UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_____________to____________
Commission File Number: 1-4115
ZENITH ELECTRONICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-1996520
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1000 Milwaukee Avenue, Glenview, Illinois 60025
(Address of principal executive offices) (Zip Code)
(708) 391-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
As of November 8, 1995, there were 63,433,742 shares of Common Stock, par
value $1 per share, outstanding.
<PAGE>
ZENITH ELECTRONICS CORPORATION
FORM 10-Q
INDEX
Page
Number
--------
Part I. Financial Information:
Item 1. Financial Statements
Condensed Consolidated Statements of Operations --
Three and Nine months ended September 30, 1995 and
October 1, 1994 3
Condensed Consolidated Balance Sheets --
September 30, 1995, December 31, 1994 and October 1, 1994 4
Condensed Consolidated Statements of Cash Flows --
Nine months ended September 30, 1995 and October 1, 1994 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of Operations 9
Liquidity and Capital Resources 9
Outlook 10
Part II. Other Information:
Item 1. Legal Proceedings 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 15
Index to Exhibits 16
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ZENITH ELECTRONICS CORPORATION
------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
-----------------------------------------------------------
In Millions, Except Per Share Amounts
Three Months Ended Nine Months Ended
---------------------- ----------------------
Sept. 30, Oct. 1, Sept. 30, Oct. 1,
1995 1994 1995 1994
---------- ---------- ---------- ----------
Net sales $ 332.5 $ 419.4 $ 879.2 $ 1,015.5
---------- ---------- ---------- ----------
Costs, expenses and other:
Cost of products sold 303.1 382.3 828.2 928.7
Selling, general and
administrative 28.9 28.6 80.2 78.4
Engineering and research 10.7 11.2 34.2 34.0
Other operating expense
(income), net (Note 4) (9.2) (10.8) (19.6) (18.9)
Restructuring and other
charges (Note 3) - - 18.0 -
---------- ---------- ---------- ----------
Operating income (loss) (1.0) 8.1 (61.8) (6.7)
Gain on asset sales, net 0.8 5.5 0.8 6.9
Interest expense (5.7) (4.7) (15.1) (11.8)
Interest income 0.2 0.2 0.6 0.4
---------- ---------- ---------- ----------
Income (loss) before income taxes (5.7) 9.1 (75.5) (11.2)
Income taxes (credit) (Note 5) (7.5) (0.3) (7.7) (0.3)
---------- --------- ---------- ----------
Net Income (loss) $ 1.8 $ 9.4 $ (67.8) $ (10.9)
========== ========== ========== ==========
Net income (loss) per share of
common stock (Note 6) $ (0.04) $ 0.21 $ (1.46) $ (0.27)
========== ========== ========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
ZENITH ELECTRONICS CORPORATION
------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
-------------------------------------------------
In Millions
Sept. 30, December 31, Oct. 1,
1995 1994 1994
-------- ------------ --------
ASSETS
- ------
Current assets:
Cash $ - $ 8.9 $ -
Receivables, net of allowance for
doubtful accounts of $3.3, $3.1
and $3.1, respectively 215.7 206.9 226.4
Inventories (Note 7) 265.3 245.2 289.5
Other 7.6 9.9 10.5
-------- ------------ --------
Total current assets 488.6 470.9 526.4
Property, plant and equipment, net 182.1 168.1 158.6
Other 15.4 14.6 14.1
-------- ------------ --------
Total assets $ 686.1 $ 653.6 $ 699.1
======== ============ ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Short-term debt (Note 8) $ 45.5 $ - $ 34.0
Current portion of long-term
debt (Note 8) 6.5 - -
Accounts payable 116.5 114.1 127.1
Income taxes payable 1.4 1.2 1.4
Accrued expenses 130.4 128.0 129.8
-------- ------------ --------
Total current liabilities 300.3 243.3 292.3
Long-term debt (Note 8) 215.5 182.0 182.0
Stockholders' equity:
Preferred stock - - -
Common stock (Note 9) 47.0 45.7 44.9
Additional paid-in capital 295.1 285.4 279.4
Retained earnings (deficit) (170.1) (102.3) (99.0)
Treasury stock (1.7) (0.5) (0.5)
-------- ------------ --------
Total stockholders' equity 170.3 228.3 224.8
-------- ------------ --------
Total liabilities and
stockholders' equity $ 686.1 $ 653.6 $ 699.1
======== ============ ========
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
ZENITH ELECTRONICS CORPORATION
------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-----------------------------------------------------------
In Millions
Increase (Decrease) in Cash
Nine Months Ended
---------------------------
September 30, October 1,
1995 1994
----------- -----------
Cash flows from operating activities:
Net income (loss) $ (67.8) $ (10.9)
Adjustments to reconcile net income (loss) to
net cash used by operations:
Depreciation 25.2 22.6
Other (0.4) (0.3)
Gain on asset sales, net (0.8) (6.9)
Changes in assets and liabilities:
Current accounts (20.4) (101.7)
Other assets (0.8) 1.2
----------- -----------
Net cash used by operating activities (65.0) (96.0)
----------- -----------
Cash flows from investing activities:
Capital additions (42.4) (41.4)
Proceeds from asset sales 2.8 21.8
----------- -----------
Net cash used by investing activities (39.6) (19.6)
----------- -----------
Cash flows from financing activities:
Short-term borrowings, net 45.5 34.0
Proceeds from issuance of long-term debt 40.0 12.0
Proceeds from issuance of common stock, net 10.2 83.3
Principal payments on long-term debt - (34.5)
----------- -----------
Net cash provided by financing activities 95.7 94.8
----------- -----------
Decrease in cash (8.9) (20.8)
Cash at beginning of period 8.9 20.8
----------- -----------
Cash at end of period $ - $ -
=========== ===========
Increase (decrease) in cash attributable to
changes in current accounts:
Receivables, net $ (0.7) $ (64.7)
Income taxes, net (6.2) 0.4
Inventories (20.1) (86.8)
Other assets 2.3 (4.4)
Accounts payable and accrued expenses 4.3 53.8
----------- -----------
Net change in current accounts $ (20.4) $ (101.7)
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid (refunded) during the period for:
Interest $ 11.7 $ 10.4
Income taxes (1.0) (0.1)
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
Zenith Electronics Corporation
------------------------------
Notes to Condensed Consolidated Financial Statements (Unaudited)
----------------------------------------------------------------
Note 1 - Basis of presentation
The accompanying unaudited condensed consolidated financial statements
("financial statements") have been prepared in accordance with generally
accepted accounting principles and pursuant to the rules and regulations
of the Securities and Exchange Commission. The accuracy of the
amounts in the financial statements is in some respects dependent upon
facts that will exist, and procedures that will be performed by the
Company, later in the year. In the opinion of management, all
adjustments necessary for a fair presentation of the financial statements
have been included and are of a normal, recurring nature. For further
information, refer to the consolidated financial statements and notes
thereto included in the Company's Form 10-K for the year ended
December 31, 1994.
Note 2 - Subsequent events
On November 8, 1995, a change in control of the Company occurred. On
that date, the transactions contemplated by the Stock Purchase
Agreement, dated as of July 17, 1995, between the Company and LG
Electronics Inc., a corporation organized under the laws of the Republic
of Korea ("LGE"), were consummated. (See "Item 5. Other Information"
for further discussion on the change in control.)
On November 6, 1995, the Company entered into a Second Amended
and Restated Credit Agreement amending its $110 million First Amended
and Restated Credit Agreement dated as of May 10, 1995, and a First
Amended and Restated Term Loan Agreement amending its $40 million
Term Loan Agreement dated as of May 10, 1995. (See "Item 5. Other
Information" for further discussion on the amendments.)
Note 3 - Restructuring and other charges
During the second quarter of 1995, the Company recorded a charge of
$18.0 million primarily to restructure its core Consumer Electronics and
Network Systems business. The major elements of the restructuring
related to (i) severance expenses ($9.6 million) associated with
employment reductions, primarily in the Company's U.S. salaried
workforce and (ii) costs associated with realigned distribution activities
($2.7 million) as the Company changed to direct-to-retail distribution on a
nationwide basis. The remaining charges related to other non-recurring
items, including certain environmental, legal and other regulatory matters,
along with trade receivable write-offs (primarily for accounts in Mexico
as a result of the peso devaluation).
Note 4 - Other operating expense (income)
Royalty income accrued in relation to tuning system patents (after
deducting legal expenses) was $7.3 million and $16.5 million for the three
and nine months ended September 30, 1995, respectively, and $7.6 million
and $17.5 million for the three and nine months ended October 1, 1994,
respectively. These amounts are included in Other Operating Expense
(Income).
Note 5 - Income taxes
As of September 30, 1995, the Company had $463.9 million of net
operating loss carryovers (NOLs) available for financial statement
purposes. For federal income tax purposes, the Company had NOLs of
$399.5 million (which expire from 2004 through 2010) and unused tax
credits of $6.5 million (which expire from 1995 through 2002).
The consummation of the LGE agreement (as described in Note 2) has
created an "ownership change" of the Company for federal income tax
purposes, with the effect that the Company's annual usage of its NOLs
will be limited to the product of (i) a tax-exempt rate of return announced
monthly by the Internal Revenue Service (5.75% for ownership changes
occurring in the month of November 1995) and (ii) the equity value of the
Company immediately before the ownership change as determined under
applicable tax regulations. This limitation, appropriately modified, also
applies to the Company's utilization of most of its tax credit carryovers.
As a result, the Company's ability to utilize such carryovers will be
materially reduced by the LGE transaction. The effect of this reduction
will depend upon the level of taxable income earned by the Company
during the carryover periods.
Note 6 - Earnings per share
Primary earnings per share are based upon the weighted average number
of shares outstanding and common stock equivalents, if dilutive. Fully
diluted earnings per share, assuming conversion of the 6-1/4% convertible
subordinated debentures and the 8.5% convertible senior subordinated
debentures, are not presented because the effect of the assumed conversion
is antidilutive. The weighted average number of shares was 46.9 million
and 46.5 million for the three and nine months ended September 30, 1995,
respectively, and 44.0 million and 41.0 million for the three and nine
months ended October 1, 1994, respectively.
Note 7 - Inventories
Inventories consisted of the following (in millions):
Sept. 30, December 31, Oct. 1,
1995 1994 1994
---------- ------------- ----------
Raw materials and work-in-process $ 166.2 $ 156.2 $ 167.9
Finished goods 107.9 97.8 130.7
---------- ------------- ---------
274.1 254.0 298.6
Excess of FIFO cost over LIFO cost (8.8) (8.8) (9.1)
---------- ------------- ---------
Total $ 265.3 $ 245.2 $ 289.5
========== ============= =========
As of September 30, 1995, December 31, 1994 and October 1, 1994,
$47.1 million, $25.0 million and $28.3 million, respectively, of inventories
were valued using the LIFO method.
An actual determination of inventory under the LIFO method can only
be made at the end of each year based on the inventory levels and costs at
that time. Accordingly, interim LIFO calculations are based on
management's estimates of expected year-end inventory levels and costs.
Since these estimates are subject to many factors beyond management's
control, interim results are subject to the final year-end LIFO inventory
determination.
Note 8 - Short-term debt and credit arrangements; Long-term debt
During the second quarter of 1995 the Company entered into a First
Amended and Restated Credit Agreement dated as of May 10, 1995 (the
"Credit Agreement") among the Company, General Electric Capital
Corporation, as agent and lender, and the other lenders named therein,
replacing a similar credit agreement with the same agent and group of
lenders. The maximum commitment of funds available for borrowing
under the Credit Agreement is $110 million, increased from $90 million,
based upon a borrowing base formula related to eligible accounts and
eligible inventory (each as defined in the Credit Agreement). On the same
date, the Company entered into a Term Loan Agreement (the "Term
Loan") with the same agent and group of lenders. The Term Loan is in
the initial principal amount of $40 million, requiring scheduled quarterly
principal payments over the life of the Term Loan and additional
mandatory prepayment in certain events.
Both the Credit Agreement and Term Loan are scheduled to expire on
June 30, 1998. Borrowings under the Credit Agreement, similar to the
former credit agreement, are secured by accounts receivable, inventory,
general intangibles and trademarks of the Company and certain of its
domestic subsidiaries. The borrowing under the Term Loan is secured by
the tuning system patent license agreements of the Company and a second
security interest in the accounts receivable, inventory, general intangibles
and trademarks of the Company and certain of its domestic subsidiaries.
The Credit Agreement and the Term Loan prohibit dividend payments on
the Company's common stock and restrict dividend payments on any of its
preferred stock, if issued. In addition, both agreements provide for
identical restrictions regarding investments, acquisitions, guaranties,
transactions with affiliates, sales of assets, mergers and additional
borrowings, along with limitations on liens. Certain material asset
transactions are permitted under both agreements.
The Credit Agreement and Term Loan also contain identical financial
covenants that must be maintained as of the end of each fiscal quarter,
including a liabilities to net worth ratio and a minimum net worth amount.
The ratio of liabilities to net worth and minimum net worth amount varies
from quarter to quarter. As of September 30, 1995, the ratio of liabilities
to net worth was required to be not greater than 4.40 to 1.0 and was
actually 3.03 to 1.0, and net worth was required to be equal to or greater
than $154.0 million and was actually $170.3 million.
Under the Credit Agreement and Term Loan as amended on
November 6, 1995, the liabilities to net worth ratio as of December 31,
1995, is required to be not greater than 3.50 to 1.0, and net worth is
required to be equal to or greater than $251.0 million. As of March 30,
1996, and through the end of the agreements, the liabilities to net worth
ratio is required to be not greater than 4.00 to 1.0, and net worth is
required to be equal to or greater than $245.0 million.
The Credit Agreement and Term Loan also restrict the amount of
capital expenditures by the Company in each fiscal year. For the fiscal
year 1995, 1996, 1997, and each fiscal year thereafter the Company is
permitted to make capital expenditures (as defined in the Credit
Agreement) of up to $80.0 million, $142.0 million, $87.0 million and
$60.0 million, respectively.
As described in Note 2, a change of control of the Company occurred
on November 8, 1995. Pursuant to the Debenture Purchase Agreements
for the 8.5% senior subordinated convertible debentures due 2000 and the
8.5% senior subordinated convertible debentures due 2001, the Company
has 30 days following the change of control to mail a notice to each
debenture holder stating (among other things) (i) that a change of control
has occurred and that the debenture holders have the right (the "Change in
Control Right") to require the Company to repurchase such debentures, in
whole or in part, at a purchase price, in cash, equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the
date of repurchase and (ii) the date on which the Change of Control Right
expires (which shall be no earlier than 30 days nor later than 60 days from
the date such notice is mailed) (the "Change in Control Expiration Date")
and a date for the repurchase of the debentures within seven days after the
Change in Control Expiration Date.
Note 9 - Stockholders' equity
During the first nine months of 1995, the Company sold 1.3 million shares
of authorized but unissued shares of common stock to investors under a
shelf registration statement registering 6.5 million shares of common
stock. The result of these stock sales was to increase equity by $10.1
million.
At the Company's Annual Meeting on April 25, 1995, the
stockholder's of the Company voted to amend the Company's Restated
Certificate of Incorporation to increase the authorized common stock of
the Company from 100,000,000 shares to 150,000,000 shares.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Analysis of Operations
The Company reported a third-quarter 1995 profit of $1.8 million or 4
cents per share, compared with a profit of $9.4 million, or 21 cents per
share, in the third quarter of 1994. Results for both periods included one-
time, non-recurring items: a $7.5 million tax refund and a $0.8 million
gain on asset sales in the 1995 quarter, and a $5.5 million gain on
property sales in the 1994 quarter.
Major cost reductions from re-engineering programs and reduced
cycle times, including new cost control and profit improvement initiatives
launched in the third quarter, helped offset the effect of lower sales, lower
prices and higher material costs compared with the third quarter of 1994.
The devaluation of the Mexican peso also had a positive impact on costs
again in the third quarter of this year.
Third-quarter sales were $332.5 million in 1995 and $419.4 million in
1994. Despite this 20 percent decline in overall dollar sales, the domestic
market share of Zenith-brand direct-view color TV was relatively constant
with the third quarter last year. The sales decline reflected a variety of
factors including lower selling prices, very soft direct-view color television
domestic industry conditions, reduced VCR revenues (due to a change in
distribution methods) and significantly lower color TV unit sales in
Mexico
Sales of Network Systems products -- set-top boxes and data modems
sold primarily to the cable TV industry -- were essentially unchanged
from the third quarter of 1994. In the third quarter, the Company
announced a multi-million-dollar agreement with "Mega TV" to provide
as many as 200,000 wireless cable decoders for Malaysia's new pay TV
operation over the next six months.
Results for the third quarter include $7.3 million of accrued royalty
revenues from tuning system licenses. These revenues were $7.6 million
in the third quarter of 1994.
Total sales in the first nine months of 1995 were $879.2 million,
compared with $1,015.5 million in the first nine months of 1994. The
Company reported a net loss of $67.8 million, or $1.46 per share in the
first nine months of 1995, compared with a nine-month 1994 loss of $10.9
million, or 27 cents per share. Results for the first nine months of 1995,
as compared to the first nine months of 1994, were impacted by lower sales,
lower prices and higher material costs, the effects of which were partially
offset by major cost reductions from re-engineering programs and reduced
cycle times, including new cost control and profit improvement initiatives
launched in the third quarter. Nine-month 1995 results include the $7.5
million tax refund and the $0.8 million gain on asset sales in the third
quarter and $18.0 million in special charges for severance and other non-
recurring items in the second quarter. The 1994 nine-month period
included asset sales of $6.9 million.
Liquidity and Capital Resources
Cash decreased $8.9 million during the nine months ended September 30,
1995. Uses of cash consisted of $65.0 million used by operating activities
and $39.6 million used to purchase fixed assets, net of proceeds from
asset sales. These uses of cash were offset by $95.7 million of cash
provided from financing activities which included $45.5 million of
borrowings under the Credit Agreement, $40.0 million of cash from the
Term Loan and $10.2 million of cash from sales of the Company's
common stock.
During the nine months ended September 30, 1995, the $65.0 million
of cash used by operating activities principally funded a $42.6 million net
loss from operations as adjusted for depreciation and a $20.4 million
change in current accounts. The change in current accounts was
composed primarily of a $20.1 million increase in inventories, mainly to
support higher projected shipment schedules in the fourth quarter.
During the nine months ended September 30, 1995, investing
activities used $39.6 million of cash (capital additions of $42.4 million
offset by $2.8 million of proceeds from asset sales) compared to $19.6
million (capital additions of $41.4 million offset by $21.8 million of
proceeds from asset sales) for the first nine months of 1994. Capital
additions for the full year 1995 are expected to be about $55 million.
As of September 30, 1995, total interest-bearing obligations of the
Company consisted of $215.5 million of long-term debt, $45.5 million of
borrowings under the Credit Agreement, the current portion ($6.5 million)
of the Term Loan and $15.2 million of extended-term payables with a
foreign supplier. The Company's long-term debt is composed of $115.0
million of 6-1/4% convertible subordinated debentures due 2011 that
require annual sinking fund payments of $5.8 million beginning in 1997,
$55.0 million aggregate principal amount of 8.5% senior subordinated
convertible debentures due 2000, $12.0 million aggregate principal
amount of 8.5% senior subordinated convertible debentures due 2001 and
the long-term portion of the Term Loan ($33.5 million). The Term Loan
requires scheduled quarterly principal payments over the life of the loan
with a balloon payment of $17.5 million due on June 30, 1998 (the
termination date of the loan).
A change of control of the Company occurred on November 8, 1995.
(See "Item 5. Other Information" for further discussion on the change of
control.) Pursuant to the Debenture Purchase Agreements for the 8.5%
senior subordinated convertible debentures due 2000 and the 8.5% senior
subordinated convertible debentures due 2001, the Company has 30 days
following the change of control to mail a notice to each debenture holder
stating (among other things) (i) that a change of control has occurred and
that the debenture holders have the right (the "Change in Control Right")
to require the Company to repurchase such debentures, in whole or in
part, at a purchase price, in cash, equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of repurchase
and (ii) the date on which the Change of Control Right expires (which
shall be no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "Change in Control Expiration Date") and a date for
the repurchase of the debentures within seven days after the Change in
Control Expiration Date.
The Company's Credit Agreement and Term Loan contain identical
financial covenants that must be maintained as of the end of each fiscal
quarter, including a liabilities to net worth ratio and a minimum net worth
amount. In addition, the Credit Agreement and the Term Loan restrict the
amount of capital expenditures by the Company in each fiscal year. (See
Note 8 to Condensed Consolidated Financial Statements for further
discussion on the financial covenants.)
On November 6, 1995, the Company entered into a Second Amended
and Restated Credit Agreement amending its $110 million First Amended
and Restated Credit Agreement dated as of May 10, 1995, and a First
Amended and Restated Term Loan Agreement amending its $40 million
Term Loan Agreement dated as of May 10, 1995. (See "Item 5. Other
Information" for further discussion on the amendments.)
Outlook
The overall outlook for the Company (including its competitive condition
and business strategy) is essentially the same as described in the
"Outlook" section of "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in the Company's
Form 10-K for the year ended December 31, 1994. In addition, the fourth
quarter of 1995 is expected to be affected by many of the same pricing,
cost and market factors that were described in the above referenced
"Outlook" section of the Company's Form 10-K for the year ended
December 31, 1994.
On November 8, 1995, a change in control of the Company occurred.
On that date, the transactions contemplated by the Stock Purchase
Agreement, dated as of July 17, 1995, between the Company and LG
Electronics Inc., a corporation organized under the laws of the Republic
of Korea, were consummated. (See "Item 5. Other Information" for
further discussion on the change in control.)
The Company believes that the proceeds from the LGE transaction,
the Credit Agreement, the Term Loan and extended-term payables
expected to be available from a foreign supplier will be adequate to meet
its seasonal working capital, capital expenditure and other requirements in
1995 (including any required repurchase of debentures upon exercise of
the Change of Control Right) and to support planned capital investment
projects, including the expansion of the Company's picture tube
operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to "Item 3. Legal Proceedings" in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994, concerning
a lawsuit filed by Electrical Distributing, Inc., a Portland, Oregon
distributor, in connection with the Company's announcement that it is
changing to one-step distribution. Shortly after the case was filed it was
removed by the Company from the state court to the United States District
Court in Oregon. On October 17, 1995, summary judgment dismissing
the case on all counts was entered. Plaintiff has until November 29, 1995
to file an appeal.
Reference is made to "Item 3. Legal Proceedings" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1994,
concerning an EPA civil action against the Company and others with
respect to the Moyer Landfill in Collegeville, Pennsylvania. The
Company has signed a consent decree for the agreed contribution of
$300,000, as a settlement with the federal government and the
Commonwealth of Pennsylvania.
Reference is made to "Item 1. Legal Proceedings" in the Company's
Quarterly Report on Form 10-Q for the quarter ended July 1, 1995,
concerning the Gwynne L. Horwits, SEP IRA purported class action suit
in the Court of Chancery of the State of Delaware in and for New Castle
County in connection with the LGE acquisition of controlling interest in
the Company. The Company, the members of the board of directors, and
LGE denied, and continue to deny, that they committed any violations of
law or breaches of duty as alleged in the complaint, but entered a
memorandum of understanding and contemplate entering into a stipulation
of settlement solely because a proposed settlement would eliminate the
burden and expense of further litigation and would facilitate the
consummation of the proposed transaction with LGE. In agreeing to
disclose additional information, the Company does not admit the
materiality of that information or that the materials previously filed with
the Securities and Exchange Commission were in anyway deficient. In
connection with the proposed settlement, it is anticipated that counsel for
the plaintiff will apply to the court for an aggregate award of attorneys'
fees and expenses in an amount not to exceed $300,000. As a condition
of settlement, the Company has agreed to pay plaintiff's counsel the
amount awarded by the court, up to $300,000. Before the proposed
settlement is finally approved by the court, notice of the proposed terms
and conditions of the settlement will be mailed to all members of any class
certified by the court, who will be afforded an opportunity to opt out of
and object to the settlement.
On August 31, 1995, a lawsuit was filed in the District Court of
Hidalgo County, Texas by the Linn-Faysville Aquifer Preservation
Association and others, alleging that the Company and other defendants'
disposal of waste at an Edinburgh, Texas, landfill resulted in
contamination of groundwater and potential contamination of the aquifer
and seeking unspecified damages and injunctive relief. The Company
believes that any of its waste deposited at the landfill could not cause such
contamination and, accordingly, that the case against the Company is
without merit.
During the three months ended September 30, 1995, no other
reportable events or material developments occurred with respect to the
legal proceedings described under "Item 1. Legal Proceedings" in the
Company's quarterly Report on Form 10-Q for the Quarter ended April 1,
1995, and the Company's Quarterly Report on Form 10-Q for the Quarter
ended July 1, 1995, and under "Item 3. Legal Proceedings" in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994.
Item 5. Other Information
1. On November 8, 1995, a change in control of the Company occurred.
On that date, the transactions contemplated by the Stock Purchase
Agreement (the "Stock Purchase Agreement"), dated as of July 17, 1995,
between the Company and LG Electronics Inc., a corporation organized
under the laws of the Republic of Korea ("LGE"), were consummated.
Pursuant to the Stock Purchase Agreement (i) LGE accepted for purchase
3,731,800 of the shares of common stock, $1.00 par value per share (the
"Common Stock"), of the Company tendered pursuant to LGE's tender
offer (the "Tender Offer") to purchase from the Company's stockholders
up to 18,619,000 shares of Common Stock at $10.00 per share, (ii) LG
Semicon Co. Ltd., a corporation organized under the laws of the Republic
of Korea and a majority owned subsidiary of LGE ("LG Semicon"),
accepted for purchase 14,887,200 of the shares of Common Stock
tendered pursuant to the Tender Offer, (iii) LGE purchased 3,300,000
newly issued shares of Common Stock from the Company at $10.00 per
share, and (iv) LG Semicon purchased 13,200,000 newly issued shares of
Common Stock from the Company at $10.00 per share. After giving
effect to such transactions, LGE beneficially owns 36,569,000 shares of
Common Stock, which represents approximately 57.7% of the
outstanding Common Stock based on the number of shares outstanding as
of November 8, 1995. Because LGE beneficially owns a majority of the
issued and outstanding shares of Common Stock, it effectively controls the
outcome of any matter requiring action by a majority of the Company's
stockholders, including the election of a majority of the Company's
directors and any future change in control of the Company.
LGE obtained substantially all the $70,318,000 necessary to pay for
the shares of Common Stock purchased by it on November 8, 1995
through borrowings under a credit agreement dated October 31, 1995 (the
"LGE Credit Agreement") between LGE and Cho Hung Bank, DKB
Asia Limited, The Korea Development Bank and Societe Generale Asia
Limited, as arrangers (the "Arrangers"), the other lenders party thereto
and Cho Hung Bank, London Branch, as agent (the "Agent").
The LGE Credit Agreement provides for two facilities: (i) a
$17,625,000 revolving term loan facility (the "LGE Tranche A Revolving
Credit Facility") and (ii) a $52,375,000 revolving term loan facility (the
"LGE Tranche B Revolving Credit Facility" and, together with the LGE
Tranche A Revolving Credit Facility, the "LGE Credit Facilities"). The
proceeds of the LGE Credit Facilities are to be used to finance LGE's
acquisition of the shares of Common Stock purchased by it on November
8, 1995 and to pay related fees and expenses.
Loans under the LGE Credit Facilities will mature on the date falling
five years from the first drawdown for the relevant tranche. All loans
under the LGE Credit Agreement will bear interest at a rate per annum
equal to the London Interbank Offered Rate ("LIBOR") (as determined by
procedures set forth in the LGE Credit Agreement) plus a margin of
0.40%.
LGE will pay the Arrangers, the other lenders and the Agent certain
fees which are customary for similar types of financings, including a
front-end fee, a commitment fee on the undrawn portion of each of the
LGE Credit Facilities and an annual agent's fee under each of the Credit
Facilities.
LGE may voluntarily repay any loans, in whole or in part, under the
LGE Credit Facilities at the end of each interest period in minimum
principal amounts of $20 million. The commitments of the lenders to
provide credit under the LGE Credit Agreement will terminate on the date
falling three months after the agreement date.
The LGE Credit Agreement contains customary representations and
warranties, affirmative and negative covenants, events of default and other
terms and conditions. The obligations of each of the lenders to provide
credit under the LGE Credit Agreement are subject to various conditions
precedent, including but not limited to: (i) board resolutions, Articles of
Incorporation and Korean Commercial Registry extracts; (ii) resolutions,
authorizations, approvals, consents and licenses, including the foreign
exchange approvals; (iii) satisfactory legal opinions; (iv) accuracy of
representations and warranties in all material respects; and (v) absence of
default or an event of default.
LG Semicon obtained $210,000,000 of the $280,872,000 necessary to
pay for the shares of Common Stock purchased by it on November 8,
1995 through borrowings under a credit agreement dated October 31,
1995 (the "LG Semicon Credit Agreement") between LG Semicon, the
Arrangers, the other lenders party thereto and the Agent with the balance
being obtained from internal sources.
The LG Semicon Credit Agreement provides for two facilities: (i) a
$52,875,000 revolving term loan facility (the "LG Semicon Tranche A
Revolving Credit Facility") and (ii) a $157,125,000 revolving term loan
facility (the "LG Semicon Tranche B Revolving Credit Facility" and,
together with the LG Semicon Tranche A Revolving Credit Facility, the
"LG Semicon Credit Facilities"). The proceeds of the LG Semicon Credit
Facilities are to be used to finance LG Semicon's acquisition of the shares
of Common Stock purchased by it on November 8, 1995 and to pay
related fees and expenses.
Loans under the LG Semicon Credit Facilities will mature on the date
falling five years from the first drawdown for the relevant tranche. All
loans under the LG Semicon Credit Agreement will bear interest at a rate
per annul equal to LIBOR (as determined by procedures set forth in the
LG Semicon Credit Agreement) plus a margin of 0.40%.
LG Semicon will pay the Arrangers, the other lenders and the Agent
certain fees which are customary for similar types of financings, including
a front-end fee, a commitment fee on the undrawn portion of each of the
LG Semicon Credit Facilities and an annual agent's fee under each of the
LG Semicon Credit Facilities.
LG Semicon may voluntarily repay any loans, in whole or in part,
under the LG Semicon Credit Facilities at the end of each interest period
in minimum principal amounts of $20 million. The commitments of the
lenders to provide credit under the LG Semicon Credit Agreement will
terminate on the date falling three months after the agreement date.
The LG Semicon Credit Agreement contains customary
representations and warranties, affirmative and negative covenants, events
of default and other terms and conditions. The obligations of each of the
lenders to provide credit under the LG Semicon Credit Agreement are
subject to various conditions precedent, including but not limited to: (i)
board resolutions, Articles of Incorporation and Korean Commercial
Registry extracts; (ii) resolutions, authorizations, approvals, consents and
licenses, including the foreign exchange approvals; (iii) satisfactory legal
opinions; (iv) accuracy of representations and warranties in all material
respects; and (v) absence of default or an event of default.
In the Stock Purchase Agreement, LGE and the Company agreed
that, following the closing of the transactions contemplated by the Stock
Purchase Agreement, the Board of Directors of the Company would
consist of ten directors, one of such directors to be the Company's
President and Chief Executive Officer of the Company, three of such
directors to be independent directors of the Company prior to such closing
and six of such directors to be persons designated by LGE and that the
Company would use its best efforts to cause the other directors of the
Company to resign. Pursuant to such agreement, immediately after the
closing of such transactions, the Board of Directors of the Company
consisted of Albin F. Moschner (the Company's President and Chief
Executive Officer), T. Kimball Brooker, Andrew McNally IV and Peter S.
Willmott (directors of the Company prior to completion of such
transactions) and Hun Jo Lee, Cha Hong Koo, Yong Nam, Nam K. Woo,
Ki-song Cho and Eugene B. Connolly (directors designated by LGE).
2. On November 6, 1995, the Company entered into a Second Amended
and Restated Credit Agreement (the "Amended Credit Agreement")
amending its $110 million First Amended and Restated Credit Agreement
dated as of May 10, 1995, and a First Amended and Restated Term Loan
Agreement (the "Amended Term Loan Agreement") amending its $40
million Term Loan Agreement dated as of May 10, 1995, among the
Company, General Electric Capital Corporation, as agent and lender, and
the other lenders named therein. The Amended Credit Agreement and
Amended Term Loan Agreement were negotiated as a result of and
became effective upon the previously announced purchase by LG
Electronics Inc. and its affiliate, LG Semicon, Ltd., of controlling interest
in the Company on November 8, 1995. The Amendments modified the
required minimum net worth as of December 31, 1995 from $166 million
to $251 million and for each quarter thereafter from $160 million to $245
million. In addition the Amendments improved the interest rate and
interest rate options, the unused line fee and letter of credit fees, improved
certain restrictive covenants, modified language relating to the
transactions with affiliates and permitted the required offer to repurchase
the Company's 8.5% Convertible Senior Subordinated Debentures as a
result of the change in control. On November 9, 1995, the Company had
no borrowings under the Amended Credit Agreement and borrowings of
$38.5 million under the Amended Term Loan Agreement. Copies of the
Amendments are attached hereto as Exhibits (4g) and (4i) hereto and are
incorporated by reference herein.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(2) Stock Purchase Agreement dated July 17, 1995 between Zenith
Electronics Corporation and LG Electronics Inc. (incorporated by
reference to Exhibit 2 of the Company's Current Report on Form 8-K
dated July 17, 1995)
(3) Amended and Restated By-Laws of Zenith Electronics
Corporation effective as of November 8, 1995
(4a) Indenture dated as of April 1, 1986, between Zenith Electronics
Corporation and The First National Bank of Boston as Trustee with
respect to the 6-1/4% Convertible Subordinated Debentures due 2011
(incorporated by reference to Exhibit 1 of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 30, 1991)
(4b) Debenture Purchase Agreement dated as of November 19, 1993,
with the institutional investors named therein (incorporated by
reference to Exhibit 4(a) of the Company's Current Report on Form 8-K
dated November 19, 1993)
(4c) Amendment No. 1 dated November 24, 1993, to the Debenture
Purchase Agreement dated as of November 19, 1993, with the
institutional investor named therein (incorporated by reference to Exhibit
4 (a) of the Company's Current Report on Form 8-K dated November
24, 1993)
(4d) Amendment No. 2 dated January 11, 1994, to the Debenture
Purchase Agreement dated as of November 19, 1993, (incorporated by
reference to Exhibit 4(c) of the Company's Current Report on Form 8-K
dated January 11, 1994)
(4e) Debenture Purchase Agreement dated as of January 11, 1994,
with the institutional investors named therein (incorporated by
reference to Exhibit 4(a) of the Company's Current Report on Form 8-K
dated January 11, 1994)
(4f) First Amended and Restated Credit Agreement, dated as of May
10, 1995, with General Electric Capital Corporation, as agent and
lender, and the other lenders named therein (incorporated by reference to
Exhibit 4(f) of the Company's Quarterly Report on Form 10-Q for the
quarter ended April 1, 1995)
(4g) Second Amended and Restated Credit Agreement, dated as of
November 6, 1995, with General Electric Capital Corporation, as
agent and lender, and the other lenders named
(4h) Term Loan Agreement, dated as of May 10, 1995, with General
Electric Capital Corporation, as agent and lender, and the other
lenders named therein (incorporated by reference to Exhibit 4(g) of the
Company's Quarterly Report on Form 10-Q for the quarter ended
April 1, 1995)
(4i) First Amended and Restated Term Loan Agreement, dated as of
November 6, 1995, with General Electric Capital Corporation, as
agent and lender, and the other lenders named
(4j) Stockholder Rights Agreement, dated as of October 3, 1986
(incorporated by reference to Exhibit 4(c) of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 28, 1991)
(4k) Amendment, dated April 26, 1988, to Stockholder Rights
Agreement (incorporated by reference to Exhibit 4(d) of the Company's
Quarterly Report on Form 10-Q for the quarter ended April 3, 1993)
(4l) Amended and Restated Summary of Rights to Purchase Common
Stock (incorporated by reference to Exhibit 4(e) of the Company's
Quarterly Report on Form 10-Q for the quarter ended July 3, 1993)
(4m) Amendment, dated July 7, 1988, to Stockholder Rights
Agreement (incorporated by reference to Exhibit 4(f) of the
Company's Quarterly Report on Form 10-Q for the quarter ended
July 3, 1993)
(4n) Agreement, dated May 23, 1991, among Zenith Electronics
Corporation, The First National Bank of Boston and Harris Trust
and Savings Bank (incorporated by reference to Exhibit 1 of Form 8,
dated May 30, 1991)
(4o) Amendment, dated May 24, 1991, to Stockholder Rights
Agreement (incorporated by reference to Exhibit 2 of Form 8, dated
May 30, 1991)
(4p) Amendment to Rights Agreement dated as of July 17, 1995
(incorporated by reference to Exhibit 4 of the Company's Current
Report on Form 8-K dated July 17, 1995)
(4q) Agreement, dated as of February 1, 1993, among Zenith
Electronics Corporation, The Bank of New York and Harris Trust
and Savings Bank (incorporated by reference to Exhibit 1 of Form 8 dated
March 25, 1993)
(27) Financial Data Schedule for the nine months ended September 30,
1995
(b) Reports on Form 8-K:
A report on Form 8-K dated July 17, 1995, was filed by the Company
stating under Item 5 that on July 17, 1995, the Company issued a press
release announcing the execution and delivery of a Stock Purchase
Agreement dated July 17, 1995 with LG Electronics Inc. In connection
with the transactions contemplated by the Stock Purchase Agreement, the
Company amended its Stockholder Rights Agreement.
A report on Form 8-K dated July 21, 1995, was filed by the Company
stating under Item 5 that on July 21, 1995, the Company issued a press
release announcing second-quarter 1995 results.
A report on Form 8-K dated July 24, 1995, was filed by the Company
stating under Item 5 that the Company had been served with a Class
Action Complaint, filed in the Court of Chancery of the State of Delaware
in and for New Castle County, against the Company, the Board of
Directors and LG Electronics Inc., alleging that the Board of Directors
breached their fiduciary duties, failed to exercise loyalty, good faith and
due care toward the Company and public shareholders in regard to the
announced proposal by LG Electronics Inc. to acquire a 57.7% interest in
the Company (the "Transaction").
