corporation
Mac Audio Electronic GmbH, a German
corporation
Magnat Audio-Produkte GmbH, a German
corporation
Heco Audio-Produkte GmbH, a German
corporation
By: /S/ X.X. XXXXXXXX
-----------------------------
Name: X.X. Xxxxxxxx
Title: Geschaftsfuhrer
Recoton Canada Ltd., a Canadian corporation
By: /S/ STUART MONT
-----------------------------
Name: Stuart Mont
Title: President
THE CHASE MANHATTAN BANK,
as Existing Agent, Existing Issuer Bank and
as an Existing Bank
By: /S/ XXXXX XXXXX
-----------------------------
Name: Xxxxx Xxxxx
Title: Managing Director
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, as an Existing Bank
By: /S/ XXXXX X. XXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Director
XXXXXX TRUST AND SAVINGS BANK, as an
Existing Bank
By: /S/ XXXXXXX XXXXXXXX
-----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Managing Director
HSBC BANK U.S.A. (formerly known as MARINE
MIDLAND BANK), as an Existing Bank
By: /S/ XXXXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Vice President
FIRST UNION NATIONAL BANK, as an Existing
Bank
By: /S/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
as a 1997 Noteholder, 1998 Noteholder and
1999 Noteholder
By: /S/ XXXX X. XXXXXXX
----------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY,
as a 1997 Noteholder
By: /S/ XXXXXXX X. XXXXX
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Second Vice President
XXXX XXXXXXX VARIABLE LIFE INSURANCE
COMPANY, as a 1997 Noteholder
By: /S/ XXXXXXX X. XXXXX
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Authorized Officer
MELLON BANK, N.A., AS TRUSTEE FOR THE
LONG-TERM INVESTMENT TRUST, solely in its
capacity as Trustee and not in its
individual capacity (as directed by Xxxx
Xxxxxxx Mutual Life Insurance Company), as
a 1997 Noteholder
By: /S/ XXXXXX XXXXX
----------------------------
Name: Xxxxxx Xxxxx
Title: Authorized Signatory
MELLON BANK, N.A. AS TRUSTEE FOR XXXX
ATLANTIC MASTER PENSION TRUST, solely in
its capacity as Trustee and not in its
individual capacity (as directed by Xxxx
Xxxxxxx Mutual Life Insurance Company), as
a 1997 Noteholder
By: /S/ XXXXXX XXXXX
-----------------------------
Name: Xxxxxx Xxxxx
Title: Authorized Signatory
THE NORTHERN TRUST COMPANY, AS TRUSTEE OF
THE LUCENT TECHNOLOGIES INC. MASTER PENSION
TRUST, as a 1997 Noteholder
BY: Xxxx Xxxxxxx Mutual Life Insurance
Company, as Investment Manager
By: XXXXXXX X. XXXXX
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Second Vice President
INVESTORS PARTNER LIFE INSURANCE COMPANY,
as a 1997 Noteholder
By: /S/ XXXXXXX X. XXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Second Vice President
ING (U.S.) CAPITAL LLC, as a 1999 Noteholder
By: /S/ XXXXXXX X. XXXXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
SCHEDULE 2.2(a) to the
Master Restructuring Agreement
EXISTING TERM LOANS
-------------------------------------------------------------------------------------------------------------------------
Term Loans Under Term Loans Under
Existing Credit Existing Credit
Agreement without Aggregate Amount Agreement after
giving effect to of New Chase giving effect to
Existing Lender Section 2.2(a) Term Loans Section 2.2(a)
------------------------------------------------------------------------------------------------------------------
The Chase
Manhattan Bank $2,333,333.35 $5,870,126 $8,203,459.35
------------------------------------------------------------------------------------------------------------------
First Union National
Bank $1,720,833.35 $1,720,833.35
------------------------------------------------------------------------------------------------------------------
HSBC Bank U.S.A. $1,750,000.00 $1,750,000.00
------------------------------------------------------------------------------------------------------------------
Xxxxxx Trust and
Savings Bank $1,195,833.30 $1,195,833.30
------------------------------------------------------------------------------------------------------------------
SunTrust Bank $1,750,000.00 $1,750,000.00
------------------------------------------------------------------------------------------------------------------
Total $8,750,000.00 $14,620,126.00
------------------------------------------------------------------------------------------------------------------
SCHEDULE 2.2(b) to the
Master Restructuring Agreement
EXISTING L/C COMMITMENT PERCENTAGE
--------------------------------------------------------------------------------------------------------------------------------
Existing Lender L/C Commitment Aggregate Existing Letter Existing L/C
Under Existing Credit Amount of of Credit Commitment
Agreement without Outstanding Commitment Percentage
giving effect to Chase Letters of (in Dollars)
Section 2.2(b) Credit Under Existing
Credit Agreement
after giving effect to
Section 2.2(b)
--------------------------------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank $3,259,047.20 $580,380 $3,839,427.20 30.7144839%
--------------------------------------------------------------------------------------------------------------------------------
First Union National Bank $2,349,551.20 $2,349,551.20 18.7958382%
--------------------------------------------------------------------------------------------------------------------------------
HSBC Bank U.S.A. $2,342,637.60 $2,342,637.60 18.7405311%
--------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Trust and Savings Bank $1,626,126.40 $1,626,126.40 13.0086157%
--------------------------------------------------------------------------------------------------------------------------------
SunTrust Bank $2,342,637.60 $2,342,637.60 18.7405311%
--------------------------------------------------------------------------------------------------------------------------------
Total $11,920,000.00 $12,500,380.00
--------------------------------------------------------------------------------------------------------------------------------
Schedule 2.8(h) to the
Master Restructuring Agreement
Benchmark Financial Covenants for
1999 Notes Upon Refinancing of the
LIFO Obligations and Existing Obligations
1. CONSOLIDATED TANGIBLE NET WORTH. The Borrower shall not permit Consolidated
Tangible Net Worth of the Borrower and its Consolidated Subsidiaries to be
less than (i) $65,000,000 as of the end of any fiscal month during the
period from the date of the relevant refinancing, refunding, renewal or
extension referred to in Section 2.8(h) of the Master Restructuring
Agreement to and including September 30, 2000 and (ii) $85,000,000 at any
time thereafter.
2. CONSOLIDATED EBITDA TO CONSOLIDATED INTEREST EXPENSE. The Borrower shall
not permit the ratio of Consolidated EBITDA to Consolidated Interest
Expense for any period of four consecutive fiscal quarters ending during
any period set forth below to be less than the ratio set forth opposite
such period:
PERIOD RATIO
------ -----
October 1, 1999 - September 30, 2000 1.4:1
October 1, 2000 - December 31, 2003 1.6:1
3. CONSOLIDATED DEBT TO CONSOLIDATED EBITDA. The Borrower shall not permit the
ratio of the Consolidated Debt to Consolidated EBITDA for any period of
four consecutive fiscal quarters ending during any period set forth below
to be less than the ratio set forth opposite such period:
PERIOD RATIO
------ -----
October 1, 1999 - March 31, 2000 7.75:1
April 1, 2000 - June 30, 2000 7.00:1
July 1, 2000 - September 30, 2001 6.25:1
October 1, 2001 - December 31, 2003 5.75:1
Capitalized terms used in this Schedule 2.8(h) without being defined
shall have the meaning assigned thereto in MRA Appendix A and the following
terms shall have the following meanings.
"CONSOLIDATED DEBT": as defined in the 1999 Securities Purchase
Agreement.
"CONSOLIDATED INTEREST EXPENSE": as defined in the 1999 Securities
Purchase Agreement.
"CONSOLIDATED TANGIBLE NET WORTH": (i) at any time prior to June 30,
2001, as defined in MRA Appendix A and (ii) at any time thereafter, as defined
in the 1999 Securities Purchase Agreement.
SCHEDULE 8.6
Addresses for Notices
THE BORROWER AND SUBSIDIARIES:
RECOTON CORPORATION
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxx 00000
Attention: Stuart Mont
Fax: 000-000-0000
CHRISTIE DESIGN CORPORATION
000 Xxxx Xxxx. #00
Xxxxxxx Xxxxxxx, XX 00000
Tel.: 000-000-0000
Fax: 000-000-0000
Attn.: Xxxx Xxxxxxxx
INTERACT ACCESSORIES, INC.
00000 XxXxxxxxx Xxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Tel.: 000-000-0000
Fax: 000-000-0000
Attn.: Xxxx Xxxx
RECOTON HOME AUDIO, INC.
RECOTON AUDIO CORPORATION
RECONE, INC.
RECOTON JAPAN, INC.
RECOTON INTERNATIONAL HOLDINGS, INC.
RECOTON EUROPEAN HOLDINGS, INC.
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn.: Stuart Mont
AAMP OF FLORIDA, INC.
00000 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn.: Xxxxx Xxxxxx
RECOTON GERMAN HOLDINGS GMBH
Xxxx-Xxxxxxx-Xxxxxxx 0
00000 Xxxxxxx
XXXXXXX
Tel: 000-00-0000-000000
Fax: 000-00-0000-000000
Attn.: Xxxxxxx Xxxxxxxx
MAGNAT AUDIO-PRODUKTE GMBH
MACAUDIO ELECTRONICS GMBH
HECO AUDIO-PRODUKTE GMBH
Xxxx-Xxxxxxx-Xxxxxxx 0
00000 Xxxxxxx
XXXXXXX
Tel: 000-00-0000-000000
Fax: 000-00-0000-000000
Attn.: Xxxx Finger, Manager Director
RECOTON CANADA LTD.
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx X0X 0XX Xxxxxx
Tel.: 000-000-0000
Fax: 000-000-0000
Attn.: Xxxxx Xxxxxxx
THE CREDITORS:
THE CHASE MANHATTAN BANK
000-00 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Recoton Account Officer
Fax: 000-000-0000
with a copy to:
Xx. Xxxxx Xxxxx
The Xxxxx Manhattan Bank
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
FIRST UNION NATIONAL BANK
Overnight Delivery
000 Xx. Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Xx. Vice President
Tel: 000-000-0000
Fax: 000-000-0000
U.S. Mail Delivery:
P.O. Box 1000
(SL 2202)
Xxxxxxx, Xxxxxxx 00000
HSBC BANK USA
Xxx XXXX Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx. Vice President & Manager Special Credits Unit
Tel: 000-000-0000
Fax: 000-000-0000
XXXXXX TRUST AND SAVINGS BANK
000 Xxxx Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Xxxxxxx Xxxxxx, 0xx Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Attn: Trade Management Group
Fax: 000-000-0000
Recipient of telephonic prepayment notices:
Attn: Manager, Trade Management Group
Tel: (000) 000-0000
Address for all other communications, deliveries and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Corporate and Project Workouts
0xx Xxxxx, Xxxxxxx Center Four
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Facsimile (000) 000-0000
Attention: Managing Director
XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY, on its own behalf and behalf of the
following entities:
Xxxx Xxxxxxx Mutual Life Insurance Company, as a Lender
Xxxx Xxxxxxx Variable Life Insurance Company
Mellon Bank, N.A., as Trustee for the Long-Term Investment Trust, solely
in its capacity as Trustee and not in its individual capacity (as directed
by Xxxx Xxxxxxx Mutual Life Insurance Company) Mellon Bank, N.A. as
Trustee for Xxxx Atlantic Master Trust, solely in its capacity as Trustee
and not in its individual capacity (as directed by Xxxx Xxxxxxx Mutual
Life Insurance Company) The Northern Trust Company, as Trustee of the
Lucent Technologies Inc. Master Pension Trust Investors Partner Life
Insurance Company
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xxx Xxxxxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xxxxxxxxx Xxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Bond & Corporate Finance Group, T-57
Fax: 000-000-0000
MELLON BANK, N.A., AS TRUSTEE FOR THE LONG-TERM INVESTMENT TRUST, SOLELY
IN ITS CAPACITY AS TRUSTEE AND NOT IN ITS INDIVIDUAL CAPACITY (AS DIRECTED
BY XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY) MELLON BANK, N.A. AS
TRUSTEE FOR XXXX ATLANTIC MASTER TRUST, SOLELY IN ITS CAPACITY AS TRUSTEE
AND NOT IN ITS INDIVIDUAL CAPACITY (AS DIRECTED BY XXXX XXXXXXX MUTUAL
LIFE INSURANCE COMPANY)
One Mellon Bank Center
Room 1935
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxxxx X. Xxxx
Tel: 000-000-0000
Fax: 000-000-0000
ING BARING, LLC
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attn: Xxxxx Xxxxxx
SUNTRUST BANKS, INC.
000 0xx Xxxxxx, X/00 Xx.
Xxxxxxxxx, Xxxxxxxxx 00000
Fax: 000-000-0000
Attn: Xxxxx Xxxxxxx
Appendix A to the
Master Restructuring Agreement
DEFINITIONS
Unless the context otherwise requires:
a. any term defined below by reference to an instrument or document
shall continue to have the meaning ascribed thereto whether or
not such instrument or document remains in effect;
b. a reference to any statute, regulation, ordinance or law includes
all statutes, regulations, ordinances or laws, consolidating or
replacing them, and a reference to a statute includes all
regulations, and ordinances issued or otherwise applicable under
that statute;
c. a reference to any document, instrument or agreement includes,
without limitation, except as otherwise specified in a particular
document, instrument or agreement, any amendment or supplement
to, or modification of, such document, instrument or agreement,
entered into from time to time in accordance with the terms of
such document, instrument or agreement and the Master
Restructuring Agreement; and
d. a reference to any Person includes its successors and permitted
assigns.
As used in the Master Restructuring Agreement and other documents,
instruments and agreements contemplated thereby, the following terms shall have
the following meanings unless otherwise defined in such document, instrument or
agreement:
"ACCELERATION DATE": the date of the acceleration of the maturity of
any of the Obligations in accordance with the terms of the applicable Operative
Agreement governing such Obligation and the terms of the Master Restructuring
Agreement.