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ZENITH ELECTRONICS CORPORATION
(Registrant)
Date: November 14, 1995
By: /s/ Richard C. Lueck
-----------------------
Richard C. Lueck
Vice President - Controller
(Chief Accounting Officer)
INDEX TO EXHIBITS
Exhibits:
(3) Amended and Restated By-Laws of Zenith Electronics Corporation
effective as of November 8, 1995
(4g) Second Amended and Restated Credit Agreement, dated as of
November 6, 1995, with General Electric Capital Corporation,
as agent and lender, and the other lenders named
(4i) First Amended and Restated Term Loan Agreement, dated as of
November 6, 1995, with General Electric Capital Corporation,
as agent and lender, and the other lenders named
(27) Financial Data Schedule for the nine months ended September
30, 1995
EXHIBIT (3)
AMENDED AND RESTATED
BY-LAWS
of
ZENITH ELECTRONICS CORPORATION
______________________________
Effective as of November 8, 1995
______________________________
ARTICLE I
Offices
Section l. The registered office in the State of
Delaware shall be in the City of Wilmington, County of
New Castle, State of Delaware.
Section 2. The corporation may also have offices at
such other places both within and without the State of
Delaware as the board of directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. All meetings of the stockholders for
the election of directors shall be held at such place, either
within or without the State of Delaware, as may be fixed
from time to time by the board of directors. Meetings of
stockholders for any other purpose may be held at such time
and place, within or without the State of Delaware, as shall
be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. An annual meeting of stockholders
shall be held for the purpose of electing directors and
transacting such other business as may properly be brought
before the meeting. The date of the annual meeting shall be
determined by the board of directors.
Section 3. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given
to each stockholder entitled to vote thereat not less than
twenty nor more than sixty days before the date of the
meeting. At an annual meeting of the stockholders, only
such business shall be conducted as shall have been brought
before the meeting (a) by or at the direction of the board of
directors or (b) by any stockholder of the corporation who
complies with the notice procedures set forth in this Section
3. For business to be properly brought before an annual
meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the secretary of the
corporation. Except as otherwise provided in Regulation
14A under the Securities Exchange Act of 1934, as
amended, to be timely, a stockholder's notice must be
delivered to or mailed and received at the principal
executive offices of the corporation not less than sixty days
nor more than ninety days prior to the meeting; provided,
however, that in the event that less than seventy-five days'
notice or prior public disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to
be timely must be received not later than the close of
business on the tenth day following the day on which such
notice of the date of the annual meeting was mailed or such
public disclosure was made. A stockholder's notice to the
secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the
annual meeting and the reasons for conducting such
business at the annual meeting, (b) the name and address, as
they appear on the corporation's books, of the stockholder
proposing such business, (c) the number of shares of
common stock of the corporation which are beneficially
owned by the stockholder and (d) any material interest of
the stockholder in such business. Notwithstanding anything
in these by-laws to the contrary, no business shall be
conducted at an annual meeting except in accordance with
the procedures set forth in this Section 3. The Chairman of
an annual meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly
brought before the meeting and in accordance with the
provisions of this Section 3, and if he should so determine,
he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
Section 4. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at
least ten days before every meeting of stockholders a
complete list of the stockholders entitled to vote at said
meeting, arranged in alphabetical order, showing the
address of and the number of shares registered in the name
of each stockholder. Such list shall be open to the
examination of any stockholder for any purpose germane to
the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within
the city, town or village where the meeting is to be held and
which place shall be specified in the notice of the meeting,
or, if not specified, at the place where said meeting is to be
held, and the list shall be produced and kept at the time and
place of the meeting during the whole time thereof, and
subject to the inspection of any stockholder who may be
present.
Section 5. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by
statute or by the certificate of incorporation, may be called
by the Chairman or president and shall be called by the
secretary at the direction of a majority of the board of
directors or at the request in writing of stockholders owning
at least a majority of the entire capital stock of the
corporation issued and outstanding and entitled to vote.
Section 6. Written notice of a special meeting of
stockholders, stating the place, date and hour of the meeting
and the purpose or purposes for which the meeting is called,
shall be given to each stockholder entitled to vote thereat,
not less than ten nor more than sixty days before the date
fixed for the meeting.
Section 7. Business transacted at any special
meeting of stockholders shall be limited to the purposes
stated in the notice.
Section 8. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present
in person or represented by proxy, shall constitute a quorum
at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall
not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power
to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting
at which a quorum shall be present or represented any
business may be transacted which might have been
transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after
adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 9. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by
proxy shall decide any question brought before such
meeting, unless the question is one upon which by express
provision of the statutes or of the certificate of
incorporation, a different vote is required in which case such
express provision shall govern and control the decision of
such question.
Section 10. Unless otherwise provided in the
certificate of incorporation and subject to statutory
provisions relating to the fixing of record dates, each
stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such
stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.
Section 11. Any action required to be taken at a
meeting of the stockholders, or any other action which may
be taken at a meeting of the stockholders may be taken
without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by stockholders having not
less than the minimum number of votes that would be
necessary to authorize or to take such action at a meeting at
which all shares entitled to vote thereon were present and
voted.
ARTICLE III
Directors
Section 1. The board of directors shall consist
of ten members, until this Section 1 is amended by a
resolution duly adopted by the board or the stockholders, in
either case in accordance with the terms of the Certificate of
Incorporation. The directors shall be elected at the annual
meeting of the stockholders as provided in Section 2 of
Article II, except as provided in Section 2 of this Article III,
and each director elected shall hold office until his successor
is elected and qualified or until his earlier resignation or
removal. Directors need not be residents of the state of
Delaware or stockholders of this corporation.
Section 2. Vacancies and newly created
directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the
directors then in office, though less than a quorum, and the
directors so chosen shall hold office until their successors
are duly elected and shall qualify, unless sooner displaced.
Section 3. The business of the corporation shall
be managed by or under the direction of its board of
directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not
by statute or by the certificate of incorporation or by these
by-laws directed or required to be exercised or done by the
stockholders.
Section 4. The board of directors at its first
meeting after each annual meeting of stockholders shall
choose a Chairman from among the directors. The
Chairman shall act as Chairman of all meetings of
stockholders and of the board of directors. The Chairman
shall from time to time report to the board of directors all
matters within his knowledge which the interest of the
corporation may require be brought to its notice.
If the Chairman of the Board is not elected, or if
elected, is not present, the President or, in the absence of
the President, a Vice Chairman (who is also a member of
the board and, if more than one, in the order designated by
the board of directors or, in the absence of such designation,
in the order of their election), if any, or if no such Vice
Chairman is present, a director chosen by a majority of the
directors present, shall act as chairman at meetings of
stockholders and of the board of directors.
Section 5. The board of directors of the
corporation may hold meetings, both regular and special,
either within or without the State of Delaware.
Section 6. The first meeting of each newly
elected board of directors shall be held immediately
following and at the place of the annual meeting of
stockholders and no notice of such meeting shall be
necessary to the newly elected directors in order legally to
constitute the meeting, provided a quorum shall be present.
In the event such meeting is not held at such time and place,
the meeting may be held at such other time and place as
shall be specified in a notice given as hereinafter provided
for special meetings of the board of directors, or as shall be
specified in a written waiver signed by all of the directors.
Section 7. Regular meetings of the board of
directors shall be held at such time and at such place as shall
from time to time be determined by resolution of the board.
Written notice of each regular meeting of directors stating
the place, date and time, shall be given to each director at
least five (5) days before such meeting.
Section 8. Special meetings of the board and
meetings of any committee of the board may be called by
the Chairman on one day notice to each director or
committee member, either by telephone, mail, facsimile or
telegram; special meetings of the board of directors shall be
called by the Chairman or secretary in like manner and on
like notice on the written request of two directors.
Section 9. At all meetings of the board a
majority shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of
the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of
incorporation. If a quorum shall not be present at any
meeting of the board of directors the directors present
thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a
quorum shall be present.
Section 10. Any action required or permitted to
be taken at any meeting of the board of directors or of any
committee thereof may be taken without a meeting, if all
members of the board or committee, as the case may be,
consent thereto in writing, and the writing, or writings are
filed with the minutes of proceedings of the board or
committee.
Section 11. Members of the board of directors,
or any committee designated by the board of directors, may
participate in a meeting of the board of directors, or any
committee, by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person
at the meeting.
Section 12. The board of directors may, by
resolution passed by a majority of the whole board,
designate one or more committees, each committee to
consist of two or more of the directors of the corporation,
which, to the extent provided in the resolution and to the
extent permitted by Delaware Law, shall have and may
exercise the powers of the board of directors in the
management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed
to all papers which may require it. Such committee or
committees shall have such name or names as may be
determined from time to time by resolution adopted by the
board of directors.
Section 13. Each committee shall report to the
board of directors on the actions taken at its meetings, but
need not keep regular minutes thereof unless required to do
so by the board of directors.
Section 14. There shall be an Executive
Committee of the board of directors of the corporation.
The board of directors shall, at its first meeting after the
annual meeting of stockholders in each year, elect a
Chairman and other members of the Committee. The
directors elected as members of the Executive Committee
shall serve as such for one year and until their respective
successors, willing to serve, shall have been elected. The
Executive Committee shall, when the board is not in
session, have and may exercise all of the authority of the
board of directors in the management of the corporation;
provided, however, that the Executive Committee shall not
have the authority of the board of directors in reference to
(1) amending the articles of incorporation, (2) adopting a
plan of merger or adopting a plan of consolidation with
another corporation or corporations, (3) recommending to
the stockholders the sale, lease, exchange, mortgage, pledge
or other disposition of all or substantially all of the property
and assets of the corporation, (4) recommending to the
stockholders a voluntary dissolution of the corporation or a
revocation thereof, (5) amending, altering or repealing the
by-laws of the corporation, (6) electing or removing officers
of the corporation or members of the Executive Committee,
(7) fixing the compensation of any member of the Executive
Committee, (8) declaring dividends, (9) authorizing the
issuance of stock, or (10) amending, altering or repealing
any resolution of the board of directors which by its terms
provides that it shall not be amended, altered or repealed by
the Executive Committee; provided further, that in the event
of the death, disability or refusal to act of the chief
executive officer or the Chairman, the Executive Committee
shall appoint a chief executive officer or a Chairman who
shall serve until the next meeting of the board of directors.
Vacancies in the regular membership of the Executive
Committee shall be filled by the board of directors.
Section 15. The board of directors shall have the
authority to fix the compensation of directors.
ARTICLE IV
Notices
Section 1. Notices to stockholders shall be in
writing and delivered personally or mailed to the
stockholders at their addresses appearing on the books of
the corporation. Notice by mail shall be deemed to be given
at the time when the same shall be mailed.
Section 2. Whenever any notice is required to
be given under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, a waiver
thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE V
Officers
Section 1. The officers of the corporation shall
be chosen by the board of directors and shall be a chief
executive officer, a president, a vice president, a secretary
and a treasurer. The board of directors may also choose
additional vice presidents, executive vice presidents, senior
vice presidents, assistant secretaries and assistant treasurers.
Two or more offices may be held by the same person.
Section 2. The board of directors at its first
meeting after each annual meeting of stockholders shall
choose a chief executive officer, a president and one or
more vice presidents, a secretary and a treasurer, none of
whom need be a member of the Board.
Section 3. The board of directors may appoint such
other officers and agents as it shall deem necessary who
shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from
time to time by the board.
Section 4. The officers of the corporation shall
hold office until their successors are chosen and qualify.
Any officer elected or appointed by the board of directors
may be removed at any time by the affirmative vote of a
majority of the board of directors. Except as otherwise
provided in Section 14 of Article III, any vacancy occurring
in any office of the corporation shall be filled by the board
of directors.
Section 5. The chief executive officer of the
corporation shall have, under the direction of the board of
directors, general charge of the affairs of the corporation.
He shall see that all orders and resolutions of the board of
directors are carried into effect. He may execute all
contracts and agreements authorized by the board of
directors and shall vote all shares of stock in other
corporations standing in the name of the corporation. He
may sign bonds, mortgages, certificates for shares of stock
and all other contracts and documents whether or not under
the seal of the corporation except in cases where the signing
and execution thereof shall be expressly delegated by law,
by the board of directors, or by these by-laws, to some
other officer or agent of the corporation. He shall from
time to time report to the board of directors all matters
within his knowledge which the interest of the corporation
may require be brought to its notice. He shall have the
general powers of supervision and shall be the final arbiter
in all differences between all officers of the corporation and
his decision as to any matter affecting the corporation shall
be final and binding as between officers of the corporation
subject only to the board of directors;.
Section 6. The president shall have the direction
and active management of the business of the corporation
under the general supervision of the chief executive officer.
He shall have concurrent power with the chief executive
officer to execute all contracts and agreements authorized
by the board of directors and shall have concurrent power
with the chief executive officer to vote all shares of stock in
other corporations standing in the name of the corporation.
He may sign bonds, mortgages, certificates for shares of
stock and all other contracts and documents whether or not
under the seal of the corporation except in cases where the
signing and execution thereof shall be expressly delegated
by law, by the board of directors, or by these by-laws, to
some other officer or agent of the corporation.
Section 7. The executive vice presidents, senior
vice presidents and vice presidents shall perform such duties
and have such powers as may be prescribed by the board of
directors.
Section 8. The secretary shall keep the minutes
of all meetings of the board of directors, the minutes of all
meetings of the stockholders, the minutes of all meetings of
the committees, which from time to time may be appointed
under authority of these by-laws, in books provided by the
corporation for such purpose. He shall attend to the giving
and serving of all notices of the corporation whereby
meetings of the board of directors, stockholders and
committees are assembled. He shall prepare all lists of
stockholders and their addresses required to be prepared by
the provisions of any present or future statute of the State
of Delaware. He may sign, with the chief executive officer
or the president or a vice president, in the name of the
corporation, when authorized by the board of directors so
to do, all contracts or other instruments requiring the seal of
the corporation and may affix the seal thereto. He shall
have concurrent power, acting alone or jointly, with the
chief executive officer, or the president to vote all shares of
stock in other corporations the majority of the voting stock
of which is owned by the corporation. He shall have charge
of such books and such papers as the board of directors may
direct. He shall, in general, perform all of the duties which
are incident to the office of secretary of a corporation,
subject at all times, to the direction and control of the board
of directors.
Section 9. The treasurer shall have custody of
all funds and securities of the corporation. When necessary
or proper he shall endorse for collection checks, drafts and
other instruments for the payment of money and shall
deposit them to the credit of the corporation in an
authorized bank or depository. Whenever required by the
board of directors, he shall render an account of his
transactions. He shall perform all acts incident to the
position of treasurer, subject to the control of the board of
directors. He shall have such powers and perform such
duties as may be assigned to him by the board of directors.
He shall submit such reports and records to the board of
directors as may be requested by them.
ARTICLE VI
Certificates of Stock
Section 1. The shares of the corporation shall be
represented by certificates signed by the chief executive
officer or the Chairman or the president or a vice president
and by the treasurer or an assistant treasurer or the secretary
or an assistant secretary and may be sealed with the seal, or
a facsimile of the seal of the corporation. In case the seal of
the corporation is changed after the certificate is sealed with
the seal or a facsimile of the seal of the corporation, but
before it is issued, the certificate may be issued by the
corporation with the same effect as if the seal had not been
changed. Any or all signatures on the certificate may be a
facsimile. In case any officer of the corporation, transfer
agent or registrar, or any officer or employee of the transfer
agent or registrar who has signed or whose facsimile
signature has been placed upon such certificate ceases to be
an officer of the corporation, transfer agent or registrar
before such certificate is issued, the certificate may be
issued by the corporation with the same effect as if the
officer of the corporation, transfer agent or registrar had not
ceased to be such at the date of its issue.
Section 2. The board of directors may by
resolution adopt such procedures as it deems appropriate
for the issuance of certificates to replace certificates which
have
been lost, stolen or destroyed.
Section 3. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the
person entitled thereto, cancel the old certificate and record
the transaction upon its books.
Section 4. In order that the corporation may
determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or
to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty
days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of
the meeting: provided, however, that the board of directors
may fix a new record date for the adjourned meeting.
ARTICLE VII
General Provisions
Section 1. Dividends upon the capital stock of
the corporation, subject to the provisions of the certificate
of incorporation, if any, may be declared by the board of
directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the certificate
of incorporation.
Section 2. The board of directors may set apart
out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and
may abolish any such reserve.
Section 3. The chief executive officer shall
present at each annual meeting, and at any special meeting
of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and
condition of the corporation.
Section 4. All checks or demands for money and
notes of the corporation shall be signed by such officer or
officers or such other person or persons as the board of
directors may from time to time designate.
Section 5. The fiscal year of the corporation
shall be fixed by resolution of the board of directors.
Section 6. The corporate seal shall have
inscribed thereon the name of the corporation and the words
"Corporate Seal, Delaware". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise.
ARTICLE VIII
Indemnification
Section 1. The Corporation shall indemnify any
director, officer or employee who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil,
criminal, administrative or investigative other than an action
by or in the right of the Corporation) by reason of the fact
that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with
such action, suit or proceeding in accordance with, and to
the fullest extent authorized by, the General Corporation
Law of the State of Delaware as it may be in effect from
time to time.
Section 2. The indemnification provided by this
article shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a
director, officer or employee and shall inure to the benefit of
the heirs, executors and administrators of such a person.
Section 3. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether
or not he would be entitled to indemnify against such
liability under the provisions of this article.
ARTICLE IX
Amendments
Section 1. These by-laws may be altered or
repealed at any regular meeting of the stockholders or of the
board of directors or at any special meeting of the
stockholders or of the board of directors if notice of such
alteration or repeal be contained in the notice of such
special meeting.
EXHIBIT (4g)
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 6, 1995
among
ZENITH ELECTRONICS CORPORATION,
as Borrower,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender,
THE BANK OF NEW YORK COMMERCIAL CORPORATION,
as Lender,
and
CONGRESS FINANCIAL CORPORATION,
as Lender
TABLE OF CONTENTS
PAGE
1. AMOUNT AND TERMS OF CREDIT. . . . . . . . . . . . . . . . .1
1.1 Revolving Credit Advances . . . . . . . . . . . . . .1
1.2 Prepayment. . . . . . . . . . . . . . . . . . . . . .2
1.3 Required Annual Reduction . . . . . . . . . . . . . .5
1.4 Letters of Credit . . . . . . . . . . . . . . . . . .6
1.5 Use of Proceeds . . . . . . . . . . . . . . . . . . .6
1.6 Single Loan . . . . . . . . . . . . . . . . . . . . .6
1.7 Interest on Revolving Credit Loan . . . . . . . . . .6
1.8 Eligible Accounts . . . . . . . . . . . . . . . . . .9
1.9 Eligible Inventory. . . . . . . . . . . . . . . . . .9
1.10 Fees. . . . . . . . . . . . . . . . . . . . . . . . .9
1.11 Cash Management Systems . . . . . . . . . . . . . . 10
1.12 Receipt of Payments . . . . . . . . . . . . . . . . 10
1.13 Application and Allocation of Payments. . . . . . . 10
1.14 Borrower's Loan Account and Accounting. . . . . . . 11
1.15 Indemnity . . . . . . . . . . . . . . . . . . . . . 11
1.16 Access. . . . . . . . . . . . . . . . . . . . . . . 13
1.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . 14
1.18 Capital Adequacy and Other Adjustments. . . . . . . 15
1.19 Amendment and Restatement . . . . . . . . . . . . . 17
2. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . 18
2.1 Conditions to the Effectiveness
of this Agreement . . . . . . . . . . . . . . . . . 18
2.2 Further Conditions to Each Revolving Credit Advance
and Each of the Letter of Credit Obligations. . . . 19
3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 19
3.1 Corporate Existence; Compliance with Law. . . . . . 20
3.2 Executive Offices . . . . . . . . . . . . . . . . . 20
3.3 Corporate Power; Authorization;
Enforceable Obligations . . . . . . . . . . . . . . 20
3.4 Financial Statements. . . . . . . . . . . . . . . . 21
3.5 Collateral Reports. . . . . . . . . . . . . . . . . 21
3.6 Material Adverse Effect . . . . . . . . . . . . . . 21
3.7 Ownership of Property; Liens. . . . . . . . . . . . 22
3.8 Restrictions; No Default. . . . . . . . . . . . . . 22
3.9 Labor Matters . . . . . . . . . . . . . . . . . . . 23
3.10 Joint Ventures, Subsidiaries and
Affiliates; Outstanding Stock and Indebtedness. . . 23
3.11 Government Regulation . . . . . . . . . . . . . . . 24
3.12 Margin Regulations. . . . . . . . . . . . . . . . . 24
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . 25
3.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . 25
3.15 No Litigation . . . . . . . . . . . . . . . . . . . 27
3.16 Brokers . . . . . . . . . . . . . . . . . . . . . . 27
3.17 Patents, Trademarks, Copyrights and Licenses. . . . 27
3.18 Full Disclosure . . . . . . . . . . . . . . . . . . 27
3.19 Hazardous Materials . . . . . . . . . . . . . . . . 28
3.20 Insurance Policies. . . . . . . . . . . . . . . . . 28
3.21 Deposit and Disbursement Accounts . . . . . . . . . 28
3.22 Government Contracts. . . . . . . . . . . . . . . . 28
3.23 Customer and Trade Relations. . . . . . . . . . . . 29
3.24 Non-Material Subsidiaries . . . . . . . . . . . . . 29
4. FINANCIAL STATEMENTS AND INFORMATION. . . . . . . . . . . 29
4.1 Reports and Notices . . . . . . . . . . . . . . . . 29
4.2 Communication with Accountants. . . . . . . . . . . 30
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 30
5.1 Maintenance of Existence and Conduct of Business. . 30
5.2 Payment of Obligations. . . . . . . . . . . . . . . 30
5.3 Books and Records . . . . . . . . . . . . . . . . . 31
5.4 Litigation. . . . . . . . . . . . . . . . . . . . . 31
5.5 Insurance . . . . . . . . . . . . . . . . . . . . . 31
5.6 Compliance with Laws. . . . . . . . . . . . . . . . 33
5.7 Agreements. . . . . . . . . . . . . . . . . . . . . 33
5.8 Supplemental Disclosure . . . . . . . . . . . . . . 33
5.9 Employee Plans. . . . . . . . . . . . . . . . . . . 33
5.10 Environmental Matters . . . . . . . . . . . . . . . 34
5.11 Landlords' Agreements and Bailee Letters. . . . . . 34
5.12 Public Offering Proceeds. . . . . . . . . . . . . . 34
5.13 Notice of Labor Matters . . . . . . . . . . . . . . 34
5.14 Government Contracts. . . . . . . . . . . . . . . . 35
6. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . 35
6.1 Mergers, Etc. . . . . . . . . . . . . . . . . . . . 35
6.2 Investments, Loans and Advances.. . . . . . . . . . 36
6.3 Indebtedness. . . . . . . . . . . . . . . . . . . . 38
6.4 Employee Loans and Transactions . . . . . . . . . . 38
6.5 Capital Structure and Business. . . . . . . . . . . 39
6.6 Guaranteed Indebtedness . . . . . . . . . . . . . . 39
6.7 Liens . . . . . . . . . . . . . . . . . . . . . . . 40
6.8 Sale of Assets. . . . . . . . . . . . . . . . . . . 40
6.9 Events of Default . . . . . . . . . . . . . . . . . 41
6.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . 41
6.11 Financial Covenants . . . . . . . . . . . . . . . . 41
6.12 Hazardous Materials . . . . . . . . . . . . . . . . 41
6.13 Sale-Leasebacks . . . . . . . . . . . . . . . . . . 42
6.14 Cancellation of Indebtedness. . . . . . . . . . . . 42
6.15 Restricted Payments . . . . . . . . . . . . . . . . 42
6.16 Fiscal Year . . . . . . . . . . . . . . . . . . . . 42
6.17 Change of Corporate Name. . . . . . . . . . . . . . 42
6.18 Sale of Stock . . . . . . . . . . . . . . . . . . . 43
6.19 Bank Accounts . . . . . . . . . . . . . . . . . . . 43
6.20 Cash Management . . . . . . . . . . . . . . . . . . 43
6.21 Non-Material Subsidiaries . . . . . . . . . . . . . 44
6.22 Foreign Subsidiaries. . . . . . . . . . . . . . . . 44
6.23 No Impairment of Upstreaming. . . . . . . . . . . . 45
6.24 Amendment of Other Debt . . . . . . . . . . . . . . 45
6.25 Prepayments of Other Debt . . . . . . . . . . . . . 45
7. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.1 Termination . . . . . . . . . . . . . . . . . . . . 45
7.2 Survival of Obligations Upon Termination of
Financing Arrangement . . . . . . . . . . . . . . . 46
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES. . . . . . . . . . 46
8.1 Events of Default . . . . . . . . . . . . . . . . . 46
8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . 48
8.3 Waivers by Borrower . . . . . . . . . . . . . . . . 49
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT . . . 49
9.1 Assignment and Participations . . . . . . . . . . . 49
9.2 Appointment of Agent. . . . . . . . . . . . . . . . 51
9.3 Set Off and Sharing of Payments . . . . . . . . . . 52
9.4 Disbursement of Funds . . . . . . . . . . . . . . . 53
9.5 Disbursements of Advances, Payments
and Information . . . . . . . . . . . . . . . . . . 53
10. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . 56
10.1 Successors and Assigns. . . . . . . . . . . . . . . 56
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 56
11.1 Complete Agreement; Modification of Agreement . . . 56
11.2 Amendments and Waivers. . . . . . . . . . . . . . . 56
11.3 Fees and Expenses . . . . . . . . . . . . . . . . . 58
11.4 No Waiver . . . . . . . . . . . . . . . . . . . . . 59
11.5 Remedies. . . . . . . . . . . . . . . . . . . . . . 60
11.6 Severability. . . . . . . . . . . . . . . . . . . . 60
11.7 Conflict of Terms . . . . . . . . . . . . . . . . . 60
11.8 Authorized Signature. . . . . . . . . . . . . . . . 60
11.9 GOVERNING LAW; CONSENT TO JURISDICTION. . . . . . . 61
11.10 Notices . . . . . . . . . . . . . . . . . . . . . . 61
11.11 Section Titles. . . . . . . . . . . . . . . . . . . 62
11.12 Counterparts. . . . . . . . . . . . . . . . . . . . 62
11.13 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . 62
11.14 Confidentiality . . . . . . . . . . . . . . . . . . 62
11.15 Reaffirmation of Guaranty . . . . . . . . . . . . . 63
INDEX OF EXHIBITS AND SCHEDULES
Exhibit A-1 - Form of Notice of Revolving Credit Advance
Exhibit A-2 - Form of Conversion/Continuation Notice
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Amended Revolving Credit Note
Schedule 1.1(a) - Responsible Individual of Agent
Schedule 1.2(b) - Material Assets
Schedule 1.8 - Eligible Accounts
Schedule 1.9A - Eligible Inventory
Schedule 1.9B - Locations of Eligible Inventory
Schedule 1.11 - List of Lock Box and Collection Account
Banks
Schedule 3.2 - Executive Offices
Schedule 3.4 - Financial Statements
Schedule 3.5 - Collateral Reports
Schedule 3.7 - Real Estate and Leases
Schedule 3.9 - Labor Matters
Schedule 3.10 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Schedule 3.13 - Tax Matters
Schedule 3.14 - ERISA Plans
Schedule 3.17 - Patents, Trademarks and Copyrights
Schedule 3.20, I - Insurance Standards
Schedule 3.20, II - Insurance Policies
Schedule 3.21 - Deposit and Disbursement Accounts
Schedule 3.22 - Government Contracts
Schedule 4.1(A) - Financial Statements and Notices --
Reporting
Schedule 4.1(B) - Collateral Reports -- Reporting
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.7 - Liens
Schedule 6.11 - Financial Covenants
Schedule 9.5(A)(3) - Lenders' Accounts
Schedule 11.8 - Authorized Signatures
Schedule 11.10 - Notice Addresses
Schedule A - Definitions
Schedule B - Letters of Credit
Schedule C - Cash Management Systems
Schedule D - Schedule of Documents
Schedule E - Tuning System Patents
Schedule F - Revolving Loan Commitments
Schedule G - Fiscal Periods
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated
as of November 6, 1995 among ZENITH ELECTRONICS CORPORATION, a
Delaware corporation ("Borrower"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity,
"GE Capital"), for itself, as Lender, and as Agent for Lenders (the
"Agent"), THE BANK OF NEW YORK COMMERCIAL CORPORATION, a New York
corporation ("BNYCC"), as Lender, and CONGRESS FINANCIAL
CORPORATION, a California corporation ("Congress"), as Lender.
RECITALS
A. The parties hereto are parties to a Credit Agreement
dated as of May 21, 1993, as amended (the "Initial Credit
Agreement") pursuant to which the Lenders provided aggregate
Commitments of up to $90,000,000.
B. The parties hereto are parties to a First Amended
and Restated Credit Agreement dated as of May 10, 1995 (the "Prior
Credit Agreement"), pursuant to which the parties amended and
restated the terms of the Initial Credit Agreement.
C. The parties hereto desire to amend and restate the
Prior Credit Agreement to incorporate such further amendments as
the parties have mutually agreed upon.
D. Capitalized terms used in this Agreement shall have
the meanings ascribed to them in Schedule A. All Schedules,
Exhibits and other attachments hereto, or expressly identified to
this Agreement, are incorporated herein by reference and, taken
together, shall constitute but a single agreement. These Recitals
shall be construed as part of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as
follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Revolving Credit Advances. (a) Upon and subject to
the terms and conditions hereof, each Lender agrees to make
available, from time to time, until the Commitment Termination
Date, for Borrower's use and upon the request of Borrower therefor,
its Pro Rata Share of advances (each, a "Revolving Credit Advance")
against Eligible Accounts and Eligible Inventory in an aggregate
amount outstanding which, pursuant to Section 1.1(b) below, shall
not at any given time exceed the lesser at such time of (i) the
Maximum Revolving Credit Loan ($110,000,000 as of the Closing Date,
as such amount may be reduced from time to time pursuant to the
terms of this Agreement) minus the Letter of Credit Obligations,
and (ii) an amount equal to the Borrowing Base minus the Letter of
Credit Obligations (collectively, "Borrowing Availability"), in any
case less such reserves as Agent in its reasonable credit judgment
may deem appropriate from time to time. In addition, the aggregate
of the Revolving Credit Advances and Letter of Credit Obligations
outstanding hereunder from time to time, plus the principal balance
of the Term Loan from time to time outstanding shall not exceed the
lesser of (i) $150,000,000 and (ii) the Borrowing Base, in any case
less such reserves as Agent in its reasonable credit judgment may
deem appropriate from time to time. To the extent reasonably
practicable Agent shall notify Borrower before implementing any
such reserve. Until all amounts outstanding in respect of the
Revolving Credit Loan shall become due and payable on the
Commitment Termination Date, Borrower may, subject to the terms and
conditions hereof, from time to time borrow, repay and reborrow
under this Section 1.1(a). Each Revolving Credit Advance that is
a Base Rate Loan shall be made on notice by Borrower to the
individual responsible for Borrower as identified on Schedule
1.1(a) at the address specified thereon, given no later than 12:00
noon (New York time) on the Business Day of the proposed Revolving
Credit Advance; each such notice (a "Notice of Revolving Credit
Advance") shall be in the form of Exhibit A-1 hereto, specifying
therein the requested date, the amount of such Revolving Credit
Advance, and such other information as may be reasonably requested
by Agent and shall be given in writing (by telecopy, telex or
cable) or by telephone confirmed immediately in writing in the form
of Exhibit A-1. Each Revolving Credit Advance that is a LIBOR Loan
shall be made on delivery by Borrower to Agent of a Notice of
Revolving Credit Advance or a Conversion/Continuation Notice in the
form of Exhibit A-2 in accordance with Section 1.7(g) hereof.
Agent shall be entitled to rely upon, and shall be fully protected
under this Agreement in relying upon, any Notice of Revolving
Credit Advance and Conversion/Continuation Notice believed by Agent
to be genuine and to assume that each Person executing and
delivering the same was duly authorized unless the responsible
individual acting thereon for Agent shall have, at the time of
reliance thereon, actual knowledge to the contrary.
(b) Borrower shall execute and deliver to each Lender an
amended note to evidence the Revolving Credit Loan, such note to be
in the principal amount of the Revolving Loan Commitment of such
Lender, dated the Closing Date and substantially in the form of
Exhibit C hereto (each an "Amended Revolving Credit Note" and,
collectively, the "Amended Revolving Credit Notes"). The Amended
Revolving Credit Notes shall represent, in the aggregate, the
obligation of Borrower to pay the amount of the Maximum Revolving
Credit Loan or, if less, the aggregate unpaid principal amount of
all Revolving Credit Advances made by Lenders to Borrower and all
other Obligations with interest thereon as prescribed in Section
1.7. The entire unpaid balance of the Revolving Credit Loan shall
be immediately due and payable on June 30, 1998, or, if earlier,
upon any acceleration of the Obligations.
1.2 Prepayment. (a) If the outstanding balance of the
Revolving Credit Loan shall, at any time, exceed the lesser at such
time of (i) the Maximum Revolving Credit Loan minus the Letter of
Credit Obligations, and (ii) the Borrowing Base minus the Letter of
Credit Obligations, Borrower shall immediately prepay the Revolving
Credit Loan in the amount of such excess. In addition, if the
outstanding balance of the Revolving Credit Loan shall at any time
exceed the lesser at such time of (i) $150,000,000 minus the sum of
the then outstanding balance of the Term Loan and Letter of Credit
Obligations and (ii) the Borrowing Base minus the sum of the then
outstanding balance of the Term Loan and the Letter of Credit
Obligations, Borrower shall immediately prepay the Revolving Credit
Loan in the amount of such excess.
(b) Notwithstanding any provision herein contained to
the contrary, so long as no Default or Event of Default has
occurred and is continuing or would result after giving effect
thereto, Borrower may or may cause its Subsidiaries, as applicable,
to (i) sell those Material Assets listed on Schedule 1.2(b)
consisting of vacant or unused land or buildings; (ii) sell or sell
and lease back those Material Assets designated as "Sale-Lease-Back
Properties" on Schedule 1.2(b); provided, however, that in the case
of a sale and lease back of real property at which Collateral is or
may be kept, Borrower or such Subsidiary shall have obtained a
landlord waiver and consent from the proposed owner of such
property, in form and substance satisfactory to Agent, in its sole
discretion, prior to consummation of such transaction; (iii)
pledge, mortgage or otherwise encumber those Material Assets and
incur Indebtedness secured by those Material Assets (other than the
Tuning System Patent Licenses) designated as "Pledge Assets" on
Schedule 1.2(b) and (iv) so long as the Term Loan has been
indefeasibly paid in full in cash and all commitments to make the
Term Loan have been terminated, pledge or otherwise encumber
Material Assets consisting of the Tuning System Patent Licenses
and/or the General Intangibles constituting rights to receive
royalty payments thereunder and incur Indebtedness secured thereby,
subject to the following conditions:
(A) Any Material Assets sold in accordance herewith
shall be offered and sold on an arms' length basis to a Person that
is not an Affiliate of Borrower or any of its Subsidiaries; the
structure of any such Material Asset sale may be through a stock
sale, asset sale or any similar structure or combination thereof;
Borrower shall fully disclose the terms of any such sale to Agent
in writing not less than fifteen (15) Business Days prior to
becoming legally bound or committed thereto; all sales shall be
either for cash consideration only or for a combination of cash
consideration and non-cash consideration such that no more than
thirty-five percent (35%) of the total consideration shall consist
of non-cash consideration, unless Agent shall otherwise consent,
which consent shall not be unreasonably withheld, and all non-cash
consideration, if any, shall be pledged to Agent for the benefit of
the Lenders;
(B) In the case of sale-lease-back transactions of
Material Assets permitted hereby, Borrower shall fully disclose the
terms of any such transaction to Agent in writing not less than
fifteen (15) Business Days prior to becoming legally bound or
committed thereto; the terms of any such sale-lease-back
transaction shall be reasonably acceptable to Agent; and, in the
case of any such transaction involving lease or other payments by
Borrower and/or any of its Subsidiaries in excess of $5,000,000 in
the aggregate over the life of any such lease, the purchaser/lessor
shall have entered into an intercreditor agreement with Agent and
Lenders on terms reasonably satisfactory to Agent; and
(C) In the case of Indebtedness incurred pursuant to
clause (b)(iii) above with respect to Pledge Assets, Borrower shall
fully disclose the terms of any transaction involving Pledge Assets
to Agent in writing not less than fifteen (15) Business Days prior
to becoming legally bound or committed thereto; the terms of any
such transaction involving Pledge Assets, including the terms of
any Indebtedness incurred in connection therewith, shall be
reasonably acceptable to Agent; and, in the case of any such
Indebtedness in excess of $5,000,000, the creditor holding the same
shall have entered into an intercreditor agreement with Agent and
Lenders on terms reasonably satisfactory to Agent.
(D) Except for the Term Loan, in the case of
Indebtedness secured by the Tuning System Patent Licenses, Tuning
System Patents and/or General Intangibles constituting rights to
receive royalty payments under the Tuning System Patent Licenses
(for purposes hereof, the "Tuning System Assets") (1) the gross
proceeds of such Indebtedness prior to deduction of expenses shall
be not less than $20,000,000, (2) Borrower shall fully disclose the
terms of any such transaction involving the Tuning System Assets to
Agent in writing not less than fifteen (15) Business Days prior to
becoming legally bound or committed thereto, (3) except as set
forth in the immediately succeeding paragraph, such Indebtedness
shall have no scheduled payments of principal due sooner than the
second anniversary of the closing date thereof and shall bear
interest at a rate not to exceed the Base Rate (or any similarly
established prime rate or base rate) plus 1% per annum (absent a
default and without regard to any imputed interest related to any
warrant issued in connection with such Indebtedness), (4) such
Indebtedness shall be secured solely by the Tuning System Assets
and (5) such Indebtedness shall be subject to an intercreditor
agreement between the holder of such Indebtedness and Agent and
Lenders on terms reasonably satisfactory to Agent (such
Indebtedness being hereinafter referred to as the "Royalty
Financing").
In connection with any Royalty Financing permitted
pursuant to this Section 1.2(b)(D), (i) Borrower or any of its
Subsidiaries may sell, assign or otherwise transfer the Tuning
System Assets to any wholly-owned Subsidiary of Borrower and (ii)
any transaction in which Borrower or any of its Subsidiaries sells,
assigns or otherwise transfers the Tuning System Assets or
undivided percentage interests therein to any trust, special-
purpose entity or other financial institution, which transaction is
accounted for federal tax purposes as indebtedness of Borrower
and/or its Subsidiaries, shall be deemed to be a pledge and not a
sale of such assets and shall be deemed to be Indebtedness within
the meaning of this Section 1.2(b)(D); provided, that, with respect
to clauses (i) and (ii) above, (a) all such Indebtedness is non-
recourse to Borrower and each Subsidiary of Borrower other than any
Subsidiary formed solely for the purpose of consummating a Royalty
Financing and which has no material assets other than the Tuning
System Assets, (b) the aggregate payments, whether scheduled or
otherwise, made in any period with respect to all such Indebtedness
shall not exceed the revenues generated by the Tuning System Assets
for such period and (c) no such Indebtedness shall terminate,
whether such termination is optional, voluntary or mandatory, on or
prior to June 30, 1998.