"ACCOUNTS": as to any Person, all rights to receive payment for goods
sold or leased by such Person or for services rendered in the ordinary course of
business of such Person to the extent not evidenced by an instrument or chattel
paper, together with all interest, finance charges and other amounts payable by
an account debtor in respect thereof.
"AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in Control of, is Controlled by or
is under common Control with, such Person.
"AGGREGATE L/C OBLIGATIONS": at any time, the sum of (a) the LIFO L/C
Obligations, (b) the Existing L/C Obligations and (c) all other obligations of
the Borrower or any Subsidiary, in respect of letters of credit, bankers=
acceptances or similar credit support documents (other than letters of credit
issued by Xxx Xxxxx Xxxxxxxxx Xxxx, Xxxx Xxxx for the account of the Borrower to
the extent supported by an Existing Letter of Credit issued in favor of Xxx
Xxxxx Xxxxxxxxx Xxxx, Xxxx Xxxx).
"ASSET SALE": any Disposition of Property or series of related
Dispositions of Property (excluding any Disposition permitted by subsection 2.5
of MRA Appendix B (other than paragraph (e) and (f)(ii) of such subsection)).
"BANKRUPTCY EVENT": any event described in clause (i) or (ii) of
paragraph (f) of the MRA Appendix C.
"BLOCKAGE NOTICE": a written notice from the LIFO Agent acting at the
direction of the Required LIFO Lenders that a LIFO Obligation Non-Payment
Default has occurred and is continuing.
"BLOCKAGE PERIOD": any period commencing on the date a Blockage Notice
is given and ending on the earlier to occur of (i) the cure or waiver of the
LIFO Obligation Non-Payment Default giving rise thereto and (ii) 179 days after
the date of the Blockage Notice giving rise thereto.
"BORROWER": Recoton Corporation.
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"CANADIAN SUBSIDIARY": any Subsidiary of the Borrower that is
organized under the laws of Canada.
"CANCELABLE FACILITY FEE WARRANTS": as defined in subsection 2.9 of
the LIFO Credit Agreement
"CAPITAL EXPENDITURE": any expenditure which in accordance with GAAP
would be classified as a non-current tangible asset.
"CAPITAL STOCK": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of any LIFO Lender or of any commercial
bank having capital and surplus in excess of $500,000,000, (c) repurchase
obligations of any LIFO Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than 30
days with respect to securities issued or fully guaranteed or insured by the
United States Government, (d) commercial paper of a domestic issuer rated at
least A-2 by Standard and Poor's Ratings Services ("S&P") or P-2 by Xxxxx'x
Investors Service, Inc. ("MOODY'S"), (e) securities with maturities of one year
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody's, (f) securities with maturities of one
year or less from the date of acquisition backed by standby letters of credit
issued by any LIFO Lender or any commercial bank satisfying the requirements of
clause (b) of this definition or (g) shares of money market mutual or similar
funds which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition.
"CHASE": The Chase Manhattan Bank, a New York banking corporation.
"CHASE LETTERS OF CREDIT": The four stand-by Letters of Credit in the
aggregate outstanding amount as of the Restructuring Effective Date of $580,380
issued pursuant to the Chase Reimbursement Agreements.
"CHASE MORTGAGES": (i) the Mortgage, dated July 3, 1991 and recorded
July 8, 1991, made between the Borrower (as successor by merger to Calibron,
Inc., a Delaware corporation) and Chase (f/k/a Chemical Bank) covering the
premises set forth on Exhibit A thereto and securing indebtedness in the
original principal amount of $2,226,000 and (ii) the Mortgage, dated October 4,
1993, made between Chase (f/k/a Chemical Bank) and the Borrower, covering the
premises described in Exhibit A thereto and securing indebtedness in the
original principal amount of $1,650,000.
"CHASE REIMBURSEMENT AGREEMENTS": the Continuing Letter of Credit
Security Agreement, the Supplemental Letter of Credit Agreement and the
Continuing Indemnity Agreement, each dated as of September 6, 1996, between the
Borrower and Chase.
"CHASE TERM LOAN AGREEMENTS": the collective reference to (a) the Loan
Agreement dated as of December 20, 1995 between Chase (f/k/a Chemical Bank) and
Far East and (b) the Term Loan Agreement dated as of December 29, 1995 between
Chase (f/k/a Chemical Bank) and the Borrower.
"CHASE TERM LOANS": the Far East Term Loan and the Domestic Chase Term
Loan.
"CODE": the Internal Revenue Code of 1986.
"COLLATERAL": the collective reference to any and all property upon
which a Lien is purported to be created by any Security Document.
"COLLATERAL ACCOUNTs": the collective reference to the Primary
Collateral Account, the LIFO L/C Cash Collateral Account and the Existing L/C
Cash Collateral Account as those terms are used in Section 4.1 of the Master
Restructuring Agreement.
"COLLATERAL AGENT": Chase, in its capacity as Collateral Agent.
"COLLATERAL AGENT EXPENSES": all fees, costs and expenses of the
Collateral Agent of the types described in Sections 6.6 and 6.7 of the Master
Restructuring Agreement and subsection 4.7 of the Collateral Agreement.
"COLLATERAL AGREEMENT": the Collateral Agreement, as of even date with
the Master Restructuring Agreement, made by the Grantors in favor of the
Collateral Agent, for the benefit of the Secured Creditors.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414 of the Code.
"CONSOLIDATED": when used in connection with any defined term, and not
otherwise defined, such defined term as it applies to the Borrower and its
Subsidiaries on a consolidated basis.
"CONSOLIDATED EBITDA": for any period, all as determined in accordance
with GAAP, the Net Income (or Net Loss) of the Borrower and its Consolidated
Subsidiaries for such period, PLUS (without duplication) (a) the sum of (i)
depreciation expense, (ii) amortization expense, (iii) net total Federal, state
and local income tax expense, (iv) gross interest expense for such period less
gross interest income for such period, net of the effect of any change in
accounting principles, (v) extraordinary losses, (vi) any non-recurring charge
or restructuring charge, including additional reserves for doubtful accounts and
inventory writedowns, in an aggregate amount not to exceed $15,000,000 from and
after July 1, 1999, (vii) the cumulative effect of any change in accounting
principles as shown on the Borrower=s consolidated statement of income for such
period and (viii) any non-cash expense related to any Premium Obligation LESS
(b) extraordinary gains PLUS or MINUS (c) the amount of cash received or
expended in such period in respect of any amount which under clauses (vi) and
(viii) above was taken into account in determining Consolidated EBITDA for such
period or any prior period.
"CONSOLIDATED INTANGIBLES": at a particular date, all assets of the
Borrower and its Subsidiaries, determined on a consolidated basis at such date,
that would be classified as intangible assets in accordance with GAAP.
"CONSOLIDATED NET WORTH": at a particular date, all amounts which
would be included under shareholders equity on a balance sheet of the Borrower
and its Consolidated Subsidiaries determined as of such date in accordance with
GAAP.
"CONSOLIDATED TANGIBLE NET WORTH": as of the end of any fiscal month,
the excess, if any, of Consolidated Net Worth less Consolidated Intangibles as
at such date PLUS or MINUS (i) the net write-up or write-down in the book value
of assets resulting from revaluations arising out of foreign currency valuations
in accordance with GAAP since June 30, 1999 through the end of such fiscal
month, PLUS or MINUS (ii) net total Federal, state and local income taxes since
June 30, 1999 through the end of such fiscal month PLUS (iii) any non-cash
expense related to any Premium Obligations since June 30, 1999 through the end
of such fiscal month.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTROL": of a Person means the power, directly or indirectly, either
to (a) vote more than 50% of the securities having ordinary voting power for the
election of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"CREDITORS": the collective reference to the LIFO Creditors and the
Subordinated Creditors.
"CURRENT ASSETS RATIO": at a particular date, the ratio of (a) the sum
of the amounts then appearing on a balance sheet of the Borrower and its
Consolidated Subsidiaries under the captions "cash," "accounts receivable" and
"inventory" to (b) the then outstanding Obligations other than 1999 Note
Obligations and Premium Obligations.
"CURRENT ASSET RATIO CERTIFICATE": as defined in subsection 1.2(e) of
MRA Appendix B.
"DEFAULT": any Event of Default, whether or not any requirement for
the giving of notice, the lapse of time, or both, or any other condition has
been satisfied.
"DIRECTING PARTY": (i) prior to the occurrence of the LIFO Repayment
Date, the Required LIFO Lenders and (ii) thereafter, the Required Existing
Senior Creditors.
"DISPOSITION": with respect to any Property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof.
"DISTRIBUTION DATE": each date fixed by the Collateral Agent in its
sole discretion for a distribution to the Secured Creditors of funds held in the
Collateral Account, but, in any event, a date not more than ten Business Days
following any date on which there is at least $3,000,000 in the Primary
Collateral Account available for distribution.
"DOLLARS" and "$": dollars in lawful currency of the United States of
America.
"DOMESTIC CHASE TERM LOAN": the term loans made to the Borrower
pursuant to the Chase Term Loan Agreement described in clause (b) of the
definition of "Chase Term Loan Agreements" in the principal amount outstanding
on the Restructuring Effective Date equal to $1,983,190.
"DOMESTIC SUBSIDIARY": any Subsidiary of the Borrower other than
RAC-FSC organized under the laws of any state or territory of the United States.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ENVIRONMENTAL PERMIT": any and all permits, licenses, approvals,
registrations, notifications, exemptions and any other authorization required
under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EVENT OF DEFAULT": any of the events set forth in MRA Appendix C,
PROVIDED that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"EXCLUDED FOREIGN SUBSIDIARY": (a) any Subsidiary of the Borrower
organized under the laws of the United Kingdom or (b) any Far East Subsidiary.
"EXISTING AGENT": Chase, in its capacity as administrative agent for
the Existing Banks under the Existing Credit Agreement.
"EXISTING AGREEMENTS": the Existing Credit Agreement, the Senior Note
Agreements, the 1999 Securities Purchase Agreement and all other documents
executed and delivered in connection therewith, respectively.
"EXISTING BANK GUARANTEE": the Guarantee dated as of August 27, 1996,
in favor of the Existing Agent (for the benefit of the Existing Banks), made by
the Existing Guarantors.
"EXISTING BANK OBLIGATIONS": the collective reference to the unpaid
principal of and interest on the Existing Loans, the Existing Reimbursement
Obligations and the Existing Letters of Credit (including interest accruing at
the then applicable rate provided in the Existing Credit Agreement after the
maturity of the Existing Loans or the Existing Reimbursement Obligations and
interest accruing at the then applicable rate provided in the Existing Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower or
any other Guarantor, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) and all other obligations and
liabilities of the Borrower or any other Guarantor to the Existing Agent, the
Existing Issuing Bank and the Existing Banks in respect of the Existing Loans,
the Existing Reimbursement Obligations and the Existing Letters of Credit,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Existing Credit Agreement, any Existing Letter of Credit, the other
Existing Loan Documents, this Agreement or any other document made, delivered or
given in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including all fees and disbursements of counsel to the Existing
Agent, the Existing Issuing Bank or to the Existing Banks that are required to
be paid by the Borrower or any other Guarantor pursuant to the terms of the
Existing Credit Agreement, any other Existing Loan Document or this Agreement),
but in each case limited to the obligations and liabilities of the Borrower and
each other Guarantor to the Existing Agent, the Existing Issuing Bank and the
Existing Banks in respect of the Existing Loans, the Existing Reimbursement
Obligations and the Existing Letters of Credit.
"EXISTING BANKS": the financial institutions listed on the signature
pages of the Master Restructuring Agreement as "Existing Banks", together with
their respective successors and assigns.
"EXISTING CREDIT AGREEMENT": the Amended and Restated Credit
Agreement, dated as of June 18, 1998, among the Borrower, the Existing Banks and
the Existing Agent.
"EXISTING CREDITORS": the Existing Senior Creditors and the 1999
Noteholders.
"EXISTING GUARANTEES": the Existing Bank Guarantee and the Senior Note
Guarantees.
"EXISTING GUARANTORS": the collective reference to all Persons that
are as of the Restructuring Effective Date or thereafter become guarantors of
the Existing Senior Obligations except to the extent any such Guarantor is
released from such obligations in accordance with Section 2.9 of the Master
Restructuring Agreement.
"EXISTING ISSUING BANK": Chase in its capacity as the "Issuing Bank"
under the Existing Credit Agreement.
"EXISTING L/C AVAILABILITY": at any time, the difference between the
Existing L/C Commitment and the Existing L/C Obligations, each at such time.
"EXISTING L/C CASH COLLATERAL ACCOUNT": the account established by the
Borrower pursuant to subsection 4.1 of the Master Restructuring Agreement under
the sole and exclusive control of the Collateral Agent, currently maintained at
the office of the Collateral Agent at 000-00 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 designated as the "Recoton Corporation Existing L/C Cash
Collateral Account" or similar title that shall be used solely for the purposes
set forth in subsection 4.1 of the Master Restructuring Agreement and any other
provision of any Operative Agreement which requires the cash collateralization
of Existing L/C Obligations.
"EXISTING L/C COMMITMENT": $12,500,380.
"EXISTING L/C COMMITMENT PERCENTAGE": as to any Existing Bank, the
percentage set forth opposite the name of such Existing Bank on Schedule 2.2(b)
of the Master Restructuring Agreement.
"EXISTING L/C OBLIGATIONS": at any time, an amount equal to (a) the
sum of (i) the undrawn and unexpired amount of the then outstanding Existing
Letters of Credit and (ii) the Existing Reimbursement Obligations at such time
(b) minus 95.25% of the aggregate amount on deposit in the Existing L/C Cash
Collateral Account.