No provision herein shall be deemed to prohibit, and the
Lenders hereby consent to, the Term Loan secured by a first
priority security interest in the Tuning System Patent Licenses
and/or General Intangibles constituting rights to receive royalty
payments under the Tuning System Patent Licenses and a second
priority security interest in Accounts, Inventory, other General
Intangibles and Instruments, all in accordance with the Term Loan
Agreement.
Immediately upon the receipt by Borrower of the Net
Proceeds of any Material Asset Disposition (including cash payments
with respect to promissory notes or installment or other deferred
payments received in connection therewith), Borrower shall prepay
the Revolving Credit Loan in an amount equal to such Net Proceeds
or, if less, the then outstanding balance of the Revolving Credit
Loan, but any such prepayment shall not result in a reduction of
the Maximum Revolving Credit Loan. Any prepayment of LIBOR Loans
shall be accompanied by any payment of any payment required under
the terms of Section 1.15(c) hereof.
(c) Borrower shall have the right, subject to the terms
and conditions of the Loan Documents and without premium or
penalty, except as set forth in Section 1.15(c) hereof with respect
to LIBOR Loans, on at least thirty (30) days' prior written notice
to Agent to voluntarily prepay the entire Revolving Credit Loan and
terminate the Revolving Loan Commitments. Upon such a prepayment
and termination, Borrower's right to request and receive Revolving
Credit Advances, and to request the incurrence of Letter of Credit
Obligations, shall simultaneously terminate. Any such prepayment
and termination shall be accompanied by the payment of all accrued
and unpaid interest and all Fees and other Obligations.
1.3 Required Annual Reduction. Borrower shall reduce
the outstanding principal balance of the Revolving Credit Loan
(excluding Letter of Credit Obligations) to $50,000,000 or less in
the aggregate, annually, for at least twenty-one (21) consecutive
days at any time during each period commencing on the first day of
December in each year and ending on the 28th day of February in the
following year.
1.4 Letters of Credit. Subject to the terms and
conditions of this Agreement, including Schedule B, Borrower shall
have the right to request, and each Lender agrees to incur its Pro
Rata Share of, the Letter of Credit Obligations in accordance with
Schedule B.
1.5 Use of Proceeds. Borrower shall utilize the
proceeds of the Revolving Credit Advances solely for (i) the
payment of Fees and expenses in connection with the transactions
contemplated hereby, (ii) the financing of Borrower's and its
Material Subsidiaries' ordinary working capital needs and Capital
Expenditures to the extent permitted hereunder, (iii) the working
capital needs of the following Non-Material Subsidiaries:
Interocean Advertising Corporation, Interocean Advertising
Corporation of California and Interocean Advertising Corporation of
Illinois which shall not exceed $15,000,000 in the aggregate during
any Fiscal Year, and (iv) so long as no Event of Default shall have
occurred and be continuing, the funding of mandatory sinking fund
payments required under the terms of Section 3.04 of the indenture
governing the Subordinated Debt.
1.6 Single Loan. All Revolving Credit Advances, all
Letter of Credit Obligations and all of the other Obligations of
Borrower arising under this Agreement and the other Loan Documents
shall constitute one general Obligation of Borrower secured, until
repaid in full, by all of the Collateral.
1.7 Interest on Revolving Credit Loan. (a) Borrower
shall pay interest to Agent, for the ratable benefit of Lenders, in
arrears (i) (x) with respect to all Base Rate Loans for the
preceding calendar month, on the first day of each calendar month,
commencing on June 1, 1995, and (y) with respect to LIBOR Loans on
the last Business Day of each LIBOR Period, (ii) on the Commitment
Termination Date and (iii) if any interest accrues or remains
payable after the Commitment Termination Date, upon demand by
Agent.
(b) If any interest or other payment on the Revolving
Credit Loan becomes due and payable on a day other than a Business
Day, the maturity thereof shall be extended to the next succeeding
Business Day (except as otherwise provided in the definition of
LIBOR Period) and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such
extension.
(c) Borrower shall pay interest to Agent, for the
ratable benefit of Lenders, on the outstanding balance of the
Revolving Credit Loan, at a floating rate equal to the Base Rate
plus one percent (1.0%) per annum (the "Stated Rate").
Alternatively, so long as no Default or Event of Default shall have
occurred and be continuing, Borrower may, upon delivery of a Notice
of Revolving Credit Advance or Conversion/Continuation Notice to
Agent not less than three Business Days prior to the intended
commencement of a LIBOR Period, elect to have the Loans or a
portion thereof bear interest at a per annum rate equal to the
LIBOR Rate for such Interest Period plus three percent (3%) per
annum (the "Adjusted LIBOR Rate"). Notwithstanding the foregoing,
if in connection with the LGE Transaction, Borrower is obligated to
redeem more than $30,000,000 in principal amount of the Convertible
Debentures, the Stated Rate shall be a floating rate equal to the
Base Rate plus one and one-quarter percent (1.25%) per annum and
the Adjusted LIBOR Rate shall be the LIBOR Rate for each particular
LIBOR Period plus three and one-quarter percent (3.25%) per annum.
Further, notwithstanding the foregoing, if the Stated Rate and
Adjusted LIBOR Rate are determined in accordance with the preceding
sentence, so long as no Event of Default shall have occurred and be
continuing, the Stated Rate shall be reduced to a floating rate
equal to the Base Rate plus one percent (1.0%) per annum at any
time when the Fixed Charge Coverage Ratio as of the last day of any
Fiscal Quarter for the four consecutive Fiscal Quarters then ended
equals or exceeds 1.0:1.0, and the Adjusted LIBOR Rate shall be
reduced to the LIBOR Rate for each particular LIBOR Period plus
three percent (3.0%) per annum at any time when the Fixed Charge
Coverage Ratio as of the last day of any Fiscal Quarter for the
four consecutive Fiscal Quarters then ended equals or exceeds
1.1:1.0. Any reduction or increase in the Stated Rate or the
Adjusted LIBOR Rate based on achievement of the Fixed Charge
Coverage Ratio thresholds set forth above shall be effective from
and after the first day of the first Fiscal Quarter following
delivery to the Lenders of Borrower's unaudited financial
statements for the preceding Fiscal Quarter demonstrating that the
criteria for a reduction or increase in the Stated Rate or Adjusted
LIBOR Rate have been met.
(d) Borrower may elect by 11:00 A.M. (New York time) on,
the third (3rd) Business Day prior to (i) the end of each LIBOR
Period with respect to any LIBOR Loans, or (ii) the date on which
Borrower wishes to convert any Base Rate Loan to a LIBOR Loan, with
respect to a Base Rate Loan, to have all or some portion of the
Revolving Credit Loan bear interest at a LIBOR Rate for one or more
succeeding LIBOR Periods (and to specify that portion of the
Revolving Credit Loan to which such LIBOR Rate shall apply) as
designated by Borrower in a Conversion/Continuation Notice. If no
election is received with respect to a LIBOR Loan by 11:00 A.M.
(New York time) on the third (3rd) Business Day prior to the end of
the applicable LIBOR Period with respect to such LIBOR Loan (or a
Default or Event of Default shall have occurred and is continuing),
such LIBOR Loan shall be converted to a Base Rate Loan at the end
of the LIBOR Period. Borrower shall make such election by
irrevocable notice to Agent and each Lender in writing, by
telecopy. Borrower shall have the option to (1) convert at any
time all or any part of the outstanding Revolving Credit Loan equal
to $5,000,000 and integral multiples of $1,000,000 in excess of
that amount from Base Rate Loans to LIBOR Loans or (2) upon the
expiration of any LIBOR Period applicable to a LIBOR Loan, to
continue all or any portion of such Loan equal to $5,000,000 and
integral multiples of $1,000,000 in excess of that amount as a
LIBOR Loan and the succeeding LIBOR Period(s) of such continued
Loan shall commence on the last day of the LIBOR Period of the Loan
to be continued; provided that LIBOR Loans may only be converted
into Base Rate Loans on the expiration date of a LIBOR Period
applicable thereto; and provided, further, that no outstanding Loan
may be continued as, or be converted into, a LIBOR Loan when any
Default or Event of Default has occurred and is continuing.
(e) All computations of interest and Fees calculated on
a per annum basis shall be made by Agent on the basis of a three
hundred and sixty (360) day year, in each case for the actual
number of days occurring in the period for which such interest is
payable. In the case of Base Rate Loans, the Stated Rate shall be
calculated based on the Base Rate as in effect on each day. Each
determination by Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error or
bad faith.
(f) So long as any Default or Event of Default shall
have occurred and be continuing, the interest rate applicable to
the Obligations shall be increased, at the option of Agent, by two
percent (2%) per annum above the Stated Rate from time to time
applicable (the "Default Rate").
(g) Notwithstanding anything to the contrary set forth
in this Section 1.7, if, at any time until payment in full of all
of the Obligations, the rate of interest payable hereunder exceeds
the highest rate of interest permissible under any law which a
court of competent jurisdiction shall, in a final determination,
deem applicable hereto (the "Maximum Lawful Rate"), then in such
event and so long as the Maximum Lawful Rate would be so exceeded,
the rate of interest payable hereunder shall be equal to the
Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the
Maximum Lawful Rate, Borrower shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total
interest received by Agent, on behalf of Lenders, from the making
of such advances hereunder is equal to the total interest which
would have been received had the interest rate payable hereunder
been (but for the operation of this paragraph) the interest rate
payable since May 10, 1995, as otherwise provided in this Agreement
or the Prior Loan Agreement. Thereafter, the interest rate payable
hereunder shall be the applicable rate of interest prescribed in
Section 1.7 of this Agreement, unless and until the rate of
interest again exceeds the Maximum Lawful Rate, in which event this
paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the
amount which such Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at
the Maximum Lawful Rate. In the event the Maximum Lawful Rate is
calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided
by the number of days in the year in which such calculation is
made. In the event that a court of competent jurisdiction,
notwithstanding the provisions of this Section 1.7(g), shall make
a final determination that a Lender has received interest hereunder
or under any of the other Loan Documents in excess of the Maximum
Lawful Rate, Agent shall, to the extent permitted by applicable
law, promptly apply such excess first to any interest due and not
yet paid hereunder, then to the outstanding principal of the
Obligations, then to Fees and any other unpaid Obligations and
thereafter shall refund any excess to Borrower or as a court of
competent jurisdiction may otherwise order.
1.8 Eligible Accounts. Based on the most recent
Schedule of Accounts delivered by Borrower to Agent and on other
information available to Agent, Agent shall determine in its
reasonable credit judgment which Accounts shall be deemed to be
"Eligible Accounts" for purposes of determining the amounts, if
any, to be advanced to Borrower. In determining whether a
particular Account constitutes an Eligible Account, Agent shall not
include any such Account which is subject to any of the criteria
set forth on Schedule 1.8.
1.9 Eligible Inventory. Based on the most recent
Schedule of Inventory delivered by Borrower to Agent and on other
information available to Agent, Agent shall determine in its
reasonable credit judgment which Inventory shall be deemed to be
"Eligible Inventory" for purposes of determining the amounts, if
any, to be advanced to Borrower. In determining whether any
particular Inventory constitutes Eligible Inventory, Agent shall
not include Inventory which is subject to any of the criteria set
forth on Schedule 1.9A. Without limiting the generality of the
foregoing, Eligible Inventory shall be further limited to finished
goods inventory consisting of color televisions and VCRs
concentrated at no more than the ten (10) locations in the
continental United States which are set forth on Schedule 1.9B or
such other locations in the continental United States, if any, as
may be agreed to in writing by Agent.
1.10 Fees. (a) Borrower shall pay to GE Capital,
individually, the fees specified in that certain Fee Letter dated
May 10, 1995, (the "GE Capital Fee Letter") to the extent payable
after the date hereof, between Borrower and GE Capital at the times
specified for payment therein. The GE Capital Fee Letter dated
March 2, 1993 between Borrower and GE Capital is terminated as of
the date hereof.
(b) As additional compensation for Lenders' costs and
risks in making the Revolving Credit Loan available to Borrower,
Borrower agrees to pay to Agent, for the ratable benefit of
Lenders, in arrears for the preceding month, on the first Business
Day of each month prior to the Commitment Termination Date and on
the Commitment Termination Date, a fee for Borrower's non-use of
funds (the "Non-use Fee") in an amount equal to three-eighths of
one percent (0.375%) per annum of the difference between the
respective daily averages of (i) the Maximum Revolving Credit Loan
and (ii) an amount equal to the Revolving Credit Loan plus Letter
of Credit Obligations outstanding during the period for which the
Non-Use Fee is due.
1.11 Cash Management Systems. On or prior to the
Closing Date, Borrower will establish, and Borrower will maintain,
the cash management systems described on Schedule C.
1.12 Receipt of Payments. Borrower shall make each
payment under this Agreement not later than 2:00 p.m. (New York
time) on the day when due in lawful money of the United States of
America in immediately available funds to the Collection Account.
For purposes of computing interest and fees and determining the
amount of funds available for borrowing by Borrower pursuant to
Section 1.1(a), (a) all payments (including cash sweeps) consisting
of cash, wire or electronic transfers in immediately available
funds shall be deemed received upon deposit in the Collection
Account and notice to Agent of such deposit, and (b) all payments
consisting of checks, drafts or similar non-cash items shall be
deemed received upon receipt of good funds following deposit of
such payment in the Collection Account and notice to Agent of such
deposit.
1.13 Application and Allocation of Payments. Borrower
irrevocably waives the right to direct the application of any and
all payments at any time or times hereafter received from or on
behalf of Borrower, and Borrower irrevocably agrees that Agent
shall have the continuing exclusive right to apply any and all such
payments against the then due and payable Obligations of Borrower
and in repayment of the Revolving Credit Loan and Letter of Credit
Obligations, as Agent may deem advisable, notwithstanding any
previous entry by Agent upon the Loan Account or any other books
and records. In the absence of a specific determination by Agent
with respect thereto, the same shall be applied in the following
order: (i) to then due and payable Fees and expenses payable to
Agent or any Lender; (ii) to then due and payable interest
payments; (iii) to Obligations other than Fees, expenses and
interest and principal payments; and (iv) to then due and payable
principal payments on the Revolving Credit Loan. Agent is
authorized to, and at its option may, make or cause to be made
Revolving Credit Advances on behalf of Borrower for payment of all
Fees, expenses, Charges, costs, principal, interest or other
Obligations owing by Borrower under this Agreement or any of the
other Loan Documents if and to the extent Borrower fails to
promptly pay any such amounts as and when due, even if such
Revolving Credit Advance would cause total Revolving Credit
Advances to exceed Borrowing Availability or the Maximum Revolving
Credit Loan. At Agent's option and to the extent permitted by law,
any advances so made shall be deemed Revolving Credit Advances
constituting part of the Revolving Credit Loan hereunder.
1.14 Borrower's Loan Account and Accounting. Agent
shall maintain a loan account (the "Loan Account") on its books to
record: (a) all Revolving Credit Advances and payments made under
Letter of Credit Obligations, (b) all payments made by Borrower and
(c) all other appropriate debits and credits as provided in this
Agreement with respect to the Obligations. All entries in the Loan
Account shall be made in accordance with Agent's customary
accounting practices as in effect from time to time. Borrower
shall pay all Obligations as such amounts become due or are
declared due pursuant to the terms of this Agreement.
The balance in the Loan Account, as recorded on Agent's
most recent printout or other written statement, shall be
presumptive evidence of the amounts due and owing to Agent and
Lenders by Borrower; provided that any failure to so record or any
error in so recording shall not limit or otherwise affect
Borrower's obligation to pay the Obligations. Agent shall render
to Borrower a monthly accounting of transactions under the
Revolving Credit Loan and setting forth the balance of the Loan
Account. Each and every such accounting shall (absent manifest
error) be deemed final, binding and conclusive upon Borrower in all
respects as to all matters reflected therein, unless Borrower,
within 30 days after the date any such accounting is rendered,
shall notify Agent in writing of any objection which Borrower may
have to any such accounting, describing the basis for such
objection with specificity. In that event, only those items
expressly and reasonably objected to in such notice shall be deemed
to be disputed by Borrower. Agent's determination, based upon the
facts available, of any item objected to by Borrower in such notice
shall (absent manifest error) be final, binding and conclusive on
Borrower, unless Borrower shall notify Agent of its continued
objection within 30 days following Agent's notifying Borrower of
such determination.
1.15 Indemnity. (a) Borrower shall indemnify and hold
each of Agent, Lenders and their respective Affiliates, officers,
directors, employees, attorneys, agents and representatives (each,
an "Indemnified Person"), harmless from and against any and all
suits, actions, proceedings, claims, damages, losses, liabilities
and expenses (including attorneys' fees and disbursements and other
costs of investigations or defense, including those incurred upon
any appeal) which may be instituted or asserted against or incurred
by any such Indemnified Person as the result of credit having been
extended under this Agreement and the other Loan Documents or in
connection with or arising out of the transactions contemplated
hereunder and thereunder, including any and all Environmental
Liabilities and Costs; provided that Borrower shall not be liable
for any indemnification to such Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss,
liability or expense results solely from such Indemnified Person's
gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction after all possible appeals have
been exhausted. NEITHER AGENT, ANY LENDER NOR ANY OTHER
INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY HERETO, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF
SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR DIRECT, INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT
HAVING BEEN EXTENDED UNDER THE LOAN DOCUMENTS.
(b) Borrower hereby acknowledges and agrees that neither
Agent nor any Lender (i) is now, or has ever been, in control of
Borrower's or any of its Subsidiaries' affairs or (ii) has the
capacity through the provisions of the Loan Documents or otherwise
to influence Borrower's or any of its Subsidiaries' conduct with
respect to the ownership, operation or management of any property.
(c) Borrower acknowledges that in connection with
Lenders' arranging to provide the LIBOR Loans from time to time at
the option of Borrower, Lenders may enter into funding arrangements
with third parties ("Funding Arrangements") on terms and conditions
which could result in substantial losses to such Lenders if such
LIBOR Rate funds do not remain outstanding at the interest rates
provided herein for the entire LIBOR Period with respect to which
the LIBOR Rate has been fixed. Consequently, in order to induce
Lenders to provide LIBOR Loans on the terms provided herein and in
consideration for the entering into by Lenders of Funding
Arrangements from time to time in contemplation thereof, if any
LIBOR Loans are either not borrowed after delivery of an
irrevocable borrowing notice under Section 1.7(d) or repaid in
whole or in part prior to the last day of any such LIBOR Period
therefor (whether such failure to borrow or repayment is made
pursuant to any provision of this Agreement or any other Loan
Document or is the result of acceleration, by operation of law or
otherwise), Borrower shall indemnify and hold harmless each Lender
from and against and in respect of any and all losses, costs and
expenses resulting from, or arising out of or imposed upon or
incurred by such Lender by reason of the liquidation or
reemployment of funds acquired or committed to be acquired by such
Lender to fund such LIBOR Loans pursuant to the Funding
Arrangements. The amount of any losses, costs or expenses
resulting in an obligation of Borrower to make a payment pursuant
to the foregoing sentence shall not include any losses attributable
to lost profit to Lenders but shall represent the excess, if any,
of (A) such Lender's cost of borrowing the LIBOR Rate funds
pursuant to the Funding Arrangements over (B) the return to such
Lender on its reinvestment of such funds; provided, however, that
if any Lender terminates any Funding Arrangements in respect of the
LIBOR Rate funds instead of reinvesting the funds, the amount of
such losses, costs and expenses shall include the cost to such
Lender of such termination. In reinvesting any funds borrowed by
any Lender pursuant to the Funding Arrangements, such Lender shall
take into consideration the remaining maturity of such borrowings.
As promptly as practicable under the circumstances, each Lender
shall provide Borrower with its written calculation of all amounts
payable pursuant to the next preceding sentence, and such
calculation shall be binding on the parties hereto unless Borrower
shall object thereto in writing within ten (10) Business Days of
receipt thereof.
1.16 Access. Borrower shall provide full access during
normal business hours, from time to time upon one (1) Business
Day's prior notice, to Agent and any of its officers, employees,
designees, agents and representatives, as frequently as Agent
determines, in its sole discretion, to be appropriate (unless a
Default or Event of Default shall have occurred and be continuing,
in which event Agent and its officers, employees, designees, agents
and representatives shall have access at any and all times and
without any notice), to the properties, facilities, books, records,
suppliers, customers, advisors and employees (including officers)
of Borrower and its Subsidiaries, to the Collateral and, either
through Borrower or with Borrower present (unless a Default or
Event of Default shall have occurred and be continuing, in which
event Agent and its officers, employees, designees, and agents
shall have access directly without going through Borrower or having
Borrower present), to the accountants (including Arthur Andersen
LLP) of Borrower and its Subsidiaries. Without limiting the
generality of the foregoing, Borrower shall (i) permit Agent, and
any of its officers, employees, agents and representatives, to
inspect, audit and make extracts from all of Borrower's and its
Subsidiaries' records, files and books of account and (ii) permit
Agent, and any of its officers, employees, agents and
representatives, to inspect, review and evaluate the Accounts,
Inventory and Borrower's and its Subsidiaries' books and other
records, at Borrower's and its Subsidiaries' locations and at
premises not owned by or leased to Borrower or any Subsidiary of
Borrower. Borrower shall make available to Agent and its counsel,
as quickly as is possible under the circumstances, originals or
copies of all books, records, board minutes, contracts, insurance
policies, environmental audits and reports, business plans, files,
financial statements (actual and pro forma), filings with federal,
state, local and foreign regulatory agencies, and other instruments
and documents which Agent may reasonably request. Borrower shall
deliver any document or instrument necessary for Agent, as it may
from time to time reasonably request, to obtain records from any
service bureau or other Person which maintains records for Borrower
or any Subsidiary of Borrower, and, if any of the records of
Borrower or any Subsidiary of Borrower are maintained with any
service bureau or other Person, shall maintain duplicate records or
supporting documentation on media, including on computer tapes and
discs owned by Borrower. Borrower shall instruct its certified
public accountants and its banking and other financial institutions
to make available to Agent, and its officers, employees, agents and
representatives, such information and records as Agent may from
time to time reasonably request. Notwithstanding the foregoing,
Borrower and its Subsidiaries shall not be required to make
available to Agent, and its officers, employees, designees, agents
and representatives, contracts or other agreements between Borrower
or any of its Subsidiaries and another Person if (i) the disclosure
thereof would violate any government security clearance regulation
applicable to such Person or destroy any attorney-client privilege
that exists in connection with such information or (ii) such
contract or other agreement contains a confidentiality provision
prohibiting its provision to Agent, and its officers, employees,
designees, agents and representatives; provided, that, Borrower and
its Subsidiaries shall use their best efforts to obtain the consent
of any other Persons party to any such contract or other agreement
to the provision of such contract or other agreement to Agent, and
its officers, employees, designees, agents and representatives;
and, provided, further, that, in the event Borrower and its
Subsidiaries are unable to obtain such consent, Borrower and its
Subsidiaries shall provide Agent, and its officers, designees,
agents and representatives, with copies of such contract or other
agreement from which the confidential and privileged information
has been redacted.
1.17 Taxes. (a) Any and all payments by Borrower
hereunder or in respect of the Amended Revolving Credit Notes shall
be made, in accordance with this Section 1.17, free and clear of
and without deduction for any and all present or future Taxes. If
Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or in respect of the Amended
Revolving Credit Notes, (i) the sum payable shall be increased as
much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section 1.17) Agent or Lenders, as applicable,
receive an amount equal to the sum they would have received had no
such deductions been made, (ii) Borrower shall make such deductions
and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable
law.
(b) Except as Borrower shall otherwise consent, each
Lender hereby severally (but not jointly) represents that under
applicable law and treaties in effect on the date of this Agreement
no Taxes will be required to be withheld by Borrower with respect
to any payments to be made to such Lender in respect of this
Agreement, the other Loan Documents or the Revolving Credit Loan.
Each Lender, if any, organized under the laws of a jurisdiction
outside of the United States (a "Foreign Lender") as to which
payments to be made in respect of this Agreement, the other Loan
Documents or the Revolving Credit Loan are wholly or partially
exempt from United States withholding tax under an applicable
statute or tax treaty shall provide to Borrower and Agent (i) two
(2) copies of a properly completed and executed Internal Revenue
Service Form 4224 or Form 1001 or other applicable form,
certificate or document prescribed by the Internal Revenue Service
certifying as to such Foreign Lender's entitlement to such
exemption with respect to payments to be made to such Foreign
Lender in respect of this Agreement, the other Loan Documents or
the Revolving Credit Loan (a "Certificate of Exemption") or (ii) a
letter from any such Foreign Lender stating that it is not entitled
to any such exemption (a "Letter of Non-Exemption"). Prior to
becoming a Lender under this Agreement and within fifteen (15) days
after a written request of Borrower or Agent from time to time
thereafter, each Foreign Lender that becomes a Lender under this
Agreement shall provide a Certificate of Exemption or a Letter of
Non-Exemption to Borrower and Agent.
If a Foreign Lender is entitled to an exemption with
respect to payments to be made to such Foreign Lender in respect of
this Agreement, the other Loan Documents and the Revolving Credit
Loan and does not provide a Certificate of Exemption to Borrower
and Agent within the time periods set forth in the immediately
preceding paragraph, Borrower shall withhold taxes from payments to
such Foreign Lender at the applicable statutory rates and Borrower
shall not be required to pay any additional amounts as a result of
such withholding; provided, that all such withholding shall cease
upon any delivery by such Foreign Lender of a Certificate of
Exemption to Borrower and Agent.
(c) Borrower shall indemnify and pay, within 10 days of
demand therefor, Agent and each Lender for the full amount of Taxes
(including any Taxes imposed by any jurisdiction on amounts payable
under this Section 1.17) paid by Agent or such Lender, as
appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally asserted.
(d) Within 30 days after the date of any payment of
Taxes, Borrower shall furnish to Agent, at its address referred to
in Section 11.10, the original or a certified copy of a receipt
evidencing payment thereof.
1.18 Capital Adequacy and Other Adjustments.
(a) In the event that any Lender shall have determined
that the adoption after the date hereof of any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar
requirements or compliance by any Lender with any request or
directive regarding capital adequacy, reserve requirements or
similar requirements (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) from
any central bank or governmental agency or body having jurisdiction
does or would have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by such Lender
and thereby reducing the rate of return on such Lender's capital as
a consequence of its obligations hereunder, then Borrower shall
from time to time within fifteen (15) days after notice and demand
from such Lender (together with the certificate referred to in the
next sentence and with a copy to Agent) pay to Agent, for the
account of such Lender, additional amounts sufficient to compensate
such Lender for such reduction; provided, however, that,
notwithstanding the foregoing, Borrower shall have no obligation to
make any such payment in the event, if any, that such notice and
demand was sent by such Lender more than ninety (90) days after it
became aware of such law, treaty, governmental (or quasi-
governmental) rule, regulation, guideline or order. A certificate
as to the amount of such cost and showing the basis of the
computation of such cost submitted by such Lender to Borrower and
Agent shall, absent manifest error, be final, conclusive and
binding for all purposes.
(b) If, due to either (i) the introduction of or any
change in or in the interpretation of any law or regulation or (ii)
the compliance with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or maintaining of any Revolving
Credit Advance or portion thereof bearing interest based on the
LIBOR Rate, other than an increase which is already covered as a
result of the reserve adjustment applied to the LIBOR Rate pursuant
to clause (b) of the definition thereof, then Borrower shall from
time to time, upon demand by such Lender (with a copy of such
demand to Agent), pay to Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased
cost, submitted to Borrower, shall be binding and conclusive for
all purposes, absent manifest error. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances
referred to in clause (i) or (ii) above which would result in any
such increased cost to such Lender, such Lender shall, to the
extent not inconsistent with such Lender's internal policies of
general application, use reasonable commercial efforts to minimize
costs and expenses incurred by it and payable to it by Borrower
pursuant to this Section 1.18(b).
(c) Notwithstanding anything to the contrary contained
herein, if the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or
any central bank or other Governmental Authority shall assert that
it is unlawful, for any Lender to agree to make or to make or to
continue to fund or maintain a Revolving Credit Advance bearing
interest based on the LIBOR Rate, then, unless such Lender
determines that it is able to (A) to make, continue to fund or
maintain such Loans which bear interest based on the LIBOR Rate at
another branch or office of such Lender or (B) to maintain such
LIBOR Loan until the end of the respective LIBOR Period, without,
in such Lender's opinion in either case, adversely affecting it or
its Revolving Credit Advances or the income obtained therefrom, on
notice thereof and demand therefor by such Lender to Borrower
through Agent, (i) the obligation of such Lender to agree to make
or to make or to continue to fund or maintain LIBOR Loans shall
terminate and (ii) Borrower shall forthwith prepay in full all such
outstanding LIBOR Loans, together with interest accrued thereon, to
such Lender unless Borrower, within five (5) Business Days after
the delivery of such notice and demand, converts all such Loans
into a Base Rate Loan.
(d) Upon the Agent obtaining actual knowledge of the
occurrence of any of the events set forth in this Section 1.18,
Agent shall promptly notify Borrower of the occurrence of such
event. Borrower shall have the right within five (5) days of
receipt of such notice to convert all outstanding LIBOR Loans to a
Base Rate Loan.
1.19 Amendment and Restatement.
(a) This Agreement amends and restates in its entirety
the Prior Credit Agreement and, upon the effectiveness of this
Agreement, the terms and provisions of the Prior Credit Agreement
shall, subject to this Section 1.19, be superseded hereby.
(b) Upon the effectiveness of this Agreement, all
references to the "Credit Agreement" or "First Amended and Restated
Credit Agreement" contained in the Loan Documents delivered in
connection with the Initial Credit Agreement or the Prior Credit
Agreement shall be deemed to refer to this Second Amended and
Restated Credit Agreement.
(c) Notwithstanding the amendment and restatement of the
Prior Credit Agreement by this Agreement, the Obligations
outstanding under the Prior Credit Agreement shall remain
outstanding as of the date hereof, constitute continuing
Obligations hereunder and shall continue to be secured by the
Collateral.
(d) Unless Borrower elects to deliver updated Schedules
to be attached hereto (other than Schedules 1.1(a), 1.8, 1.9A,
4.1(A), 4.1(B), 6.11, 11.10 and Schedules A, B, C, D, and F
supplied by Agent), the Schedules delivered by Borrower and
attached to the Prior Credit Agreement shall be deemed to have been
delivered pursuant to and attached to this Agreement.
The Obligations outstanding under the Prior Credit
Agreement and the Liens securing payment thereof shall in all
respects be continuing, and this Agreement shall not be deemed to
evidence or result in a novation or repayment and re-borrowing of
such Obligations. In furtherance of and without limiting the
foregoing, from and after the date on which this Agreement becomes
effective, the terms, conditions, and covenants governing the
Obligations that were outstanding under the Prior Credit Agreement
shall be solely as set forth in this Agreement, which shall
supersede the Prior Credit Agreement in its entirety.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Effectiveness of this Agreement.
Notwithstanding any other provision of this Agreement,
this Agreement shall not become effective and the Prior Agreement
shall continue to govern the Obligations until the following
conditions have been satisfied, in Agent's sole discretion, or
waived in writing by Agent:
(a) This Agreement or counterparts hereof shall have
been duly executed by, and delivered to, Borrower, Agent and each
Lender.
(b) Agent shall have received such documents,
instruments and agreements as Agent may request in connection with
the transactions contemplated by this Agreement and the other Loan
Documents, including all documents, instruments and agreements
listed in the Schedule of Documents, each in form and substance
satisfactory to Agent.
(c) Since December 31, 1994, there shall have been (i)
no event the occurrence of which could have a Material Adverse
Effect on the business, operations or prospects of Borrower,
Borrower and its Subsidiaries, taken as a whole, or Borrower and
the Guarantor Subsidiaries, taken as a whole; (ii) no litigation
commenced which is reasonably likely to be determined adversely to
Borrower or its Subsidiaries and which, if so determined, would
have a Material Adverse Effect or would challenge any of the
transactions contemplated by this Agreement and the other Loan
Documents; (iii) no dividends or other distributions to Borrower's
stockholders; (iv) no increase in liabilities, liquidated or
contingent, and no decrease in assets of Borrower or any Guarantor
Subsidiary which could have a Material Adverse Effect; and (v) no
event the occurrence of which could have a Material Adverse Effect
on the financial condition of Borrower or any Guarantor Subsidiary,
except as reflected in Borrower's financial statements as of July
1, 1995 which have been delivered to Agent.
(d) Agent, on behalf of Lenders, shall have received
landlord waivers and consents, in form and substance satisfactory
to Agent, with respect to each leased location, if any, where any
Collateral is or may be located and as to which Agent has not
received such waivers and consents pursuant to the Prior Credit
Agreement.
(e) Agent, on behalf of Lenders, shall have received
bailee letters, in form and substance satisfactory to Agent, with
respect to each warehouse where any Collateral is located, if any,
and as to which Agent has not received such letters pursuant to the
Prior Credit Agreement.
(f) The LGE Transaction shall have been consummated.
2.2 Further Conditions to Each Revolving Credit Advance
and Each of the Letter of Credit Obligations. It shall be a
further condition to the initial and each subsequent Revolving
Credit Advance and the incurrence of the initial and each
subsequent Letter of Credit Obligation that the following
statements shall be true on the date of each such Advance or
incurrence, as the case may be:
(a) All of Borrower's and each Domestic Subsidiary's
representations and warranties contained herein or in any of the
other Loan Documents shall be true and correct on and as of the
Closing Date, and the date on which each such Revolving Credit
Advance is made or Letter of Credit Obligation incurred, as though
made on and as of such date, except to the extent that any such
representation or warranty expressly relates to an earlier date and
except for changes therein expressly permitted by this Agreement.
(b) Borrower and each Guarantor Subsidiary shall be in
full compliance with all of its covenants and other agreements
contained herein or in any of the other Loan Documents.
(c) No event shall have occurred and be continuing, or
would result from the making of any Revolving Credit Advance or the
incurrence of any Letter of Credit Obligation which constitutes or
would constitute a Default or an Event of Default.
(d) After giving effect to such Revolving Credit Advance
or the incurrence of such Letter of Credit Obligation, as the case
may be, the aggregate principal amount of the Revolving Credit Loan
shall not exceed the maximum amount permitted by Section 1.2(a)
without requiring that a payment be made to Agent or any Lender.
The request and acceptance by Borrower of the proceeds of any
Revolving Credit Advance and the request by Borrower for the
incurrence by Lenders of any Letter of Credit Obligation shall be
deemed to constitute, as of the date of such request or acceptance,
(i) a representation and warranty by Borrower that all of the
conditions in this Section 2.2 have been satisfied and (ii) a
reaffirmation by Borrower of the granting and continuance of
Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make or continue the Revolving
Credit Loan and incur Letter of Credit Obligations, in each case as
herein provided for, Borrower makes the following representations
and warranties to Agent and each Lender, each and all of which
shall be true and correct as of the date of execution and delivery
of this Agreement, and shall survive the execution and delivery of
this Agreement:
3.1 Corporate Existence; Compliance with Law. Borrower
and each of its Subsidiaries (i) is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and has been duly qualified to
conduct business and is in good standing in each other jurisdiction
where its ownership or lease of property or the conduct of its
business requires such qualification; (ii) has the requisite
corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease
the property it operates under lease and to conduct its business as
now, heretofore and proposed to be conducted; (iii) has all
licenses, permits, consents or approvals from or by, and has made
all filings with, and has given all notices to, all Governmental
Authorities having jurisdiction over it, except to the extent, if
any, that failure to have such licenses, permits, consents or
approvals, to have made such filings, or to have given such
notices, either individually or in the aggregate, would not have a
Material Adverse Effect; (iv) is in compliance with its certificate
or articles of incorporation and bylaws; and (v) is in compliance
with all applicable provisions of law, except for any noncompliance
which, either individually or in the aggregate with all
circumstances of noncompliance, could not have or result in a
Material Adverse Effect.
3.2 Executive Offices. As of the Closing Date, the
location of Borrower's and each Subsidiary of Borrower's executive
offices and principal place of business is set forth on Schedule
3.2 and, except as set forth on Schedule 3.2, none of such
locations have changed within the past six (6) months.
3.3 Corporate Power; Authorization; Enforceable
Obligations. The execution, delivery and performance by Borrower
and the Guarantor Subsidiaries of this Agreement and the other Loan
Documents and all instruments and documents to be delivered by
Borrower or any Guarantor Subsidiary hereunder and thereunder (in
each case, to the extent such Person is a party thereto) and the
creation of all Liens provided for herein and therein: (i) are
within Borrower's and each Guarantor Subsidiary's corporate power;
(ii) have been duly authorized by all necessary or proper corporate
and shareholder action; (iii) are not in contravention of any
provision of Borrower's or any Subsidiary of Borrower's certificate
or articles of incorporation or bylaws; (iv) will not violate any
law or regulation, or any order or decree of any court or
governmental instrumentality; (v) will not conflict with or result
in the breach or termination of, constitute a default under or
accelerate any performance required by, any indenture, mortgage,
deed of trust, lease, agreement or other instrument to which
Borrower or any Subsidiary of Borrower is a party or by which
Borrower or any Subsidiary of Borrower or any of its or their
assets or properties is bound, where the consequence of such
conflict, breach, termination, default or acceleration could have
or result in a Material Adverse Effect; (vi) will not result in the
creation or imposition of any Lien upon any of the assets or
properties of Borrower or any Subsidiary of Borrower other than
those on the assets and properties Borrower and the Guarantor
Subsidiaries in favor of Agent, on behalf of itself and Lenders,
pursuant to the Loan Documents; and (vii) do not require the
consent or approval of any Governmental Authority or any other
Person, except those referred to in Section 2.1(d), all of which
will have been duly obtained, made or complied with prior to the
Closing Date. At or prior to the Closing Date, this Agreement and
each of the other Loan Documents shall have been duly executed and
delivered on behalf of or for the benefit of Borrower and the
Guarantor Subsidiaries and each shall then constitute a legal,
valid and binding obligation of Borrower and the Guarantor
Subsidiaries enforceable against Borrower and the Guarantor
Subsidiaries in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency or other similar laws
affecting the rights of creditors generally or by application of
general principles of equity.
3.4 Financial Statements. Borrower has delivered the
financial statements identified on Schedule 3.4 and each such
financial statement complies with the description thereof contained
on Schedule 3.4.
3.5 Collateral Reports. Borrower has delivered the
Collateral Reports identified on Schedule 3.5 and each such
Collateral Report complies with the description thereof contained
on Schedule 3.5.
3.6 Material Adverse Effect. Neither Borrower nor any
of its Subsidiaries, as of December 31, 1994, had any obligations,
contingent liabilities, or liabilities for Charges, long-term
leases or unusual forward or long-term commitments which are not
reflected in the consolidated pro forma balance sheet of Borrower
and its Subsidiaries dated as of such date and which could, alone
or in the aggregate, have or result in a Material Adverse Effect.
Between December 31, 1994 and the Closing Date, there has been (i)
no event the occurrence of which could have a Material Adverse
Effect on the business, operations or prospects of Borrower,
Borrower and its Subsidiaries, taken as a whole, or Borrower and
the Guarantor Subsidiaries, taken as a whole, (ii) no litigation
commenced which is reasonably likely to be determined adversely to
Borrower or its Subsidiaries and which, if so determined, would
have a Material Adverse Effect or would challenge any of the
transactions contemplated by this Agreement and the other Loan
Documents, (iii) no increase in liabilities, liquidated or
contingent, and no decrease in assets of Borrower or any Guarantor
Subsidiary which could have a Material Adverse Effect and (iv) no
event the occurrence of which could have a Material Adverse Effect
on the financial condition of Borrower or any Guarantor Subsidiary,
except as reflected in Borrower's financial statements as of July
1, 1995, which have been delivered to Agent. Since July 1, 1995
and until the Closing Date, no dividends, advances or other
distributions have been declared, paid or made upon any Stock of
Borrower and no shares of Stock of Borrower have been, or are now
required to be, redeemed, retired, purchased or otherwise acquired
for value by Borrower.
3.7 Ownership of Property; Liens. (a) Except as
described on Schedule 3.7, the real estate listed on Schedule 3.7
constitutes all of the real property owned, leased or used in its
business by Borrower or any Subsidiary of Borrower. Borrower, or
such Subsidiary of Borrower, as applicable, (i) holds title to all
of its owned real estate, subject to no Liens other than Permitted
Encumbrances, and has valid leasehold interests in all of its
Leases (both as lessor and lessee, sublessee or assignee), all as
described on Schedule 3.7, and (ii) holds title to, or valid
leasehold interests in, all of its other properties and assets, and
none of the properties or assets of Borrower or any Subsidiary of
Borrower are subject to any Liens, except Permitted Encumbrances.
Borrower or such Subsidiary of Borrower, as applicable, has
received all deeds, assignments, waivers, consents, non-disturbance
and recognition or similar agreements, bills of sale and other
documents, and duly effected all recordings, filings and other
actions necessary to establish, protect and perfect Borrower's or
such Subsidiary's, as appropriate, right, title and interest in and
to all such real estate and other assets and properties that are
material to the conduct of its business or at which Collateral is
located. Except as described on Schedule 3.7, (i) neither Borrower
or any Subsidiary of Borrower nor, to the knowledge of Borrower,
any other party to any such Lease described on Schedule 3.7 is in
material default of its obligations thereunder or has delivered or
received any notice of termination under any such Lease, and no
event has occurred which, with the giving of notice, the passage of
time or both, would constitute a material default under any such
Lease; (ii) on the Closing Date, neither Borrower nor any
Subsidiary of Borrower owns or holds, or is obligated under or a
party to, any option, right of first refusal or any other
contractual right to purchase, acquire, sell, assign or dispose of
any real property owned or leased by Borrower or any Subsidiary of
Borrower except as set forth on Schedule 3.7; and (iii) on the
Closing Date, no portion of any real property owned or leased by
Borrower or any Subsidiary of Borrower has suffered any material
damage by fire or other casualty loss or a Release which has not
heretofore been completely repaired and restored to its original
condition or is being remedied. All permits required to have been
issued or appropriate to enable the real property owned or leased
by Borrower and its Subsidiaries, and material to the conduct of
their respective businesses or at which any Collateral is located,
to be lawfully occupied and used for all of the purposes for which
they are currently occupied and used, have been lawfully issued and
are, as of the date hereof, in full force and effect.
3.8 Restrictions; No Default. No contract, lease,
agreement or other instrument to which Borrower or any Subsidiary
of Borrower is a party or by which it or any of its properties or
assets is bound or affected and no provision of applicable law or
governmental regulation has or results in a Material Adverse Effect
or could have or result in a Material Adverse Effect. Neither
Borrower nor any Subsidiary of Borrower is in default, and, to
Borrower's knowledge, no third party is in default, under or with
respect to any contract, agreement, lease or other instrument to
which it is a party where the consequence of such default, either
individually or when considered in the aggregate with all such
defaults, could have or result in a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
3.9 Labor Matters. There are no strikes which have
lasted more than seven (7) Business Days, or, as of the Closing
Date, other material labor disputes, against Borrower or any
Subsidiary of Borrower that are pending or, to Borrower's
knowledge, threatened. Hours worked by and payment made to
employees of Borrower and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable
federal, state, local or foreign law dealing with such matters.
All payments due from Borrower or any Subsidiary of Borrower on
account of employee health and welfare insurance have been paid or
accrued as a liability on the books of Borrower or the applicable
Subsidiary, as appropriate. As of the Closing Date, neither
Borrower nor any Subsidiary of Borrower has any obligation under
any collective bargaining agreement or any employment agreement
except as set forth on Schedule 3.9 hereto, a true and complete
copy of each of which has been furnished to Agent. As of the
Closing Date, there is no organizing activity involving Borrower or
any Subsidiary of Borrower pending or threatened by any labor union
or group of employees. As of the Closing Date, except as set forth
on Schedule 3.9, there are no representation proceedings pending
or, to Borrower's knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees of
Borrower or any Subsidiary of Borrower has made a demand for
recognition. As of the Closing Date, except as set forth on
Schedule 3.9, there are no complaints or charges involving an
amount in excess of $400,000 against Borrower or any Subsidiary of
Borrower pending or threatened to be filed with any federal, state,
local or foreign court, governmental agency or arbitrator based on,
arising out of, in connection with, or otherwise relating to the
employment or termination of employment of any individual by
Borrower or any Subsidiary of Borrower.
3.10 Joint Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness. Except as set forth on
Schedule 3.10 or as otherwise expressly permitted by the terms of
this Agreement: (i) Borrower has no Subsidiaries, is not engaged,
directly or indirectly through a Subsidiary or otherwise, in any
joint venture or partnership with any other Person, and is not an
Affiliate of any Person other than a Subsidiary of Borrower; (ii)
there are no outstanding rights to purchase, options, warrants or
similar rights or agreements pursuant to which Borrower may be
required to issue or sell any Stock or other equity security of
Borrower and; (iii) Borrower is the sole direct or indirect
beneficial owner of the stock of all of its Subsidiaries. Except
for LGE and as set forth on Schedule 3.10, on the Closing Date, to
Borrower's knowledge, no stockholder of Borrower owns more than
five percent (5%) of any class of its Stock. Except as set forth
on Schedule 3.10, there are no outstanding rights to purchase,
options, warrants or similar rights or agreements pursuant to which
Borrower or any Subsidiary of Borrower may be required to issue or
sell any Stock or other equity security of any Subsidiary. As of
the Closing Date, all outstanding Indebtedness and all Liens of
Borrower and its Subsidiaries are described on Schedule 6.3 and
Schedule 6.7, respectively.
3.11 Government Regulation. Neither Borrower nor any
Subsidiary of Borrower is an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended. Neither Borrower nor any Material
Subsidiary is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act or any other federal, state, local or foreign statute
that restricts or limits its ability to incur Indebtedness or to
perform its obligations hereunder or under any of the other Loan
Documents, and the making of the Revolving Credit Advances and the
incurrence of the Letter of Credit Obligations by Lenders, the
application of the proceeds and repayment thereof by Borrower and
the consummation of the transactions contemplated by this Agreement
and the other Loan Documents does not and will not violate any
provision of any such statute or any rule, regulation or order
issued by the Securities and Exchange Commission or any
Governmental Authority.
3.12 Margin Regulations. Neither Borrower nor any
Subsidiary of Borrower is engaged, nor will it engage, principally
or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin
security" within the respective meanings of each of the quoted
terms under Regulation U or G of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") as now and
from time to time hereafter in effect. None of the proceeds of the
Revolving Credit Advances or any Letter of Credit will be used,
directly or indirectly, for the purpose of purchasing or carrying
any margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of
the loans or other extensions of credit under this Agreement to be
considered a "purpose credit" within the meaning of Regulation G,
T, U or X of the Federal Reserve Board. Neither Borrower nor any
Subsidiary of Borrower will take, or permit any agent acting on its
behalf to take, any action which might cause this Agreement or any
other Loan Document or any document or instrument delivered
pursuant hereto or thereto to violate any regulation of the Federal
Reserve Board.
3.13 Taxes. As of the Closing Date, all federal, state,
local and foreign tax returns, reports and statements required to
be filed by Borrower, or any Subsidiary of Borrower, have been
filed with the appropriate Governmental Authority and all Charges
and other impositions shown thereon to be due and payable have been
paid prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment thereof, or any such
fine, penalty, interest, late charge or loss has been paid.
Borrower and each of its Subsidiaries has paid when due and payable
all Charges required to be paid by it. As of the Closing Date,
proper and accurate amounts have been withheld by Borrower and each
of its Subsidiaries from their respective employees for all periods
in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid
to the respective Governmental Authorities. Schedule 3.13 sets
forth those taxable years for which Borrower's tax returns are
currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened
assessments in connection with such audit or otherwise currently
outstanding. As of the Closing Date, except as described on
Schedule 3.13, Borrower has not executed or filed with the IRS or
any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for
assessment or collection of any Charges. Borrower has not filed a
consent pursuant to IRC Section 341(f) or agreed to have IRC
Section 341(f)(2) apply to any dispositions of subsection (f)
assets (as such term is defined in IRC Section 341(f)(4)). None of
the property owned by Borrower or any Subsidiary of Borrower is
property which Borrower or any Subsidiary of Borrower is required
to treat as being owned by any other Person pursuant to the
provisions of IRC Section 168(f)(8) of the Internal Revenue Code of
1954, as amended, and in effect immediately prior to the enactment
of the Tax Reform Act of 1986 or is "tax-exempt use property"
within the meaning of the IRC Section 168(h). As of the Closing
Date, except as set forth on Schedule 3.13, neither Borrower nor
any Subsidiary of Borrower has agreed or been requested to make any
adjustment under IRC Section 481(a) by reason of a change in
accounting method or otherwise. Neither Borrower nor any
Subsidiary of Borrower has any obligation under any written tax
sharing agreement except as set forth on Schedule 3.13.
3.14 ERISA. (a) Schedule 3.14 lists all Plans
maintained or contributed to by Borrower or any Subsidiary of
Borrower and all Qualified Plans maintained or contributed to by
any ERISA Affiliate, and separately identifies the Title IV Plans,
Multiemployer Plans, any multiple employer plans subject to Section
4064 of ERISA, unfunded Pension Plans, Welfare Plans and Retiree
Welfare Plans. Each Qualified Plan, if any, has been determined by
the IRS to qualify under Section 401 of the IRC, and the trusts
created thereunder have been determined to be exempt from tax under
the provisions of Section 501 of the IRC, and nothing has occurred
which would cause the loss of such qualification or tax-exempt
status. Each Plan is in compliance with the applicable provisions
of ERISA and the IRC, including the filing of reports required
under the IRC or ERISA, all of which are true and correct as of the
date filed, and with respect to each Plan, other than a Qualified
Plan, all required contributions and benefits have been paid in
accordance with the provisions of each such Plan. Neither Borrower
or any Subsidiary of Borrower nor any ERISA Affiliate, with respect
to any Qualified Plan, has failed to make any contribution or pay
any amount due as required by Section 412 of the IRC or Section 302
of ERISA or the terms of any such Plan. With respect to all
Retiree Welfare Plans, the present value of future anticipated
expenses pursuant to the latest actuarial projections of
liabilities does not exceed $50,000 and copies of such latest
projections have been provided to Agent; with respect to Pension
Plans, other than Qualified Plans, the present value of the
liabilities for current participants thereunder using the PBGC
interest rate for immediate annuities in effect on the Closing Date
does not exceed $50,000. Neither Borrower nor any Subsidiary of
Borrower has engaged in a prohibited transaction, as defined in
Section 4975 of the IRC or Section 406 of ERISA, in connection with
any Plan.
(b) Except as set forth on Schedule 3.14: (i) no Title
IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or
event described in Section 4062(e) of ERISA with respect to any
Title IV Plan has occurred or is reasonably expected to occur;
(iii) there are no pending or, to the knowledge of Borrower,
threatened claims, actions or lawsuits (other than claims for
benefits in the normal course), asserted or instituted against (x)
any Plan or its assets, (y) any fiduciary with respect to any Plan
or (z) Borrower, any Subsidiary of Borrower or any ERISA Affiliate
with respect to any Plan; (iv) neither Borrower or any Subsidiary
of Borrower nor any ERISA Affiliate has incurred or reasonably
expects to incur any Withdrawal Liability (and no event has
occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 of ERISA
as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years neither Borrower
or any Subsidiary of Borrower nor any ERISA Affiliate has engaged
in a transaction which resulted in a Title IV Plan with Unfunded
Liabilities being transferred outside of the "controlled group"
(within the meaning of Section 4001(a)(14) of ERISA) of any such
entity; (vi) no Plan which is a Retiree Welfare Plan provides for
continuing benefits or coverage for any participant or any
beneficiary of a participant after such participant's termination
of employment (except as may be required by Section 4980B of the
IRC and at the sole expense of the participant or the beneficiary
of the participant); Borrower, each Subsidiary of Borrower and each
ERISA Affiliate have complied with the notice and continuation
coverage requirements of Section 4980B of the IRC and the
regulations thereunder; and (vii) no liability under any Plan has
been funded, nor has any such obligation been satisfied, with the
purchase of a contract from an insurance company that is not rated
AAA by the Standard & Poor's Corporation and the equivalent by each
other nationally recognized rating agency.
3.15 No Litigation. Except as set forth in writing to
Agent, on behalf of itself and Lenders, in that certain letter of
even date herewith (the "Disclosure Letter"), as of the Closing
Date, no action, claim or proceeding is now pending or, to the
knowledge of Borrower, threatened against Borrower, or any
Subsidiary of Borrower, at law, in equity or otherwise, before any
court, board, commission, agency or instrumentality of any federal,
state, local or foreign government or of any agency or subdivision
thereof, or before any arbitrator or panel of arbitrators, (i)
which challenges Borrower's or any Domestic Subsidiary's right,
power or competence to enter into or perform any of its obligations
under this Agreement or any of the other Loan Documents, or the
validity or enforceability of any Loan Document or any action taken
thereunder or (ii) which seeks monetary damages in excess of
$400,000 or injunctive relief, nor to the knowledge of Borrower
does a state of facts exist which is reasonably likely to give rise
to such proceedings.
3.16 Brokers. No broker or finder acting on behalf of
Borrower brought about the obtaining, making or closing of the
loans made pursuant to this Agreement or the transactions
contemplated by the Loan Documents and neither Borrower nor any
Subsidiary of Borrower, nor Agent or any Lender by reason of any
action of Borrower, has any obligation to any Person in respect of
any finder's or brokerage fees in connection therewith.
3.17 Patents, Trademarks, Copyrights and Licenses.
Except as otherwise set forth on Schedule 3.17, Borrower owns all
licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications and trade names necessary to
continue to conduct its business as heretofore conducted by it and
its Subsidiaries, now conducted by it and its Subsidiaries and
proposed to be conducted by it or any of its Subsidiaries each of
which is listed, together with Patent and Trademark Office
application or registration numbers, where applicable, on Schedule
3.17. Schedule 3.17 lists all tradenames or other names under
which Borrower or any Subsidiary of Borrower conducts business.
Except as otherwise set forth in the Disclosure Letter, Borrower
and each of its Subsidiaries conducts its business without
infringement or claim of infringement of any license, patent,
copyright, service mark, trademark, trade name, trade secret or
other intellectual property right of others. Except as otherwise
set forth on Schedule 3.17, there is no infringement or claim of
infringement by others of any license, patent, copyright, service
mark, trademark, trade name, trade secret or other intellectual
property right of Borrower or any Subsidiary of Borrower.
3.18 Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, the Disclosure Letter,
the Financial Statements, the Collateral Reports or any written
statement furnished by or on behalf of Borrower or any Subsidiary
of Borrower pursuant to the terms of this Agreement, which has
previously been delivered to Agent or any Lender, contains any
untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein
not misleading in light of the circumstances under which they were
made. The Liens granted to Agent, on behalf of itself and Lenders,
pursuant to the Collateral Documents will at the Closing Date be
fully perfected first priority Liens in and on the Collateral
described therein.
3.19 Hazardous Materials. As of the Closing Date,
except as set forth in the Disclosure Letter, all real property
owned or leased by Borrower or any Subsidiary of Borrower is free
of contamination from any Hazardous Material. In addition, the
Disclosure Letter discloses all existing or potential environmental
liabilities of Borrower and its Subsidiaries of which Borrower has
knowledge which could constitute or result in a Material Adverse
Effect or any Environmental Liabilities or Costs. As of the
Closing Date, except as set forth in the Disclosure Letter, neither
Borrower nor any Subsidiary of Borrower has caused or suffered to
occur any Release at, under, above or within any real property
which it owns or leases. As of the Closing Date, except as set
forth in the Disclosure Letter, neither Borrower nor any Subsidiary
of Borrower is involved in any operations which are reasonably
likely to lead to the imposition of any liability or Lien on it or
any of its properties or other assets, or any owner of any premises
which it occupies, under the Environmental Laws, and neither
Borrower nor any Subsidiary of Borrower has permitted any tenant or
occupant of such premises to engage in any such activity.
3.20 Insurance Policies. Schedule 3.20 Part II lists
all insurance of any nature maintained for current occurrences by
Borrower or any Subsidiary of Borrower, as well as a summary of the
terms of such insurance. Borrower covenants that such insurance
complies with and shall at all times comply with the standards set
forth on Schedule 3.20 Part I.
3.21 Deposit and Disbursement Accounts. As of the
Closing Date, Schedule 3.21 lists all banks and other financial
institutions at which Borrower or any Domestic Subsidiary of
Borrower maintains deposits and/or other accounts, and such
Schedule correctly identifies the name, address and telephone
number of each depository, the name in which the account is held,
a description of the purpose of the account and the complete
account number.
3.22 Government Contracts. As of the Closing Date,
except as set forth on Schedule 3.22 hereto, neither Borrower nor
any Subsidiary of Borrower is a party to any contract or agreement
with the federal government and none of the Accounts are subject to
the Federal Assignment of Claims Act (31 U.S.C. Section 3727)
relative to the assignment of such Accounts.
3.23 Customer and Trade Relations. There exists no
actual or threatened termination or cancellation of, or any
material adverse modification or change in: (a) the business
relationship of Borrower or any Subsidiary of Borrower with any
customer or group of customers of Borrower whose purchases
individually or in the aggregate are material to the operations of
Borrower, Borrower and its Subsidiaries, taken as a whole, or
Borrower and the Guarantor Subsidiaries, taken as a whole; or (b)
the business relationship of Borrower or any Subsidiary of Borrower
with any supplier material to the operations of Borrower, Borrower
and its Subsidiaries, taken as a whole, or Borrower and the
Guarantor Subsidiaries, taken as a whole.
3.24 Non-Material Subsidiaries. Neither any Non-
Guarantor Domestic Subsidiary nor any other Non-Material Subsidiary
has any assets or liabilities, other than (i) assets or liabilities
consisting solely of intercompany balances and/or intercompany
allocation of tax assets or liabilities, (ii) liabilities (whether
contingent or liquidated) of Zenith Electronics Corporation of
Pennsylvania with respect to environmental matters as disclosed to
Agent and Lenders in the Disclosure Letter (the "Pennsylvania
Liabilities"); (iii) with respect to Zenith Electronics (Ireland)
Limited: (y) assets consisting of cash or cash equivalents not
exceeding 135,000 Irish pounds, in the aggregate and (z) liabilities
(whether contingent or liquidated) with respect to accrued accounts payable
not yet due and payable, accrued accounts payable subject to
dispute, liabilities for taxes filed but not yet finalized and
other miscellaneous liabilities and contingencies for which
reserves have been estimated and established, all of which
liabilities shall not exceed 200,000 Irish pounds in the aggregate
(collectively, the "Ireland Assets and Liabilities"); (iv) trade
payables incurred in the ordinary course of business consistent
with past practices by Interocean Advertising Corporation of
California and Interocean Advertising Corporation of Illinois; and
(v) with respect to Non-Material Subsidiaries other than Zenith
Electronics Corporation of Pennsylvania and Zenith Electronics
(Ireland) Limited other assets with a value not in excess of
$50,000. Neither any Non-Guarantor Domestic Subsidiary nor any
other Non-Material Subsidiary, except for Interocean Advertising
Corporation, Interocean Advertising Corporation of California and
Interocean Advertising Corporation of Illinois, carries on any
trade or business.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. (a) Borrower covenants and
agrees that from and after the Closing Date, it shall deliver to
Agent and/or Lenders, as required, the Financial Statements,
notices and Projections at the times, to the Persons and in the
manner set forth on Schedule 4.1(A).
(b) Borrower covenants and agrees that from and after
the Closing Date, it shall deliver to Agent and/or Lenders, as
required, the various Collateral Reports at the times, to the
Persons and in the manner set forth on Schedule 4.1(B).
4.2 Communication with Accountants. Borrower authorizes
Agent, on behalf of Lenders, to communicate either through Borrower
or with Borrower present (and upon the occurrence and during the
continuance of any Default or Event of Default, directly and
without the presence of Borrower) with its independent certified
public accountants and tax advisors and authorizes those
accountants to disclose to Agent, on behalf of Lenders, any and all
financial statements and other supporting financial documents and
schedules including copies of any management letter with respect to
the business, financial condition and other affairs of Borrower or
any of its Subsidiaries.
5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless Agent and
Requisite Lenders shall otherwise consent in writing, from and
after the date hereof:
5.1 Maintenance of Existence and Conduct of Business.
Borrower shall, and shall cause each of its Subsidiaries to: (a)
except as otherwise expressly permitted under this Agreement, do or
cause to be done all things necessary to preserve and keep in full
force and effect Borrower's and each of its Subsidiaries' corporate
existence and its rights and franchises; (b) except as otherwise
expressly permitted under this Agreement, continue to conduct
Borrower's and each of its Subsidiaries' business substantially as
now conducted or as otherwise permitted hereunder; (c) at all times
maintain, preserve and protect all of its United States, Canadian
and Mexican trademarks, patents, trade names, copyrights and all
United States, Canadian and Mexican other intellectual property and
rights as licensee or licensor thereof, including all rights of
Borrower and its Subsidiaries under and pursuant to the Tuning
System Patents and Tuning System Patent Licenses; (d) at all times
maintain, preserve and protect all the remainder of Borrower's and
each of its Subsidiaries' properties, equipment, fixtures and other
assets in use or useful in the conduct of its business, and keep
the same in good repair, working order and condition and from time
to time make, or cause to be made, all necessary or appropriate
maintenance, service, repairs, replacements and improvements
thereto consistent with industry practices, so that the business
carried on in connection therewith may be properly and
advantageously conducted at all times; and (e) except as otherwise
expressly permitted under this Agreement, transact business only in
such names as are set forth on Schedule 5.1.
5.2 Payment of Obligations. (a) Borrower shall: (i) pay
and discharge or cause to be paid and discharged all Obligations;
(ii) so long as there shall not be any Default or Event of Default,
pay and discharge, or cause to be paid and discharged, its
Indebtedness other than the Obligations at the time such amounts
are due and payable; and (iii) subject to Section 5.2(b), pay and
discharge or cause to be paid and discharged promptly all (A)
Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed), and (B) lawful claims for
labor, materials, supplies and services or otherwise, before any
thereof shall become in default.
(b) Borrower may in good faith contest, by proper legal
actions or proceedings, the validity or amount of any Charges or
claims arising under Section 5.2 (a) (iii) above; provided, that at
the time of commencement of any such action or proceeding, and
during the pendency thereof (i) no Default or Event of Default
shall have occurred, (ii) adequate reserves with respect thereto
are maintained on the books of Borrower, in accordance with GAAP,
(iii) such contest operates to suspend collection of the contested
Charges or claims and such contest is maintained and prosecuted
continuously and with diligence, (iv) none of the Collateral would
be subject to forfeiture or loss or any Lien by reason of the
institution or prosecution of such contest, (v) no Lien shall
exist, be imposed or be attempted to be imposed for such Charges or
claims during such action or proceeding, (vi) Borrower shall
promptly pay or discharge such contested Charges and all additional
charges, interest, penalties and expenses, if any, and shall
deliver to Agent evidence acceptable to Agent of such compliance,
payment or discharge, if such contest is terminated or discontinued
adversely to Borrower, and (vii) Agent has not advised Borrower in
writing that Agent believes that nonpayment or nondischarge thereof
could have or result in a Material Adverse Effect.
5.3 Books and Records. Borrower shall keep adequate
records and books of account with respect to Borrower's and its
Subsidiaries' business activities, in which proper entries,
reflecting all of their financial transactions (including
consolidating transactions), are made in accordance with GAAP and
on a basis consistent with the Financial Statements referred to in
Schedule 3.4.
5.4 Litigation. Borrower shall notify Agent in writing,
promptly upon learning thereof, of any litigation commenced or, to
the knowledge of Borrower, threatened against Borrower or any
Subsidiary of Borrower, and of the institution against it of any
suit or administrative proceeding, that (a) may involve an amount
in excess of $400,000, or (b) seeks injunctive relief or could have
or result in a Material Adverse Effect if adversely determined.
5.5 Insurance. (a) Borrower shall, at its sole cost
and expense, maintain the policies of insurance described on
Schedule 3.20 in form and with insurers satisfactory to Agent.
Such policies shall be in such amounts as are set forth on Schedule
3.20 and in no event less than the amounts maintained on the
Closing Date, except as otherwise approved in writing in advance by
Agent in its sole discretion. Borrower shall notify Agent promptly
of any occurrence causing a material loss or decline in value of
any real or personal property of Borrower or any of its
Subsidiaries and the estimated (or actual, if available) amount of
such loss or decline. Except as otherwise specified on Schedule
3.20, Borrower hereby directs all present and future insurers under
its "All Risk" policies of insurance to pay all proceeds payable
thereunder directly to Agent, on behalf of Lenders; provided,
however, that to the extent that such proceeds are paid solely in
respect of the loss of or damage to Excluded Assets, Agent shall
release such proceeds to Borrower when and as necessary to pay for
the repair, replacement or reconstruction of the Excluded Assets
subject to such casualty, provided that: (i) at the time of any
requested release of insurance proceeds, no Default or Event of
Default shall have occurred and be continuing and (ii) the repair,
replacement or reconstruction of such Excluded Assets shall be
reasonably anticipated to be completed prior to the Commitment
Termination Date. Effective upon the occurrence of any Default or
Event of Default and for so long as any Default or Event of Default
shall have occurred and be continuing, Borrower irrevocably makes,
constitutes and appoints Agent (and all officers, employees or
agents designated by Agent) as Borrower's true and lawful agent and
attorney in-fact for the purpose of making, settling and adjusting
claims under the "All Risk" policies of insurance, endorsing the
name of Borrower on any check, draft, instrument or other item of
payment for the proceeds of such "All Risk" policies of insurance,
and for making all determinations and decisions with respect to
such "All Risk" policies of insurance. In the event Borrower at
any time or times hereafter shall fail to obtain or maintain any of
the policies of insurance required above or to pay any premium in
whole or in part relating thereto, Agent, without waiving or
releasing any Obligations or Default or Event of Default hereunder,
may at any time or times thereafter (but shall not be obligated to)
obtain and maintain such policies of insurance and pay such premium
and take any other action with respect thereto as Agent may deem
advisable. All sums so disbursed, including reasonable attorneys'
fees, court costs and other charges related thereto, shall be
payable, on demand, by Borrower to Agent and shall be additional
Obligations hereunder secured by the Collateral; provided, that, if
and to the extent that Borrower fails to promptly pay any of such
sums upon Agent's demand therefor, Agent is authorized to, and at
its option may, make or cause to be made Revolving Credit Advances
on behalf of Borrower for payment thereof.
(b) Agent reserves the right at any time, upon review of
Borrower's and/or any Guarantor Subsidiaries' risk profile, to
require additional forms and limits of insurance to, in Agent's
sole opinion, both adequately protect Agent's and Lenders'
interests in all or any portion of the Collateral and to ensure
that Borrower and each Guarantor Subsidiary is protected by
insurance in amounts and with coverage customary for businesses
engaged in their business. Upon the occurrence and during the
continuance of any Default or Event of Default, Agent reserves the
right at any time, upon review of Borrower's and/or any Material
Subsidiaries' risk profile, to require additional forms and limits
of insurance to, in Agent's sole opinion, adequately protect
Agent's and Lenders' interests, including, but not limited to,
their interests in the Collateral. Borrower shall, if so requested
by Agent, deliver to Agent, as often as Agent may request, a report
of a reputable insurance broker, satisfactory to Agent with respect
to its insurance policies.
(c) Borrower shall deliver to Agent endorsements (i) to
all "All Risk" and business interruption insurance naming Agent
loss payee, on behalf of itself and Lenders, and (ii) to all
general liability and other liability policies naming Agent, on
behalf of itself and Lenders, as an additional insured.
5.6 Compliance with Laws. Borrower and each of its
Subsidiaries shall comply with all federal, state, local and
foreign laws and regulations applicable to it, including those
relating to licensing, environmental, consumer credit,
truth-in-lending, ERISA and labor matters, except for those which
if not complied with, either individually or in the aggregate,
could have or result in a Material Adverse Effect.
5.7 Agreements. Borrower and each of its Subsidiaries
shall perform, within all required time periods (after giving
effect to any applicable grace periods), all of its obligations and
enforce all of its rights under each agreement to which it is a
party, including any leases and customer contracts to which it is
a party, where the consequence of failure to so perform could have
or result in a Material Adverse Effect. Neither Borrower nor any
Subsidiary of Borrower shall terminate or modify any provision of
any agreement to which it is a party which termination or
modification could have or result in a Material Adverse Effect.
5.8 Supplemental Disclosure. On the request of Agent
(in the event that such information is not otherwise delivered by
Borrower to Agent pursuant to this Agreement), so long as there are
Obligations outstanding hereunder, but not more frequently than
once every three (3) months, Borrower will supplement each schedule
or representation herein with respect to any matter hereafter
arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in
such schedule or as an exception to such representation or which is
necessary to correct any information in such schedule or
representation which has been rendered inaccurate thereby;
provided, however, that such supplement to such schedule or
representation shall not be deemed an amendment thereof unless
expressly consented to in writing by Agent and Requisite Lenders,
and no such amendments, except as the same may be consented to in
a writing which expressly includes a waiver, shall be or be deemed
a waiver of any Default or Event of Default disclosed therein.
5.9 Employee Plans. Borrower shall notify Agent of (i)
to the extent that any of the following individually, or that all
of the following in the aggregate, exceeds $400,000, any and all
claims, actions, or lawsuits asserted or instituted, and any and
all threatened litigation or claims in connection with any Plan
maintained, at any time, by Borrower, any Subsidiary of Borrower or
any ERISA Affiliate, or to which Borrower, any Subsidiary of
Borrower or any ERISA Affiliate has or had at any time any
obligation to contribute and (ii) the occurrence of any Reportable
Event with respect to any Pension Plan of Borrower, any Subsidiary
of Borrower or any ERISA Affiliate.
5.10 Environmental Matters. Borrower and each
Subsidiary of Borrower shall (i) comply in all respects with the
Environmental Laws applicable to it, where the consequence of
failure to so comply, either individually or when considered in the
aggregate with all such failures to so comply, could have or result
in a Material Adverse Effect, (ii) notify Agent promptly after
Borrower becomes aware of any Release upon any premises owned or
occupied by Borrower or any Subsidiary of Borrower if such Release
requires reporting to a Governmental Authority and (iii) promptly
forward to Agent a copy of any order, notice, permit, application
or any communication or report received by Borrower in connection
with any such Release or any other matter relating to the
Environmental Laws that may affect such premises or Borrower or any
Subsidiary of Borrower. The provisions of this Section 5.10 shall
apply whether or not the Environmental Protection Agency, any other
federal agency or any state, local or foreign environmental or
other agency has taken or threatened any action in connection with
any Release or the presence of any Hazardous Materials.
5.11 Landlords' Agreements and Bailee Letters. Borrower
shall use its best efforts to obtain a landlord's agreement in form
and substance acceptable to Agent from the lessor of each leased
premises currently being used by Borrower or any Guarantor
Subsidiary and the lessor of any new leased premises, in each case
where Collateral is currently or may be located. Borrower shall
use its best efforts to obtain a bailee letter in form and
substance acceptable to Agent with respect to each warehouse
currently being used by Borrower or any Guarantor Subsidiary and
with respect to any warehouse used in the future, in each case
where Collateral is currently or may be located.
5.12 Public Offering Proceeds. Unless Agent shall
otherwise agree, Borrower shall apply the entire net cash proceeds
from any sale of Stock permitted under Section 6.18 hereof, first,
to reduce the Revolving Credit Loan to zero without any
corresponding reduction of the Revolving Credit Commitment, second,
to reduce all of the other Obligations then due and payable to zero
and, third, for any other legally permissible purpose.
5.13 Notice of Labor Matters. Borrower shall provide
prompt notice to Agent of (i) any strike or other material labor
dispute against Borrower or any Subsidiary of Borrower, (ii) any
organizing efforts involving Borrower or any Subsidiary of Borrower
by any labor union or group of employees, and (iii) any complaints
or charges against Borrower or any Subsidiary of Borrower filed
with any federal, state, local or foreign court, governmental
agency or arbitrator involving an amount in excess of $400,000 and
based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment by Borrower or any
Subsidiary of Borrower of any individual. Borrower shall provide
prompt notice to Agent of any collective bargaining agreement or
employment agreement with any officer entered into by Borrower or
any Material Subsidiary with any other Person and, together with
such notice, shall provide Agent with a copy of any such collective
bargaining agreement or employment agreement.
5.14 Government Contracts. Borrower shall designate in
the monthly report delivered to Agent pursuant to Section 4.1(b)
all Accounts arising out of any contract or agreement entered into
by Borrower or any Subsidiary with the federal government. In
addition, Borrower shall inform Agent, at any time and from time to
time upon Agent's request, as to whether or not such contract or
agreement is subject to the Federal Assignment of Claims Act (31
U.S.C. 3727) and, if subject to the Federal Assignment of Claims
Act, whether or not Borrower or the appropriate Subsidiary has
complied with such Act (providing evidence thereof if it has so
complied).
6. NEGATIVE COVENANTS
Borrower covenants and agrees that, without Agent's and
Requisite Lenders' prior written consent, from and after the date
hereof:
6.1 Mergers, Etc. Neither Borrower nor any Subsidiary
of Borrower shall directly or indirectly, by operation of law or
otherwise, merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise
combine with, any Person or form any Subsidiary, except that so
long as no Default or Event of Default shall have occurred and be
continuing or would result after giving effect thereto: (i) any
Domestic Subsidiary may be merged with and into any other Domestic
Subsidiary or Borrower upon not less than thirty (30) days' prior
written notice to Agent and delivery to Agent of executed UCC-1
financing statements and such other documents and filings as may be
necessary or appropriate to maintain Agent's perfected security
interest in the Collateral; (ii) upon not less than thirty (30)
days prior written notice to Agent, Borrower may form additional
Domestic Subsidiaries if necessary to prudently manage or reduce
state or local tax liabilities; provided that if assets with a
value in excess of $25,000 are contributed to the capital of or
otherwise transferred to such Subsidiary, it shall within ten (10)
days thereafter (A) become a Guarantor Subsidiary, (B) become a
party to the Domestic Subsidiaries Guaranty, the Security Agreement
and the Guarantor Contribution Agreement and (C) shall execute and
deliver to Agent executed UCC-1 financing statements and such other
documents and filings as may be necessary to obtain a first
priority perfected security interest in any Collateral of that
Domestic Subsidiary; and (iii) upon not less than ten (10) days'
prior written notice to Agent, Borrower may form a Domestic
Subsidiary for the purpose of acquiring the finished goods bearing
Borrower's brand name from a distributor of Borrower the
distributor agreement of which has been terminated by Borrower or
such distributor or which distributor is insolvent and is likely to
sell those finished goods at distressed prices, and such Domestic
Subsidiary may acquire those finished goods; provided that (A) the
aggregate net cash outlay made with respect to the acquisitions of
such finished goods shall not exceed $5,000,000, (B) neither
Borrower nor any Subsidiary, including any Subsidiary formed in
connection therewith, shall assume or incur any liability, express
or implied, of such distributor, other than those unsecured
liabilities (other than Indebtedness), if any, which directly
relate to the finished goods Inventory being repurchased, and (C)
Borrower shall within ten (10) days after the formation of that
Domestic Subsidiary cause it to comply with provisions of clause
(ii) above regarding newly formed Domestic Subsidiaries with assets
in excess of $25,000.
6.2 Investments, Loans and Advances. Borrower shall
not, and shall not cause or permit any Subsidiary to, directly or
indirectly, make any investment in, or make or accrue loans or
advances to any Person, through the direct or indirect lending of
money, holding of securities or otherwise, except for the
following:
(A) So long as no Default or Event of Default shall have
occurred and be continuing or would result after giving effect
thereto, intercompany loans by Borrower to any Material Subsidiary
or by any Subsidiary to Borrower; provided that in the case of
intercompany loans to any such Subsidiary: (i) such loans shall be
made solely in the ordinary course of business for the working
capital needs of such Subsidiary or Capital Expenditures made or
committed to by such Subsidiary solely in the ordinary course of
its business; (ii) at the time such intercompany loans are to be
made, those intercompany loans together with cash on hand or on
deposit held by such Subsidiary shall not exceed the cash needs of
that Subsidiary for working capital and Capital Expenditures which
it is contractually obligated to pay during the period of ten (10)
consecutive days following any date of determination; and (iii)
such intercompany loans shall be reflected on the books and records
of Borrower and shall be summarized in the monthly financial
statements delivered to Agent in accordance herewith (collectively,
"Intercompany Loans").