"EXISTING L/C REDUCTION AMOUNT: at any date of determination, the
difference (if any) between the Existing L/C Obligations as of such date of
determination and (a) in the case of the first date of determination following
the Restructuring Effective Date, the Existing L/C Obligations on the
Restructuring Effective Date and (b) in the case of any subsequent date of
determination, the Existing L/C Obligations on the immediately preceding date of
determination of the Existing L/C Reduction Amount, PROVIDED that any expiration
of, or any dishonor of any proposed drawing on, any Existing Letter of Credit
shall not be deemed to be a reduction of the Existing L/C Obligations until 30
days after the date of expiration of such Existing Letter of Credit or until any
dispute with respect to any such dishonor has been finally determined in favor
of the propriety of such dishonor; PROVIDED FURTHER that for purposes of this
definition Existing L/C Obligations shall be determined without giving effect to
clause (b) of the definition of AExisting L/C Obligations."
"EXISTING LETTERS OF CREDIT": any letter of credit issued (or deemed
issued) pursuant to the Existing Credit Agreement and that is outstanding as of
the Restructuring Effective Date or issued thereafter.
"EXISTING LOAN DOCUMENTS": the "Loan Documents" under and as defined
in the Existing Credit Agreement.
"EXISTING LOANS": the "Revolving Credit Loans" and the "Term Loans"
under and as defined in the Existing Credit Agreement.
"EXISTING OBLIGATIONS": the collective reference to the Existing
Senior Obligations and the 1999 Note Obligations.
"EXISTING REIMBURSEMENT OBLIGATIONS": at any date, the aggregate
amount of drawings under Existing Letters of Credit which have not then been
reimbursed.
"EXISTING SENIOR CREDITOR AGREEMENTS": the Existing Credit Agreement
and the Senior Note Agreements.
"EXISTING SENIOR CREDITOR PERCENTAGE": at a particular time, as to any
Existing Senior Creditor, a percentage represented by a fraction the numerator
of which is the principal amount of Existing Senior Obligations of such Existing
Senior Creditor outstanding at such time, and the denominator of which is the
aggregate principal amount of Existing Senior Obligations of all Existing Senior
Creditors outstanding at such time.
"EXISTING SENIOR CREDITORS": the Existing Banks and the Senior
Noteholders.
"EXISTING SENIOR OBLIGATIONS": the Existing Bank Obligations, the
Senior Note Obligations and the Premium Obligations.
"EXISTING SENIOR OBLIGATIONS PAYMENT DEFAULT": any default in the
payment of the Existing Senior Obligations (whether upon maturity, mandatory
prepayment, acceleration or otherwise) beyond any applicable grace period with
respect thereto.
"FACILITY FEE WARRANTS": the collective reference to the Fixed
Facility Fee Warrants and the Cancelable Facility Fee Warrants.
"FAIR MARKET VALUE": with respect to any Property, the sale value of
such Property that would be realized in an arm=s length sale at such time
between an informed and willing buyer and an informed and willing seller under
no compulsion to buy or sell, respectively.
"FAR EAST": Recoton (Far East) Limited.
"FAR EAST TERM LOAN": the term loans made to Far East pursuant to the
Chase Term Loan Agreement described in clause (a) of the definition of "Chase
Term Loan Agreements" in the principal amount outstanding on the Restructuring
Effective Date equal to 30,169,619 Hong Kong dollars.
"FAR EAST SUBSIDIARY": any Hong Kong Subsidiary or PRC Subsidiary.
"FINANCIAL ADVISOR": (i) Zolfo Xxxxxx or (ii) a management consulting
firm or individual specializing in corporate turnarounds and restructurings
selected by the Borrower and reasonably satisfactory to the Agent and the
Required LIFO Lenders which Financial Advisor shall assist the Borrower with,
among other things, the preparation and delivery of financial information, and
other reports and materials, delivered to any LIFO Lender or any Existing
Creditor pursuant to the terms of any Operative Agreement or otherwise, and
shall be reasonably available to the LIFO Lenders or any Existing Creditor and
their respective advisors to discuss the implementation of the Borrower=s
strategic business plan, the development and implementation of the other reports
described in subsections 1.1, 1.2 and 1.10 of MRA Appendix B, the results of
operations and other matters related to its role as Financial Advisor.
"FINANCING LEASE": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"FIRST PRIORITY OBLIGATIONS": the LIFO Obligations.
"FIRST TIER EXCLUDED FOREIGN SUBSIDIARY": any Excluded Foreign
Subsidiary the Capital Stock of which is owned by the Borrower or any Domestic
Subsidiary.
"FIXED FACILITY FEE WARRANTS": as defined in subsection 2.9 of the
LIFO Credit Agreement.
"FOREIGN SUBSIDIARY": any Subsidiary of the Borrower organized under
the laws of any jurisdiction outside the United States of America.
"FOREIGN SUBSIDIARY SECURITY AGREEMENT": each Security Document made
by a (a) Foreign Subsidiary or (b) the Borrower or a Domestic Subsidiary with
respect to the Capital Stock of a Foreign Subsidiary, in each case in favor of
the Collateral Agent for the benefit of the Secured Creditors.
"FOURTH PRIORITY OBLIGATIONS": the 1999 Note Obligations.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
"GERMAN SUBSIDIARY": any Subsidiary of the Borrower organized under
the laws of Germany.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"GRANTOR": the Borrower and each Guarantor and each other Person that
becomes a "Grantor" under any Security Document after the Restructuring
Effective Date.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "PRIMARY OBLIGATIONS")
of any other third Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; PROVIDED, HOWEVER, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"GUARANTEES": the collective reference to (i) the LIFO Guarantee and
(ii) the Existing Guarantees and (iii) supplements, addendums or additional
guarantees executed by any Person that becomes a party to either or both the
LIFO Guarantee or any Existing Guarantee, the Master Restructuring Agreement or
the LIFO Credit Agreement.
"GUARANTORS": the collective reference to the Existing Guarantors and
the LIFO Guarantors.
"HAZARDOUS SUBSTANCES": any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products or any hazardous or toxic
substances, materials or wastes, defined or regulated as such in or under any
Environmental Law, including, without limitation, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
"HONG KONG SUBSIDIARIES": any Subsidiary of the Borrower that is
organized under the laws of Hong Kong.
"INDEBTEDNESS": of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of letters of credit, bankers=
acceptances, discounted drafts or trust receipts issued or created for the
account of such Person and (e) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"ITALIAN SUBSIDIARY": any Subsidiary of the Borrower that is organized
under the laws of Italy.
"XXXX XXXX PROPERTY": the collective reference to the following
parcels of property commonly known as 0000 Xxxx Xxxx Xxxx and 000 Xxxx Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxx with the following legal descriptions: (a) Parcel One
consisting of (i) Parcel A consisting of the east 648.00 feet of the south
155.70 feet of the southwest 1/4 of the southwest 1/4 of section 18, township 20
south, range 30 east, Seminole County, Florida, less the east 83.00 feet thereof
for Lake Emma Road. And the east 648.00 feet of the north 144.30 feet of the
northwest 1/4 of the northwest 1/4 of section 19, township 20 south, range 30
east, less the east 83.00 feet thereof for Lake Emma Road and (ii) Parcel B,
consisting of the east 648.00 feet of the south 336.12 feet of the north 480.42
feet of the northwest 1/4 of the northwest 1/4 section 19, township 20 south,
range 30 east, Seminole County, Florida, less the east 83.00 feet thereof for
Lake Emma Road and (b) Parcel Two consisting of (A) the south 873.50 feet of the
north 1076.70 feet of the east 250.00 feet of government lot 2, section 24,
township 20 south, range 29 east, Seminole County, Florida; (B) the northwest
1/4 of the southwest 1/4 section of section 19, township 20 south, range 30
east, Seminole County, Florida; less the south 460.00 feet thereof and less the
east 83.00 feet thereof; and (C) the south 873.50 feet of the north 1076.70 feet
of the west 248.00 feet of the east 498.00 feet of government lot 2, section 24,
township 20 south, range 29 east, Seminole County, Florida.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing).
"LIFO AGENT": Chase, in its capacity as administrative agent for the
LIFO Lenders.
"LIFO COMMITMENT PERCENTAGE": as to any LIFO Lender, its "Commitment
Percentage" under and as defined in the LIFO Credit Agreement.
"LIFO COMMITMENTS": the "Commitments" under and as defined in the LIFO
Credit Agreement.
"LIFO CREDIT AGREEMENT": the Agreement, of even date with the Master
Restructuring Agreement, among the Borrower, the LIFO Lenders, and the LIFO
Agent.
"LIFO CREDITORS": the holders from time to time of the LIFO
Obligations.
"LIFO GUARANTEE": the Guarantee, of even date with the Master
Restructuring Agreement, made by each of the corporations that are signatories
thereto in favor of Chase, as LIFO Agent.
"LIFO GUARANTOR": any guarantor under the LIFO Guarantee.
"LIFO ISSUING BANK": Chase, in its capacity as issuer of any LIFO
Letter of Credit.
"LIFO L/C CASH COLLATERAL ACCOUNT": the account established by the
Borrower pursuant to subsection 4.1 of the Master Restructuring Agreement under
the sole and exclusive control of the Collateral Agent, currently maintained at
the office of the Collateral Agent at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
designated as the "Recoton Corporation LIFO L/C Cash Collateral Account" or
similar title that shall be used solely for the purposes set forth in subsection
4.1 of the Master Restructuring Agreement and any other provision of any
Operative Agreement which requires the cash collateralization of LIFO L/C
Obligations.
"LIFO L/C OBLIGATIONS": at any time, the "L/C Obligations" as defined
in the LIFO Credit Agreement.
"LIFO LENDER": a "Lender" (including a "Voting Participant") under and
as defined in the LIFO Credit Agreement.
"LIFO LETTERS OF CREDIT": "Letters of Credit" under and as defined in
the LIFO Credit Agreement.
"LIFO LOANS": Loans under and as defined in the LIFO Credit Agreement.
"LIFO LOAN DOCUMENTS": "Loan Documents" under and as defined in the LIFO Credit
Agreement.
"LIFO NOTES": "Notes" under and as defined in the LIFO Credit
Agreement.
"LIFO OBLIGATIONS": the collective reference to the unpaid principal
of and interest on the LIFO Loans, the LIFO Letters of Credit and the
reimbursement obligations due thereunder (including interest accruing at the
then applicable rate provided in the LIFO Credit Agreement after the maturity of
the LIFO Loans or the LIFO L/C Obligations and interest accruing at the then
applicable rate provided in the LIFO Credit Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower or any other Guarantor, whether or not
a claim for post-filing or post-petition interest is allowed in such proceeding)
and all other obligations and liabilities of the Borrower or any other Guarantor
to the LIFO Agent, the LIFO Issuing Bank and the LIFO Lenders in respect of the
LIFO Loans, the LIFO L/C Obligations and the LIFO Letters of Credit, whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the LIFO Credit Agreement, any LIFO Letter of Credit, the Collateral
Agreement, the other LIFO Loan Documents or any other document made, delivered
or given in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including all fees and disbursements of counsel to the LIFO Agent,
the LIFO Issuing Bank or to the LIFO Lenders that are required to be paid by the
Borrower or any other Guarantor pursuant to the terms of the LIFO Credit
Agreement, the Collateral Agreement or any other LIFO Loan Document), but in
each case limited to the obligations and liabilities of the Borrower and each
other Guarantor to the LIFO Agent, the LIFO Issuing Bank and the LIFO Lenders in
respect of the LIFO Loans, the LIFO L/C Obligations and the LIFO Letters of
Credit.
"LIFO OBLIGATION NON-PAYMENT DEFAULT": an Event of Default in respect
of the LIFO Obligations other than Payment Default.
"LIFO PAYMENT DEFAULT": a Payment Default in respect of the LIFO
Obligations.
"LIFO REPAYMENT DATE": the date on which (a) the LIFO Obligations
shall have been indefeasibly paid in full, (b) the LIFO Commitments shall have
been terminated and (c) all outstanding but undrawn LIFO Letters of Credit have
been replaced and returned, secured by "back-to-back" letters of credit or cash
collateralized, in each case, in the manner set forth in subsection 3.5(d) of
the LIFO Credit Agreement.
"LIFO TERMINATION DATE": June 30, 2001.
"LOAN PARTY": as defined in the recitals of the Master Restructuring
Agreement.
"MASTER RESTRUCTURING AGREEMENT": the Master Restructuring Agreement,
dated as of September 8, 1999, among the Loan Parties, the Existing Creditors
and the Collateral Agent.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of the Master Restructuring Agreement or any of the other
Operative Agreements or the rights or remedies of the Collateral Agent or the
Creditors thereunder.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"MORTGAGED PROPERTIES": any of the Properties of the Borrower or any
Subsidiary that is subject to a Mortgage.
"MORTGAGES": each of the mortgages and deeds of trust made by any Loan
Party in favor of, or for the benefit of, the Collateral Agent for the benefit
of the Secured Creditors.
"MRA APPENDIX A": Appendix A to the Master Restructuring Agreement.
"MRA APPENDIX B": Appendix B to the Master Restructuring Agreement.
"MRA APPENDIX C": Appendix C to the Master Restructuring Agreement.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS": (a) in connection with any Asset Sale, the
proceeds thereof in the form of cash and Cash Equivalents (including any such
proceeds received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but
only as and when received), net of (i) attorneys= fees, accountants= fees,
investment banking fees and other professional fees, (ii) amounts required to be
applied to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of such Asset Sale (other than any
Lien pursuant to a Security Document) or to the repayment of any other liability
associated with the assets or business sold and required to be paid in
connection with or as a result of such Asset Sale, such as accounts payable,
severance payments or winddown costs, (iii) the amount of such proceeds which
are attributable to (and payable to) minority interests, (iv) the amount of any
reserve reasonably maintained by the Borrower and its Subsidiaries with respect
to indemnification obligations or obligations to repurchase sold property or
other contingent obligations in respect of such Asset Sale pursuant to the
definitive documentation pursuant to which such Asset Sale is consummated (with
any unused portion of such reserve to constitute Net Cash Proceeds on the date
(or dates) upon which any such obligations owing thereunder are satisfied in
whole or in part), and (v) taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (b) in connection with any
issuance or sale of Capital Stock or debt securities or instruments or the
incurrence of loans, the cash proceeds received by the Borrower or any of its
Subsidiaries from such issuance or incurrence, net of attorneys= fees,
investment banking fees, and other professional fees, underwriting discounts and
commissions and other reasonable fees and expenses actually incurred in
connection therewith; PROVIDED that for purposes of clause (b) of this
definition, any proceeds derived from any issuance of Capital Stock or warrants,
rights or options or the exercise of any such warrants, rights or options
permitted under subsection 2.5 of MRA Appendix B (other than under paragraph
(f)(ii) thereof) shall not constitute Net Cash Proceeds.
"NET INCOME" OR "NET LOSS": of any Person for any period, net income
(or net loss) of such Person, determined on a consolidated basis in accordance
with GAAP.
"NON-PARTICIPATING SENIOR CREDITOR": as defined in Section 2.6 of the
Master Restructuring Agreement.
"NOTICE OF SECURED OBLIGATION PAYMENT DEFAULT": a written notification
given by or on behalf of a Secured Creditor certifying that a Secured Obligation
Payment Default has occurred.
"OBLIGATIONS": the LIFO Obligations and the Subordinated Obligations.
"OPERATIVE AGREEMENTS": the Existing Agreements, the LIFO Credit
Agreement and the other LIFO Loan Documents, the Warrants, and the Registration
Rights Agreement.
"PARTICIPATING SENIOR CREDITOR": as defined in Section 2.6 of the
Master Restructuring Agreement.
"PAYMENT DEFAULT": as to any Obligation, an Event of Default under
paragraph (a) of MRA Appendix C.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"PERMITTED LIENS": Liens described in subsection 2.2 of MRA Appendix
B.
"PERMITTED PAYMENTS": collectively, (a) the fees payable in accordance
with the terms of the Existing Agreements as in effect on the Restructuring
Effective Date (including the Restructuring Fee, unused commitment fees, letter
of credit fees and the payment or reimbursement of any Creditor=s costs and
expenses payable or reimbursable under such Creditor=s Existing Agreement or the
Master Restructuring Agreement), (b) payments on account of interest on (but not
on account of principal of or Premium Obligations in respect of) the Existing
Senior Obligations and the 1999 Notes in accordance with the terms of the
Existing Agreements as in effect on the Restructuring Effective Date, and (c)
the issuance of any warrants to purchase the Borrower=s common stock
contemplated by the LIFO Credit Agreement or the Master Restructuring Agreement
or the issuance of any such common stock upon the exercise thereof.
"PERSON": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PRC SUBSIDIARY": any Subsidiary of the Borrower that is organized
under the laws of the People's Republic of China (other than Hong Kong).
"PREMIUM OBLIGATIONS": the collective reference to the 1997 Note
Premium Obligations and the 1998 Note Premium Obligations.
"PREPAYMENT WARRANTS": as defined in Section 2.7 of the Master
Restructuring Agreement.
"PRIMARY COLLATERAL ACCOUNT": as defined in Section 4.1 of the Master
Restructuring Agreement.
"PROPERTY": any interest in any kind of property or assets, whether
real, personal or mixed and whether tangible or intangible.
"PROPERTIES": the facilities and properties owned, leased or operated
by the Borrower or any of its Subsidiaries.
"RAC-FSC": RAC-FSC, a U.S. Virgin Islands corporation.
"REGISTRATION RIGHTS AGREEMENT": the Registration Rights Agreement,
dated as of even date herewith, among the Borrower, and each of the parties
whose signatures are set forth thereto under the heading "LIFO Lenders".
"RELATED MORTGAGE DOCUMENTS": the Negative Covenants Agreement, dated
as of July 13, 1991, between the Borrower (for itself and as successor by merger
to Calibron, Inc., a Delaware corporation and Tape Services, Inc., a New Jersey
corporation) and Chase (as successor by merger to Chemical Bank); the First
Mortgage Modification Agreement, dated as of October 4, 1993, between the
Borrower (for itself and as successor by merger to Calibron, Inc.) and Chase (as
successor by merger to Chemical Bank); the Term Loan Agreement dated October 4,
1993, between the Borrower, Recoton Canada Ltd. and Far East and Chase (as
successor by merger to Chemical Bank); and the Amendment Agreement, dated as of
August 27, 1996, between the Borrower and Chase.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .21, .22, .23, .24, .25, .26, .27, .28, .29, .30, .31,
.32, .34 or .35 of PBGC Reg. ' 4043.
"REQUIRED EXISTING SENIOR CREDITORS": Existing Senior Creditors having
Existing Senior Creditor Percentages aggregating more than 51%.
"REQUIRED LIFO LENDERS": "Required Lenders" under and as defined in
the LIFO Credit Agreement.
"REQUIREMENT OF LAW": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, the president, the
chief operating officer or the chief financial officer of the Borrower.
"RESTRUCTURING AGREEMENTS": as defined in Section 7(a) of the Master
Restructuring Agreement.
"RESTRUCTURING EFFECTIVE DATE": the date upon which all conditions
precedent to the Master Restructuring Agreement have been satisfied or waived as
provided therein.
"RESTRUCTURING FEE": as to any Participating Senior Creditor, the sum
of (a) .65% of the outstanding principal amount of such Participating Senior
Creditor=s Existing Senior Obligations on the Restructuring Effective Date PLUS
(b) an amount equal to such Participating Senior Creditor=s pro rata share
(based on the proportion that the principal amount of its Existing Senior
Obligations bears to the aggregate principal amount of all of the Existing
Senior Obligations other than the Existing Senior Obligations of any
Non-Participating Senior Creditors) of .65% of the outstanding principal amount
of the aggregate Existing Senior Obligations of all Non-Participating Senior
Creditors on the Restructuring Effective date.
"SECOND PRIORITY OBLIGATIONS": the Existing Senior Obligations;
PROVIDED that the amount of Premium Obligations constituting "SECOND PRIORITY
OBLIGATIONS" shall be (i) if the aggregate Premium Obligations are equal to or
greater than $6,666,667, an amount equal to the greater of (x) an amount equal
to 75% of such aggregate Premium Obligations and (y) such aggregate Premium
Obligations minus $3,000,000, (ii) if the aggregate Premium Obligations are less
than $6,666,667 but greater than or equal to $5,000,000, an amount equal to
$5,000,000 and (iii) if the aggregate Premium Obligations are less than
$5,000,000, an amount equal to such aggregate Premium Obligations.
"SECURED CREDITORS": the Collateral Agent, the LIFO Creditors and the
Existing Senior Creditors.
"SECURED OBLIGATIONS": the LIFO Obligations and the Existing Senior
Obligations.
"SECURED OBLIGATION PAYMENT DEFAULT": a Payment Default in respect of
any of the Secured Obligations.
"SECURITY DOCUMENTS": the collective reference to the Collateral
Agreement, the Mortgages, the Foreign Subsidiary Security Agreements and all
other security documents hereafter delivered to the Collateral Agent purporting
to xxxxx x Xxxx on any asset or assets of any Person to secure the Secured
Obligations.
"SENIOR NOTE AGREEMENTS": the collective reference to the 1997 Note
Purchase Agreement and the 1998 Note Purchase Agreement.
"SENIOR NOTE GUARANTEES": the collective reference to (i) the Guaranty
dated as of January 6, 1997 by the Guarantors in favor of the 1997 Noteholders
and (ii) the Guaranty dated as of September 1, 1998 by the Guarantors in favor
of the 1998 Noteholders.
"SENIOR NOTEHOLDERS": the collective reference to the 1997 Noteholders
and the 1998 Noteholders.
"SENIOR NOTE OBLIGATIONS": the collective reference to the 1997 Note
Obligations and the 1998 Note Obligations.
"SENIOR NOTES": the collective reference to the 1997 Notes and the
1998 Notes.
"SHARING AGREEMENT": the First Amended and Restated Sharing
Agreement, dated as of September 1, 1998, among the Existing Banks and the
Senior Noteholders.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"SUBORDINATED CREDITORS": the holders from time to time of the
Subordinated Obligations.
"SUBORDINATED NOTEHOLDERS": the holders of the notes issued under the
1999 Securities Purchase Agreement.
"SUBORDINATED OBLIGATIONS": the collective reference to the Fourth
Priority Obligations, the Third Priority Obligations and the Second Priority
Obligations in relation to the First Priority Obligations.
"SUBSIDIARY": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of the Borrower.
"SUMMARY TERM SHEET": as defined in the recitals to the Master
Restructuring Agreement.
"TERM LENDER PURCHASE AMOUNT": at any date of determination an amount
equal to the product of the Existing L/C Reduction Amount at such date TIMES a
fraction, the numerator of which is the sum of (a) the principal amount of the
Existing Bank Obligations (other than Existing L/C Obligations) at such date
plus (b) the principal amount of the Senior Note Obligations at such date, and
the denominator of which is the sum of (a) principal amount of the Existing Bank
Obligations at such date plus (b) the principal amount of the Senior Note
Obligations at such date.
"THIRD PRIORITY OBLIGATIONS": any Premium Obligation that is not a
Second Priority Obligation.
"TOTAL TANGIBLE ASSETS": as to any Person and its Consolidated
Subsidiaries, as of any date of determination, all assets of such Person and its
Consolidated Subsidiaries determined in conformity with GAAP other than (a)
assets constituting Accounts owed by the Borrower or any Subsidiary of the
Borrower, and (b) assets that would be classified as intangible assets in
accordance with GAAP.
"TRANSFEREE": as defined in subsection 8.5 of the Master Restructuring
Agreement. "UCC": the Uniform Commercial Code as in effect on the date of the
Master Restructuring Agreement in the State of New York.
"WARRANTS": the Facility Fee Warrants, the Prepayment Warrants and the
1999 Replacement Warrants.
"1997 NOTEHOLDERS": the holders of the 1997 Notes, together with their
respective successors and assigns.
"1997 NOTE OBLIGATIONS": the collective reference to the unpaid
principal of, interest on the 1997 Notes (including interest accruing at the
then applicable rate provided in the 1997 Note Purchase Agreement after the
maturity of the 1997 Notes and interest accruing at the then applicable rate
provided in the 1997 Note Purchase Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower or any other Guarantor, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
and all other obligations and liabilities of the Borrower or any other Guarantor
to each 1997 Noteholder in respect of the 1997 Notes, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with the
1997 Note Purchase Agreement, the applicable Senior Note Guarantee or this
Agreement or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including all fees
and disbursements of counsel to each 1997 Noteholder that are required to be
paid by the Borrower or any other Guarantor pursuant to the terms of the 1997
Note Purchase Agreement or Senior Note Guarantee), but in each case limited to
the obligations and liabilities of the Borrower and each other Guarantor to each
1997 Noteholder in respect of the 1997 Notes and 1997 Note Purchase Agreement.
"1997 NOTE PREMIUM OBLIGATIONS": at any time (i) the
"Yield-Maintenance Amount" (as such term is defined in the 1997 Note Purchase
Agreement) in respect of the 1997 Notes.
"1997 NOTE PURCHASE AGREEMENT": collectively, the separate Note
Purchase Agreements, each dated as of January 6, 1997, between the Borrower and
each of the purchasers named in Annex 1 thereto.
"1997 NOTES": the Adjustable Rate Senior Notes of the Borrower issued
pursuant to the 1997 Note Purchase Agreement.
"1998 NOTEHOLDERS": the holder of the 1998 Notes, together with its
successors and assigns.
"1998 NOTE OBLIGATIONS": the collective reference to the unpaid
principal of, interest on the 1998 Notes (including interest accruing at the
then applicable rate provided in the 1998 Note Purchase Agreement after the
maturity of the 1998 Notes and interest accruing at the then applicable rate
provided in the 1998 Note Purchase Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower or any other Guarantor, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
and all other obligations and liabilities of the Borrower or any other Guarantor
to each 1998 Noteholder in respect of the 1998 Notes, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
1998 Note Purchase Agreement, the applicable Senior Note Guarantee or this
Agreement or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including all fees
and disbursements of counsel to each 1998 Noteholder that are required to be
paid by the Borrower or any other Guarantor pursuant to the terms of the 1998
Note Purchase Agreement or Senior Note Guarantee), but in each case limited to
the obligations and liabilities of the Borrower and each other Guarantor to each
1998 Noteholder in respect of the 1998 Notes and 1998 Note Purchase Agreement.
"1998 NOTE PREMIUM OBLIGATIONS": the "Yield-Maintenance Amount" (as
such term is defined in the 1998 Note Purchase Agreement) in respect of the 1998
Notes.
"1998 NOTE PURCHASE AGREEMENT": the Note Purchase Agreement, dated as
of September 1, 1998, between the Borrower and the purchaser named in Annex 1
thereto.
"1998 NOTES": the Adjustable Rate Senior Note of the Borrower issued
pursuant to the 1998 Note Purchase Agreement.
"1999 NOTEHOLDERS": the holders of the 1999 Notes, together with their
respective successors and assigns.
"1999 NOTE OBLIGATIONS": the collective reference to the unpaid
principal of and interest on (including interest accruing at the then applicable
rate provided in the 1999 Securities Purchase Agreement after the maturity of
the 1999 Notes and interest accruing at the then applicable rate provided in the
1999 Securities Purchase Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceedings, relating to the Borrower or any guarantor of the 1999 notes,
whether or not a claim for post-filing or post-petition interest is allowed in
any such proceeding) and any "Early Payment Amounts" owing in respect of the
1999 Notes and all other obligations and liabilities of the Borrower to each
1999 Noteholder in respect of the 1999 Notes, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the 1999
Securities Purchase Agreement whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including all fees and disbursements of counsel to each 1999 Noteholder that
are required to be paid by the Borrower pursuant to the terms of the 1999
Securities Purchase Agreement), but in each case limited to the obligations and
liabilities of the Borrower to each 1999 Noteholder in respect of the 1999 Notes
and 1999 Securities Purchase Agreement.
"1999 NOTES": the Senior Subordinated Notes due February 4, 2004 of
the Borrower issued pursuant to the 1999 Securities Purchase Agreement.
"1999 NOTES SUBSIDIARY GUARANTEE": as defined in Section 2.8(d) of the
Master Restructuring Agreement.