(B) Investments in Subsidiaries permitted in accordance
with Section 6.1 hereof.
(C) Loans to employees permitted in accordance with
Section 6.4 hereof.
(D) Investments in Foreign Subsidiaries arising from the
contribution to capital of Intercompany Loans owing by such Foreign
Subsidiaries to the extent necessary (i) to comply with the
capitalization requirements of the laws of the jurisdictions in
which such Subsidiaries are incorporated and (ii) for tax planning
purposes; provided, that the amount of such Investments in Foreign
Subsidiaries made after the date hereof for tax planning purposes
shall not exceed $20,000,000 in the aggregate.
(E) Investments by Borrower in its Subsidiaries as in
existence on the Closing Date.
(F) So long as no Default or Event of Default shall have
occurred and be continuing, Borrower and its Subsidiaries may
invest in (i) short term obligations of, or fully guaranteed by,
the United States government; (ii) commercial paper rated A-1 or
better by Standard and Poors or P-1 or better by Moody's; or (iii)
certificates of deposit issued by or time deposits with commercial
banks having capital and surplus in excess of $100,000,000 and no
set off rights against Borrower or any Subsidiary (other than for
normal and customary service charges or returned checks), but, in
each case with respect to Domestic Subsidiaries, only to the extent
necessary (a) to invest funds overnight that are not swept from
Borrower's and its Domestic Subsidiaries' cash management systems
maintained in accordance with Schedule C, (b) to the extent
necessary to invest funds which are permitted to be maintained in
bank accounts under Section 6.20(ii) or 6.20(iii) (which funds may
only be invested in investments satisfying the requirements of
(iii) immediately above), or (c) to the extent necessary to invest
funds so long as the Revolving Credit Advances have been reduced to
zero.
(G) Joint ventures formed between Borrower or any
Subsidiary and any Person that is not an Affiliate of Borrower;
provided that (i) neither Borrower nor any Subsidiary shall
contribute or be obligated to contribute any cash or cash
equivalents or other assets (other than non-exclusive licenses to
use Patents) to that joint venture and (ii) neither Borrower nor
any Subsidiary shall guarantee or be liable in any manner for any
debts or liabilities of that joint venture, if the value of such
cash or other assets contributed plus the value of the debts or
liabilities guaranteed or for which Borrower and its Subsidiaries
become liable for all such joint ventures would exceed $10,000,000
in the aggregate in any Fiscal Year.
(H) Advances by Borrower or any Domestic Subsidiary for
payment of Taxes for up to ten days prior to the due date of such
Taxes in an amount not exceeding $5,250,000 in the aggregate at any
time, to one or more providers of payroll tax payment services
("Service Company") selected by Borrower, and reasonably acceptable
to Agent (such acceptance subject to reasonable prior notice to
Agent of the identity of such Service Company) which Service
Company shall have established, in the reasonable credit judgment
of Borrower, through net worth, insurance, security bond or
otherwise, such Service Company's ability to fulfill the tax
obligation against which funds have been advanced.
6.3 Indebtedness. Borrower shall not and shall not
cause or permit any Subsidiary to, directly or indirectly create,
incur, assume or permit to exist any Indebtedness, except:
(A) The Obligations;
(B) Indebtedness outstanding on the date hereof as set
forth on Schedule 6.3 hereto;
(C) Indebtedness secured by Liens set forth on Schedule
6.7 or Permitted Encumbrances;
(D) Royalty Financing or other Indebtedness incurred in
accordance with Section 1.2(b) hereof;
(E) Intercompany Loans permitted in accordance with
Section 6.2 hereof;
(F) Surety bonds entered into, solely in the ordinary
course of Borrower's or such Subsidiary's business;
(G) Insurance premium financing incurred solely in the
ordinary course of Borrower's business consistent with past
practice;
(H) Subordinated indebtedness on terms and conditions
and subordinated in right of payment to the Obligations in a
manner, satisfactory to Agent in its sole discretion in all
respects;
(I) The Convertible Debentures;
(J) The Term Loan; and
(K) Other unsecured Indebtedness not to exceed
$10,000,000 in the aggregate, the proceeds of which are applied to
the Revolving Credit Loan to the extent then outstanding.
6.4 Employee Loans and Transactions. Borrower shall not
and shall not cause or permit any Subsidiary to:
(i) make loans or advances to any employee or Affiliate
other than: (A) Intercompany Loans permitted in accordance with
Section 6.2 hereof, and (B) advances for travel and related
expenses and for relocation expenses (including any related tax
reimbursements) to Borrower's officers and employees and loans to
employees in Mexico, in each case solely in the ordinary course of
business consistent with past practice, and not to exceed
$1,500,000 in the aggregate for all such amounts outstanding at any
time; or
(ii) enter into any transactions with any Affiliate
(excluding transactions between or among Borrower and the Guarantor
Subsidiaries or Borrower and its Subsidiaries in Mexico to the
extent such transactions are in the ordinary course of business in
accordance with past practices) except on an arms' length basis on
fair and reasonable terms no less favorable to Borrower or the
applicable Subsidiary than would be obtained in a transaction with
a Person that is not an Affiliate; provided that any contracts,
purchase orders, or other transactions between Borrower or any
Subsidiary, on one hand, and any Affiliate, on the other hand, that
provide for payments in excess of $10,000,000 either in a single
contract, purchase order or transaction or a series of related
contracts, purchase orders or transactions shall be summarized in
a quarterly report prepared by Borrower, certified by an authorized
officer of Borrower and delivered to Agent within forty-five (45)
days following the last day of each Fiscal Quarter; or
(iii) except for that certain consulting agreement dated
as of July 1, 1994 between the Thomas Group, Inc. and Borrower, as
in effect on the Closing Date and a copy of which has been
delivered to Agent, enter into any management consulting, advisory
or similar agreement providing for compensation determined by or as
a percentage of Borrower's or such Subsidiary's operating
performance or income.
6.5 Capital Structure and Business. Neither Borrower
nor any Subsidiary of Borrower shall: (i) make any change in any
of its business objectives, purposes or operations, (ii) make any
change in its capital structure, including the issuance of any
shares of Stock, warrants or other securities convertible into
Stock, other than as set forth on Schedule 6.5 hereto or permitted
under Section 6.18, or any revision of the terms of its outstanding
Stock; or (iii) amend its certificate or articles of incorporation
or bylaws if such amendment would have an adverse effect upon (i)
the Collateral or Agent's security interest therein; (ii) the
ability of Borrower or any Guarantor to repay the Obligations; or
(iii) Borrower's or any Subsidiary's ability to comply with any
provision of any Loan Document. Neither Borrower nor any
Subsidiary of Borrower shall engage in any business other than the
business currently engaged in by it.
6.6 Guaranteed Indebtedness. Neither Borrower nor any
Subsidiary of Borrower shall incur any Guaranteed Indebtedness
except:
(A) by endorsement of instruments or items of payment for
deposit to the general account of Borrower; and
(B) for Guaranteed Indebtedness incurred for the benefit
of Borrower or such Subsidiary of Borrower if the primary
obligation constitutes Indebtedness permitted by this Agreement;
and
(C) for Guaranteed Indebtedness of Borrower or such
Subsidiary of Borrower under Currency Protection Agreements, but
only to the extent entered into solely in the ordinary course of
Borrower's or such Subsidiary's business, which, in any event,
shall not include any speculative or similar investment purpose;
and
(D) guaranties issued by Borrower for the benefit of any
Material Subsidiary solely in the ordinary course of business
consistent with past practice with respect to leases, workmen's
compensation, performance of contracts, trade payables or customs
bonds owing or incurred by such Material Subsidiary solely in the
ordinary course of business of such Material Subsidiary consistent
with past practices; provided that neither such guaranty nor the
underlying obligations so guaranteed constitute Indebtedness or are
secured by a Lien and, provided, further, that, so long as any
Default or Event of Default shall have occurred and be continuing,
Borrower shall not enter into any such guaranty without the prior
written consent of Agent.
6.7 Liens. Neither Borrower nor any Subsidiary of
Borrower shall create or permit to exist any Lien on any of its
properties or other assets, except (A) presently existing or
hereafter created Liens in favor of Agent, on behalf of itself and
Lenders, (B) Liens set forth on Schedule 6.7, (C) Permitted
Encumbrances and (D) Liens created or permitted to be created in
accordance with Section 1.2(b). In addition, neither Borrower nor
any Subsidiary of Borrower shall become a party to any agreement,
note, indenture or instrument, or take any other action, which
would prohibit the creation of a Lien on any of its properties or
other assets, including on any Excluded Asset, in favor of Agent,
on behalf of itself and Lenders, as additional collateral for the
Obligations.
6.8 Sale of Assets. Neither Borrower nor any Subsidiary
of Borrower shall sell, transfer, convey, assign or otherwise
dispose of any of its properties or other assets (including,
without limitation, the capital stock of any Subsidiary, any of its
Accounts or any of the other Collateral), other than:
(A) sales of Inventory in the ordinary course of
business;
(B) sales, transfers, conveyances, assignments or other
dispositions of Material Assets permitted in accordance with
Section 1.2(b); and
(C) sales of equipment or fixtures to Persons that are
not Affiliates of Borrower or any Subsidiary which are obsolete or
not used or usable in the ordinary course of Borrower's or the
applicable Subsidiaries' business, provided, that the fair value of
such assets sold shall not exceed $5,000,000 in the aggregate
during any Fiscal Year; the net cash proceeds thereof shall be
applied to the outstanding Revolving Credit Advances; and, unless
Agent and Requisite Lenders shall otherwise consent in writing,
which consent shall not be unreasonably withheld, such assets shall
not constitute Material Assets listed on Schedule 1.2(b) hereto.
6.9 Events of Default. Neither Borrower nor any
Subsidiary of Borrower shall take any action or omit to take any
action, which act or omission would constitute (a) a Default or an
Event of Default under, or noncompliance with any of, the terms of
this Agreement or any of the other Loan Documents or (b) a default
or an event of default pursuant to, or noncompliance with, any
other contract, lease, mortgage, deed of trust, instrument or
agreement to which it is a party or by which it or any of its
properties is bound which would have a Material Adverse Effect.
6.10 ERISA. Neither Borrower or any Subsidiary of
Borrower nor any ERISA Affiliate shall without Agent's prior
written consent acquire any new ERISA Affiliate that maintains or
has an obligation to contribute to a Pension Plan that has either
an "accumulated funding deficiency," as defined in Section 302 of
ERISA, or any "unfunded vested benefits," as defined in Section
4006(a)(3)(e)(iii) of ERISA, in the case of any Plan other than a
Multiemployer Plan, and in Section 4211 of ERISA, in the case of a
Multiemployer Plan. Additionally, neither Borrower or any
Subsidiary of Borrower nor any ERISA Affiliate shall, without
Agent's prior written consent, terminate any Pension Plan that is
subject to Title IV of ERISA where such termination could
reasonably be anticipated to result in material liability to
Borrower or any Subsidiary of Borrower; permit any accumulated
funding deficiency, as defined in Section 302(a)(2) of ERISA, to be
incurred with respect to any Pension Plan; fail to make any
contributions or fail to pay any amounts due and owing as required
by the terms of any Plan before such contributions or amounts
become delinquent; make a complete or partial withdrawal (within
the meaning of Section 4201 of ERISA) from any Multiemployer Plan;
or at any time fail to provide Agent with copies of any Plan
documents or governmental reports or filings which may be requested
by Agent.
6.11 Financial Covenants. Borrower shall not breach or
fail to comply with any of the Financial Covenants (the "Financial
Covenants") set forth on Schedule 6.11.
6.12 Hazardous Materials. Except as set forth in the
Disclosure Letter, neither Borrower nor any Subsidiary of Borrower
shall, and neither Borrower nor any Subsidiary of Borrower shall
permit any other Person within its control to, cause or permit a
Release or the presence, use, generation, manufacture,
installation, Release, discharge, storage or disposal of any
Hazardous Materials on, under, in, above or about any of its real
estate or the transportation of any Hazardous Materials to or from
any real estate where such Release or such presence, use,
generation, manufacture, installation, Release, discharge, storage
or disposal would violate, or form the basis for liability under,
any Environmental Laws. If an Event of Default shall have occurred
and be continuing, Borrower, at its own expense, shall cause the
performance of such environmental audits and preparation of such
environmental reports as Agent may from time to time request as to
any location at which Collateral is then located, by reputable
environmental consulting firms acceptable to Agent, and in form and
substance acceptable to Agent.
6.13 Sale-Leasebacks. Neither Borrower nor any
Subsidiary of Borrower shall engage in any sale-leaseback or
similar transaction involving any of its assets, except (A)
sale- leaseback transactions with respect to Material Assets
permitted in accordance with Section 1.2(b) hereof and (B) so long
as no Default or Event of Default shall have occurred and be
continuing, sale-leaseback transactions of equipment or real estate
not constituting Material Assets; provided that (i) such sale-
leaseback transactions shall be subject to the terms governing
sale-leaseback transactions set forth in Section 1.2(b) hereof and
(ii) the aggregate capitalized liabilities outstanding with respect
to such sale lease-back transactions shall not exceed $20,000,000
in the aggregate at any time.
6.14 Cancellation of Indebtedness. Neither Borrower nor
any Subsidiary of Borrower shall cancel any claim or debt owing to
it, except for (A) reasonable consideration negotiated on an arms
length basis and in the ordinary course of its business consistent
with past practices and (B) cancellation of Intercompany Loans
permitted to be cancelled in accordance with Section 6.2 hereof.
6.15 Restricted Payments. Neither Borrower nor any
Subsidiary of Borrower shall make any Restricted Payment except for
the payment of dividends or other distributions by a Subsidiary of
Borrower directly to Borrower; provided, however, that so long as
no Default or Event of Default shall have occurred and be
continuing, or would result after giving effect to the payment
thereof, Borrower may pay cash dividends with respect to preferred
stock permitted to be issued by it in accordance with Section 6.18
hereof in an amount not to exceed $5,000,000 in each Fiscal Year.
6.16 Fiscal Year. Neither Borrower nor any Subsidiary
of Borrower shall change its Fiscal Year, except that Borrower and
its Subsidiaries may change their Fiscal Year to that date of each
year or the next succeeding year which is the Saturday closest to
December 31st of each year.
6.17 Change of Corporate Name. Neither Borrower nor any
Guarantor Subsidiary shall change its corporate name, except that
a Guarantor Subsidiary may change its name so long as no Default or
Event of Default shall have occurred and be continuing; provided
that at least thirty (30) days prior to such name change, the
Guarantor Subsidiary shall have given written notice thereof to
Agent and shall have delivered to Agent executed UCC-1s and such
other documents and filings as shall be necessary or desirable to
enable Agent to maintain its first priority security interest and
otherwise protect its security interest in the Collateral.
6.18 Sale of Stock. Neither Borrower nor any Subsidiary
of Borrower shall sell (whether in a public or private offering or
otherwise) any of its Stock, other than a sale of common stock of
Borrower solely for cash, and except for preferred stock or
convertible preferred stock with a per annum dividend rate not in
excess of 12.5% per annum.
6.19 Bank Accounts. Borrower shall not, and shall not
cause or permit any Subsidiary of Borrower to establish or maintain
any checking, depository, lock box or similar account other than
those accounts set forth on Schedule 3.21, accounts maintained by
Borrower's Foreign Subsidiaries outside the United States, and
those accounts, if any, in the United States which at all times
contain less than $50,000 per account and less than $250,000 for
all such accounts in the aggregate (without taking into account in
the calculation thereof amounts which are deposited into the cash
management system established and maintained in accordance with
Schedule C); provided that so long as no Default or Event of
Default shall have occurred and be continuing, (A) Borrower or any
Subsidiary may, upon at least fifteen (15) days' prior written
notice to Agent, establish additional disbursement or payroll
accounts; and (B) Borrower or any Subsidiary may, upon at least
thirty (30) days' prior written notice to the Agent, establish
additional depository or lock box accounts at banks acceptable to
Agent; provided, that, all such depository and lock box accounts
are subject to tri-party blocked account and/or lock box agreements
in form and substance satisfactory to Agent, in its sole
discretion, and such accounts are part of Borrower's cash
management systems established and maintained in accordance with
Schedule C.
6.20 Cash Management. Borrower shall not, and shall not
cause or permit any Subsidiary to accumulate or maintain cash (i)
in disbursement or payroll accounts as of any date of determination
in excess of checks outstanding against such accounts as of that
date and amounts necessary to meet minimum balance requirements;
(ii) in the case of all bank accounts of Borrower or any Subsidiary
(other than those accounts, if any, in the United States which at
all times contain less than $50,000 per account and less than
$250,000 for all such accounts in the aggregate (without taking
into account in the calculation thereof amounts which are deposited
into the cash management system established and maintained in
accordance with Schedule C)), in excess of the cash needs of
Borrower or that Subsidiary for working capital and Capital
Expenditures which it is contractually obligated to pay solely in
the ordinary course of Borrower's or that Subsidiary's business
during the period of ten (10) consecutive days following any date
of determination; (iii) in the case of Zenith Video Tech
Corporation-Florida, in the minimum amount necessary to comply with
applicable laws, rules and regulations of the State of Florida; or
(iv) other than with respect to Zenith Electronics (Ireland)
Limited which shall not exceed 135,000 Irish pounds in the aggregate.
6.21 Non-Material Subsidiaries. Borrower shall not cause
or permit any Domestic Non-Guarantor Subsidiary or any other Non-
Material Subsidiary to own or hold any assets or assume or incur
any liabilities, other than (i) assets or liabilities consisting
solely of intercompany balances and/or intercompany allocation of
tax assets or liabilities, (ii) the Pennsylvania Liabilities, (iii)
the Ireland Assets or Liabilities, (iv) trade payables incurred in
the ordinary course of business consistent with past practices by
Interocean Advertising Corporation of California and Interocean
Advertising Corporation of Illinois, and (v) with respect to Non-
Material Subsidiaries other than Zenith Electronics Corporation of
Pennsylvania and Zenith Electronics (Ireland) Limited, other assets
which do not exceed $50,000 in value in the aggregate as to each
such Subsidiary of Borrower. Borrower shall not cause or permit
any Domestic Non-Guarantor Subsidiary or any other Non-Material
Subsidiary to engage in any trade or business, except that those
Domestic Non-Guarantor Subsidiaries acting as domestic advertising
agencies as of the Closing Date may continue to do so.
6.22 Foreign Subsidiaries. Borrower shall not cause or
permit any Foreign Subsidiary to (i) sell Inventory to any Account
Debtor located in the United States and agrees that all such sales
to domestic Account Debtors shall be by Borrower or a Guarantor
Subsidiary or (ii) accumulate or maintain more than three (3) days'
supply of finished goods Inventory, other than (a) Partes de
Television de Reynosa, S.A. de C.V., Productos de Magneticos de
Chihuahua, S.A. de C.V. and Cableproductos de Chihuahua, S.A. de
C.V., which may maintain a supply of finished goods Inventory in
the ordinary course of business consistent with past practices for
sale to customers in Mexico and which, in addition, may maintain a
supply of finished goods Inventory in the ordinary course of
business for sale to customers located in Central America and South
America and (b) Zenith Radio Canada, Ltd./Zenith Radio Canada
Ltee., which may maintain a supply of not more than $6,000,000 of
finished goods Inventory in the ordinary course of business
consistent with past practices for sale to customers in Canada.
Borrower shall cause Zenith Electronics Corporation of
Texas or Zenith Electronics Corporation of Arizona to maintain
ownership of and title to substantially all of the equipment used
by and substantially all of the Inventory processed or assembled by
the Foreign Subsidiaries located in Mexico; provided, however, that
Partes de Television de Reynosa, S.A. de C.V., Productos de
Magneticos de Chihuahua, S.A. de C.V. and Cableproductos de
Chihuahua, S.A. de C.V., may maintain a supply of finished goods
Inventory in the ordinary course of business consistent with past
practices for sale to customers in Mexico.
6.23 No Impairment of Upstreaming. Except in connection
with any current asset financing by a Foreign Subsidiary permitted
by and made in accordance with Section 1.2(b), Borrower shall not,
and shall not cause or permit any Subsidiary to, directly or
indirectly, enter into or become bound by any agreement,
instrument, indenture or other obligation which could directly or
indirectly restrict, prohibit or require the consent of any Person
with respect to the payment of dividends or distributions or the
making of Intercompany Loans by any Subsidiary to Borrower.
6.24 Amendment of Other Debt. Borrower shall not amend,
modify or permit to be amended or modified any of the documents
evidencing or governing the Subordinated Debt, the Convertible
Debentures, or any other Indebtedness if the documents evidencing
or governing the same were subject to the approval of Agent prior
to the execution thereof in accordance with this Agreement or any
other Loan Document.
6.25 Prepayments of Other Debt. Borrower shall not, and
shall not cause or permit any Subsidiary to, directly or
indirectly, prepay, repurchase, redeem, retire or otherwise prepay
the Subordinated Debt or the Convertible Debentures except (a) that
Borrower may cause the Subordinated Debt or the Convertible
Debentures to be converted into common stock of Borrower or, on
terms satisfactory to Agent in its sole discretion, into preferred
stock or subordinated debt of Borrower, (b) in the case of the
Subordinated Debt, as permitted pursuant to Section 1.5(iv) hereof,
and (c) to the extent that Borrower is obligated to repurchase some
or all of the Convertible Debentures as a result of the LGE
Transaction.
7. TERM
7.1 Termination. Subject to the terms hereof, the
financing arrangement contemplated hereby shall be in effect until
the Commitment Termination Date; provided, however, that in the
event of a prepayment of any part of the Obligations, other than a
prepayment made in compliance with Section 1.2(b) in connection
with a Material Asset Disposition or from the proceeds of
Indebtedness permitted under Section 6.3(D), (H), (I), (J) or (K),
prior to the Commitment Termination Date with funds borrowed from
any Person other than Lenders pursuant to this Agreement, Borrower
shall simultaneously therewith pay to Agent, on behalf of Lenders,
in full, in immediately available funds all then current and
liquidated Obligations arising under this Agreement or any of the
other Loan Documents and provide for payment of all other
Obligations, including the provision of cash collateral for all
Letter of Credit Obligations, in a manner satisfactory to Agent.
7.2 Survival of Obligations Upon Termination of
Financing Arrangement. Except as otherwise expressly provided for
in this Agreement or the other Loan Documents, no termination or
cancellation (regardless of cause or procedure) of any financing
arrangement under this Agreement shall in any way affect or impair
the obligations, duties and liabilities of Borrower or the rights
of Agent and Lenders relating to any unpaid Obligation, due or not
due, liquidated, contingent or unliquidated, or any transaction or
event occurring prior to such termination, or any transaction or
event the performance of which is not required until after the
Commitment Termination Date. Except as otherwise expressly
provided herein or in any other Loan Document, all undertakings,
agreements, covenants, warranties and representations of or binding
upon Borrower or any Subsidiary of Borrower, and all rights of
Agent and Lenders, all as contained in this Agreement or any of the
other Loan Documents shall not terminate or expire, but rather
shall survive such termination or cancellation and shall continue
in full force and effect until such time as all of the Obligations
have been indefeasibly paid in full or performed in accordance with
the terms of the agreements creating such Obligations.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or
more of the following events (regardless of the reason therefor)
shall constitute an "Event of Default" hereunder:
(a) Borrower shall fail to make any payment in respect
of any Obligation hereunder or under any of the other Loan
Documents when due and payable or declared due and payable,
including any payment of principal of, interest on or Fees with
respect to the Revolving Credit Loan or any payment of Fees with
respect to the Letter of Credit Obligations.
(b) Borrower or any Subsidiary of Borrower shall fail or
neglect to perform, keep or observe any of the provisions of
Section 1.11, Section 5.5(a), Section 5.12, or any of Sections 6.1
through 6.25, inclusive, including any of the provisions set forth
on Schedule C or Schedule 6.11.
(c) Borrower or any Subsidiary of Borrower shall fail or
neglect to perform, keep or observe any term or provision of this
Agreement (other than any such term or provision referred to in
paragraph (a) or (b) above) or any of the other Loan Documents, and
the same shall remain unremedied for a period ending thirty (30)
days after Borrower shall become aware thereof.
(d) A default shall occur and be continuing under any
other agreement, document or instrument to which Borrower or any
Subsidiary of Borrower is a party or by which Borrower or any
Subsidiary of Borrower or any of Borrower's or any Subsidiary of
Borrower's properties or other assets is bound and such default (i)
involves an event of default under the Term Loan Agreement, (ii)
involves any default or event of default under the Subordinated
Debt or Convertible Debentures, or (iii) causes, or permits any
holder of such Indebtedness or any trustee to cause, such
Indebtedness or a portion thereof in an amount exceeding $5,000,000
for all such Indebtedness in the aggregate, to become due prior to
its stated maturity or prior to its regularly scheduled dates of
payment.
(e) Any representation or warranty herein or in any
other Loan Document or in any written statement pursuant hereto or
thereto, any report, financial statement or certificate made or
delivered to Agent or any Lender by Borrower or any Subsidiary of
Borrower shall be untrue or incorrect in any material respect, as
of the date when made or deemed made (including any of those made
or deemed made pursuant to Section 2.2).
(f) Any of the assets of Borrower or any Material
Subsidiary of Borrower (including any Collateral) shall be
attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of Borrower or
any Material Subsidiary of Borrower and shall remain unstayed or
undismissed for forty (40) consecutive days; or any Person other
than Borrower shall apply for the appointment of a receiver,
trustee or custodian for any of Borrower's or any of its Material
Subsidiaries' assets and shall remain unstayed or undismissed for
forty (40) consecutive days; or Borrower or any Material Subsidiary
of Borrower shall have concealed, removed or permitted to be
concealed or removed, any part of its properties or other assets
with intent to hinder, delay or defraud its creditors or any of
them or made or suffered a transfer of any of its properties, or
obligation, which may be fraudulent under any bankruptcy,
fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced
against Borrower or any Material Subsidiary of Borrower in a court
having competent jurisdiction seeking a decree or order (i) under
Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of Borrower or any Material Subsidiary of Borrower or of
any substantial part of Borrower's or any Material Subsidiary of
Borrower's properties, or other assets, or (iii) ordering the
winding up or liquidation of the affairs of Borrower or any
Material Subsidiary of Borrower and such case or proceeding shall
remain undismissed or unstayed for forty (40) consecutive days or
such court shall enter a decree or order granting the relief sought
in such case or proceeding.
(h) Borrower or any Material Subsidiary of Borrower
shall (i) file a petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any
other applicable federal, state or foreign bankruptcy or other
similar law, (ii) make an assignment for the benefit of creditors,
(iii) consent to the institution of proceedings thereunder or to
the filing of any such petition or to the appointment of or taking
of possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of Borrower or any
Material Subsidiary of Borrower or of any substantial part of
Borrower's or any of its Material Subsidiaries' properties or other
assets, (iv) fail generally to pay its debts as such debts become
due, or (v) take any corporate action in furtherance of any such
action.
(i) A final judgment or judgments (after the expiration
of all times to appeal therefrom) for the payment of money in
excess of $5,000,000 in the aggregate during any Fiscal Year shall
be rendered against Borrower or any Subsidiary of Borrower unless
the same shall be (i) fully covered by insurance in accordance with
Section 5.5 and the insurer shall have accepted liability therefor
in writing or (ii) vacated, stayed, bonded, paid or discharged
within a period of fifteen (15) days from the date of such
judgment.
(j) Any other event shall have occurred which has a
Material Adverse Effect.
(k) Any provision of any Collateral Document, after
delivery thereof pursuant to Section 2.1, shall for any reason
cease to be valid, binding and enforceable in accordance with its
terms, or any security interest created under any Collateral
Document shall cease to be a valid and perfected security interest
or Lien having the first priority as to all of the Collateral
purported to be covered thereby, subject only to Liens permitted in
accordance with the terms of the Security Agreement.
(l) There shall be any Change in Control of Borrower.
8.2 Remedies. If any Default or Event of Default shall
have occurred and be continuing, Agent may, without notice, and, at
the request of the Requisite Lenders, shall, take any one or more
of the following actions: (a) increase the rate of interest
applicable to the Revolving Credit Loan to the Default Rate, as
provided in Section 1.7(f), or (b) terminate this facility with
respect to further Revolving Credit Advances and Letter of Credit
Obligations, whereupon any further Revolving Credit Advances or
Letter of Credit Obligations shall be made or incurred in Lenders'
sole discretion. If any Event of Default shall have occurred and
be continuing, Agent may, without notice, and, at the request of
the Requisite Lenders, shall, (i) declare all or any portion of the
Obligations to be forthwith due and payable, including contingent
liabilities with respect to Letter of Credit Obligations, whereupon
such Obligations shall become and be due and payable, without
presentment, demand, protest or further notice of any kind, all of
which are expressly waived by Borrower, and (ii) exercise any
rights and remedies provided to Agent under this Agreement and the
other Loan Documents and/or at law or equity, including all
remedies provided under the Code; provided, however, that upon the
occurrence of an Event of Default specified in Section 8.1(f), (g)
or (h), all Obligations shall automatically become immediately due
and payable without any declaration, notice or demand by Agent.
Upon the occurrence of any Event of Default, at Agent's request,
Borrower shall deposit with Agent cash collateral in the amount of
all then existing Letter of Credit Obligations.
8.3 Waivers by Borrower. Except as otherwise provided
for in this Agreement, Borrower waives: (i) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of
any or all Loan Documents, Amended Revolving Credit Notes,
commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Agent
or any Lender on which Borrower may in any way be liable, and
hereby ratifies and confirms whatever Agent may do in this regard
on behalf of Lenders, (ii) all rights to notice and a hearing prior
to Agent's taking possession or control of, or to Agent's replevy,
attachment or levy upon, the Collateral or any bond or security
which might be required by any court prior to allowing Agent to
exercise any of its or any Lender's remedies, and (iii) the benefit
of all valuation, appraisal and exemption laws. Borrower
acknowledges that it has been advised by counsel of its choice with
respect to this Agreement, the other Loan Documents and the
transactions evidenced by this Agreement and the other Loan
Documents and has knowingly entered into this Agreement and each of
the other Loan Documents.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations. GE Capital may
assign its rights and delegate its obligations as a Lender under
this Agreement and, further, may assign, or sell participations in,
all or any part of its Revolving Credit Advances, its Letter of
Credit Obligations, its Commitments or any other interest herein or
in its Amended Revolving Credit Note to an Affiliate or to any
another Person.
Unless Agent shall have otherwise agreed in writing, no
other Lender shall assign any of its rights or delegate any of its
obligations under this Agreement or any of the other Loan Documents
or assign, or sell any participation in, all or any part of its
Revolving Credit Advances, its Letter of Credit Obligations, its
Commitments or any other interest herein or in its Amended
Revolving Credit Note to any Affiliate or other Person.
In the case of an assignment by GE Capital under this
Section 9.1, (or in the event, if any, that Agent shall so agree in
writing, an assignment by another Lender), the assignee shall have,
to the extent of such assignment, the same rights, benefits and
obligations as it would if it were a Lender hereunder. The
assigning Lender shall be relieved of its obligations hereunder
with respect to its Commitment or assigned portion thereof.
Borrower hereby acknowledges and agrees that any assignment will
give rise to a direct obligation of Borrower to the assignee and
that the assignee shall be considered to be a "Lender." In all
instances, each Lender's liability to make Revolving Credit
Advances or incur Letter of Credit Obligations hereunder shall be
several and not joint and shall be limited to such Lender's Pro
Rata Share.
GE Capital may (or, in the event, if any, that Agent
shall so agree in writing, another Lender may) sell participations
in all or any part of any Revolving Credit Advances made, or any
Letter of Credit Obligations incurred, by it as a Lender to an
Affiliate or any other Person; provided that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not
sold such participation and the holder of any such participation
shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly affecting (a) any
reduction in the principal amount, interest rate or fees payable
with respect to any Revolving Credit Advances in which such holder
participates; (b) any extension of the final scheduled maturity
date of the principal amount of the Revolving Credit Advances in
which such holder participates; and (c) any release of any
Collateral with a value in excess of $2,500,000 in the aggregate
(other than in accordance with the terms of this Agreement, the
Collateral Documents or the other Loan Documents). Borrower hereby
acknowledges and agrees that any participation will give rise to a
direct obligation of Borrower to the participant and the
participant shall for purposes of Sections 1.15, 1.17 and 9.3 be
considered to be a "Lender."
Unless Agent shall have otherwise agreed in writing, no
Lender, other than GE Capital, shall sell any participation in all
or any part of any Revolving Credit Advances made, or any Letter of
Credit Obligations incurred, by it to any Affiliate or other
Person.
Except as otherwise provided in this Section 9.1 no
Lender shall, as between Borrower and that Lender, be relieved of
any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of
participation in, all or any part of the Revolving Credit Advances,
the Amended Revolving Credit Notes or other Obligations owed to
such Lender. Any Lender permitted to sell assignments and
participations under this Section 9.1 may furnish any information
concerning Borrower and its Subsidiaries in the possession of that
Lender from time to time to assignees and participants (including
prospective assignees and participants).
Borrower shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 in whatever
manner necessary in order to enable or effect any such assignment
or participation, including the execution and delivery of any and
all agreements, notes and other documents and instruments as shall
be requested and the preparation of informational materials for,
and the participation of relevant management in meetings with,
potential assignees or participants. Borrower shall certify the
correctness, completeness and accuracy of all descriptions of
Borrower and its affairs contained in any selling materials and all
information provided by it and included in such materials. No
information provided to potential co-Lenders or participants shall
be provided unless and until such potential co-Lenders or
participants have signed a confidentiality agreement substantially
in the form provided to Borrower and used by Agent prior to the
Closing Date (as defined in the Prior Credit Agreement).
9.2 Appointment of Agent. GE Capital is hereby
appointed Agent hereunder to act on behalf of all Lenders as Agent
under this Agreement and the other Loan Documents. The provisions
of this Section 9.2 are solely for the benefit of Agent and Lenders
and neither Borrower or any Subsidiary of Borrower nor any other
Person shall have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties
under this Agreement and the other Loan Documents, Agent shall act
solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrower, any Subsidiary of Borrower or
any other Person. Agent shall have no duties or responsibilities
except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and
administrative in nature and Agent shall not have, or be deemed to
have, by reason of this Agreement, any other Loan Document or
otherwise a fiduciary relationship in respect of any Lender.
Neither Agent nor any of its officers, directors, employees, agents
or representatives shall be liable to any Lender for any action
taken or omitted to be taken by it hereunder or under any other
Loan Document, or in connection herewith or therewith, unless
caused by its or their own gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction after
all possible appeals have been exhausted.
The agency hereby created shall in no way impose any of
the rights and powers of, or impose any duties or obligations upon,
Agent in its individual capacity as a Lender hereunder. Agent
shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not performing the
duties and functions delegated to it hereunder. Agent may resign
at any time by giving thirty (30) days prior written notice thereof
to Lenders and Borrower. Upon any such resignation, Requisite
Lenders shall have the right, upon five (5) days notice to
Borrower, to appoint a successor Agent. Upon acceptance of
appointment, the successor Agent shall succeed to and become vested
with all rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from all of its
duties and obligations under this Agreement and the other Loan
Documents.
If Agent shall request instructions from Requisite
Lenders with respect to any act or action (including failure to
act) in connection with this Agreement or any other Loan Document,
then Agent shall be entitled to refrain from such act or taking
such action unless and until Agent shall have received instructions
from Requisite Lenders; and Agent shall not incur liability to any
Person by reason of so refraining. Agent shall be fully justified
in failing or refusing to take any action hereunder or under any
other Loan Document (a) if such action would, in the opinion of
Agent, be contrary to law or the terms of this Agreement or any
other Loan Document or (b) if Agent shall not first be indemnified
to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any
such action. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Loan
Document in accordance with the instructions of Requisite Lenders.
9.3 Set Off and Sharing of Payments. In addition to any
rights now or hereafter granted under applicable law and not by way
of limitation of any such rights, upon the occurrence and during
the continuance of any Event of Default, each Lender and each
holder of any Amended Revolving Credit Note is hereby authorized at
any time or from time to time, without notice to Borrower or to any
other Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all balances held by it
at any of its offices for the account of Borrower or any Guarantor
Subsidiary (regardless of whether such balances are then due to
Borrower or such Guarantor Subsidiary) and any other properties or
assets any time held or owing by that Lender or that holder to or
for the credit or for the account of Borrower or any Guarantor
Subsidiary against and on account of any of the Obligations which
are not paid when due. Any Lender or holder of any Amended
Revolving Credit Note having a right to set off shall, to the
extent the amount of any such set off exceeds its Pro Rata Share of
the Obligations, purchase for cash (and the other Lenders or
holders shall sell) such participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary
to cause such Lender to share such excess with each other Lender or
holder in accordance with their respective Pro Rata Shares.
Borrower agrees, to the fullest extent permitted by law, that (a)
any Lender or holder may exercise its right to set off with respect
to amounts in excess of its Pro Rata Share of the Obligations and
may sell participations in such excess to other Lenders and holders
and (b) any Lender or holders so purchasing a participation in the
Revolving Credit Advances made or other Obligations held by other
Lenders or holders may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender or holder were a direct
holder of Revolving Credit Advances and other Obligations in the
amount of such participation.
9.4 Disbursement of Funds. Agent may, on behalf of
Lenders, disburse funds to Borrower for Revolving Credit Advances
requested. Each Lender shall reimburse Agent on demand for all
funds disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro Rata Share of any Revolving
Credit Advance before Agent disburses same to Borrower. If any
Lender fails to pay the amount of its Pro Rata Share forthwith upon
Agent's demand, Agent shall promptly notify Borrower and Borrower
shall immediately repay such amount to Agent. Nothing in this
Section 9.4 or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights
that Borrower may have against any Lender as a result of any
default by such Lender hereunder.
9.5 Disbursements of Advances, Payments and Information.
(A) Revolving Credit Advances and Payments; Fee
Payments.
(1) The Revolving Credit Loan balance may fluctuate from
day to day through Agent's disbursement of funds to, and receipt of
funds from, Borrower. In order to minimize the frequency of
transfers of funds between Agent and each Lender, Revolving Credit
Advances and payments in respect thereof will be settled according
to the procedures described in Sections 9.5(A)(2) and 9.5(A)(3)
below. Notwithstanding these procedures, each Lender's obligation
to fund its portion of any advances made by Agent to Borrower will
commence on the date such advances are made by Agent. Such
payments will be made by each Lender without set-off, counterclaim
or reduction of any kind.