"1999 ORIGINAL WARRANTS": the warrants originally issued in connection
with the issue and sale by the Borrower of the 1999 Notes, evidencing the right
to purchase an aggregate of 310,000 shares of common stock.
"1999 REPLACEMENT WARRANTS": as defined in Section 2.4(c) of the
Master Restructuring Agreement.
"1999 SECURITIES PURCHASE AGREEMENT": the Securities Purchase
Agreements, dated as of February 4, 1999, between the Borrower and each of the
purchasers named in Annex 1 thereto.
Appendix B to the
Master Restructuring Agreement
The covenants set forth in this Appendix B are the covenants referred
to in the LIFO Credit Agreement (as such term and all other capitalized terms
used herein without being defined are defined in MRA Appendix A), and the Master
Restructuring Agreement, and shall be applicable to (i) the LIFO Credit
Agreement to the extent provided in Sections 6 and 7 thereof, (ii) the Existing
Credit Agreement, the Senior Note Agreements and the 1999 Securities Purchase
Agreement to the extent provided in Section 2.8(d) of the Master Restructuring
Agreement and (iii) the Chase Mortgages to the extent provided in Section 2.5 of
the Master Restructuring Agreement.
SECTION 1. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, until the payment in full of the LIFO
Obligations and Existing Obligations, the Borrower shall and (except in the case
of delivery of financial information, reports and notices) shall cause each of
its Subsidiaries to:
1.1 FINANCIAL STATEMENTS. Furnish to the Collateral Agent, each LIFO
Lender and each Creditor:
(a) as soon as available, but in any event within (x) 95 days, in the
case of consolidated financial statements and the related accountants
report, or (y) 105 days, in the case of consolidating financial statements
and the related certificate of a Responsible Officer, after the end of each
fiscal year of the Borrower, copies of the consolidated and consolidating
balance sheets of the Borrower and its consolidated Subsidiaries as at the
end of such year and the related consolidated and consolidating statements
of income and retained earnings and of cash flows for such year, setting
forth in each case in comparative form the figures for the previous year,
(i) in the case of such consolidated financial statements, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by independent
certified public accountants of nationally recognized standing retained
pursuant to subsection 1.11(a) hereof and (ii) in the case of such
consolidating financial statements, certified by a Responsible Officer as
being fairly stated in all material respects;
(b) as soon as available, but in any event not later than (x) 50 days,
in the case of consolidated financial statements, or (y) 65 days, in the
case of consolidating financial statements, after the end of each of the
first three quarterly periods of each fiscal year of the Borrower, the
unaudited consolidated and consolidating balance sheets of the Borrower and
its consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated and consolidating statements of income and retained
earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments); and
(c) with respect to each fiscal month of the Borrower that is not also
the end of a fiscal quarter or the fiscal year of the Borrower, as soon as
available, but in any event not later than (i) 30 days after the end of
such month, the unaudited consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such fiscal month and the related
unaudited consolidated statements of income and stockholders' equity of the
Borrower and its Subsidiaries for such fiscal month and (ii) 40 days after
the end of such month, the related unaudited consolidated statements of
cash flows of the Borrower and its Subsidiaries for such fiscal month and,
in each case, for the portion of the fiscal year through the end of such
fiscal month, setting forth in each case in comparative form the figures
for the previous year and the figures for such period, certified by the
chief financial officer of the Borrower as being fairly stated in all
material respects (subject to normal quarter-en review and year-end audit
adjustments), PROVIDED that in the case of (x) January of each fiscal year,
the Borrower shall deliver all such financial statements within 60 days
after the end of such month and (y) February of each fiscal year, the
Borrower shall deliver all such financial statements within 45 days after
the end of such month;
All financial statements referred to in paragraphs (a), (b) and (c) of this
Subsection 1.1 shall be complete and correct in all material respects and shall
be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case may be, and
disclosed therein);
1.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Collateral Agent
and each Creditor:
(a) concurrently with the delivery of the consolidated financial
statements referred to in subsection 1.1(a) of MRA Appendix B, a letter
from the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary to
express their opinion on such financial statements no knowledge was
obtained of any Default or Event of Default except as specified in such
letter;
(b) concurrently with the delivery of the financial statements
referred to in subsections 1.1(a), (b) and (c) of MRA Appendix B, a
certificate of the president, chief executive officer or chief operating
officer of the Borrower (i) stating that, to the best of such officer's
knowledge, each Loan Party has observed or performed all of its covenants
and other agreements, and satisfied in all material respects each
condition, contained in the Operative Agreements to be observed, performed
or satisfied by it, and that such officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate, (ii)
showing in detail as of the end of the related period the figures and
calculations supporting such statement in respect of the financial
covenants to be tested at the end of the related period as set forth
subsection 2.1 of this Appendix B, and (iii) showing in detail as of the
end of the related period the calculations for monthly Consolidated EBITDA
for purposes of determining the applicable Maximum Outstanding Amount;
(c) within five days of receipt thereof, copies of all final reports
submitted to the Borrower or to any of its Subsidiaries by independent
certified public accountants in connection with each annual, interim or
special audit of the books of the Borrower or any of its Subsidiaries made
by such accountants, including, without limitation, any final comment
letter submitted by such accountants to management in connection with their
annual audit;
(d) within five days after the same are sent or made available, copies
of all financial statements, reports, notices and proxy statements sent or
made available to stockholders or the public generally by the Borrower or
any of its Subsidiaries, if any, and all regular and periodic reports and
all final registration statements and final prospectuses, if any, filed by
the Borrower or any of its Subsidiaries with any securities exchange or
with the Securities and Exchange Commission or any Governmental Authority
succeeding to any of its functions;
(e)(i) as soon as available but in any event on or before Wednesday of
each week, a certificate in the form of Exhibit A-1 hereto (a "CURRENT
ASSETS RATIO CERTIFICATE"), certified as true and correct in all material
respects by any executive officer of the Borrower setting forth the Current
Assets Ratio and the calculation thereof as of the preceding Saturday;
PROVIDED that no less frequently than once every 30 days, either the
President, Chief Executive Officer or Chief Operating Officer shall certify
as to the truth and correctness in all material respects of each Current
Assets Ratio Certificate that had not previously certified in the preceding
30-day period by any such officer and (ii) unless the Collateral Agent
agrees otherwise, on the respective dates specified in Exhibit A-2 hereto,
the information specified in such Exhibit A-2;
(f) promptly, on or before Wednesday of each week, a weekly cash flow
projection for the Borrower and its Subsidiaries for the period of five
consecutive calendar weeks beginning in the week in which the applicable
Wednesday occurs, together with a comparison of the actual cash flows of
the Borrower and its Subsidiaries for the immediately preceding week to the
most recently forecasted cash flows of the Borrower and its Subsidiaries
for such week and a discussion of any material variances therein;
(g) on or before the first day of any month, commencing with September
1999, a weekly cash flow projection for the Borrowers and its Subsidiaries
for the period of 13 consecutive weeks from the beginning of such month,
together with a report identifying and explaining any material variances
for weeks common to such projection and the immediately preceding
projection delivered pursuant hereto or otherwise; and
(h) concurrently with the delivery of the financial statements
referred to on subsections 1.1(a) and (b) of MRA Appendix B, a certificate
of the president, chief executive officer or chief operating officer of the
Borrower showing in detail as of the end of the applicable period the
calculations showing compliance with the agreements contained in subsection
2.6 of MRA Appendix B.
(i) promptly, such additional financial and other information as any
Creditor may from time to time reasonably request.
1.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy before
they become delinquent, as the case may be, all its obligations of whatever
nature, except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of the Borrower or its
Subsidiaries, as the case may be.
1.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Except as
otherwise contemplated by Schedule 1.4, continue to engage in business of the
same general type as now conducted by it and preserve, renew and keep in full
force and effect its corporate existence and take all reasonable action to
maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business except as otherwise permitted pursuant to
subsection 2.5 of MRA Appendix B or to the extent that the failure to do so
could not, in the aggregate, be reasonably expected to have a Material Adverse
Effect; and comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
1.5 MAINTENANCE OF PROPERTY; INSURANCE. Keep all property useful and
necessary in its business in good working order and condition except to the
extent that the failure do so could not, in the aggregate, be reasonably
expected to have a Material Adverse Effect; maintain the insurance on all its
Property and with respect to its businesses as required by the Collateral
Agreement; and furnish to the Collateral Agent or any Secured Creditor at the
Borrower's expense, upon such Person's written request, full information as to
the insurance carried.
1.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all material
dealings and transactions in relation to its business and activities; and permit
representatives of any Creditor to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers of the Borrower and its Subsidiaries and with its
independent certified public accountants so long as representatives of the
Borrower are given the opportunity to be present.
1.7 NOTICES. Promptly give notice to the Collateral Agent and each
Creditor of:
(a) the occurrence of any Default or Event of Default of which it is
aware;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries of which it is aware
or (ii) litigation, investigation or proceeding of which it is aware which
may exist at any time between the Borrower or any of its Subsidiaries and
any Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected to
have a Material Adverse Effect;
(c) any litigation or proceeding of which it is aware affecting the
Borrower or any of its Subsidiaries in which the amount involved is
$1,000,000 or more and not covered by insurance or in which injunctive or
similar relief is sought;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan where such
failure could reasonably be expected to have a Material Adverse Effect or
to result in the creation of a Lien, the creation of any Lien in favor of
the PBGC or a Plan or the Reorganization or Insolvency of, any
Multiemployer Plan or any withdrawal from, or termination of, any
Multiemployer Plan where such withdrawal or termination could reasonably be
expected to have a Material Adverse Effect, or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the Borrower
or any Commonly Controlled Entity or any Multiemployer Plan with respect to
the Reorganization or Insolvency of any Plan or any withdrawal from, or
termination of, any Multiemployer Plan where such withdrawal or termination
could reasonably be expected to have a Material Adverse Effect; and
(e) Any development or event of which it is aware which has had or
could reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
1.8 ENVIRONMENTAL LAWS. (a) Other than exceptions to any of the
following that would not (either individually or in the aggregate) have a
Material Adverse Effect, (i) comply with all Environmental Laws applicable to
it, and obtain, comply with and maintain any and all Environmental Permits
necessary for its operations as conducted and as planned; and (ii) take all
reasonable efforts to ensure that all of its tenants, subtenants, contractors,
subcontractors, and invitees comply with all Environmental Laws, and obtain,
comply with and maintain any and all Environmental Permits, applicable to any of
them.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could not be
reasonably expected to have a Material Adverse Effect.
(c) At any time upon the Collateral Agent's request following the
occurrence and during the continuance of an Event of Default in respect of any
Secured Obligations permit an environmental consultant whom the Collateral Agent
in its discretion designates to perform an environmental assessment (including,
without limitation: reviewing documents; interviewing knowledgeable persons; and
sampling and analyzing soil, air, surface water, groundwater, and/or other media
or building materials) in or about real property owned or leased by the Borrower
or any of its Subsidiaries, or on which operations of the Borrower or any of its
Subsidiaries otherwise take place. Such environmental assessment shall be in
form, scope, and substance reasonably satisfactory to the Collateral Agent. The
Borrower and any such Subsidiary shall cooperate fully in the conduct of such
environmental assessment, and the Borrower shall pay the costs of such
environmental assessment promptly upon written demand by the Collateral Agent.
The Collateral Agent shall have the right, but shall not have any duty, to
request and/or obtain such environmental assessment.
1.9 COLLATERAL AUDIT. Permit employees, representatives and/or agents
of the Collateral Agent, at any time upon the Collateral Agent's reasonable
request, during normal business hours, to enter into the premises of the
Borrower and any of its Subsidiaries to conduct an audit, the reasonable cost
and expense of which will be borne by the Borrower, of (a) the assets of the
Borrower and its Subsidiaries that comprise the Collateral and (b) the
Borrower's and the Guarantors' practices in the computation of the Currents
Assets Ratio.
1.10 OTHER REPORTS. Deliver to the Collateral Agent and each Creditor:
(a) on or before Friday of each week, commencing with the first Friday
after the Restructuring Effective Date, a report detailing the status of
operational and financial restructuring activities of the Borrower and its
Subsidiaries as of the end of the week preceding the week in which such report
is delivered;
(b) as soon as available, but in any event no later than 30 days after
the Restructuring Effective Date, a report, prepared with the assistance of the
Financial Advisor, detailing the Borrower's present efforts and future plans to
reduce general, selling and administrative expenses to levels appropriate for
businesses in comparable financial circumstances to the Borrower and its
Subsidiaries; and
(c) on or before December 31, 1999, a strategic plan, prepared with
the assistance of the Financial Advisor, outlining specific capital financial
measures to reduce and pay in full the Existing Senior Obligations in form and
substance reasonably satisfactory to the Required Existing Senior Creditors.
1.11 RETENTION OF PROFESSIONALS. (a) As promptly as possible, but by
no later than November 30, 1999, retain a nationally recognized certified public
accounting firm with in-house international capabilities and expertise in the
foreign jurisdictions in which the Borrower or any Subsidiary operates or files
a tax return, to audit the financial statements referred to in subsection 1.1(a)
of MRA Appendix B and to review the financial statements referred to in
subsection 1.1(b) of MRA Appendix B.
(b) Unless otherwise agreed by the Required Existing Senior Creditors,
continue at all times the retention of a Financial Advisor on terms and
conditions reasonably satisfactory to the Required Existing Senior Creditors.
1.12 BOARD OF DIRECTORS. Exercise its best efforts to elect two
independent directors to its Board of Directors by January 15, 2000; PROVIDED
that if the Borrower shall not have elected two independent directors to its
Board of Directors within 90 days after the Restructuring Effective Date, the
Borrower shall promptly retain, for the purpose of assisting the Borrower in
effectuating such election by January 15, 2000 a reputable consulting firm
specializing in the identification and retention of professional independent
directors. For purposes of this subsection, the term "independent director"
shall mean a natural Person who does not have a material business, social,
familial or economic relationship with the Chief Executive Officer, the Chief
Operating Officer or the Chief Financial Officer of the Borrower other than his
or her relationship as an independent director.