(2) On the second Business Day of each week, or more
frequently (including daily) if Agent so elects (each such day
being a "Settlement Date"), Agent will advise each Lender by
telephone, telex or telecopy of the amount of such Lender's Pro
Rata Share of the Revolving Credit Loan balance as of the close of
business on the second Business Day immediately preceding the
Settlement Date. In the event that payments are necessary to
adjust the amount of such Lender's portion of the Revolving Credit
Loan to such Lender's Pro Rata Share of the Revolving Credit Loan
as of any Settlement Date, the party from which such payment is due
will pay the other, in same day funds, by wire transfer to the
other's account not later than 1:00 p.m. New York time on the first
Business Day following the Settlement Date. Notwithstanding the
foregoing, if Agent so elects, Agent may require that each Lender
make its Pro Rata Share of any requested Revolving Credit Advance
available to Agent for disbursement prior to the funding of such
Revolving Credit Advance. If Agent elects to require that such
funds be so made available, Agent shall advise each Lender by
telephone, telex or telecopy of the amount of such Lender's Pro
Rata Share of the requested Revolving Credit Advance no later than
12:30 p.m. New York time on the date of funding thereof, and each
such Lender shall pay Agent such Lender's Pro Rata Share of such
requested Revolving Credit Advance, in same day funds, by wire
transfer to the Agent's account not later than 2:00 p.m. New York
time on the date of funding such Revolving Credit Advance.
(3) For purposes of this Section 9.5(A)(3), the
following terms and conditions will have the following meanings:
(a) "Daily Loan Balance" means an amount calculated as
of the end of each calendar day by subtracting (i)
the cumulative principal amount paid by Agent to a
Lender with respect to the Revolving Credit Loan
from the Closing Date through and including such
calendar day, from (ii) the cumulative principal
amount of the Revolving Credit Loan advanced by
such Lender to Agent from the Closing Date through
and including such calendar day.
(b) "Daily Interest Rate" means an amount calculated by
dividing the Stated Rate payable to a Lender on the
Revolving Credit Loan (as set forth in Section 1.7)
as of each calendar day by three hundred sixty
(360) days.
(c) "Daily Interest Amount" means an amount calculated
by multiplying the Daily Loan Balance of the
Revolving Credit Loan by the associated Daily
Interest Rate on the Revolving Credit Loan.
(d) "Interest Ratio" means a number calculated by
dividing the total amount of interest on the
Revolving Credit Loan received by Agent during the
immediately preceding month by the total amount of
interest on the Revolving Credit Loan due from
Borrower during the immediately preceding month.
On the first Business Day of each calendar month (an "Interest
Settlement Date"), Agent will advise each Lender by telephone,
telex or telecopy of the amount of such Lender's Pro Rata Share of
interest paid and Fees paid under Section 1.10(b) on the Revolving
Credit Loan and Fees paid pursuant to Schedule B in respect of
Letter of Credit Obligations as of the end of the last day of the
immediately preceding month. Provided that such Lender has made
all payments required to be made by it under this Agreement and the
other Loan Documents, Agent will pay to such Lender, by wire
transfer to such Lender's account (as specified by such Lender on
Schedule 9.5(a)(3) or the applicable Lender Addition Agreement, as
amended by such Lender from time to time after the date hereof
pursuant to the notice provisions contained herein or in the
applicable Lender Addition Agreement) not later than 12:00 p.m.
(New York time) on the next Business Day following the Interest
Settlement Date, such Lender's Pro Rata Share of interest paid and
Fees paid under Section 1.10(b) on the Revolving Credit Loan and
Fees paid pursuant to Schedule B in respect of Letter of Credit
Obligations. Such Lender's Pro Rata Share of interest on the
Revolving Credit Loan will be calculated by adding together the
Daily Interest Amounts for each calendar day of the prior month for
the Revolving Credit Loan and multiplying the total thereof by the
Interest Ratio for the Revolving Credit Loan.
(B) Availability of Lender's Pro Rata Share.
(1) Agent may assume that each Lender will make its Pro
Rata Share of each Revolving Credit Advance available to Agent on
the first Business Day following the next Settlement Date. If such
Pro Rata Share is not, in fact, paid to Agent by such Lender when
due, Agent will be entitled to recover such amount on demand from
such Lender without set-off, counterclaim or deduction of any kind.
(2) Nothing contained in this Section 9.6(B) will be
deemed to relieve any Lender of its obligation to fulfill its
Commitments or to prejudice any rights Agent or Borrower may have
against any Lender as a result of any default by such Lender under
this Agreement.
(3) Without limiting the generality of the foregoing,
each Lender shall be obligated to fund its Pro Rata Share of any
Revolving Credit Advance made after any acceleration of the
Obligations with respect to any Letter of Credit Obligations.
(C) Return of Payments.
(1) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has
been or will be received by Agent from Borrower and such related
payment is not received by Agent, then Agent will be entitled to
recover such amount from such Lender on demand without set-off,
counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to
Borrower or paid to any other Person pursuant to any insolvency law
or otherwise, then, notwithstanding any other term or condition of
this Agreement or any other Loan Document, Agent will not be
required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together
with interest at such rate, if any, as Agent is required to pay to
Borrower or such other Person, without set-off, counterclaim or
deduction of any kind.
(D) Dissemination of Information.
Agent will use reasonable efforts to provide Lenders with
any information received by Agent from Borrower which is required
to be provided to Lenders hereunder, with any notice of Default or
Event of Default received by Agent from Borrower, with any notice
of Default or Event of Default delivered by Agent to Borrower, with
notice of any Default or Event of Default of which Agent has become
aware and with notice of any action taken by Agent following any
Default or Event of Default; provided, however, that Agent shall
not be liable to any Lender for any failure to do so, except to the
extent that such failure is attributable to Agent's gross
negligence or willful misconduct as finally determined by a court
of competent jurisdiction after all possible appeals have been
exhausted.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the
other Loan Documents shall be binding on and shall inure to the
benefit of Borrower, the Domestic Subsidiaries, Agent, Lenders and
their respective successors and assigns, except as otherwise
provided herein or therein. Neither Borrower nor any Domestic
Subsidiary shall assign, transfer, hypothecate or otherwise convey
any of its rights, benefits, obligations or duties hereunder or
under any of the other Loan Documents to any Person without the
prior express written consent of Agent and Requisite Lenders. Any
such purported assignment, transfer, hypothecation or other
conveyance by Borrower or any Domestic Subsidiary without the prior
express written consent of Agent shall be void. The terms and
provisions of this Agreement are for the purpose of defining the
relative rights and obligations of Borrower, the Domestic
Subsidiaries, Agent and Lenders with respect to the transactions
contemplated hereby and there shall be no third party beneficiaries
of any of the terms or provisions of this Agreement or any of the
other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement.
This Agreement and the other Loan Documents constitute the complete
agreement between the parties with respect to the subject matter
thereof and may not be modified, altered or amended except as set
forth in Section 11.2 below. Any letter of interest or commitment
letter between Borrower and GE Capital or any of its affiliates, or
between Borrower and BNYCC, predating this Agreement and relating
to a financing of substantially similar form, purpose or effect
shall be superseded by this Agreement.
11.2 Amendments and Waivers. (a) Except as otherwise
provided herein, no amendment, modification, termination or waiver
of any provision of this Agreement or any of the Amended Revolving
Credit Notes, or consent to any departure by Borrower or any
Subsidiary of Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by Requisite Lenders
and Borrower.
(b) In furtherance of and without limiting the foregoing,
no amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement which (i) increases
the percentage advance rates set forth in the definition of
Borrowing Base or (ii) makes less restrictive the non-discretionary
criteria for exclusion from Eligible Accounts and Eligible
Inventory set forth in Schedule 1.8 and Schedule 1.9A hereto shall
be effective unless the same shall be in writing and signed by
Requisite Lenders and Borrower; provided however, that Agent, in
its discretion, may (but shall have no obligation to) on behalf and
for the account of Lenders, regardless of whether the conditions
precedent set forth in Section 2.2 have been satisfied, make
Revolving Credit Advances in amounts which exceed the amounts
permitted to be advanced pursuant to Section 1.1(a) (such excess
being referred to as an "Overadvance"); provided further, that (u)
the aggregate amount of Over Advances outstanding shall not exceed
the lesser of $5,000,000 and 10% of Eligible Inventory at any time;
(v) such Over Advances shall not be outstanding for more than
thirty (30) consecutive days; (w) no such Over Advance shall cause
the Revolving Credit Loan to exceed the lesser of (1) the Maximum
Revolving Credit Loan minus the Letter of Credit Obligations and
(2) $150,000,000 minus the sum of the Letter of Credit Obligations
and the principal balance of the Term Loan; (x) no more than two
(2) such Over Advances shall be made during any Fiscal Year; (y)
any such Over Advance shall be made only during the period of June
1st through October 31st of each Fiscal Year; and (z) nothing
contained herein shall create any duty on the part of any Lender to
Borrower (as opposed to a duty to Agent) to make any Over Advance.
(c) Notwithstanding the foregoing, except to the extent
permitted by any applicable Lender Addition Agreement, no
amendment, modification, termination or waiver shall, unless in
writing and signed by each affected Lender, do any of the
following: (a) increase the principal amount of the Commitment of
any affected Lender; (b) reduce the principal of, rate of interest
on or Fees payable with respect to any Revolving Credit Advance or
Fees payable with respect to any Letter of Credit Obligation; (c)
extend the final scheduled maturity date of the principal amount of
the Revolving Credit Loan; (d) waive, forgive, defer, extend or
postpone any payment required hereunder; (e) release any Guarantor
with gross assets in excess of $2,500,000; (f) except as otherwise
contemplated herein or in one of the other Loan Documents, permit
Borrower or any Guarantor Subsidiary to sell or otherwise dispose
of any Collateral with a value exceeding $2,500,000 in the
aggregate; (g) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Revolving Credit Loan
which shall be required for Lenders or any of them to take any
action hereunder; (h) release Collateral with a value exceeding
$2,500,000 in the aggregate (except if the sale or other
disposition of such Collateral is permitted under the Loan
Documents); (i) amend or waive clause (ii) of the definition of
"Enforcement Period" contained in the Intercreditor Agreement
referred to in Schedule D; and (j) amend or waive this Section 11.2
or the definitions of the terms used in this Section 11.2 insofar
as the definitions affect the substance of this Section 11.2; and
provided, further, that no amendment, modification, termination or
waiver affecting the rights or duties of Agent under this Agreement
or any other Loan Document shall in any event be effective, unless
in writing and signed by Agent, in addition to Lenders required
hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No
amendment, modification, termination or waiver shall be required
for Agent to take additional Collateral pursuant to any Loan
Document. No amendment, modification, termination or waiver of any
provision of any Amended Revolving Credit Note shall be effective
without the written concurrence of the holder of that Amended
Revolving Credit Note . No notice to or demand on Borrower in any
case shall entitle Borrower to any other or further notice or
demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance
with this Section 11.2 shall be binding upon each holder of the
Amended Revolving Credit Notes at the time outstanding and each
future holder of the Amended Revolving Credit Notes.
11.3 Fees and Expenses. Borrower shall reimburse Agent
for all of its out-of-pocket expenses incurred in connection with
(i) the preparation of this Agreement and the other Loan Documents
(including the fees and expenses of Agent's counsel, advisors,
consultants and auditors retained in connection with this Agreement
and the other Loan Documents and the transactions contemplated
hereby and thereby and advice in connection therewith), (ii) wire
transfers to the account of Borrower and (iii) Letter of Credit
Obligations. Borrower shall reimburse Agent for all fees, costs
and expenses, including the fees, costs and expenses of counsel and
other advisors (including environmental and management
consultants), for advice, assistance or other representation in
connection with:
(a) the forwarding to Borrower or any other Person on
behalf of Borrower by Agent of the proceeds of the Revolving Credit
Advances;
(b) any amendment, modification or waiver of, or consent
with respect to, this Agreement or any of the other Loan Documents
or advice in connection with the administration of the loans made
pursuant hereto or Agent's or any Lender's rights hereunder or
thereunder;
(c) any litigation, contest, dispute, suit, proceeding
or action (whether instituted by Agent, any Lender, Borrower, any
Subsidiary of Borrower or any other Person) in any way relating to
the Collateral, this Agreement or any of the other Loan Documents
or any other agreement to be executed or delivered in connection
therewith or herewith, whether as a party, witness or otherwise,
including any litigation, contest, dispute, suit, case, proceeding
or action, and any appeal or review thereof, in connection with a
case commenced by or against Borrower, any Subsidiary of Borrower
or any other Person that may be obligated to Agent or Lenders by
virtue of this Agreement or any of the other Loan Documents;
(d) any attempt to enforce any rights of Agent or any
Lender against Borrower, any Subsidiary of Borrower or any other
Person that may be obligated to Agent or any Lender by virtue of
this Agreement or any of the other Loan Documents; or
(e) any attempt to (i) monitor the Revolving Credit
Advances, Letter of Credit Obligations or any other Obligations,
(ii) evaluate, observe or assess Borrower, any of its Subsidiaries
or Borrower's or any of its Subsidiaries' affairs or (iii) verify,
protect, evaluate, assess, appraise, collect, sell, liquidate or
otherwise dispose of any of the Collateral;
including all the attorneys' and other professional and service
providers' fees arising from such services, including those in
connection with any appellate proceedings; and all expenses, costs,
charges and other fees incurred by such counsel and others in any
way or respect arising in connection with or relating to any of the
events or actions described in this Section 11.3 shall be payable,
on demand, by Borrower to Agent. Without limiting the generality
of the foregoing, such expenses, costs, charges and fees shall
include: fees, costs and expenses of environmental advisors to
advise Agent, but not to conduct any on site environmental review
or testing, appraisers, management and other consultants,
paralegals, court costs and expenses, photocopying and duplication
expenses, court reporter fees, costs and expenses, long distance
telephone charges, air express charges, telegram charges,
secretarial overtime charges, expenses for travel, lodging and food
paid or incurred in connection with the performance of such legal
or other advisory services, and, in accordance with the GE Capital
Fee Letter, fees, costs and expenses of Agent's internal collateral
auditors, provided that so long as no Default or Event of Default
has occurred and is continuing such collateral audits or
examinations shall be conducted not more frequently than four (4)
times in any Fiscal Year; and, following the occurrence and during
the continuance of any Default or Event of Default, environmental
advisors for any reason, including to conduct on site environmental
reviews and testing, outside accountants, and investment bankers.
11.4 No Waiver. Agent's or any Lender's failure, at any
time or times, to require strict performance of any provision of
this Agreement or any of the other Loan Documents shall not waive,
affect or diminish any right of Agent or such Lender thereafter to
demand strict compliance and performance therewith. Any suspension
or waiver of an Event of Default under the Loan Documents shall not
suspend, waive or affect any other Event of Default under this
Agreement or any of the other Loan Documents whether the same is
prior or subsequent thereto and whether of the same or a different
type. None of the undertakings, agreements, warranties, covenants
and representations of Borrower and its Subsidiaries contained in
this Agreement or any of the other Loan Documents and no Default or
Event of Default under this Agreement and no defaults or events of
default under any of the other Loan Documents shall be deemed to
have been suspended or waived by Agent or any Lender, unless such
waiver or suspension is by an instrument in writing signed by an
officer of or other authorized employee of Agent and Requisite
Lenders and directed to Borrower specifying such suspension or
waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies
under this Agreement shall be cumulative and nonexclusive of any
other rights and remedies which Agent or any Lender may have under
any other agreement, including the Loan Documents, by operation of
law or otherwise. Recourse to the Collateral shall not be
required.
11.6 Severability. Wherever possible, each provision of
this Agreement and the other Loan Documents shall be interpreted in
such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement or any other Loan Document
shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement and
the other Loan Documents.
11.7 Conflict of Terms. Except as otherwise provided in
this Agreement or any of the other Loan Documents by specific
reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or
inconsistent with, any provision contained in any of the other Loan
Documents, the provision contained in this Agreement shall govern
and control.
11.8 Authorized Signature. Until Agent shall be
notified by Borrower to the contrary, the signature upon any
document or instrument delivered pursuant hereto of an officer of
Borrower or a Guarantor Subsidiary, as appropriate, listed on
Schedule 11.8 shall bind Borrower or such Guarantor Subsidiary, as
the case may be, and be deemed to be the act of Borrower or such
Guarantor Subsidiary, as the case may be, affixed pursuant to and
in accordance with resolutions duly adopted by Borrower's Board of
Directors or such Guarantor Subsidiary's Board of Directors, as
appropriate. Agent shall be entitled to assume the authenticity of
each signature and the authority of each Person whose signature it
is or appears to be unless the responsible Person of Agent acting
in reliance thereupon shall have actual knowledge, at the time of
reliance thereon, of the fact that such signature is false or the
Person whose signature or purported signature is presented is
without authority.
11.9 GOVERNING LAW; CONSENT TO JURISDICTION. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. BORROWER, AGENT AND LENDERS HEREBY
CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN COOK
COUNTY, ILLINOIS, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER, ANY GUARANTOR
SUBSIDIARY, AGENT OR ANY LENDER PERTAINING TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS, BORROWER AND EACH GUARANTOR
SUBSIDIARY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE OF COOK COUNTY, ILLINOIS
AND, PROVIDED, FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT OR LENDERS.
BORROWER, EACH GUARANTOR SUBSIDIARY, AGENT AND LENDERS EXPRESSLY
SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER, EACH GUARANTOR
SUBSIDIARY, AGENT AND LENDERS HEREBY WAIVE ANY OBJECTION WHICH THEY
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HEREBY CONSENT TO THE GRANTING OF SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
BORROWER, EACH GUARANTOR SUBSIDIARY, AGENT AND LENDERS HEREBY WAIVE
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
IN ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED, IN THE CASE OF NOTICE TO BORROWER OR ANY GUARANTOR
SUBSIDIARY, TO BORROWER, IN THE CASE OF NOTICE TO AGENT, TO AGENT,
IN THE CASE OF NOTICE TO A LENDER, TO SUCH LENDER, AT THEIR
RESPECTIVE ADDRESSES SET FORTH ON SCHEDULE 11.10 OF THIS AGREEMENT
AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER
OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may
be given to or served upon any of the parties by any other party,
or whenever any the parties desires to give or serve upon any other
party any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been
validly served, given or delivered (i) upon the earlier of actual
receipt and three (3) days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper
postage prepaid, (ii) upon transmission, when sent by telecopy or
other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal
delivery or United States Mail as otherwise provided in this
Section 11.10), (iii) one (1) Business Day after deposit with a
reputable overnight courier with all charges prepaid or (iv) when
delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address or
facsimile number indicated on Schedule 11.10 or to such other
address (or facsimile number) as may be substituted by notice given
as herein provided. The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such
notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Agent)
designated on Schedule 11.10 to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of
Contents contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not
a part of the agreement between the parties hereto.
11.12 Counterparts. This Agreement may be executed in
any number of separate counterparts, each of which shall
collectively and separately constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER
THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM
AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN
AGENT, LENDERS, BORROWER OR ANY DOMESTIC SUBSIDIARY ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.
11.14 Confidentiality. Each of the Lenders and Agent
agrees to exercise reasonable efforts to keep any non-public
information delivered or made available to it pursuant to this
Agreement or any other Loan Document, which Borrower has identified
in writing as confidential information, confidential from any
Person other than officers, employees, agents, designees or
representatives of such Lender or Agent who are or are expected to
become engaged in evaluating, approving, structuring or
administering this Agreement or any of the other Loan Documents, or
Revolving Credit Advances, Letter of Credit Obligations or any
other transaction contemplated hereby or thereby; provided, that,
nothing herein shall prevent Agent or any Lender from disclosing
such information to any bona fide assignee, transferee or
participant that has agreed in writing to comply with this Section
11.14 in connection with the contemplated assignment or transfer of
any Revolving Credit Advances or Letter of Credit Obligations or
participations therein; to any of its Affiliates to the extent any
such Affiliates require such information in the ordinary course of
Agent's or such Lender's credit committee or asset management
procedures; or as required or requested by any Governmental
Authority or representative thereof or pursuant to legal process or
as required in connection with the exercise of any remedy under
this Agreement or any of the other Loan Documents.
11.15 Reaffirmation of Guaranty. Each Guarantor
Subsidiary hereby reaffirms all of its covenants and obligations
under the Guaranty and the Contribution Agreement, each dated as of
May 21, 1993 and delivered in connection with the Initial Credit
Agreement.
[signature pages follow]
IN WITNESS WHEREOF, this Second Amended and Restated
Credit Agreement has been duly executed as of the date first
written above.
ZENITH ELECTRONICS CORPORATION
By: /s/ Willard C. McNitt
________________________________
Title: Vice President - Treasurer
_____________________________
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Robert Battle
________________________________
Title: Duly Authorized Signatory
____________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: /s/ Stephen V. Mangiante
________________________________
Title: Vice President
_____________________________
CONGRESS FINANCIAL CORPORATION
By: /s/ Kenneth Donahue
________________________________
Title: Assistant Vice President
_____________________________
ACKNOWLEDGED AND AGREE TO BE
BOUND BY ANY AND ALL PROVISIONS
HEREOF AFFECTING THEM:
ZENITH DISTRIBUTING CORPORATION
OF ILLINOIS
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH DISTRIBUTING CORPORATION -
MIDSTATES
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH DISTRIBUTING CORPORATION
OF NEW ENGLAND
By: /s/ Willard C. McNitt
__________________________
Title: Treasurer
_________________________
ZENITH DISTRIBUTING CORPORATION
OF NEW YORK
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH DISTRIBUTING CORPORATION -
SOUTHEAST
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH DISTRIBUTING CORPORATION -
WEST
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH/INTEQ, INC.
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH ELECTRONICS CORPORATION
OF ARIZONA
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH ELECTRONICS CORPORATION
OF TEXAS
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH MICROCIRCUITS CORPORATION
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH VIDEO TECH CORPORATION
By: /s/ Willard C. Mcnitt
____________________________
Title: Treasurer
_________________________
ZENITH VIDEO TECH CORPORATION -
FLORIDA
By: /s/ Willard C. Mcnitt
____________________________
Title: Treasurer
_________________________
ZENTRANS, INC.
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
EXHIBIT (4i)
FIRST AMENDED AND RESTATED TERM LOAN AGREEMENT
Dated as of November 6, 1995
among
ZENITH ELECTRONICS CORPORATION,
as Borrower,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender,
THE BANK OF NEW YORK COMMERCIAL CORPORATION,
as Lender,
and
CONGRESS FINANCIAL CORPORATION,
as Lender
TABLE OF CONTENTS
PAGE
1. AMOUNT AND TERMS OF CREDIT. . . . . . . . . . . . . . . . .1
1.1 Term Loan . . . . . . . . . . . . . . . . . . . . . .1
1.2 Amortization. . . . . . . . . . . . . . . . . . . . .1
1.3 Mandatory Prepayments . . . . . . . . . . . . . . . .2
1.4 Voluntary Prepayments . . . . . . . . . . . . . . . .2
1.5 Prepayment Fees and Interest. . . . . . . . . . . . .2
1.6 Single Loan . . . . . . . . . . . . . . . . . . . . .2
1.7 Interest on the Term Loan . . . . . . . . . . . . . .3
1.8 Use of Proceeds . . . . . . . . . . . . . . . . . . .5
1.9 Fees. . . . . . . . . . . . . . . . . . . . . . . . .5
1.10 Cash Management Systems . . . . . . . . . . . . . . .6
1.11 Receipt of Payments . . . . . . . . . . . . . . . . .6
1.12 Application and Allocation of Payments. . . . . . . .6
1.13 Borrower's Loan Account and Accounting. . . . . . . .6
1.14 Indemnity . . . . . . . . . . . . . . . . . . . . . .7
1.15 Access. . . . . . . . . . . . . . . . . . . . . . . .7
1.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . .9
1.17 Capital Adequacy and Other Adjustments. . . . . . . 10
1.18 Amendment and Restatement . . . . . . . . . . . . . 11
2. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . 12
2.1 Conditions to Effectiveness of this Agreement . . . 12
3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 13
3.1 Corporate Existence; Compliance with Law. . . . . . 13
3.2 Executive Offices . . . . . . . . . . . . . . . . . 14
3.3 Corporate Power; Authorization;
Enforceable Obligations . . . . . . . . . . . . . . 14
3.4 Financial Statements. . . . . . . . . . . . . . . . 14
3.5 Collateral Reports. . . . . . . . . . . . . . . . . 15
3.6 Material Adverse Effect . . . . . . . . . . . . . . 15
3.7 Ownership of Property; Liens. . . . . . . . . . . . 15
3.8 Restrictions; No Default. . . . . . . . . . . . . . 16
3.9 Labor Matters . . . . . . . . . . . . . . . . . . . 16
3.10 Joint Ventures, Subsidiaries and
Affiliates; Outstanding Stock and Indebtedness. . . 17
3.11 Government Regulation . . . . . . . . . . . . . . . 17
3.12 Margin Regulations. . . . . . . . . . . . . . . . . 18
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . 18
3.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . 19
3.15 Litigation. . . . . . . . . . . . . . . . . . . . . 20
3.16 Brokers . . . . . . . . . . . . . . . . . . . . . . 21
3.17 Patents, Trademarks, Copyrights and Licenses. . . . 21
3.18 Full Disclosure . . . . . . . . . . . . . . . . . . 21
3.19 Hazardous Materials . . . . . . . . . . . . . . . . 21
3.20 Insurance Policies. . . . . . . . . . . . . . . . . 22
3.21 Deposit and Disbursement Accounts . . . . . . . . . 22
3.22 Government Contracts. . . . . . . . . . . . . . . . 22
3.23 Customer and Trade Relations. . . . . . . . . . . . 22
3.24 Non-Material Subsidiaries . . . . . . . . . . . . . 22
4. FINANCIAL STATEMENTS AND INFORMATION. . . . . . . . . . . 23
4.1 Reports and Notices . . . . . . . . . . . . . . . . 23
4.2 Communication with Accountants. . . . . . . . . . . 23
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 24
5.1 Maintenance of Existence and Conduct of Business. . 24
5.2 Payment of Obligations. . . . . . . . . . . . . . . 24
5.3 Books and Records . . . . . . . . . . . . . . . . . 25
5.4 Litigation. . . . . . . . . . . . . . . . . . . . . 25
5.5 Insurance . . . . . . . . . . . . . . . . . . . . . 25
5.6 Compliance with Laws. . . . . . . . . . . . . . . . 26
5.7 Agreements. . . . . . . . . . . . . . . . . . . . . 27
5.8 Supplemental Disclosure . . . . . . . . . . . . . . 27
5.9 Employee Plans. . . . . . . . . . . . . . . . . . . 27
5.10 Environmental Matters . . . . . . . . . . . . . . . 27
5.11 Landlords' Agreements and Bailee Letters. . . . . . 28
5.12 Public Offering Proceeds. . . . . . . . . . . . . . 28
5.13 Notice of Labor Matters . . . . . . . . . . . . . . 28
5.14 Government Contracts. . . . . . . . . . . . . . . . 28
5.15 Intellectual Property . . . . . . . . . . . . . . . 29
6. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . 29
6.1 Mergers, Etc. . . . . . . . . . . . . . . . . . . . 29
6.2 Investments, Loans and Advances.. . . . . . . . . . 30
6.3 Indebtedness. . . . . . . . . . . . . . . . . . . . 31
6.4 Employee Loans and Transactions . . . . . . . . . . 32
6.5 Capital Structure and Business. . . . . . . . . . . 33
6.6 Guaranteed Indebtedness . . . . . . . . . . . . . . 33
6.7 Liens . . . . . . . . . . . . . . . . . . . . . . . 34
6.8 Sale of Assets. . . . . . . . . . . . . . . . . . . 34
6.9 Events of Default . . . . . . . . . . . . . . . . . 34
6.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . 35
6.11 Financial Covenants . . . . . . . . . . . . . . . . 35
6.12 Hazardous Materials . . . . . . . . . . . . . . . . 35
6.13 Sale-Leasebacks . . . . . . . . . . . . . . . . . . 36
6.14 Cancellation of Indebtedness. . . . . . . . . . . . 36
6.15 Restricted Payments . . . . . . . . . . . . . . . . 36
6.16 Fiscal Year . . . . . . . . . . . . . . . . . . . . 36
6.17 Change of Corporate Name. . . . . . . . . . . . . . 36
6.18 Sale of Stock . . . . . . . . . . . . . . . . . . . 36
6.19 Bank Accounts . . . . . . . . . . . . . . . . . . . 37
6.20 Cash Management . . . . . . . . . . . . . . . . . . 37
6.21 Non-Material Subsidiaries . . . . . . . . . . . . . 37
6.22 Foreign Subsidiaries. . . . . . . . . . . . . . . . 38
6.23 No Impairment of Upstreaming. . . . . . . . . . . . 38
6.24 Amendment of Other Debt . . . . . . . . . . . . . . 39
6.25 Prepayments of Other Debt . . . . . . . . . . . . . 39
6.26 Permitted Asset Dispositions. . . . . . . . . . . . 39
7. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.1 Termination . . . . . . . . . . . . . . . . . . . . 40
7.2 Survival of Obligations Upon Termination of
Financing Arrangement . . . . . . . . . . . . . . . 40
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES. . . . . . . . . . 41
8.1 Events of Default . . . . . . . . . . . . . . . . . 41
8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . 43
8.3 Waivers by Borrower . . . . . . . . . . . . . . . . 43
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT . . . 44
9.1 Assignment and Participations . . . . . . . . . . . 44
9.2 Appointment of Agent. . . . . . . . . . . . . . . . 45
9.3 Set Off and Sharing of Payments . . . . . . . . . . 46
9.4 Disbursements of Payments and Information . . . . . 47
10. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . 48
10.1 Successors and Assigns. . . . . . . . . . . . . . . 48
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 48
11.1 Complete Agreement; Modification of Agreement . . . 48
11.2 Amendments and Waivers. . . . . . . . . . . . . . . 48
11.3 Fees and Expenses . . . . . . . . . . . . . . . . . 49
11.4 No Waiver . . . . . . . . . . . . . . . . . . . . . 50
11.5 Remedies. . . . . . . . . . . . . . . . . . . . . . 51
11.6 Severability. . . . . . . . . . . . . . . . . . . . 51
11.7 Conflict of Terms . . . . . . . . . . . . . . . . . 51
11.8 Authorized Signature. . . . . . . . . . . . . . . . 51
11.9 GOVERNING LAW; CONSENT TO JURISDICTION. . . . . . . 52
11.10 Notices . . . . . . . . . . . . . . . . . . . . . . 52
11.11 Section Titles. . . . . . . . . . . . . . . . . . . 53
11.12 Counterparts. . . . . . . . . . . . . . . . . . . . 53
11.13 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . 53
11.14 Confidentiality . . . . . . . . . . . . . . . . . . 53
11.15 Reaffirmation of Guaranty . . . . . . . . . . . . . 54
INDEX OF EXHIBITS AND SCHEDULES
Exhibit A - Form of Term Note
Exhibit A-2 - Conversion/Continuation Notice (Previously
Delivered)
Schedule 1.1(a) - Responsible Individual of Agent
Schedule 1.10 - List of Lock Box and Collection Account
Banks
Schedule 3.2 - Executive Offices
Schedule 3.4 - Financial Statements
Schedule 3.5 - Collateral Reports
Schedule 3.7 - Real Estate and Leases
Schedule 3.9 - Labor Matters
Schedule 3.10 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Schedule 3.13 - Tax Matters
Schedule 3.14 - ERISA Plans
Schedule 3.17 - Patents, Trademarks and Copyrights
Schedule 3.20, I - Insurance Standards
Schedule 3.20, II - Insurance Policies
Schedule 3.21 - Deposit and Disbursement Accounts
Schedule 3.22 - Government Contracts
Schedule 4.1(A) - Financial Statements and Notices --
Reporting
Schedule 4.1(B) - Collateral Reports -- Reporting
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.7 - Liens
Schedule 6.11 - Financial Covenants
Schedule 6.26 - Material Assets
Schedule 9.5(A)(3) - Lenders' Accounts
Schedule 11.8 - Authorized Signatures
Schedule 11.10 - Notice Addresses
Schedule A - Definitions
Schedule B - intentionally omitted
Schedule C - Cash Management Systems
Schedule D - Schedule of Documents
Schedule E - Tuning System Patents
Schedule F - Term Loan Commitments
Schedule G - Fiscal Periods
THIS FIRST AMENDED AND RESTATED TERM LOAN AGREEMENT,
dated as of November 6, 1995 among ZENITH ELECTRONICS CORPORATION,
a Delaware corporation ("Borrower"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity,
"GE Capital"), for itself, as Lender, and as Agent for Lenders (the
"Agent"), THE BANK OF NEW YORK COMMERCIAL CORPORATION, a New York
corporation ("BNYCC"), as Lender, and CONGRESS FINANCIAL
CORPORATION, a California corporation ("Congress"), as Lender.
RECITALS
A. The Borrower has borrowed Forty Million Dollars
($40,000,000) pursuant to a Term Loan Agreement dated as of May 10,
1995 (the "Prior Term Loan Agreement").
B. The parties hereto desire to amend and restate the
Prior Term Loan Agreement to incorporate such amendments as the
parties have mutually agreed upon.
C. Capitalized terms used in this Agreement shall have
the meanings ascribed to them in Schedule A. All Schedules,
Exhibits and other attachments hereto, or expressly identified to
this Agreement, are incorporated herein by reference and, taken
together, shall constitute but a single agreement. These Recitals
shall be construed as part of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as
follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Term Loan. (a) Subject to the terms hereof, each
Lender advanced to Borrower on the Closing Date of the Prior Term
Loan Agreement, its Pro Rata Share of a loan (the "Term Loan") in
the aggregate principal amount of Forty Million Dollars
($40,000,000).
(b) Borrower has executed and delivered to each Lender
a promissory note in the principal amount of the Pro Rata Share of
the Term Loan funded by such Lender, dated May 10, 1995 and
substantially in the form of Exhibit A to the Prior Term Loan
Agreement (each, a "Term Note").
1.2 Amortization. Borrower shall repay the Term Loan to
Agent for the benefit of the Lenders in twelve (12) consecutive
quarterly payments (the "Scheduled Installments"), payable on the
last day of each of the following calendar quarters, commencing
September 30, 1995 (which initial payment has been received), in
the following respective amounts:
Payment Date Scheduled Installments
------------------------------ -----------------------
September 30, and
December 31, 1995 $ 1,500,000 each
March 31, June 30, September 30
and December 31, 1996 $ 1,750,000 each
March 31, June 30, September 30
and December 31, 1997 $ 2,500,000 each
March 31, 1998 $ 2,500,000
June 30, 1998 $ 17,500,000
The final Scheduled Installment shall be in the amount of
$17,500,000 or the then outstanding principal balance of the Term
Loan.
1.3 Mandatory Prepayments. (a) If Borrower has elected
to have the Floating Rate apply to the Term Loan in accordance with
Section 1.7(a) hereof: (1) Borrower shall deliver to Agent within
ten (10) Business Days following the last day of each Fiscal
Quarter, commencing with the Fiscal Quarter ending September 30,
1995, a report, certified by its Chief Financial Officer, setting
forth all revenue received by Borrower during the preceding Fiscal
Quarter under the Tuning System Patent Licenses, and (2) if 25% of
the revenues received by Borrower during any Fiscal Quarter under
the Tuning System Patent Licenses exceeds the Scheduled Installment
paid or payable as of the last day of the corresponding calendar
quarter, Borrower shall pay such excess to Agent for the benefit of
the Lenders concurrently with the delivery of the applicable
quarterly report. Each prepayment in accordance with this Section
1.3(a) shall be applied to the Scheduled Installments in inverse
order of maturity.
(b) Borrower shall prepay the Term Loan in full upon
payment in full of the Revolving Credit Loan and termination of the
Revolving Loan Agreement, unless the Revolving Credit Loan is
replaced by a similar working capital facility of not less than $90
million and not more than $110 million on terms satisfactory to
each Lender and subject to an intercreditor agreement containing
terms satisfactory to each Lender in its sole and absolute
discretion, which terms may differ from those of the Intercreditor
Agreement.
1.4 Voluntary Prepayments. Borrower may voluntarily
prepay the Term Loan in whole or in part at any time; provided that
Borrower shall notify Agent at least thirty (30) days prior to a
prepayment in full of the Term Loan.
1.5 Prepayment Fees and Interest. Each prepayment of
the Term Loan shall be accompanied by payment of all interest
accrued on the amount so prepaid. Each voluntary prepayment of the
Term Loan on or prior to May 10, 1996 shall be accompanied by a
premium in the amount of one percent (1%) of the principal amount
prepaid.
1.6 Single Loan. The Term Loan and all of the other
Obligations of Borrower arising under this Agreement and the other
Loan Documents shall constitute one general obligation of Borrower
secured by all of the Collateral.
1.7 Interest on the Term Loan.
(a) Borrower shall pay interest to Agent, for the
ratable benefit of Lenders, in arrears (i) (x) with respect to all
Base Rate Loans for the preceding calendar month, on the first day
of each calendar month, commencing on June 1, 1995, and (y) with
respect to LIBOR Loans on the last Business Day of each LIBOR
Period, and (ii) upon payment in full of the Term Loan.
(b) If any interest or other payment on the Term Loan
becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business
Day (except as otherwise provided in the definition of LIBOR
Period) and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such
extension.
(c) Borrower shall pay interest to Agent, for the
ratable benefit of Lenders, on the outstanding balance of the Term
Loan, at a floating rate equal to the Base Rate plus one percent
(1.0%) per annum (the "Stated Rate"). Alternatively, so long as no
Default or Event of Default shall have occurred and be continuing,
Borrower may, upon delivery of a Conversion/Continuation Notice to
Agent not less than three Business Days prior to the intended
commencement of a LIBOR Period, elect to have the Term Loan or a
portion thereof bear interest at a per annum rate equal to the
LIBOR Rate for such Interest Period plus three percent (3%) per
annum (the "Adjusted LIBOR Rate"). Notwithstanding the foregoing,
if in connection with the LGE Transaction, Borrower is obligated to
redeem more than $30,000,000 in principal amount of the Convertible
Debentures, the Stated Rate shall be a floating rate equal to the
Base Rate plus one and one-quarter percent (1.25%) per annum and
the Adjusted LIBOR Rate shall be the LIBOR Rate for each particular
LIBOR Period plus three and one-quarter percent (3.25%) per annum.