1.13 POST CLOSING COLLATERAL; ADDITIONAL COLLATERAL, ETC. (a) (i)
Deliver to the Collateral Agent as soon as available, but in any event by
October 15, 1999, (A) an as-is appraisal of the Xxxx Xxxx Property, prepared by
an appraiser that is a member of the American Institute of Real Estate
Appraisers and has at least ten (10) years' experience in evaluating and
appraising properties similar in type and geographic location to the Xxxx Xxxx
Property, which appraisal shall meet the minimum appraisal standards for
national banks promulgated by the Comptroller of the Currency pursuant to Title
XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989,
as amended, (B) a first priority deed of trust or mortgage, as the case may be
(subordinate only to the Chase Mortgages and any other Permitted Liens) in favor
of the Collateral Agent, for the benefit of the Secured Creditors, covering the
Xxxx Xxxx Property, in form for recording and otherwise in form and substance
reasonably satisfactory to the Collateral Agent and (C) title and extended
coverage insurance covering the Xxxx Xxxx Property in an amount at least equal
to the purchase price of such real estate and the cost of the improvements
thereto (or such other amount as shall be reasonably specified by the Collateral
Agent) and (ii) use its best efforts to deliver by October 15, 1999 and in any
case deliver no later than November 15, 1999, to the Collateral Agent (A) a
current ALTA survey of the Xxxx Xxxx Property, together with a surveyor's
certificate, (B) any consents or estoppels deemed necessary or advisable by the
Agent in connection with such Mortgage, (C) a Abring-down or update of the title
insurance referred to above to remove any exceptions relating to the surveys,
each of the foregoing in form and substance reasonably satisfactory to the
Collateral Agent and (D) legal opinions relating to the matters described in the
this paragraph, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Collateral Agent.
(b) Cooperate with the Collateral Agent in the formulation and
development of a cash management system, to be implemented no later than October
1, 1999, which cash management system shall be memorialized in a cash collateral
and administration agreement, in a form reasonably satisfactory to the Borrower
and the Collateral Agent, and provide for (i) the collection of domestic
accounts receivable in bank accounts maintained with the Collateral Agent or in
an account or accounts maintained with other banks and (ii) the concentration of
available funds on a daily basis in an account or accounts maintained by the
Collateral Agent; in connection with such cash management system, deliver to the
Collateral Agent as soon as available, but in any event by October 15, 1999, (x)
lockbox agreements, in a form reasonably satisfactory to the Collateral Agent,
with respect to the lockbox accounts set forth on Part A of Schedule 1.13(b)
hereto, duly executed by the respective bank(s) at which such accounts are
maintained and the Borrower or applicable Loan Party specified in relation to
each such lockbox account on such Schedule 1.13(b), (y) blocked account
agreements, in a form reasonably satisfactory to the Collateral Agent, with
respect to the depositary accounts among the bank accounts set forth on Part B
of Schedule 1.13(b) hereto, duly executed by the respective bank(s) at which
such accounts are maintained and the Borrower or applicable Loan Party specified
in relation to each such bank account on such Schedule 1.13(b) and (z) the cash
collateral and administration agreement referred to above;
(c) As soon as available but in any event by October 1, 1999, deliver
to the Collateral Agent Assumption Agreements relating to each of the LIFO
Guarantee and the Master Restructuring Agreement, duly executed by each Italian
Subsidiary, in a form satisfactory to the Collateral Agent, and opinions, in a
form and from counsel reasonably satisfactory to the Collateral Agent, relating
to the validity and enforceability of the obligations under the LIFO Guarantee
of each Foreign Subsidiary that executed and delivered the LIFO Guarantee on the
Restructuring Effective Date and each Italian Subsidiary.
(d) As soon as available but in any event by October 15, 1999:
(i) With respect to Far East, (A) deliver to the Collateral Agent, a
mortgage of shares or other comparable agreement with respect to 65% of
each class of Capital Stock of Far East, duly executed and delivered by the
Borrower and any Domestic Subsidiary that owns any such Capital Stock, in a
form or forms satisfactory to the Collateral Agent, (B) take all actions
reasonably necessary or advisable to grant the Collateral Agent, for the
benefit of the Secured Creditors, perfected Liens on such Capital Stock,
including the issuance of share certificates representing such Capital
Stock in the name of the Collateral Agent or its nominee and the delivery
of copies of the shareholder registry of Far East showing the Collateral
Agent or its nominee as the registered owner of such pledged shares and (C)
deliver to the Collateral Agent opinions relating to the enforceability of
any such mortgage of shares or other agreement and the perfected status and
priority of such Liens, which opinions shall be in form and substance and
from counsel, reasonably satisfactory to the Collateral Agent;
(ii) With respect to Recoton (UK) Limited, (A) deliver to the
Collateral Agent, a mortgage of shares or other comparable agreement with
respect to 65% of each class of Capital Stock of Recoton (UK) Limited, duly
executed and delivered by the Borrower and any Domestic Subsidiary that
owns any such Capital Stock, in a form or forms satisfactory to the
Collateral Agent, (B) take all actions reasonably necessary or advisable to
grant the Collateral Agent, for the benefit of the Secured Creditors,
perfected Liens on such Capital Stock, including the issuance of share
certificates representing such Capital Stock in the name of the Collateral
Agent or its nominee and the delivery of copies of the shareholder registry
of each such Subsidiary showing the Collateral Agent or its nominee as the
registered owner of such pledged shares and (C) deliver to the Collateral
Agent opinions relating to the enforceability of any such mortgage of
shares or other agreement and the perfected status and priority of such
Liens, which opinions shall be in form and substance and from counsel,
reasonably satisfactory to the Collateral Agent;
(iii) with respect to each German Subsidiary, Italian Subsidiary and
Canadian Subsidiary that is a Foreign Subsidiary owned by the Borrower or a
Domestic Subsidiary, (A) deliver to the Collateral Agent, a pledge
agreement or comparable agreement with respect to 100% of each class of
Capital Stock of such Foreign Subsidiary owned by the Borrower or a
Domestic Subsidiary, duly executed and delivered by such Loan Party, in a
form satisfactory to the Collateral Agent, (B) take all actions reasonably
necessary or advisable to grant the Collateral Agent, for the benefit of
the Secured Creditors, perfected Liens in such Capital Stock including, to
the extent applicable, the issuance of share certificates representing such
Capital Stock in the name of the Collateral Agent or its nominee and the
delivery of copies of the shareholder registry of each such Subsidiary
showing the Collateral Agent or its nominee as the registered owner of such
pledged shares and (C) deliver to the Collateral Agent opinions relating to
the validity and enforceability of such pledge or comparable agreements and
the perfected status and priority of such Liens, which opinions shall be in
form and substance and from counsel reasonably satisfactory to the
Collateral Agent PROVIDED that in the case of any such Subsidiary that is
an Italian Subsidiary, the obligations of the Borrower under clause (B)
above shall be satisfied upon the delivery of the pledge or comparable
agreement with respect to the Capital Stock of such Italian Subsidiary to
the appropriate Italian Governmental Authority for recordation under
applicable Italian law; and
(iv) with respect to each Canadian Subsidiary, (A) deliver duly
executed agreements that are valid and enforceable under the laws under
which each such Canadian Subsidiary is organized granting the Collateral
Agent, for the benefit of the Secured Creditors, perfected Liens (subject
to Permitted Liens) on substantially all of the tangible and intangible
assets of such Canadian Subsidiary, (B) to the extent possible under the
laws of each applicable jurisdiction, take all actions reasonably necessary
or advisable to perfect such Liens in Canada and (C) deliver to the
Collateral Agent opinions relating to the validity and enforceability of
such pledge or comparable agreements and the perfected status and priority
of such Liens, which opinions shall be in form and substance and from
counsel, reasonably satisfactory to the Collateral Agent.
(e) With respect to any assets acquired after the Restructuring
Effective Date by the Borrower or any other domestic Loan Party (other than (x)
assets covered by the (A) after-acquired property clauses of the Collateral
Agreement to which the Person acquiring such assets is a party and (B) the
Uniform Commercial Code financing statements already on file with respect to
such Person, (y) any assets described in paragraph (f), (g), (h) or (i) below
and (z) assets with an aggregate value not to exceed $500,000 with respect to
which a security interest cannot be perfected by filing UCC-1 financing
statements), promptly (i) execute and deliver to the Collateral Agent such
amendments to any Operative Agreements or such other documents as the Collateral
Agent, the Required LIFO Lenders or the Required Existing Senior Creditors deem
necessary or advisable in order to grant to the Collateral Agent, for the
benefit of the Secured Creditors, perfected Liens on such assets, (ii) take all
actions reasonably necessary or advisable to grant to the Collateral Agent, for
the benefit of the Secured Creditors, perfected first and second priority Liens
in such assets, prior to all other Liens, including the filing of UCC financing
statements in such jurisdictions as may be required by the appropriate Security
Document or by law or as may be requested by the Collateral Agent and (iii) if
reasonably requested by the Collateral Agent, the Required LIFO Lenders or the
Required Existing Senior Creditors, deliver to the Collateral Agent legal
opinions relating to the matters described in the preceding clauses (i) and
(ii), which opinions shall be in form and substance reasonably consistent with
the opinion delivered on the Restructuring Effective Date as to relevant
matters, and from counsel reasonably satisfactory to the Collateral Agent and
any requesting LIFO Lenders and/or Existing Senior Creditors.
(f) With respect to any fee interest in any real estate having a value
(together with improvements thereof), of at least $100,000 in each case acquired
after the Restructuring Effective Date by the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver a first priority mortgage or deed
of trust, as the case may be (subordinate only to Permitted Liens), in favor of
the Collateral Agent, for the benefit of the Secured Creditors, covering such
real estate, in form and substance reasonably satisfactory to the Collateral
Agent, (ii) if requested by the Collateral Agent or the Required Existing Senior
Creditors, provide the Collateral Agent with (x) title and extended coverage
insurance covering such real estate in an amount at least equal to the purchase
price of such real estate (or such other amount as shall be reasonably specified
by the Collateral Agent) as well as a current ALTA survey thereof, together with
a surveyor's certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Collateral Agent in connection with such mortgage
or deed of trust, each of the foregoing in form and substance (x) reasonably
satisfactory to the Collateral Agent and (iii) if requested by the Collateral
Agent, the Required LIFO Lenders or the Required Existing Senior Creditors,
deliver to the Collateral Agent legal opinions relating to the matters described
in the preceding clauses (i) and (ii),which opinions shall be in form and
substance reasonably consistent with the opinion delivered on the Restructuring
Effective Date as to relevant matters, and from counsel reasonably satisfactory
to the Collateral Agent and any requesting LIFO Lenders and/or Existing Senior
Creditors.
(g) With respect to any new Subsidiary other than an Excluded Foreign
Subsidiary, a German Subsidiary or an Italian Subsidiary created or acquired
after the Restructuring Effective Date by the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Collateral Agent such
amendments to any Operative Agreement or any Security Document that the
Collateral Agent, the Required LIFO Lenders or the Required Existing Senior
Creditors deem necessary or advisable in order to grant to the Collateral Agent,
for the benefit of the Secured Creditors, perfected Liens on the Capital Stock
of such new Subsidiary which is owned by the Borrower or any of its
Subsidiaries, (ii) deliver to the Collateral Agent the certificates representing
such Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of the Borrower or such Subsidiary, as
the case may be, or take such other actions as prescribed under the law under
which the issuer of such Capital Stock is organized to perfect the Liens granted
under clause (i) above, (iii) cause such new Subsidiary (A) to become a party to
the Guarantee, the Existing Guarantees, the Collateral Agreement and any other
Security Document (or comparable forms of agreement under local law to the
extent legal) and (B) to take such actions necessary or advisable to grant to
the Collateral Agent, for the benefit of the Secured Creditors, perfected Liens
in the Collateral described in the Collateral Agreement with respect to such new
Subsidiary, including, without limitation, the filing of UCC financing
statements or comparable filings or registrations in such jurisdictions as may
be required by the Collateral Agreement or by law or as may be requested by the
Collateral Agent, and (iv) if requested by the Collateral Agent, the Required
LIFO Lenders or the Required Existing Senior Creditors, deliver to the
Collateral Agent legal opinions relating to the matters described in the
preceding clauses (i), (ii) and, (iii) , which opinions shall be in form and
substance reasonably consistent with the opinion delivered on the Restructuring
Effective Date as to relevant matters, and from counsel reasonably satisfactory
to the Collateral Agent and any requesting LIFO Lenders and/or Existing Senior
Creditors.
(h) With respect to any new First Tier Excluded Foreign Subsidiary
created or acquired after the Restructuring Effective Date by the Borrower or
any of its Domestic Subsidiaries, promptly (i) execute and deliver to the
Collateral Agent such amendments to the Collateral Agreement as the Collateral
Agent or the Required Existing Senior Creditors deem necessary or advisable in
order to grant to the Collateral Agent, for the benefit of the Secured
Creditors, perfected Liens in the Capital Stock of such new Foreign Subsidiary
which is owned by the Borrower or any of its Domestic Subsidiaries (provided
that in no event shall more than 65% of each class of the Capital Stock of any
such new Foreign Subsidiary be required to be so pledged), (ii) deliver to the
Collateral Agent the certificates representing such Capital Stock, together with
undated stock powers, in blank, executed and delivered by a duly authorized
officer of the Borrower or such Subsidiary, as the case may be, and otherwise
take all actions reasonably necessary or advisable to grant to the Collateral
Agent, for the benefit of the Secured Creditors, perfected Liens on such Capital
Stock and (iii) if requested by the Collateral Agent or the Required Existing
Senior Creditors, deliver to the Collateral Agent legal opinions relating to the
matters described in the preceding clauses (i) and (ii), which opinions shall be
in form and substance reasonably consistent with the opinion delivered on the
Restructuring Effective Date as to relevant matters, and from counsel reasonably
satisfactory to the Collateral Agent and any requesting LIFO Lenders and/or
Existing Senior Creditors.
(i) With respect to each German or Italian Subsidiary created or
acquired after the Restructuring Effective Date, promptly (i) deliver to the
Collateral Agent, a pledge agreement with respect to 100% of the Capital Stock
of such new Subsidiary owned by the Borrower or a Domestic Subsidiary, duly
executed and delivered by such Loan Party, in a form or forms satisfactory to
the Collateral Agent, customary under applicable law, (ii) cause such new
Subsidiary(A) to become a party to the Guarantee, the Existing Guarantees and
the Master Restructuring Agreement and (B) to take such actions reasonably
necessary or advisable to grant the Collateral Agent, for the benefit of the
Secured Creditors, perfected Liens on such Capital Stock and (iii) deliver to
the Collateral Agent opinions relating to the validity and enforceability of the
obligations of such new Subsidiary under the Guarantee, the Existing Guarantees
and any such pledge agreements and the Master Restructuring Agreement, which
opinions shall be in form and substance reasonably consistent with the opinion
delivered on the Restructuring Effective Date as to relevant matters, and from
counsel reasonably satisfactory to the Collateral Agent and any requesting LIFO
Lenders and/or Existing Senior Creditors.
1.14 FURTHER ASSURANCES; SECURITY INTERESTS. Upon the reasonable
request of the Collateral Agent, promptly perform or cause to be performed any
and all acts and execute or cause to be executed any and all documents
(including, without limitation, the execution, amendment or supplementation of
any financing statement and continuation statement or other statement) for
filing under the provisions of the UCC and the rules and regulations thereunder,
or any other statute, rule or regulation of any applicable foreign, federal,
state or local jurisdiction, which are desirable, from time to time, in order to
grant and maintain in favor of the Secured Creditors as beneficiaries thereof
the Liens in the Collateral contemplated by the Operative Agreements, subject
only to Permitted Liens.
SECTION 2. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the LIFO Commitments
remain in effect, or any LIFO Obligations or Existing Obligations remains
outstanding and unpaid to the Borrower shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly:
2.1 FINANCIAL CONDITION COVENANTS.
(a) MINIMUM CURRENT ASSETS RATIO. Permit the Current Assets Ratio, at
any time during any period set forth on Schedule 2.1(a) hereto, to be less than
the amount set forth opposite such period.
(b) MINIMUM CUMULATIVE EBITDA. Permit Consolidated EBITDA, as of the
end of any period set forth on Schedule 2.1(b) hereto to be less than the amount
set forth opposite such period.
(c) MINIMUM NON-CUMULATIVE EBITDA. Permit Consolidated EBITDA as of
the end of any fiscal quarter set forth on Schedule 2.1(c) hereto to be less
than the amount set forth opposite such fiscal quarter.
(d) MAXIMUM CAPITAL EXPENDITURES. Permit Capital Expenditures during
any period set forth on Schedule 2.1(d) hereto to exceed than the amount set
forth opposite such period.
(e) MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Permit Consolidated
Tangible Net Worth of the Borrower and its Consolidated Subsidiaries to be less
than (i) $65,000,000 as of the end of any fiscal month ending during the period
from the Restructuring Effective Date to and including December 30, 2000 and
(ii) $85,000,000 as of the end of any fiscal month thereafter.
2.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of the Borrower under (i) the LIFO Credit Agreement
in a maximum principal amount not to exceed $50,000,000, (ii) the Existing
Agreements set forth on Schedule 2.2(a) hereto in the respective maximum
principal amounts set forth opposite each such Existing Agreement on
Schedule 2.2(a) hereto and (iii) any refinancing, renewal or extension of
both the LIFO Commitments and the Existing Senior Obligations (but not one
without the other) so long as the maximum principal amount available to be
borrowed under any such refinancing, renewal or extension of the LIFO
Commitments and the Existing Senior Obligations collectively does not
exceed $275,000,000;
(b) Indebtedness of (i) the Borrower to any Guarantor, (ii) any
Subsidiary to the Borrower or any other Guarantor, (iii) any Subsidiary
that is not a Guarantor to any other Subsidiary that is not a Guarantor and
(iv) the Borrower or any Guarantor to any Subsidiary that is not a
Guarantor incurred after the Restructuring Effective Date in an aggregate
amount not to exceed $100,000 at any one time outstanding;
(c) Indebtedness of the Borrower and any of its Subsidiaries incurred
to finance the acquisition of fixed or capital assets (whether pursuant to
a loan, a Financing Lease or otherwise) in a principal amount not exceeding
100% of the purchase price of such asset, which Indebtedness (i) was
outstanding on the Restructuring Effective Date or (ii) is incurred
thereafter in an aggregate amount not to exceed $500,000 at any one time
outstanding;
(d) Indebtedness outstanding on the date hereof and listed on Schedule
2.2(d);
(e) Indebtedness constituting amounts owing in respect of goods and
services purchased pursuant to corporate credit cards in an aggregate
amount for the Borrower and its Subsidiaries not to exceed $50,000 at any
one time outstanding;
(f) Indebtedness of the Borrower and its Subsidiaries in respect of
letters of credit issued in connection with their Hong Kong operations
and/or in respect of trust receipt financing obtained in connection with
such Hong Kong operations other than under the LIFO Credit Agreement or the
Existing Credit Agreement; PROVIDED that (i) no such Indebtedness shall
have a tenor of more than 120 days and (ii) the aggregate amount of all
such Indebtedness of the Borrower and its Subsidiaries shall not at any
time exceed the Hong Kong dollar equivalent of $5,400,000 and (iii) the
incurrence of any such Indebtedness would not cause the Aggregate L/C
Obligations at the time of such incurrence to exceed $24,000,000;
(g) Indebtedness of the Borrower and its Subsidiaries in an aggregate
amount for the Borrower and its Subsidiaries not to exceed $1,000,000 at
any one time outstanding in respect of overdrafts outstanding for not more
than 15 days;
(h) Indebtedness of the Borrower in an amount not to exceed
$14,000,000 plus accrued interest evidenced by a promissory note payable to
the United States of America or an agency thereof delivered in settlement
of obligations of the Borrower arising out of the customs investigation
discussed in the Borrower's Form 10-Q for the period ended June 30, 1999;
(i) Indebtedness of the Borrower and its Subsidiaries in respect of
letters of credit issued in connection with their German operations other
than under the LIFO Credit Agreement or the Existing Credit Agreement;
PROVIDED that (i) no such Indebtedness shall have a tenor of more than 120
days, (ii) the aggregate amount of all such Indebtedness of the Borrower
and its Subsidiaries shall not at any time exceed 4,750,000 Deutsche Marks
and (iii) the incurrence of any such Indebtedness would not cause the
Aggregate L/C Obligations at the time of such incurrence to exceed
$24,000,000; and
(j) Indebtedness of the Borrower and its Subsidiaries in respect of
drafts received from customers that are discounted on a full recourse basis
by the Borrower or any Subsidiaries, PROVIDED that (i) no such discounted
draft shall have a maturity of more than 180 days and (ii) the aggregate
amount of all such Indebtedness in respect of discounted drafts shall not
at any time exceed 16,500,000 Deutsche Marks.
2.3 LIMITATION ON LIENS. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes, assessments and governmental charges or levies
not yet due or which are being contested in good faith by appropriate
proceedings, PROVIDED that adequate reserves with respect thereto are
maintained on the books of the Borrower or the affected Subsidiaries, as
the case may be, in conformity with GAAP;
(b) landlords', carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 20 days or which are being
contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule 2.3,
securing Indebtedness permitted by subsections 2.2(c) or 2.2(d), PROVIDED
that such Liens are not to be renewed, extended, amended or refinanced and
PROVIDED FURTHER that no such Lien is spread to cover any additional
Property after the Restructuring Effective Date and that the amount of
Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower and its Subsidiaries
permitted by subsection 2.2(c) incurred to finance the acquisition of fixed
or capital assets, PROVIDED that (i) such Liens shall be created in the
ordinary course of business and substantially simultaneously with the
acquisition of such fixed or capital assets, (ii) such Liens do not at any
time encumber any Property other than the Property financed by such
Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased and (iv) the principal amount of Indebtedness secured by any such
Lien shall at no time exceed 100% of the original purchase price of such
Property at the time it was acquired;
(h) Liens on the property or assets of a Person which becomes a
Subsidiary after the date of this Agreement or on property or assets
acquired by the Borrower or any Subsidiary after the date of this
Agreement, in each case securing Indebtedness permitted by subsection
2.2(c) or (d) of this MRA Appendix B, PROVIDED that (i) such Liens exist at
the time such Person becomes a Subsidiary or such property or assets are
acquired, as the case may be, and are not created in anticipation thereof
and (ii) any such Lien is not extended to cover any property or assets of
such Person or any other property or assets of the Borrower or such
Subsidiary, as the case may be, after the time such Person becomes a
Subsidiary or such property or assets are acquired, as the case may be;
(i) Liens arising in respect of (i) any judgment arising from the
customs investigation referred to in subsection 2.2 (h), but only to the
extent credited against the Indebtedness discussed in such subsection, and
(ii) other judgments in an aggregate amount of less than $3,000,000 at any
one time outstanding in circumstances not constituting a Default or Event
of Default;
(j) attachments, judgments, or other similar Liens arising in
connection with court proceedings, provided that the execution or other
enforcement of such Liens is effectively stayed by being contested in good
faith by appropriate proceedings;
(k) Liens on goods (and the documents of title related thereto) the
purchase price of which is financed by a letter of credit issued for the
account of the Borrower or its Subsidiaries, PROVIDED that such Lien
secures only the obligations of the Borrower or such Subsidiaries in
respect of such letter of credit;
(l) Liens created pursuant to the Security Documents;
(m) Liens on deposits on other property of the Borrower or any
Subsidiary to secure up to $500,000 of insurance obligations incurred in
the ordinary course of business;
(n) Liens on the inventory of the Borrowers or any of its Subsidiaries
that is consigned in an aggregate amount not to exceed $500,000 at any one
time outstanding; and
(o) Liens against the interest of the Borrower or any Subsidiary in
real property arising out of the lease or sublease of such real property,
but only to the extent that the lease or sublease constitutes an
"encumbrance" as such term is used in the definition of the term "Lien".
2.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations of the Borrower in existence on the date
hereof and listed on Schedule 2.4;
(b) guarantees made in the ordinary course of its business by the
Borrower of obligations of any of its Subsidiaries, and guarantees made in
the ordinary course of its business by any Guarantor of obligations of the
Borrower or any Subsidiary of the Borrower, which obligations are not
prohibited by this Agreement;
(c) the Guarantees;
(d) Guarantee Obligations of the Borrower and its Subsidiaries in
respect of Indebtedness permitted under subsection 2.2(j); and
(e) Guarantee Obligations under the 1999 Notes Subsidiary Guaranty to
the extent such 1999 Notes Subsidiary Guaranty is consistent with Section
2.8(d) of the Master Restructuring Agreement.
2.5 LIMITATION ON FUNDAMENTAL CHANGES AND SALES OF ASSETS. Except as
contemplated by Schedule 1.4, enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or, except if such transaction is in the ordinary
course of business, convey, sell, lease, assign, transfer or otherwise dispose
of its property, business or assets (including the Capital Stock of the Borrower
or any of its Subsidiaries), or make any material change in its present method
of conducting business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (PROVIDED that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned
Subsidiaries of the Borrower that are Guarantors (PROVIDED that the wholly
owned Subsidiary, or Subsidiaries that are Guarantors shall be the
continuing or surviving corporation);
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or any other wholly owned Subsidiary of the
Borrower that is a Guarantor;
(c) the sale or other Disposition of any property in the ordinary
course of business;
(d) the sale or discount without recourse, in the ordinary course of
business, of accounts receivable arising in the ordinary course of business
in connection with the compromise or collection thereof;
(e) the sale or other Disposition of worn out, obsolete or surplus
property so long as the Net Cash Proceeds of any such sale or Disposition
are applied to the prepayment of the LIFO Loans and the reduction of the
LIFO Commitments or, with the consent of all of the LIFO Lenders, to the
reduction of the Existing Senior Obligations when the aggregate Net Cash
Proceeds of such sales equal $1,000,000 and each whole multiple thereof,
PROVIDED that to the extent that the Borrower reinvests the Net Cash
Proceeds from the Disposition of worn out or obsolete fixed or capital
assets in replacement fixed or capital assets within 45 days following any
such Disposition such Net Cash Proceeds shall not be counted toward the
$1,000,000 baskets referred to above (it being understood that any such
reinvestments shall nonetheless constitute Capital Expenditures);
(f) the issuance of shares of Capital Stock of the Borrower or any
Subsidiary (i) upon the exercise of any warrant, option or rights (A)
outstanding on the Restructuring Effective Date or issued in connection
with the LIFO Credit Agreement or the transactions contemplated by the
Master Restructuring Agreement or (B) issued after the Restructuring
Effective Date under clause (g) of this subsection or (ii) for Fair Market
Value as of the date of such issuance; PROVIDED that, in the case of clause
(ii), the Net Cash Proceeds thereof are applied to the prepayment of the
LIFO Obligations and the reduction of the LIFO Commitment, or with the
consent of all of the LIFO Lenders, the reduction of the Existing Senior
Obligations;
(g) The issuance of shares of Capital Stock of the Borrower and the
issuance of warrants, options or rights to acquire such Capital Stock to
employees, former employees or directors of, or consultants to, the
Borrower or any of its Subsidiaries under shareholder approved plans or
which were outstanding on the Restructuring Effective Date; and
(h) form or create new Subsidiaries so long as the applicable Loan
Party and such new Subsidiary complies with subsection 1.13 of MRA Appendix
B.
2.6 LIMITATION ON NON-DOMESTIC ASSETS. (a) Permit at any time (i) the
aggregate Total Tangible Assets of the Far East Subsidiaries to be greater than
$35,000,000 or (ii) the aggregate cash on hand of the Far East Subsidiaries to
exceed for a period of five consecutive Business Days $3,000,000.