Further, notwithstanding the foregoing, if the Stated Rate and
Adjusted LIBOR Rate are determined in accordance with the preceding
sentence, so long as no Event of Default shall have occurred and be
continuing, the Stated Rate shall be reduced to a floating rate
equal to the Base Rate plus one percent (1.0%) per annum at any
time when the Fixed Charge Coverage Ratio as of the last day of any
Fiscal Quarter for the four consecutive Fiscal Quarters then ended
equals or exceeds 1.0:1.0, and the Adjusted LIBOR Rate shall be
reduced to the LIBOR Rate for each particular LIBOR Period plus
three percent (3.0%) per annum at any time when the Fixed Charge
Coverage Ratio as of the last day of any Fiscal Quarter for the
four consecutive Fiscal Quarters then ended equals or exceeds
1.1:1.0. Any reduction or increase in the Stated Rate or the
Adjusted LIBOR Rate based on achievement of the Fixed Charge
Coverage Ratio thresholds set forth above shall be effective from
and after the first day of the first Fiscal Quarter following
delivery to the Lenders of Borrower's unaudited financial
statements for the preceding Fiscal Quarter demonstrating that the
criteria for a reduction or increase in the Stated Rate or Adjusted
LIBOR Rate have been met.
(d) Borrower may elect by 11:00 A.M. (New York time) on,
the third (3rd) Business Day prior to (i) the end of each LIBOR
Period with respect to any LIBOR Loans, or (ii) the date on which
Borrower wishes to convert any Base Rate Loan to a LIBOR Loan, with
respect to a Base Rate Loan, to have all or some portion of the
Term Loan bear interest at a LIBOR Rate for one or more succeeding
LIBOR Periods (and to specify that portion of the Term Loan to
which such LIBOR Rate shall apply) as designated by Borrower in a
Conversion/Continuation Notice. If no election is received with
respect to a LIBOR Loan by 11:00 A.M. (New York time) on the third
(3rd) Business Day prior to the end of the applicable LIBOR Period
with respect to such LIBOR Loan (or a Default or Event of Default
shall have occurred and is continuing), such LIBOR Loan shall be
converted to a Base Rate Loan at the end of the LIBOR Period.
Borrower shall make such election by irrevocable notice to Agent
and each Lender in writing, by telecopy. Borrower shall have the
option to (1) convert at any time all or any part of the
outstanding Term Loan equal to $5,000,000 and integral multiples of
$1,000,000 in excess of that amount from Base Rate Loans to LIBOR
Loans or (2) upon the expiration of any LIBOR Period applicable to
a LIBOR Loan, to continue all or any portion of such Loan equal to
$5,000,000 and integral multiples of $1,000,000 in excess of that
amount as a LIBOR Loan and the succeeding LIBOR Period(s) of such
continued Loan shall commence on the last day of the LIBOR Period
of the Loan to be continued; provided that LIBOR Loans may only be
converted into Base Rate Loans on the expiration date of a LIBOR
Period applicable thereto; and provided, further, that no
outstanding Loan may be continued as, or be converted into, a LIBOR
Loan when any Default or Event of Default has occurred and is
continuing.
(e) All computations of interest and Fees calculated on
a per annum basis shall be made by Agent on the basis of a three
hundred and sixty (360) day year, in each case for the actual
number of days occurring in the period for which such interest is
payable. In the case of Base Rate Loans, the Stated Rate shall be
calculated based on the Base Rate as in effect on each day. Each
determination by Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error or
bad faith.
(f) So long as any Default or Event of Default shall
have occurred and be continuing, the interest rate applicable to
the Obligations shall be increased, at the option of Agent, by two
percent (2%) per annum above the Stated Rate from time to time
applicable (the "Default Rate").
(g) Notwithstanding anything to the contrary set forth
in this Section 1.7, if, at any time until payment in full of all
of the Obligations, the rate of interest payable hereunder exceeds
the highest rate of interest permissible under any law which a
court of competent jurisdiction shall, in a final determination,
deem applicable hereto (the "Maximum Lawful Rate"), then in such
event and so long as the Maximum Lawful Rate would be so exceeded,
the rate of interest payable hereunder shall be equal to the
Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the
Maximum Lawful Rate, Borrower shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total
interest received by Agent, on behalf of Lenders, from the making
of such advances hereunder is equal to the total interest which
would have been received had the interest rate payable hereunder
been (but for the operation of this paragraph) the interest rate
payable since May 10, 1995 as otherwise provided in this Agreement
or the Prior Term Loan Agreement. Thereafter, the interest rate
payable hereunder shall be the rate of interest provided in
Sections 1.7(a) through (f) of this Agreement, unless and until the
rate of interest again exceeds the Maximum Lawful Rate, in which
event this paragraph shall again apply. In no event shall the
total interest received by any Lender pursuant to the terms hereof
exceed the amount which such Lender could lawfully have received
had the interest due hereunder been calculated for the full term
hereof at the Maximum Lawful Rate. In the event the Maximum Lawful
Rate is calculated pursuant to this paragraph, such interest shall
be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation
is made. In the event that a court of competent jurisdiction,
notwithstanding the provisions of this Section 1.7(g), shall make
a final determination that a Lender has received interest hereunder
or under any of the other Loan Documents in excess of the Maximum
Lawful Rate, Agent shall, to the extent permitted by applicable
law, promptly apply such excess first to any interest due and not
yet paid hereunder, then to the outstanding principal of the
Obligations, then to Fees and any other unpaid Obligations and
thereafter shall refund any excess to Borrower or as a court of
competent jurisdiction may otherwise order.
1.8 Use of Proceeds. Borrower shall utilize the
proceeds of the Term Loan solely for (i) the payment of Fees and
expenses in connection with the transactions contemplated hereby
and (ii) the financing of Borrower's and its Material Subsidiaries'
working capital needs.
1.9 Fees. Borrower shall pay to GE Capital,
individually, the fees specified in that certain Fee Letter dated
as of April 16, 1995 (the "GE Capital Fee Letter"), between
Borrower and GE Capital to the extent payable after the date hereof
at the times specified for payment therein.
1.10 Cash Management Systems. On or prior to the Closing
Date, Borrower will establish, and Borrower will maintain, the cash
management systems described on Schedule C.
1.11 Receipt of Payments. Borrower shall make each
payment under this Agreement not later than 2:00 p.m. (New York
time) on the day when due in lawful money of the United States of
America in immediately available funds to the Collection Account.
For purposes of computing interest and fees, (a) all payments
consisting of cash, wire or electronic transfers in immediately
available funds shall be deemed received upon deposit in the
Collection Account and notice to Agent of such deposit, and (b) all
payments consisting of checks, drafts or similar non-cash items
shall be deemed received upon receipt of good funds following
deposit of such payment in the Collection Account and notice to
Agent of such deposit.
1.12 Application and Allocation of Payments. Borrower
irrevocably waives the right to direct the application of any and
all payments at any time or times hereafter received from or on
behalf of Borrower, and Borrower irrevocably agrees that Agent
shall have the continuing exclusive right to apply any and all such
payments against the then due and payable Obligations of Borrower
and in repayment of the Term Loan, as Agent may deem advisable,
notwithstanding any previous entry by Agent upon the Loan Account
or any other books and records. In the absence of a specific
determination by Agent with respect thereto, the same shall be
applied in the following order: (i) to then due and payable Fees
and expenses payable to Agent or any Lender; (ii) to then due and
payable interest payments; (iii) to Obligations other than Fees,
expenses and interest and principal payments; and (iv) to then due
and payable principal payments on the Term Loan.
1.13 Borrower's Loan Account and Accounting. Agent shall
maintain a loan account (the "Loan Account") on its books to
record: (a) all payments made by Borrower and (b) all other
appropriate debits and credits as provided in this Agreement with
respect to the Obligations. All entries in the Loan Account shall
be made in accordance with Agent's customary accounting practices
as in effect from time to time. Borrower shall pay all Obligations
as such amounts become due or are declared due pursuant to the
terms of this Agreement.
The balance in the Loan Account, as recorded on Agent's
most recent printout or other written statement, shall be
presumptive evidence of the amounts due and owing to Agent and
Lenders by Borrower; provided that any failure to so record or any
error in so recording shall not limit or otherwise affect
Borrower's obligation to pay the Obligations. Agent shall render
to Borrower a monthly accounting of transactions reflected in the
Loan Account and setting forth the balance of the Loan Account.
Each and every such accounting shall (absent manifest error) be
deemed final, binding and conclusive upon Borrower in all respects
as to all matters reflected therein, unless Borrower, within 30
days after the date any such accounting is rendered, shall notify
Agent in writing of any objection which Borrower may have to any
such accounting, describing the basis for such objection with
specificity. In that event, only those items expressly and
reasonably objected to in such notice shall be deemed to be
disputed by Borrower. Agent's determination, based upon the facts
available, of any item objected to by Borrower in such notice shall
(absent manifest error) be final, binding and conclusive on
Borrower, unless Borrower shall notify Agent of its continued
objection within 30 days following Agent's notifying Borrower of
such determination.
1.14 Indemnity. (a) Borrower shall indemnify and hold
each of Agent, Lenders and their respective Affiliates, officers,
directors, employees, attorneys, agents and representatives (each,
an "Indemnified Person"), harmless from and against any and all
suits, actions, proceedings, claims, damages, losses, liabilities
and expenses (including attorneys' fees and disbursements and other
costs of investigations or defense, including those incurred upon
any appeal) which may be instituted or asserted against or incurred
by any such Indemnified Person as the result of credit having been
extended under this Agreement and the other Loan Documents or in
connection with or arising out of the transactions contemplated
hereunder and thereunder, including any and all Environmental
Liabilities and Costs; provided that Borrower shall not be liable
for any indemnification to such Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss,
liability or expense results solely from such Indemnified Person's
gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction after all possible appeals have
been exhausted. NEITHER AGENT, ANY LENDER NOR ANY OTHER
INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY HERETO, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF
SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR DIRECT, INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT
HAVING BEEN EXTENDED UNDER THE LOAN DOCUMENTS.
(b) Borrower hereby acknowledges and agrees that neither
Agent nor any Lender (i) is now, or has ever been, in control of
Borrower's or any of its Subsidiaries' affairs or (ii) has the
capacity through the provisions of the Loan Documents or otherwise
to influence Borrower's or any of its Subsidiaries' conduct with
respect to the ownership, operation or management of any property.
1.15 Access. Borrower shall provide full access during
normal business hours, from time to time upon one (1) Business
Day's prior notice, to Agent and any of its officers, employees,
designees, agents and representatives, as frequently as Agent
determines, in its sole discretion, to be appropriate (unless a
Default or Event of Default shall have occurred and be continuing,
in which event Agent and its officers, employees, designees, agents
and representatives shall have access at any and all times and
without any notice), to the properties, facilities, books, records,
suppliers, customers, advisors and employees (including officers)
of Borrower and its Subsidiaries, to the Collateral and, either
through Borrower or with Borrower present (unless a Default or
Event of Default shall have occurred and be continuing, in which
event Agent and its officers, employees, designees, and agents
shall have access directly without going through Borrower or having
Borrower present), to the accountants (including Arthur Andersen
LLP) of Borrower and its Subsidiaries. Without limiting the
generality of the foregoing, Borrower shall (i) permit Agent, and
any of its officers, employees, agents and representatives, to
inspect, audit and make extracts from all of Borrower's and its
Subsidiaries' records, files and books of account and (ii) permit
Agent, and any of its officers, employees, agents and
representatives, to inspect, review and evaluate the Accounts,
Inventory and Borrower's and its Subsidiaries' books and other
records, at Borrower's and its Subsidiaries' locations and at
premises not owned by or leased to Borrower or any Subsidiary of
Borrower. Borrower shall make available to Agent and its counsel,
as quickly as is possible under the circumstances, originals or
copies of all books, records, board minutes, contracts, insurance
policies, environmental audits and reports, business plans, files,
financial statements (actual and pro forma), filings with federal,
state, local and foreign regulatory agencies, and other instruments
and documents which Agent may reasonably request. Borrower shall
deliver any document or instrument necessary for Agent, as it may
from time to time reasonably request, to obtain records from any
service bureau or other Person which maintains records for Borrower
or any Subsidiary of Borrower, and, if any of the records of
Borrower or any Subsidiary of Borrower are maintained with any
service bureau or other Person, shall maintain duplicate records or
supporting documentation on media, including on computer tapes and
discs owned by Borrower. Borrower shall instruct its certified
public accountants and its banking and other financial institutions
to make available to Agent, and its officers, employees, agents and
representatives, such information and records as Agent may from
time to time reasonably request. Notwithstanding the foregoing,
Borrower and its Subsidiaries shall not be required to make
available to Agent, and its officers, employees, designees, agents
and representatives, contracts or other agreements between Borrower
or any of its Subsidiaries and another Person if (i) the disclosure
thereof would violate any government security clearance regulation
applicable to such Person or destroy any attorney-client privilege
that exists in connection with such information or (ii) such
contract or other agreement contains a confidentiality provision
prohibiting its provision to Agent, and its officers, employees,
designees, agents and representatives; provided, that, Borrower and
its Subsidiaries shall use their best efforts to obtain the consent
of any other Persons party to any such contract or other agreement
to the provision of such contract or other agreement to Agent, and
its officers, employees, designees, agents and representatives;
and, provided, further, that, in the event Borrower and its
Subsidiaries are unable to obtain such consent, Borrower and its
Subsidiaries shall provide Agent, and its officers, designees,
agents and representatives, with copies of such contract or other
agreement from which the confidential and privileged information
has been redacted.
1.16 Taxes. (a) Any and all payments by Borrower
hereunder or in respect of the Term Notes shall be made, in
accordance with this Section 1.16, free and clear of and without
deduction for any and all present or future Taxes. If Borrower
shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or in respect of the Term Notes, (i) the
sum payable shall be increased as much as shall be necessary so
that after making all required deductions (including deductions
applicable to additional sums payable under this Section 1.16)
Agent or Lenders, as applicable, receive an amount equal to the sum
they would have received had no such deductions been made, (ii)
Borrower shall make such deductions and (iii) Borrower shall pay
the full amount deducted to the relevant taxing or other authority
in accordance with applicable law.
(b) Except as Borrower shall otherwise consent, each
Lender hereby severally (but not jointly) represents that under
applicable law and treaties in effect on the date of this Agreement
no Taxes will be required to be withheld by Borrower with respect
to any payments to be made to such Lender in respect of this
Agreement, the other Loan Documents or the Term Loan. Each Lender,
if any, organized under the laws of a jurisdiction outside of the
United States (a "Foreign Lender") as to which payments to be made
in respect of this Agreement, the other Loan Documents or the Term
Loan are wholly or partially exempt from United States withholding
tax under an applicable statute or tax treaty shall provide to
Borrower and Agent (i) two (2) copies of a properly completed and
executed Internal Revenue Service Form 4224 or Form 1001 or other
applicable form, certificate or document prescribed by the Internal
Revenue Service certifying as to such Foreign Lender's entitlement
to such exemption with respect to payments to be made to such
Foreign Lender in respect of this Agreement, the other Loan
Documents or the Term Loan (a "Certificate of Exemption") or (ii)
a letter from any such Foreign Lender stating that it is not
entitled to any such exemption (a "Letter of Non-Exemption").
Prior to becoming a Lender under this Agreement and within fifteen
(15) days after a written request of Borrower or Agent from time to
time thereafter, each Foreign Lender that becomes a Lender under
this Agreement shall provide a Certificate of Exemption or a Letter
of Non-Exemption to Borrower and Agent.
If a Foreign Lender is entitled to an exemption with
respect to payments to be made to such Foreign Lender in respect of
this Agreement, the other Loan Documents and the Term Loan and does
not provide a Certificate of Exemption to Borrower and Agent within
the time periods set forth in the immediately preceding paragraph,
Borrower shall withhold taxes from payments to such Foreign Lender
at the applicable statutory rates and Borrower shall not be
required to pay any additional amounts as a result of such
withholding; provided, that all such withholding shall cease upon
any delivery by such Foreign Lender of a Certificate of Exemption
to Borrower and Agent.
(c) Borrower shall indemnify and pay, within 10 days of
demand therefor, Agent and each Lender for the full amount of Taxes
(including any Taxes imposed by any jurisdiction on amounts payable
under this Section 1.16) paid by Agent or such Lender, as
appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally asserted.
(d) Within 30 days after the date of any payment of
Taxes, Borrower shall furnish to Agent, at its address referred to
in Section 11.10, the original or a certified copy of a receipt
evidencing payment thereof.
1.17 Capital Adequacy and Other Adjustments.
(a) In the event that any Lender shall have determined
that the adoption after the date hereof of any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar
requirements or compliance by any Lender with any request or
directive regarding capital adequacy, reserve requirements or
similar requirements (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) from
any central bank or governmental agency or body having jurisdiction
does or would have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by such Lender
and thereby reducing the rate of return on such Lenders's capital
with respect to its Pro Rata Share of the Term Loan, then Borrower
shall from time to time within fifteen (15) days after notice and
demand from such Lender (together with the certificate referred to
in the next sentence and with a copy to Agent) pay to Agent, for
the account of such Lender, additional amounts sufficient to
compensate such Lender for such reduction; provided, however, that,
notwithstanding the foregoing, Borrower shall have no obligation to
make any such payment in the event, if any, that such notice and
demand was sent by such Lender more than ninety (90) days after it
became aware of such law, treaty, governmental (or quasi-governmental)
rule, regulation, guideline or order. A certificate
as to the amount of such cost and showing the basis of the
computation of such cost submitted by such Lender to Borrower and
Agent shall, absent manifest error, be final, conclusive and
binding for all purposes.
(b) If, due to either (i) the introduction of or any
change in or in the interpretation of any law or regulation or (ii)
the compliance with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to any Lender of
maintaining the Term Loan or any portion thereof bearing interest
based on the LIBOR Rate, other than an increase which is already
covered as a result of the reserve adjustment applied to the LIBOR
Rate pursuant to clause (b) of the definition thereof, then
Borrower shall from time to time, upon demand by such Lender (with
a copy of such demand to Agent), pay to Agent for the account of
such Lender additional amounts sufficient to compensate such Lender
for such increased cost. A certificate as to the amount of such
increased cost, submitted to Borrower, shall be binding and
conclusive for all purposes, absent manifest error. Each Lender
agrees that, as promptly as practicable after it becomes aware of
any circumstances referred to in clause (i) or (ii) above which
would result in any such increased cost to such Lender, such Lender
shall, to the extent not inconsistent with such Lender's internal
policies of general application, use reasonable commercial efforts
to minimize costs and expenses incurred by it and payable to it by
Borrower pursuant to this Section 1.17(b).
(c) Notwithstanding anything to the contrary contained
herein, if the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or
any central bank or other Governmental Authority shall assert that
it is unlawful, for any Lender to agree to maintain the Term Loan
or any portion thereof bearing interest based on the LIBOR Rate,
then, unless such Lender determines that it is able to (A) to make,
continue to fund or maintain such Loans which bear interest based
on the LIBOR Rate at another branch or office of such Lender or (B)
to maintain such LIBOR Loan until the end of the respective LIBOR
Period, without, in such Lender's opinion in either case, adversely
affecting it or that portion of the Term Loan advanced by it or the
income obtained therefrom, on notice thereof and demand therefor by
such Lender to Borrower through Agent, (i) the obligation of such
Lender to agree to make or to make or to continue to fund or
maintain LIBOR Loans shall terminate and (ii) Borrower shall
forthwith prepay in full all such outstanding LIBOR Loans, together
with interest accrued thereon, to such Lender unless Borrower,
within five (5) Business Days after the delivery of such notice and
demand, converts all such Loans into a Base Rate Loan.
(d) Upon the Agent obtaining actual knowledge of the
occurrence of any of the events set forth in this Section 1.17,
Agent shall promptly notify Borrower of the occurrence of such
event. Borrower shall have the right within five (5) days of
receipt of such notice to convert all outstanding LIBOR Loans to a
Base Rate Loan.
1.18 Amendment and Restatement.
(a) This Agreement amends and restates in its entirety
the Prior Term Loan Agreement and, upon the effectiveness of this
Agreement, the terms and provisions of the Prior Term Loan
Agreement shall, subject to this Section 1.18, be superseded
hereby.
(b) Upon the effectiveness of this Agreement, all
references to the "Term Loan Agreement" contained in the Loan
Documents delivered in connection with the Prior Term Loan
Agreement shall be deemed to refer to this First Amended and
Restated Term Loan Agreement.
(c) Notwithstanding the amendment and restatement of the
Prior Term Loan Agreement by this Agreement, the Obligations
outstanding under the Prior Term Loan Agreement shall remain
outstanding as of the date hereof, constitute continuing
Obligations hereunder and shall continue to be secured by the
Collateral.
(d) Unless Borrower elects to deliver updated Schedules
to be attached hereto (other than Schedules 1.1(a), 1.8, 1.9A,
4.1(B), 6.11, 11.10 and Schedules A through G which have been
provided by Agent), the Schedules delivered by Borrower and
attached to the Prior Term Loan Agreement shall be deemed to have
been delivered pursuant to and attached to this Agreement.
The Obligations outstanding under the Prior Term Loan
Agreement and the Liens securing payment thereof shall in all
respects be continuing, and this Agreement shall not be deemed to
evidence or result in a novation or repayment and re-borrowing of
such Obligations. In furtherance of and without limiting the
foregoing, the effectiveness of this Agreement, the terms,
conditions, and covenants governing the Obligations outstanding
under the Prior Term Loan Agreement shall be solely as set forth in
this Agreement, which shall supersede the Prior Term Loan Agreement
in its entirety.
2. CONDITIONS PRECEDENT
2.1 Conditions to Effectiveness of this Agreement
Notwithstanding any other provision of this Agreement,
this Agreement shall not become effective and the Prior Term Loan
Agreement shall continue to govern the Obligations, until the
following conditions have been satisfied, in Agent's sole
discretion, or waived in writing by Agent:
(a) This Agreement or counterparts hereof shall have
been duly executed by, and delivered to, Borrower, Agent and each
Lender.
(b) Agent shall have received such documents,
instruments, and agreements as Agent may request in connection with
the transactions contemplated by this Agreement and the other Loan
Documents, including all documents, instruments, and agreements
listed in the Schedule of Documents, each in form and substance
satisfactory to Agent.
(c) Since December 31, 1994, there shall have been (i)
no event the occurrence of which could have a Material Adverse
Effect on the business, operations or prospects of Borrower,
Borrower and its Subsidiaries, taken as a whole, or Borrower and
the Guarantor Subsidiaries, taken as a whole; (ii) no litigation
commenced which is reasonably likely to be determined adversely to
Borrower or its Subsidiaries and which, if so determined, would
have a Material Adverse Effect or would challenge any of the
transactions contemplated by this Agreement and the other Loan
Documents; (iii) no dividends or other distributions to Borrower's
stockholders; (iv) no increase in liabilities, liquidated or
contingent, and no decrease in assets of Borrower or any Guarantor
Subsidiary which could have a Material Adverse Effect; and (v) no
event the occurrence of which could have a Material Adverse Effect
on the financial condition of Borrower or any Guarantor Subsidiary,
except as reflected in Borrower's financial statements as of July
1, 1995 which have been delivered to Agent.
(d) The LGE Transaction shall have been consummated.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Term Loan as herein
provided for, Borrower makes the following representations and
warranties to Agent and each Lender, each and all of which shall be
true and correct as of the date of execution and delivery of this
Agreement, and shall survive the execution and delivery of this
Agreement:
3.1 Corporate Existence; Compliance with Law. Borrower
and each of its Subsidiaries (i) is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and has been duly qualified to
conduct business and is in good standing in each other jurisdiction
where its ownership or lease of property or the conduct of its
business requires such qualification; (ii) has the requisite
corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease
the property it operates under lease and to conduct its business as
now, heretofore and proposed to be conducted; (iii) has all
licenses, permits, consents or approvals from or by, and has made
all filings with, and has given all notices to, all Governmental
Authorities having jurisdiction over it, except to the extent, if
any, that failure to have such licenses, permits, consents or
approvals, to have made such filings, or to have given such
notices, either individually or in the aggregate, would not have a
Material Adverse Effect; (iv) is in compliance with its certificate
or articles of incorporation and bylaws; and (v) is in compliance
with all applicable provisions of law, except for any noncompliance
which, either individually or in the aggregate with all
circumstances of noncompliance, could not have or result in a
Material Adverse Effect.
3.2 Executive Offices. As of the Closing Date, the
location of Borrower's and each Subsidiary of Borrower's executive
offices and principal place of business is set forth on Schedule
3.2 and, except as set forth on Schedule 3.2, none of such
locations have changed within the past six (6) months.
3.3 Corporate Power; Authorization; Enforceable
Obligations. The execution, delivery and performance by Borrower
and the Guarantor Subsidiaries of this Agreement and the other Loan
Documents and all instruments and documents to be delivered by
Borrower or any Guarantor Subsidiary hereunder and thereunder (in
each case, to the extent such Person is a party thereto) and the
creation of all Liens provided for herein and therein: (i) are
within Borrower's and each Guarantor Subsidiary's corporate power;
(ii) have been duly authorized by all necessary or proper corporate
and shareholder action; (iii) are not in contravention of any
provision of Borrower's or any Subsidiary of Borrower's certificate
or articles of incorporation or bylaws; (iv) will not violate any
law or regulation, or any order or decree of any court or
governmental instrumentality; (v) will not conflict with or result
in the breach or termination of, constitute a default under or
accelerate any performance required by, any indenture, mortgage,
deed of trust, lease, agreement or other instrument to which
Borrower or any Subsidiary of Borrower is a party or by which
Borrower or any Subsidiary of Borrower or any of its or their
assets or properties is bound, where the consequence of such
conflict, breach, termination, default or acceleration could have
or result in a Material Adverse Effect; (vi) will not result in the
creation or imposition of any Lien upon any of the assets or
properties of Borrower or any Subsidiary of Borrower other than
those on the assets and properties Borrower and the Guarantor
Subsidiaries in favor of Agent, on behalf of itself and Lenders,
pursuant to the Loan Documents; and (vii) do not require the
consent or approval of any Governmental Authority or any other
Person, except those referred to in Section 2.1(d), all of which
will have been duly obtained, made or complied with prior to the
Closing Date. At or prior to the Closing Date, this Agreement and
each of the other Loan Documents shall have been duly executed and
delivered on behalf of or for the benefit of Borrower and the
Guarantor Subsidiaries and each shall then constitute a legal,
valid and binding obligation of Borrower and the Guarantor
Subsidiaries enforceable against Borrower and the Guarantor
Subsidiaries in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency or other similar laws
affecting the rights of creditors generally or by application of
general principles of equity.
3.4 Financial Statements. Borrower has delivered the
financial statements identified on Schedule 3.4 and each such
financial statement complies with the description thereof contained
on Schedule 3.4.
3.5 Collateral Reports. Borrower has delivered the
Collateral Reports identified on Schedule 3.5 and each such
Collateral Report complies with the description thereof contained
on Schedule 3.5.
3.6 Material Adverse Effect. Neither Borrower nor any
of its Subsidiaries, as of December 31, 1994, had any obligations,
contingent liabilities, or liabilities for Charges, long-term
leases or unusual forward or long-term commitments which are not
reflected in the consolidated pro forma balance sheet of Borrower
and its Subsidiaries dated as of such date and which could, alone
or in the aggregate, have or result in a Material Adverse Effect.
Between December 31, 1994 and the Closing Date, there has been (i)
no event the occurrence of which could have a Material Adverse
Effect on the business, operations or prospects of Borrower,
Borrower and its Subsidiaries, taken as a whole, or Borrower and
the Guarantor Subsidiaries, taken as a whole, (ii) no litigation
commenced which is reasonably likely to be determined adversely to
Borrower or its Subsidiaries and which, if so determined, would
have a Material Adverse Effect or would challenge any of the
transactions contemplated by this Agreement and the other Loan
Documents, (iii) no increase in liabilities, liquidated or
contingent, and no decrease in assets of Borrower or any Guarantor
Subsidiary which could have a Material Adverse Effect and (iv) no
event the occurrence of which could have a Material Adverse Effect
on the financial condition of Borrower or any Guarantor Subsidiary,
except as reflected in Borrower's financial statements as of July
1, 1995, which have been delivered to Agent. Since July 1, 1995
and until the Closing Date, no dividends, advances or other -
distributions have been declared, paid or made upon any Stock of
Borrower and no shares of Stock of Borrower have been, or are now
required to be, redeemed, retired, purchased or otherwise acquired
for value by Borrower.
3.7 Ownership of Property; Liens. (a) Except as
described on Schedule 3.7, the real estate listed on Schedule 3.7
constitutes all of the real property owned, leased or used in its
business by Borrower or any Subsidiary of Borrower. Borrower, or
such Subsidiary of Borrower, as applicable, (i) holds title to all
of its owned real estate, subject to no Liens other than Permitted
Encumbrances, and has valid leasehold interests in all of its
Leases (both as lessor and lessee, sublessee or assignee), all as
described on Schedule 3.7, and (ii) holds title to, or valid
leasehold interests in, all of its other properties and assets, and
none of the properties or assets of Borrower or any Subsidiary of
Borrower are subject to any Liens, except Permitted Encumbrances.
Borrower or such Subsidiary of Borrower, as applicable, has
received all deeds, assignments, waivers, consents, non-disturbance
and recognition or similar agreements, bills of sale and other
documents, and duly effected all recordings, filings and other
actions necessary to establish, protect and perfect Borrower's or
such Subsidiary's, as appropriate, right, title and interest in and
to all such real estate and other assets and properties that are
material to the conduct of its business or at which Collateral is
located. Except as described on Schedule 3.7, (i) neither Borrower
or any Subsidiary of Borrower nor, to the knowledge of Borrower,
any other party to any such Lease described on Schedule 3.7 is in
material default of its obligations thereunder or has delivered or
received any notice of termination under any such Lease, and no
event has occurred which, with the giving of notice, the passage of
time or both, would constitute a material default under any such
Lease; (ii) on the Closing Date, neither Borrower nor any Subsid-
iary of Borrower owns or holds, or is obligated under or a party
to, any option, right of first refusal or any other contractual
right to purchase, acquire, sell, assign or dispose of any real
property owned or leased by Borrower or any Subsidiary of Borrower
except as set forth on Schedule 3.7; and (iii) on the Closing Date,
no portion of any real property owned or leased by Borrower or any
Subsidiary of Borrower has suffered any material damage by fire or
other casualty loss or a Release which has not heretofore been
completely repaired and restored to its original condition or is
being remedied. All permits required to have been issued or
appropriate to enable the real property owned or leased by Borrower
and its Subsidiaries, and material to the conduct of their
respective businesses or at which any Collateral is located, to be
lawfully occupied and used for all of the purposes for which they
are currently occupied and used, have been lawfully issued and are,
as of the date hereof, in full force and effect.
3.8 Restrictions; No Default. No contract, lease,
agreement or other instrument to which Borrower or any Subsidiary
of Borrower is a party or by which it or any of its properties or
assets is bound or affected and no provision of applicable law or
governmental regulation has or results in a Material Adverse Effect
or could have or result in a Material Adverse Effect. Neither
Borrower nor any Subsidiary of Borrower is in default, and, to
Borrower's knowledge, no third party is in default, under or with
respect to any contract, agreement, lease or other instrument to
which it is a party where the consequence of such default, either
individually or when considered in the aggregate with all such
defaults, could have or result in a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
3.9 Labor Matters. There are no strikes which have
lasted more than seven (7) Business Days, or, as of the Closing
Date, other material labor disputes, against Borrower or any
Subsidiary of Borrower that are pending or, to Borrower's knowl-
edge, threatened. Hours worked by and payment made to employees of
Borrower and its Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable federal, state,
local or foreign law dealing with such matters. All payments due
from Borrower or any Subsidiary of Borrower on account of employee
health and welfare insurance have been paid or accrued as a
liability on the books of Borrower or the applicable Subsidiary, as
appropriate. As of the Closing Date, neither Borrower nor any
Subsidiary of Borrower has any obligation under any collective
bargaining agreement or any employment agreement except as set
forth on Schedule 3.9 hereto, a true and complete copy of each of
which has been furnished to Agent. As of the Closing Date, there
is no organizing activity involving Borrower or any Subsidiary of
Borrower pending or threatened by any labor union or group of
employees. As of the Closing Date, except as set forth on Schedule
3.9, there are no representation proceedings pending or, to
Borrower's knowledge, threatened with the National Labor Relations
Board, and no labor organization or group of employees of Borrower
or any Subsidiary of Borrower has made a demand for recognition.
As of the Closing Date, except as set forth on Schedule 3.9, there
are no complaints or charges involving an amount in excess of
$400,000 against Borrower or any Subsidiary of Borrower pending or
threatened to be filed with any federal, state, local or foreign
court, governmental agency or arbitrator based on, arising out of,
in connection with, or otherwise relating to the employment or
termination of employment of any individual by Borrower or any
Subsidiary of Borrower.
3.10 Joint Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness. Except as set forth on
Schedule 3.10 or as otherwise expressly permitted by the terms of
this Agreement: (i) Borrower has no Subsidiaries, is not engaged,
directly or indirectly through a Subsidiary or otherwise, in any
joint venture or partnership with any other Person, and is not an
Affiliate of any Person other than a Subsidiary of Borrower; (ii)
there are no outstanding rights to purchase, options, warrants or
similar rights or agreements pursuant to which Borrower may be
required to issue or sell any Stock or other equity security of
Borrower and; (iii) Borrower is the sole direct or indirect
beneficial owner of the stock of all of its Subsidiaries. Except
as set forth on Schedule 3.10, on the Closing Date, to Borrower's
knowledge, no stockholder of Borrower owns more than five percent
(5%) of any class of its Stock. Except as set forth on Schedule
3.10, there are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which Borrower
or any Subsidiary of Borrower may be required to issue or sell any
Stock or other equity security of any Subsidiary. As of the
Closing Date, all outstanding Indebtedness and all Liens of
Borrower and its Subsidiaries are described on Schedule 6.3 and
Schedule 6.7, respectively.
3.11 Government Regulation. Neither Borrower nor any
Subsidiary of Borrower is an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended. Neither Borrower nor any Material
Subsidiary is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act or any other federal, state, local or foreign statute
that restricts or limits its ability to incur Indebtedness or to
perform its obligations hereunder or under any of the other Loan
Documents, and the making of the Term Loan by Lenders, the applica-
tion of the proceeds and repayment thereof by Borrower and the
consummation of the transactions contemplated by this Agreement and
the other Loan Documents does not and will not violate any
provision of any such statute or any rule, regulation or order
issued by the Securities and Exchange Commission or any Governmen-
tal Authority.
3.12 Margin Regulations. Neither Borrower nor any
Subsidiary of Borrower is engaged, nor will it engage, principally
or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin
security" within the respective meanings of each of the quoted
terms under Regulation U or G of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") as now and
from time to time hereafter in effect. None of the proceeds of the
Term Loan will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of
reducing or retiring any indebtedness which was originally incurred
to purchase or carry any margin security or for any other purpose
which might cause any of the loans or other extensions of credit
under this Agreement to be considered a "purpose credit" within the
meaning of Regulation G, T, U or X of the Federal Reserve Board.
Neither Borrower nor any Subsidiary of Borrower will take, or
permit any agent acting on its behalf to take, any action which
might cause this Agreement or any other Loan Document or any
document or instrument delivered pursuant hereto or thereto to
violate any regulation of the Federal Reserve Board.
3.13 Taxes. As of the Closing Date, all federal, state,
local and foreign tax returns, reports and statements required to
be filed by Borrower, or any Subsidiary of Borrower, have been
filed with the appropriate Governmental Authority and all Charges
and other impositions shown thereon to be due and payable have been
paid prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment thereof, or any such
fine, penalty, interest, late charge or loss has been paid.
Borrower and each of its Subsidiaries has paid when due and payable
all Charges required to be paid by it. As of the Closing Date,
proper and accurate amounts have been withheld by Borrower and each
of its Subsidiaries from their respective employees for all periods
in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid
to the respective Governmental Authorities. Schedule 3.13 sets
forth those taxable years for which Borrower's tax returns are
currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assess-
ments in connection with such audit or otherwise currently
outstanding. As of the Closing Date, except as described on
Schedule 3.13, Borrower has not executed or filed with the IRS or
any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for
assessment or collection of any Charges. Borrower has not filed a
consent pursuant to IRC Section 341(f) or agreed to have IRC
Section 341(f)(2) apply to any dispositions of subsection (f)
assets (as such term is defined in IRC Section 341(f)(4)). None of
the property owned by Borrower or any Subsidiary of Borrower is
property which Borrower or any Subsidiary of Borrower is required
to treat as being owned by any other Person pursuant to the
provisions of IRC Section 168(f)(8) of the Internal Revenue Code of
1954, as amended, and in effect immediately prior to the enactment
of the Tax Reform Act of 1986 or is "tax-exempt use property"
within the meaning of the IRC Section 168(h). As of the Closing
Date, except as set forth on Schedule 3.13, neither Borrower nor
any Subsidiary of Borrower has agreed or been requested to make any
adjustment under IRC Section 481(a) by reason of a change in
accounting method or otherwise. Neither Borrower nor any Subsid-
iary of Borrower has any obligation under any written tax sharing
agreement except as set forth on Schedule 3.13.
3.14 ERISA. (a) Schedule 3.14 lists all Plans maintained
or contributed to by Borrower or any Subsidiary of Borrower and all
Qualified Plans maintained or contributed to by any ERISA Affili-
ate, and separately identifies the Title IV Plans, Multiemployer
Plans, any multiple employer plans subject to Section 4064 of
ERISA, unfunded Pension Plans, Welfare Plans and Retiree Welfare
Plans. Each Qualified Plan, if any, has been determined by the IRS
to qualify under Section 401 of the IRC, and the trusts created
thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred
which would cause the loss of such qualification or tax-exempt
status. Each Plan is in compliance with the applicable provisions
of ERISA and the IRC, including the filing of reports required
under the IRC or ERISA, all of which are true and correct as of the
date filed, and with respect to each Plan, other than a Qualified
Plan, all required contributions and benefits have been paid in
accordance with the provisions of each such Plan. Neither Borrower
or any Subsidiary of Borrower nor any ERISA Affiliate, with respect
to any Qualified Plan, has failed to make any contribution or pay
any amount due as required by Section 412 of the IRC or Section 302
of ERISA or the terms of any such Plan. With respect to all
Retiree Welfare Plans, the present value of future anticipated
expenses pursuant to the latest actuarial projections of liabili-
ties does not exceed $50,000 and copies of such latest projections
have been provided to Agent; with respect to Pension Plans, other
than Qualified Plans, the present value of the liabilities for
current participants thereunder using the PBGC interest rate for
immediate annuities in effect on the Closing Date does not exceed
$50,000. Neither Borrower nor any Subsidiary of Borrower has
engaged in a prohibited transaction, as defined in Section 4975 of
the IRC or Section 406 of ERISA, in connection with any Plan.