(b) Permit the aggregate Total Tangible Assets of the PRC
Subsidiaries, taken as a whole, to be greater than $22,000,000 or (ii) at any
time the aggregate cash on hand of the PRC Subsidiaries to exceed $500,000.
(c) Permit the aggregate Total Tangible Assets of the Borrower and any
Domestic Subsidiary located outside the United States to exceed (i) $11,000,000
at any time prior to January 1, 2000 and (ii) $5,000,000 at any time thereafter.
(d) Permit the German Subsidiaries, taken as a whole, to have Total
Tangible Assets in excess of $55,000,000 at any time.
(e) Permit Recoton (UK), a United Kingdom corporation, to have Total
Tangible Assets in excess of $25,000,000 at any time.
(f) Permit the Italian Subsidiaries, taken as a whole, to have Total
Tangible Assets in excess of $17,500,000 at any time.
2.7 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any other Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Borrower or its
Subsidiaries in an aggregate amount not to exceed $2,000,000 at any one
time outstanding;
(d) investments by the Borrower in its Subsidiaries and investments by
such Subsidiaries in the Borrower and in other Subsidiaries, which
investments (i) are in existence as of the Restructuring Effective Date,
(ii) made thereafter to the extent permitted under subsection 2.2(b) of MRA
Appendix B or (iii) constitute investments in Guarantors that are Domestic
Subsidiaries;
(e) the advance by the Borrower to STD Manufacturing Limited not to
exceed $4,000,000 made within ten days of the Restructuring Effective Date;
(f) loans and advances to suppliers in the ordinary course of business
not to exceed $2,000,000 at any one time outstanding, PROVIDED that no such
loan or advance shall be outstanding for more than 180 days; and --------
(g) to the extent otherwise prohibited by this subsection 2.7, amounts
on deposit in the Collateral Accounts.
2.8 LIMITATION ON DIVIDENDS. Declare or pay any dividend (other than
dividends payable solely in Capital Stock of the Person making such dividend)
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of Capital Stock of the Borrower
or any Subsidiary or any warrants or options to purchase any such Capital Stock,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Borrower or any Subsidiary (collectively, "RESTRICTED
PAYMENTS"), except that any Subsidiary may make Restricted Payments to the
Borrower and to any other Subsidiary if such other Subsidiary owns 100% of each
class of Capital Stock of the first Subsidiary.
2.9 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) not prohibited by this Agreement, (b) in the ordinary
course of the Borrower's or such Subsidiary's business and (c) upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate.
2.10 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year of
the Borrower to end on a day other than December 31.
2.11 LIMITATION ON LINES OF BUSINESS. Engage in any material business
other than those in or directly related to the consumer electronics industry.
2.12 LIMITATION ON RAC-FSC ASSETS. Permit RAC-FSC to have any material
assets.
2.13 CASH MANAGEMENT; BANK ACCOUNTS. At any time after October 1, 1999
or October 15, 1999, as applicable (a) fail to maintain the system of cash
management developed and implemented in accordance with subsection 1.13(b) of
MRA Appendix B and (b) maintain more than $2,000,000 of cash in domestic bank
accounts with banks that are not party to a duly executed lockbox or blocked
account agreement, as applicable, that has been delivered, and is in a form
reasonably satisfactory, to the Collateral Agent.
2.14 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT
INSTRUMENTS, ETC. (a) Make any optional payment, prepayment, repurchase or
redemption of or otherwise defease or segregate funds with respect to any
Indebtedness (other than the Secured Obligations), and (b) amend, modify or
change, or consent or agree to any amendment, modification or change to, any of
the terms of any Indebtedness subordinated to the LIFO Obligations (other than
any such amendment, modification or change which would extend the maturity or
reduce the amount of any payment of principal thereof or which would reduce the
rate or extend the date for payment of interest thereon).
SCHEDULE 2.1(a)
to MRA Appendix B
-------------------------------------------------------------------------------
Minimum Current Assets Ratio (000's)
-------------------------------------------------------------------------------
Month Amount
-------------------------------------------------------------------------------
August 1999 1.25:1
-------------------------------------------------------------------------------
September 1999 1.25:1
-------------------------------------------------------------------------------
October 1999 1.25:1
-------------------------------------------------------------------------------
November 1999 1.25:1
-------------------------------------------------------------------------------
December 1999 1.25:1
-------------------------------------------------------------------------------
January 2000 1.25:1
-------------------------------------------------------------------------------
February 2000 1.25:1
-------------------------------------------------------------------------------
March 2000 1.20:1
-------------------------------------------------------------------------------
April 2000 1.20:1
-------------------------------------------------------------------------------
May 2000 1.20:1
-------------------------------------------------------------------------------
June 2000 1.25:1
-------------------------------------------------------------------------------
July 2000 1.25:1
-------------------------------------------------------------------------------
August 2000 1.25:1
-------------------------------------------------------------------------------
September 2000 1.25:1
-------------------------------------------------------------------------------
October 2000 1.25:1
-------------------------------------------------------------------------------
November 2000 1.25:1
-------------------------------------------------------------------------------
December 2000 1.25:1
-------------------------------------------------------------------------------
January 2001 1.25:1
-------------------------------------------------------------------------------
February 2001 1.25:1
-------------------------------------------------------------------------------
March 2001 1.25:1
-------------------------------------------------------------------------------
April 2001 1.25:1
-------------------------------------------------------------------------------
May 2001 1.25:1
-------------------------------------------------------------------------------
SCHEDULE 2.1(b)
to MRA Appendix B
-------------------------------------------------------------------------------
Minimum Cumulative Consolidated EBITDA (000's)
-------------------------------------------------------------------------------
Period Amount
-------------------------------------------------------------------------------
July 1, 1999 - September 30, 1999 $ 5,700
-------------------------------------------------------------------------------
July 1, 1999 - December 31, 1999 $27,370
-------------------------------------------------------------------------------
July 1, 1999 - March 31, 2000 $32,700
-------------------------------------------------------------------------------
July 1, 1999- June 30, 2000 $34,900
-------------------------------------------------------------------------------
October 1, 1999- September 30, 2000 $44,300
-------------------------------------------------------------------------------
January 1, 2000 - December 31, 2000 $46,000
-------------------------------------------------------------------------------
April 1, 2000 - March 31, 2001 $50,400
-------------------------------------------------------------------------------
SCHEDULE 2.1(c)
to MRA Appendix B
-------------------------------------------------------------------------------
Minimum Non-Cumulative Consolidated EBITDA (000's)
-------------------------------------------------------------------------------
Fiscal Quarter Ending Amount
------------------------------------------------------------------------
September 30, 1999 $5,700
------------------------------------------------------------------------
December 31, 1999 $19,400
------------------------------------------------------------------------
March 31, 2000 $2,100
------------------------------------------------------------------------
June 30, 2000 $1,000
------------------------------------------------------------------------
September 30, 2000 $12,900
------------------------------------------------------------------------
December 31, 2000 $25,600
------------------------------------------------------------------------
March 31, 2001 $6,900
------------------------------------------------------------------------
SCHEDULE 2.1(d)
to MRA Appendix B
---------------------------------------------------------------------------
Maximum Capital Expenditures (000's)
---------------------------------------------------------------------------
Period Amount
---------------------------------------------------------------------------
September 1, 1999 -September 30, 1999 $2,500
---------------------------------------------------------------------------
September 1, 1999- December 31, 1999 $6,000
---------------------------------------------------------------------------
January 1, 2000 - March 31, 2000 $10,000
---------------------------------------------------------------------------
January 1, 2000 - June 30, 2000 $12,000
---------------------------------------------------------------------------
January 1, 2000 - September 30, 2000 $12,000
---------------------------------------------------------------------------
January 1, 2000- December 31, 2000 $12,000
---------------------------------------------------------------------------
January 1, 2001 -March 31, 2001 $5,000
---------------------------------------------------------------------------
SCHEDULE 2.2(a)
to MRA Appendix B
Indebtedness under Existing Agreements
--------------------------------------------------------------------------------
Existing Agreement Principal Amount Outstanding on
Restructuring Effective Date
--------------------------------------------------------------------------------
Existing Credit Agreement $101,700,505
--------------------------------------------------------------------------------
1997 Note Purchase Agreement $75,000,000
--------------------------------------------------------------------------------
1998 Note Purchase Agreement $25,000,000
--------------------------------------------------------------------------------
1999 Securities Purchase Agreement $35,000,000
--------------------------------------------------------------------------------
Appendix C to the
Master Restructuring Agreement
The following Events of Default are applicable to the LIFO Credit
Agreement (as such term and all other capitalized terms used herein without
being defined are defined in MRA Appendix A) and the Master Restructuring
Agreement, and shall be applicable to (i) the LIFO Credit Agreement to the
extent provided in Section 8 thereof, (ii) the Existing Agreements as provided
in Section 2.8(f) of the Master Restructuring Agreement and (iii) the Chase
Mortgages to the extent provided in Section 2.5 of the Master Restructuring
Agreement.
UNIFORM EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) As to the holder of any Obligations, the Borrower shall fail to
pay any principal of any Obligation owed to such holder when due in
accordance with the terms thereof; or the Borrower shall fail to pay any
interest on any Obligation, or any other amount payable with respect
thereto, (x) in the case of LIFO Obligations or Existing Senior Obligations
or Premium Obligations, within five days and (y) in the case of the 1999
Note Obligations, within 15 days after any such interest or other amount
becomes due in accordance with the terms of the Operative Agreements
governing such holder's Obligations; or
(b) Any representation or warranty made or deemed made by the Borrower
or any other Loan Party in the Master Restructuring Agreement, the LIFO
Credit Agreement or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with the Master Restructuring Agreement,
the LIFO Credit Agreement or any such other Loan Document shall prove to
have been incorrect in any material respect on or as of the date made or
deemed made; or
(c) The Borrower shall default in the observance or performance of (i)
any agreement contained in subsection 1.11 or Section 2 of MRA Appendix B,
(ii) any agreement contained in subsection 1.10 of MRA Appendix B and such
default shall continue uncured for a period of one Business Day, (iii) any
agreement contained in subsections 1.1, 1.2(e)(i) or 1.13 of MRA Appendix B
and such default shall continue uncured for a period of five Business Days
and (iv) any agreement contained in subsection 1.2(e)(ii) of MRA Appendix B
and such default shall continue uncured for a period of 10 Business Days;
or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in Section 1 of
MRA Appendix B, the LIFO Credit Agreement or any other Loan Document (other
than as provided in paragraphs (a) through (c) above), and such default
shall continue unremedied for a period of 30 days after the occurrence
thereof; or
(e) As to the holder of any Obligation, the Borrower or any of its
Subsidiaries shall (i) default in any payment of principal of or interest
of any Indebtedness (other than such holder's Obligations) or in the
payment of any Guarantee Obligation, beyond the period of grace (not to
exceed 30 days), if any, provided in the instrument or agreement under
which such Indebtedness or Guarantee Obligation was created; or (ii)
default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or Guarantee Obligation or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of
such Guarantee Obligation (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated
maturity or such Guarantee Obligation to become payable; PROVIDED, HOWEVER,
that no Default or Event of Default shall exist under this paragraph unless
the aggregate amount of Indebtedness and/or Guarantee Obligations in
respect of which any default or other event or condition referred to in
this paragraph shall have occurred shall be equal to at least $1,000,000;
or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Any of the Operative Agreements shall cease, for any reason,
to be in full force and effect and valid, or (ii) as to any Secured
Creditor, any security interest or Lien purported to be created under any
Security Document shall cease, or the Borrower or any other Loan Party
shall claim that such security interest or Lien shall have ceased, to be
effective to create a perfected Lien on the Collateral (otherwise than by
the release of the Collateral as provided in the Master Restructuring
Agreement or applicable Security Document) with the priority purported to
have been created thereby, except to the extent that any such loss of
enforceability or priority results from the failure of the Collateral Agent
to maintain possession of certificates representing Pledged Securities
referred to in the Collateral Agreement or otherwise take any action within
its control (including the filing of UCC continuation statements); or
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Existing Senior Creditors, likely to result in the termination
of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer
Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or
any Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Existing Senior Creditors is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
a Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material Adverse
Effect; or
(i) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $1,000,000 or more, and all
such judgments or decrees shall not have been vacated, discharged, stayed
or bonded pending appeal within 60 days from the entry thereof; or
(j) Any of the Guarantees shall cease, for any reason, to be in full
force and effect or any Guarantor shall so assert; or
(k) (i) Any natural person other than Xxxxxx X. Xxxxxxxxx, his estate,
any trust established by him or his heirs, or any Person or "group" (within
the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended) not controlled by Xxxxxx X. Xxxxxxxxx, his estate, any
trust established by him or his heirs (other than a Permitted Holder, as
defined below) (A) shall have acquired beneficial ownership of 20% or more
of any outstanding class of Capital Stock having ordinary voting power in
the election of directors of the Borrower or (B) shall obtain the power
(whether or not exercised) to elect a majority of the Borrower's directors
or (ii) the Board of Directors of the Borrower shall not consist of a
majority of Continuing Directors; "CONTINUING DIRECTORS" shall mean the
directors of the Borrower on the Restructuring Effective Date and each
other director, if such other director's nomination for election to the
Board of Directors of the Borrower is recommended by a majority of the then
Continuing Directors; as used in this paragraph the term "Permitted Holder"
shall mean any holder of shares of any outstanding class of the Capital
Stock of the Borrower that shall have been designated as a Permitted Holder
in a resolution duly adopted by the Board of Directors of the Borrower and
that shall have been approved in writing by the Required Existing Senior
Creditors; or
(l) without the written consent of Chase, the Domestic Term Loan shall
not have been paid in full on the Restructuring Effective Date; or
(m) without the written consent of Chase, the Far East Term Loan shall
not have been paid in full within two Business Days following the making of
the loan described in Section 2.2(a)(ii) of the Master Restructuring
Agreement.