(b) Except as set forth on Schedule 3.14: (i) no Title
IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or
event described in Section 4062(e) of ERISA with respect to any
Title IV Plan has occurred or is reasonably expected to occur;
(iii) there are no pending or, to the knowledge of Borrower,
threatened claims, actions or lawsuits (other than claims for
benefits in the normal course), asserted or instituted against (x)
any Plan or its assets, (y) any fiduciary with respect to any Plan
or (z) Borrower, any Subsidiary of Borrower or any ERISA Affiliate
with respect to any Plan; (iv) neither Borrower or any Subsidiary
of Borrower nor any ERISA Affiliate has incurred or reasonably
expects to incur any Withdrawal Liability (and no event has
occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 of ERISA
as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years neither Borrower
or any Subsidiary of Borrower nor any ERISA Affiliate has engaged
in a transaction which resulted in a Title IV Plan with Unfunded
Liabilities being transferred outside of the "controlled group"
(within the meaning of Section 4001(a)(14) of ERISA) of any such
entity; (vi) no Plan which is a Retiree Welfare Plan provides for
continuing benefits or coverage for any participant or any
beneficiary of a participant after such participant's termination
of employment (except as may be required by Section 4980B of the
IRC and at the sole expense of the participant or the beneficiary
of the participant); Borrower, each Subsidiary of Borrower and each
ERISA Affiliate have complied with the notice and continuation
coverage requirements of Section 4980B of the IRC and the regula-
tions thereunder; and (vii) no liability under any Plan has been
funded, nor has any such obligation been satisfied, with the
purchase of a contract from an insurance company that is not rated
AAA by the Standard & Poor's Corporation and the equivalent by each
other nationally recognized rating agency.
3.15 No Litigation. Except as set forth in writing to
Agent, on behalf of itself and Lenders, in that certain letter of
even date herewith (the "Disclosure Letter"), as of the Closing
Date, no action, claim or proceeding is now pending or, to the
knowledge of Borrower, threatened against Borrower, or any
Subsidiary of Borrower, at law, in equity or otherwise, before any
court, board, commission, agency or instrumentality of any federal,
state, local or foreign government or of any agency or subdivision
thereof, or before any arbitrator or panel of arbitrators, (i)
which challenges Borrower's or any Domestic Subsidiary's right,
power or competence to enter into or perform any of its obligations
under this Agreement or any of the other Loan Documents, or the
validity or enforceability of any Loan Document or any action taken
thereunder or (ii) which seeks monetary damages in excess of
$400,000 or injunctive relief, nor to the knowledge of Borrower
does a state of facts exist which is reasonably likely to give rise
to such proceedings.
3.16 Brokers. No broker or finder acting on behalf of
Borrower brought about the obtaining, making or closing of the
loans made pursuant to this Agreement or the transactions
contemplated by the Loan Documents and neither Borrower nor any
Subsidiary of Borrower, nor Agent or any Lender by reason of any
action of Borrower, has any obligation to any Person in respect of
any finder's or brokerage fees in connection therewith.
3.17 Patents, Trademarks, Copyrights and Licenses.
Except as otherwise set forth on Schedule 3.17, Borrower owns all
licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications and trade names necessary to
continue to conduct its business as heretofore conducted by it and
its Subsidiaries, now conducted by it and its Subsidiaries and
proposed to be conducted by it or any of its Subsidiaries each of
which is listed, together with Patent and Trademark Office
application or registration numbers, where applicable, on Schedule
3.17. Schedule 3.17 lists all tradenames or other names under
which Borrower or any Subsidiary of Borrower conducts business.
Except as otherwise set forth in the Disclosure Letter, Borrower
and each of its Subsidiaries conducts its business without
infringement or claim of infringement of any license, patent,
copyright, service mark, trademark, trade name, trade secret or
other intellectual property right of others. Except as otherwise
set forth on Schedule 3.17, there is no infringement or claim of
infringement by others of any license, patent, copyright, service
mark, trademark, trade name, trade secret or other intellectual
property right of Borrower or any Subsidiary of Borrower.
3.18 Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, the Disclosure Letter,
the Financial Statements, the Collateral Reports or any written
statement furnished by or on behalf of Borrower or any Subsidiary
of Borrower pursuant to the terms of this Agreement, which has
previously been delivered to Agent or any Lender, contains any
untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein
not misleading in light of the circumstances under which they were
made. The Liens granted to Agent, on behalf of itself and Lenders,
pursuant to the Collateral Documents will at the Closing Date be
fully perfected first priority Liens in and on the Collateral
described therein, except as expressly permitted otherwise by the
Loan Documents.
3.19 Hazardous Materials. As of the Closing Date, except
as set forth in the Disclosure Letter, all real property owned or
leased by Borrower or any Subsidiary of Borrower is free of
contamination from any Hazardous Material. In addition, the
Disclosure Letter discloses all existing or potential environmental
liabilities of Borrower and its Subsidiaries of which Borrower has
knowledge which could constitute or result in a Material Adverse
Effect or any Environmental Liabilities or Costs. As of the
Closing Date, except as set forth in the Disclosure Letter, neither
Borrower nor any Subsidiary of Borrower has caused or suffered to
occur any Release at, under, above or within any real property
which it owns or leases. As of the Closing Date, except as set
forth in the Disclosure Letter, neither Borrower nor any Subsidiary
of Borrower is involved in any operations which are reasonably
likely to lead to the imposition of any liability or Lien on it or
any of its properties or other assets, or any owner of any premises
which it occupies, under the Environmental Laws, and neither
Borrower nor any Subsidiary of Borrower has permitted any tenant or
occupant of such premises to engage in any such activity.
3.20 Insurance Policies. Schedule 3.20 Part II lists all
insurance of any nature maintained for current occurrences by
Borrower or any Subsidiary of Borrower, as well as a summary of the
terms of such insurance. Borrower covenants that such insurance
complies with and shall at all times comply with the standards set
forth on Schedule 3.20 Part I.
3.21 Deposit and Disbursement Accounts. As of the
Closing Date, Schedule 3.21 lists all banks and other financial
institutions at which Borrower or any Domestic Subsidiary of
Borrower maintains deposits and/or other accounts, and such
Schedule correctly identifies the name, address and telephone
number of each depository, the name in which the account is held,
a description of the purpose of the account and the complete
account number.
3.22 Government Contracts. As of the Closing Date,
except as set forth on Schedule 3.22 hereto, neither Borrower nor
any Subsidiary of Borrower is a party to any contract or agreement
with the federal government and none of the Accounts are subject to
the Federal Assignment of Claims Act (31 U.S.C. Section 3727)
relative to the assignment of such Accounts.
3.23 Customer and Trade Relations. There exists no
actual or threatened termination or cancellation of, or any
material adverse modification or change in: (a) the business
relationship of Borrower or any Subsidiary of Borrower with any
customer or group of customers of Borrower whose purchases
individually or in the aggregate are material to the operations of
Borrower, Borrower and its Subsidiaries, taken as a whole, or
Borrower and the Guarantor Subsidiaries, taken as a whole; or (b)
the business relationship of Borrower or any Subsidiary of Borrower
with any supplier material to the operations of Borrower, Borrower
and its Subsidiaries, taken as a whole, or Borrower and the
Guarantor Subsidiaries, taken as a whole.
3.24 Non-Material Subsidiaries. Neither any Non-Guarantor
Domestic Subsidiary nor any other Non-Material Subsidiary
has any assets or liabilities, other than (i) assets or liabilities
consisting solely of intercompany balances and/or intercompany
allocation of tax assets or liabilities, (ii) liabilities (whether
contingent or liquidated) of Zenith Electronics Corporation of
Pennsylvania with respect to environmental matters as disclosed to
Agent and Lenders in the Disclosure Letter (the "Pennsylvania
Liabilities"); (iii) with respect to Zenith Electronics (Ireland)
Limited: (y) assets consisting of cash or cash equivalents not
exceeding 135,000 Irish pounds, in the aggregate and (z) liabilities
(whethercontingent or liquidated) with respect to accrued accounts payable
not yet due and payable, accrued accounts payable subject to
dispute, liabilities for taxes filed but not yet finalized and
other miscellaneous liabilities and contingencies for which
reserves have been estimated and established, all of which
liabilities shall not exceed 200,000 Irish pounds in the aggregate
(collectively, the "Ireland Assets and Liabilities"); (iv) trade
payables incurred in the ordinary course of business consistent
with past practices by Interocean Advertising Corporation of
California and Interocean Advertising Corporation of Illinois; and
(v) with respect to Non-Material Subsidiaries other than Zenith
Electronics Corporation of Pennsylvania and Zenith Electronics
(Ireland) Limited other assets with a value not in excess of
$50,000. Neither any Non-Guarantor Domestic Subsidiary nor any
other Non-Material Subsidiary, except for Interocean Advertising
Corporation, Interocean Advertising Corporation of California and
Interocean Advertising Corporation of Illinois, carries on any
trade or business.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. (a) Borrower covenants and
agrees that from and after the Closing Date, it shall deliver to
Agent and/or Lenders, as required, the Financial Statements,
notices and Projections at the times, to the Persons and in the
manner set forth on Schedule 4.1(A).
(b) Borrower covenants and agrees that from and after
the Closing Date, it shall deliver to Agent and/or Lenders, as
required, the various Collateral Reports at the times, to the
Persons and in the manner set forth on Schedule 4.1(B).
4.2 Communication with Accountants. Borrower authorizes
Agent, on behalf of Lenders, to communicate either through Borrower
or with Borrower present (and upon the occurrence and during the
continuance of any Default or Event of Default, directly and
without the presence of Borrower) with its independent certified
public accountants and tax advisors and authorizes those
accountants to disclose to Agent, on behalf of Lenders, any and all
financial statements and other supporting financial documents and
schedules including copies of any management letter with respect to
the business, financial condition and other affairs of Borrower or
any of its Subsidiaries.
5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless Agent and
Requisite Lenders shall otherwise consent in writing, from and
after the date hereof:
5.1 Maintenance of Existence and Conduct of Business.
Borrower shall, and shall cause each of its Subsidiaries to: (a)
except as otherwise expressly permitted under this Agreement, do or
cause to be done all things necessary to preserve and keep in full
force and effect Borrower's and each of its Subsidiaries' corporate
existence and its rights and franchises; (b) except as otherwise
expressly permitted under this Agreement, continue to conduct
Borrower's and each of its Subsidiaries' business substantially as
now conducted or as otherwise permitted hereunder; (c) at all times
maintain, preserve and protect all of its United States, Canadian
and Mexican trademarks, patents, trade names, copyrights and all
United States, Canadian and Mexican other intellectual property and
rights as licensee or licensor thereof, including all rights of
Borrower and its Subsidiaries under and pursuant to the Tuning
System Patents and the Tuning System Patent Licenses; (d) at all
times maintain, preserve and protect all the remainder of
Borrower's and each of its Subsidiaries' properties, equipment,
fixtures and other assets in use or useful in the conduct of its
business, and keep the same in good repair, working order and
condition and from time to time make, or cause to be made, all
necessary or appropriate maintenance, service, repairs, replace-
ments and improvements thereto consistent with industry practices,
so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; and (e) except
as otherwise expressly permitted under this Agreement, transact
business only in such names as are set forth on Schedule 5.1.
5.2 Payment of Obligations. (a) Borrower shall: (i) pay
and discharge or cause to be paid and discharged all Obligations;
(ii) so long as there shall not be any Default or Event of Default,
pay and discharge, or cause to be paid and discharged, its
Indebtedness other than the Obligations at the time such amounts
are due and payable; and (iii) subject to Section 5.2(b), pay and
discharge or cause to be paid and discharged promptly all (A)
Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed), and (B) lawful claims for
labor, materials, supplies and services or otherwise, before any
thereof shall become in default.
(b) Borrower may in good faith contest, by proper legal
actions or proceedings, the validity or amount of any Charges or
claims arising under Section 5.2 (a) (iii) above; provided, that at
the time of commencement of any such action or proceeding, and
during the pendency thereof (i) no Default or Event of Default
shall have occurred, (ii) adequate reserves with respect thereto
are maintained on the books of Borrower, in accordance with GAAP,
(iii) such contest operates to suspend collection of the contested
Charges or claims and such contest is maintained and prosecuted
continuously and with diligence, (iv) none of the Collateral would
be subject to forfeiture or loss or any Lien by reason of the
institution or prosecution of such contest, (v) no Lien shall
exist, be imposed or be attempted to be imposed for such Charges or
claims during such action or proceeding, (vi) Borrower shall
promptly pay or discharge such contested Charges and all additional
charges, interest, penalties and expenses, if any, and shall
deliver to Agent evidence acceptable to Agent of such compliance,
payment or discharge, if such contest is terminated or discontinued
adversely to Borrower, and (vii) Agent has not advised Borrower in
writing that Agent believes that nonpayment or nondischarge thereof
could have or result in a Material Adverse Effect.
5.3 Books and Records. Borrower shall keep adequate
records and books of account with respect to Borrower's and its
Subsidiaries' business activities, in which proper entries,
reflecting all of their financial transactions (including consoli-
dating transactions), are made in accordance with GAAP and on a
basis consistent with the Financial Statements referred to in
Schedule 3.4.
5.4 Litigation. Borrower shall notify Agent in writing,
promptly upon learning thereof, of any litigation commenced or, to
the knowledge of Borrower, threatened against Borrower or any
Subsidiary of Borrower, and of the institution against it of any
suit or administrative proceeding, that (a) may involve an amount
in excess of $400,000, or (b) seeks injunctive relief or could have
or result in a Material Adverse Effect if adversely determined.
5.5 Insurance. (a) Borrower shall, at its sole cost
and expense, maintain the policies of insurance described on
Schedule 3.20 in form and with insurers satisfactory to Agent.
Such policies shall be in such amounts as are set forth on Schedule
3.20 and in no event less than the amounts maintained on the
Closing Date, except as otherwise approved in writing in advance by
Agent in its sole discretion. Borrower shall notify Agent promptly
of any occurrence causing a material loss or decline in value of
any real or personal property of Borrower or any of its
Subsidiaries and the estimated (or actual, if available) amount of
such loss or decline. Except as otherwise specified on Schedule
3.20, Borrower hereby directs all present and future insurers under
its "All Risk" policies of insurance to pay all proceeds payable
thereunder directly to Agent, on behalf of Lenders as their
interests may appear; provided, however, that to the extent that
such proceeds are paid solely in respect of the loss of or damage
to Excluded Assets, Agent shall release such proceeds to Borrower
when and as necessary to pay for the repair, replacement or
reconstruction of the Excluded Assets subject to such casualty,
provided that: (i) at the time of any requested release of
insurance proceeds, no Default or Event of Default shall have
occurred and be continuing and (ii) the repair, replacement or
reconstruction of such Excluded Assets shall be reasonably
anticipated to be completed prior to the Commitment Termination
Date. Effective upon the occurrence of any Default or Event of
Default and for so long as any Default or Event of Default shall
have occurred and be continuing, Borrower irrevocably makes,
constitutes and appoints Agent (and all officers, employees or
agents designated by Agent) as Borrower's true and lawful agent and
attorney in-fact for the purpose of making, settling and adjusting
claims under the "All Risk" policies of insurance, endorsing the
name of Borrower on any check, draft, instrument or other item of
payment for the proceeds of such "All Risk" policies of insurance,
and for making all determinations and decisions with respect to
such "All Risk" policies of insurance. In the event Borrower at
any time or times hereafter shall fail to obtain or maintain any of
the policies of insurance required above or to pay any premium in
whole or in part relating thereto, Agent, without waiving or
releasing any Obligations or Default or Event of Default hereunder,
may at any time or times thereafter (but shall not be obligated to)
obtain and maintain such policies of insurance and pay such premium
and take any other action with respect thereto as Agent may deem
advisable. All sums so disbursed, including reasonable attorneys'
fees, court costs and other charges related thereto, shall be
payable, on demand, by Borrower to Agent and shall be additional
Obligations hereunder secured by the Collateral; provided, that, if
and to the extent that Borrower fails to promptly pay any of such
sums upon Agent's demand therefor, Agent is authorized to, and at
its option may, make or cause to be made advances on behalf of
Borrower for payment thereof.
(b) Agent reserves the right at any time, upon review of
Borrower's and/or any Guarantor Subsidiaries' risk profile, to
require additional forms and limits of insurance to, in Agent's
sole opinion, both adequately protect Agent's and Lenders'
interests in all or any portion of the Collateral and to ensure
that Borrower and each Guarantor Subsidiary is protected by
insurance in amounts and with coverage customary for businesses
engaged in their business. Upon the occurrence and during the
continuance of any Default or Event of Default, Agent reserves the
right at any time, upon review of Borrower's and/or any Material
Subsidiaries' risk profile, to require additional forms and limits
of insurance to, in Agent's sole opinion, adequately protect
Agent's and Lenders' interests, including, but not limited to,
their interests in the Collateral. Borrower shall, if so requested
by Agent, deliver to Agent, as often as Agent may request, a report
of a reputable insurance broker, satisfactory to Agent with respect
to its insurance policies.
(c) Borrower shall deliver to Agent endorsements (i) to
all "All Risk" and business interruption insurance naming Agent
loss payee, on behalf of itself and Lenders, and (ii) to all
general liability and other liability policies naming Agent, on
behalf of itself and Lenders, as an additional insured.
5.6 Compliance with Laws. Borrower and each of its
Subsidiaries shall comply with all federal, state, local and
foreign laws and regulations applicable to it, including those
relating to licensing, environmental, consumer credit,
truth-in-lending, ERISA and labor matters, except for those which
if not complied with, either individually or in the aggregate,
could have or result in a Material Adverse Effect.
5.7 Agreements. Borrower and each of its Subsidiaries
shall perform, within all required time periods (after giving
effect to any applicable grace periods), all of its obligations and
enforce all of its rights under each agreement to which it is a
party, including any leases and customer contracts to which it is
a party, where the consequence of failure to so perform could have
or result in a Material Adverse Effect. Neither Borrower nor any
Subsidiary of Borrower shall terminate or modify any provision of
any agreement to which it is a party which termination or
modification could have or result in a Material Adverse Effect.
5.8 Supplemental Disclosure. On the request of Agent
(in the event that such information is not otherwise delivered by
Borrower to Agent pursuant to this Agreement), so long as there are
Obligations outstanding hereunder, but not more frequently than
once every three (3) months, Borrower will supplement each schedule
or representation herein with respect to any matter hereafter
arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in
such schedule or as an exception to such representation or which is
necessary to correct any information in such schedule or represen-
tation which has been rendered inaccurate thereby; provided,
however, that such supplement to such schedule or representation
shall not be deemed an amendment thereof unless expressly consented
to in writing by Agent and Requisite Lenders, and no such
amendments, except as the same may be consented to in a writing
which expressly includes a waiver, shall be or be deemed a waiver
of any Default or Event of Default disclosed therein.
5.9 Employee Plans. Borrower shall notify Agent of (i)
to the extent that any of the following individually, or that all
of the following in the aggregate, exceeds $400,000, any and all
claims, actions, or lawsuits asserted or instituted, and any and
all threatened litigation or claims in connection with any Plan
maintained, at any time, by Borrower, any Subsidiary of Borrower or
any ERISA Affiliate, or to which Borrower, any Subsidiary of
Borrower or any ERISA Affiliate has or had at any time any
obligation to contribute and (ii) the occurrence of any Reportable
Event with respect to any Pension Plan of Borrower, any Subsidiary
of Borrower or any ERISA Affiliate.
5.10 Environmental Matters. Borrower and each Subsidiary
of Borrower shall (i) comply in all respects with the Environmental
Laws applicable to it, where the consequence of failure to so
comply, either individually or when considered in the aggregate
with all such failures to so comply, could have or result in a
Material Adverse Effect, (ii) notify Agent promptly after Borrower
becomes aware of any Release upon any premises owned or occupied by
Borrower or any Subsidiary of Borrower if such Release requires
reporting to a Governmental Authority and (iii) promptly forward to
Agent a copy of any order, notice, permit, application or any
communication or report received by Borrower in connection with any
such Release or any other matter relating to the Environmental Laws
that may affect such premises or Borrower or any Subsidiary of
Borrower. The provisions of this Section 5.10 shall apply whether
or not the Environmental Protection Agency, any other federal
agency or any state, local or foreign environmental or other agency
has taken or threatened any action in connection with any Release
or the presence of any Hazardous Materials.
5.11 Landlords' Agreements and Bailee Letters. Borrower
shall use its best efforts to obtain a landlord's agreement in form
and substance acceptable to Agent from the lessor of each leased
premises currently being used by Borrower or any Guarantor
Subsidiary and the lessor of any new leased premises, in each case
where Collateral is currently or may be located. Borrower shall
use its best efforts to obtain a bailee letter in form and
substance acceptable to Agent with respect to each warehouse
currently being used by Borrower or any Guarantor Subsidiary and
with respect to any warehouse used in the future, in each case
where Collateral is currently or may be located.
5.12 Public Offering Proceeds. Unless Agent shall
otherwise agree, Borrower shall apply the entire net cash proceeds
from any sale of Stock permitted under Section 6.18 hereof, first,
to the Indebtedness outstanding under the Revolving Loan Agreement
and, upon payment in full thereof, for any other legally
permissible purpose.
5.13 Notice of Labor Matters. Borrower shall provide
prompt notice to Agent of (i) any strike or other material labor
dispute against Borrower or any Subsidiary of Borrower, (ii) any
organizing efforts involving Borrower or any Subsidiary of Borrower
by any labor union or group of employees, and (iii) any complaints
or charges against Borrower or any Subsidiary of Borrower filed
with any federal, state, local or foreign court, governmental
agency or arbitrator involving an amount in excess of $400,000 and
based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment by Borrower or any
Subsidiary of Borrower of any individual. Borrower shall provide
prompt notice to Agent of any collective bargaining agreement or
employment agreement with any officer entered into by Borrower or
any Material Subsidiary with any other Person and, together with
such notice, shall provide Agent with a copy of any such collective
bargaining agreement or employment agreement.
5.14 Government Contracts. Borrower shall designate in
the monthly report delivered to Agent pursuant to Section 4.1(b)
all Accounts arising out of any contract or agreement entered into
by Borrower or any Subsidiary with the federal government. In
addition, Borrower shall inform Agent, at any time and from time to
time upon Agent's request, as to whether or not such contract or
agreement is subject to the Federal Assignment of Claims Act (31
U.S.C. 3727) and, if subject to the Federal Assignment of Claims
Act, whether or not Borrower or the appropriate Subsidiary has
complied with such Act (providing evidence thereof if it has so
complied). Notwithstanding the foregoing, so long as the Revolving
Credit Loan is outstanding, Borrower's obligations under this
Section 5.14 shall be suspended.
5.15 Intellectual Property. If, upon the payment in full
of the Revolving Credit Loan and termination of the commitments to
make the Revolving Credit Loan, the Term Loan remains outstanding,
Borrower and each Guarantor Subsidiary shall thereupon enter into
Copyright Assignments and Trademark Assignments in form and
substance reasonably acceptable to Agent.
6. NEGATIVE COVENANTS
Borrower covenants and agrees that, without Agent's and
Requisite Lenders' prior written consent, from and after the date
hereof:
6.1 Mergers, Etc. Neither Borrower nor any Subsidiary
of Borrower shall directly or indirectly, by operation of law or
otherwise, merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise
combine with, any Person or form any Subsidiary, except that so
long as no Default or Event of Default shall have occurred and be
continuing or would result after giving effect thereto: (i) any
Domestic Subsidiary may be merged with and into any other Domestic
Subsidiary or Borrower upon not less than thirty (30) days' prior
written notice to Agent and delivery to Agent of executed UCC-1
financing statements and such other documents and filings as may be
necessary or appropriate to maintain Agent's perfected security
interest in the Collateral; (ii) upon not less than thirty (30)
days prior written notice to Agent, Borrower may form additional
Domestic Subsidiaries if necessary to prudently manage or reduce
state or local tax liabilities; provided that if assets with a
value in excess of $25,000 are contributed to the capital of or
otherwise transferred to such Subsidiary, it shall within ten (10)
days thereafter (A) become a Guarantor Subsidiary, (B) become a
party to the Domestic Subsidiaries Guaranty, the Security Agreement
and the Guarantor Contribution Agreement and (C) shall execute and
deliver to Agent executed UCC-1 financing statements and such other
documents and filings as may be necessary to obtain a first
priority perfected security interest in any Collateral of that
Domestic Subsidiary; and (iii) upon not less than ten (10) days'
prior written notice to Agent, Borrower may form a Domestic
Subsidiary for the purpose of acquiring the finished goods bearing
Borrower's brand name from a distributor of Borrower the
distributor agreement of which has been terminated by Borrower or
such distributor or which distributor is insolvent and is likely to
sell those finished goods at distressed prices, and such Domestic
Subsidiary may acquire those finished goods; provided that (A) the
aggregate net cash outlay made with respect to the acquisitions of
such finished goods shall not exceed $5,000,000, (B) neither
Borrower nor any Subsidiary, including any Subsidiary formed in
connection therewith, shall assume or incur any liability, express
or implied, of such distributor, other than those unsecured
liabilities (other than Indebtedness), if any, which directly
relate to the finished goods Inventory being repurchased, and (C)
Borrower shall within ten (10) days after the formation of that
Domestic Subsidiary cause it to comply with provisions of clause
(ii) above regarding newly formed Domestic Subsidiaries with assets
in excess of $25,000.
6.2 Investments, Loans and Advances. Borrower shall
not, and shall not cause or permit any Subsidiary to, directly or
indirectly, make any investment in, or make or accrue loans or
advances to any Person, through the direct or indirect lending of
money, holding of securities or otherwise, except for the
following:
(A) So long as no Default or Event of Default shall have
occurred and be continuing or would result after giving effect
thereto, intercompany loans by Borrower to any Material Subsidiary
or by any Subsidiary to Borrower; provided that in the case of
intercompany loans to any such Subsidiary: (i) such loans shall be
made solely in the ordinary course of business for the working
capital needs of such Subsidiary or Capital Expenditures made or
committed to by such Subsidiary solely in the ordinary course of
its business; (ii) at the time such intercompany loans are to be
made, those intercompany loans together with cash on hand or on
deposit held by such Subsidiary shall not exceed the cash needs of
that Subsidiary for working capital and Capital Expenditures which
it is contractually obligated to pay during the period of ten (10)
consecutive days following any date of determination; and (iii)
such intercompany loans shall be reflected on the books and records
of Borrower and shall be summarized in the monthly financial
statements delivered to Agent in accordance herewith (collectively,
"Intercompany Loans").
(B) Investments in Subsidiaries permitted in accordance
with Section 6.1 hereof.
(C) Loans to employees permitted in accordance with
Section 6.4 hereof.
(D) Investments in Foreign Subsidiaries arising from the
contribution to capital of Intercompany Loans owing by such Foreign
Subsidiaries to the extent necessary (i) to comply with the
capitalization requirements of the laws of the jurisdictions in
which such Subsidiaries are incorporated and (ii) for tax planning
purposes; provided, that the amount of such Investments in Foreign
Subsidiaries made after the date hereof for tax planning purposes
shall not exceed $20,000,000 in the aggregate.
(E) Investments by Borrower in its Subsidiaries as in
existence on the Closing Date.
(F) So long as no Default or Event of Default shall have
occurred and be continuing, Borrower and its Subsidiaries may
invest in (i) short term obligations of, or fully guaranteed by,
the United States government; (ii) commercial paper rated A-1 or
better by Standard and Poors or P-1 or better by Moody's; or (iii)
certificates of deposit issued by or time deposits with commercial
banks having capital and surplus in excess of $100,000,000 and no
set off rights against Borrower or any Subsidiary (other than for
normal and customary service charges or returned checks), but, in
each case with respect to Domestic Subsidiaries, only to the extent
necessary (a) to invest funds overnight that are not swept from
Borrower's and its Domestic Subsidiaries' cash management systems
maintained in accordance with Schedule C, (b) to the extent
necessary to invest funds which are permitted to be maintained in
bank accounts under Section 6.20(ii) or 6.20(iii) (which funds may
only be invested in investments satisfying the requirements of
(iii) immediately above), or (c) to the extent necessary to invest
funds so long as the advances outstanding under the Revolving
Credit Loan have been reduced to zero.
(G) Joint ventures formed between Borrower or any
Subsidiary and any Person that is not an Affiliate of Borrower;
provided that (i) neither Borrower nor any Subsidiary shall
contribute or be obligated to contribute any cash or cash
equivalents or other assets other than non-exclusive licenses to
use Patents to that joint venture and (ii) neither Borrower nor any
Subsidiary shall guarantee or be liable in any manner for any debts
or liabilities of that joint venture, if the value of such cash or
other assets contributed plus the value of the debts or liabilities
guaranteed or for which Borrower and its Subsidiaries become liable
for all such joint ventures would exceed $10,000,000 in the
aggregate in any Fiscal Year.
(H) Advances by Borrower or any Domestic Subsidiary for
payment of Taxes for up to ten days prior to the due date of such
Taxes in an amount not exceeding $5,250,000 in the aggregate at any
time, to one or more providers of payroll tax payment services
("Service Company") selected by Borrower, and reasonably acceptable
to Agent (such acceptance subject to reasonable prior notice to
Agent of the identity of such Service Company) which Service
Company shall have established, in the reasonable credit judgment
of Borrower, through net worth, insurance, security bond or
otherwise, such Service Company's ability to fulfill the tax
obligation against which funds have been advanced.
6.3 Indebtedness. Borrower shall not and shall not
cause or permit any Subsidiary to, directly or indirectly create,
incur, assume or permit to exist any Indebtedness, except:
(A) The Obligations;
(B) Indebtedness outstanding on the date hereof as set
forth on Schedule 6.3 hereto;
(C) Indebtedness secured by Liens set forth on Schedule
6.7 or Permitted Encumbrances;
(D) Indebtedness incurred in accordance with Section
6.26 hereof;
(E) Intercompany Loans permitted in accordance with
Section 6.2 hereof;
(F) Surety bonds entered into, solely in the ordinary
course of Borrower's or such Subsidiary's business;
(G) Insurance premium financing incurred solely in the
ordinary course of Borrower's business consistent with past
practice;
(H) Subordinated indebtedness on terms and conditions
and subordinated in right of payment to the Obligations in a
manner, satisfactory to Agent in its sole discretion in all
respects;
(I) The Convertible Debentures;
(J) The Revolving Credit Loan; and
(K) Other unsecured Indebtedness not to exceed
$10,000,000 in the aggregate, the proceeds of which are applied to
the Revolving Credit Loan to the extent then outstanding.
6.4 Employee Loans and Transactions. Borrower shall not
and shall not cause or permit any Subsidiary to:
(i) make loans or advances to any employee or Affiliate
other than:
(A) Intercompany Loans permitted in accordance with
Section 6.2 hereof, and (B) advances for travel and related
expenses and for relocation expenses (including any related tax
reimbursements) to Borrower's officers and employees and loans to
employees in Mexico, in each case solely in the ordinary course of
business consistent with past practice, and not to exceed
$1,500,000 in the aggregate for all such amounts outstanding at any
time; or
(ii) enter into any transactions with any Affiliate
(excluding transactions between or among Borrower and the Guarantor
Subsidiaries or Borrower and its Subsidiaries in Mexico to the
extent such transactions are in the ordinary course of business in
accordance with past practices) except on an arms' length basis on
fair and reasonable terms no less favorable to Borrower or the
applicable Subsidiary than would be obtained in a transaction with
a Person that is not an Affiliate; provided that any contracts,
purchase orders, or other transactions between Borrower or any
Subsidiary, on one hand, and any Affiliate, on the other hand, that
provide for payments in excess of $10,000,000 either in a single
contract, purchase order or transaction or a series of related
contracts, purchase orders or transactions shall be summarized in
a quarterly report prepared by Borrower, certified by an authorized
officer of Borrower and delivered to Agent within forty-five (45)
days following the last day of each Fiscal Quarter; or
(iii) except for that certain consulting agreement dated
as of July 1, 1994 between the Thomas Group, Inc. and Borrower, as
in effect as of the Closing Date and a copy of which has been
delivered to Agent, enter into any management consulting, advisory
or similar agreement providing for compensation determined by or as
a percentage of Borrower's or such Subsidiary's operating
performance or income.
6.5 Capital Structure and Business. Neither Borrower
nor any Subsidiary of Borrower shall: (i) make any change in any
of its business objectives, purposes or operations, (ii) make any
change in its capital structure, including the issuance of any
shares of Stock, warrants or other securities convertible into
Stock, other than as set forth on Schedule 6.5 hereto or permitted
under Section 6.18, or any revision of the terms of its outstanding
Stock; or (iii) amend its certificate or articles of incorporation
or bylaws if such amendment would have an adverse effect upon (i)
the Collateral or Agent's security interest therein; (ii) the
ability of Borrower or any Guarantor to repay the Obligations; or
(iii) Borrower's or any Subsidiary's ability to comply with any
provision of any Loan Document. Neither Borrower nor any
Subsidiary of Borrower shall engage in any business other than the
business currently engaged in by it.
6.6 Guaranteed Indebtedness. Neither Borrower nor any
Subsidiary of Borrower shall incur any Guaranteed Indebtedness
except:
(A) by endorsement of instruments or items of payment for
deposit to the general account of Borrower; and
(B) for Guaranteed Indebtedness incurred for the benefit
of Borrower or such Subsidiary of Borrower if the primary
obligation constitutes Indebtedness permitted by this Agreement;
and
(C) for Guaranteed Indebtedness of Borrower or such
Subsidiary of Borrower under Currency Protection Agreements, but
only to the extent entered into solely in the ordinary course of
Borrower's or such Subsidiary's business, which, in any event,
shall not include any speculative or similar investment purpose;
and
(D) guaranties issued by Borrower for the benefit of any
Material Subsidiary solely in the ordinary course of business
consistent with past practice with respect to leases, workmen's
compensation, performance of contracts, trade payables or customs
bonds owing or incurred by such Material Subsidiary solely in the
ordinary course of business of such Material Subsidiary consistent
with past practices; provided that neither such guaranty nor the
underlying obligations so guaranteed constitute Indebtedness or are
secured by a Lien and, provided, further, that, so long as any
Default or Event of Default shall have occurred and be continuing,
Borrower shall not enter into any such guaranty without the prior
written consent of Agent.
6.7 Liens. Neither Borrower nor any Subsidiary of
Borrower shall create or permit to exist any Lien on any of its
properties or other assets, except (A) presently existing or
hereafter created Liens in favor of Agent, on behalf of itself and
Lenders, (B) Liens set forth on Schedule 6.7, (C) Permitted
Encumbrances and (D) Liens created or permitted to be created in
accordance with Section 6.26. In addition, neither Borrower nor
any Subsidiary of Borrower shall become a party to any agreement,
note, indenture or instrument, or take any other action, which
would prohibit the creation of a Lien on any of its properties or
other assets, including on any Excluded Asset, in favor of Agent,
on behalf of itself and Lenders, as additional collateral for the
Obligations.
6.8 Sale of Assets. Neither Borrower nor any Subsidiary
of Borrower shall sell, transfer, convey, assign or otherwise
dispose of any of its properties or other assets (including,
without limitation, the capital stock of any Subsidiary, any of its
Accounts or any of the other Collateral), other than:
(A) sales of Inventory in the ordinary course of
business;
(B) sales, transfers, conveyances, assignments or other
dispositions of Material Assets permitted in accordance with
Section 6.26; and
(C) sales of equipment or fixtures to Persons that are
not Affiliates of Borrower or any Subsidiary which are obsolete or
not used or usable in the ordinary course of Borrower's or the
applicable Subsidiaries' business, provided, that the fair value of
such assets sold shall not exceed $5,000,000 in the aggregate
during any Fiscal Year; the net cash proceeds thereof shall be
applied to the outstanding Revolving Credit Loan; and, unless Agent
and Requisite Lenders shall otherwise consent in writing, which
consent shall not be unreasonably withheld, such assets shall not
constitute Material Assets listed on Schedule 6.26 hereto.
6.9 Events of Default. Neither Borrower nor any
Subsidiary of Borrower shall take any action or omit to take any
action, which act or omission would constitute (a) a Default or an
Event of Default under, or noncompliance with any of, the terms of
this Agreement or any of the other Loan Documents or (b) a default
or an event of default pursuant to, or noncompliance with, any
other contract, lease, mortgage, deed of trust, instrument or
agreement to which it is a party or by which it or any of its
properties is bound which would have a Material Adverse Effect.
6.10 ERISA. Neither Borrower or any Subsidiary of
Borrower nor any ERISA Affiliate shall without Agent's prior
written consent acquire any new ERISA Affiliate that maintains or
has an obligation to contribute to a Pension Plan that has either
an "accumulated funding deficiency," as defined in Section 302 of
ERISA, or any "unfunded vested benefits," as defined in Section
4006(a)(3)(e)(iii) of ERISA, in the case of any Plan other than a
Multiemployer Plan, and in Section 4211 of ERISA, in the case of a
Multiemployer Plan. Additionally, neither Borrower or any
Subsidiary of Borrower nor any ERISA Affiliate shall, without
Agent's prior written consent, terminate any Pension Plan that is
subject to Title IV of ERISA where such termination could
reasonably be anticipated to result in material liability to
Borrower or any Subsidiary of Borrower; permit any accumulated
funding deficiency, as defined in Section 302(a)(2) of ERISA, to be
incurred with respect to any Pension Plan; fail to make any
contributions or fail to pay any amounts due and owing as required
by the terms of any Plan before such contributions or amounts
become delinquent; make a complete or partial withdrawal (within
the meaning of Section 4201 of ERISA) from any Multiemployer Plan;
or at any time fail to provide Agent with copies of any Plan
documents or governmental reports or filings which may be requested
by Agent.
6.11 Financial Covenants. Borrower shall not breach or
fail to comply with any of the Financial Covenants (the "Financial
Covenants") set forth on Schedule 6.11.
6.12 Hazardous Materials. Except as set forth in the
Disclosure Letter, neither Borrower nor any Subsidiary of Borrower
shall, and neither Borrower nor any Subsidiary of Borrower shall
permit any other Person within its control to, cause or permit a
Release or the presence, use, generation, manufacture,
installation, Release, discharge, storage or disposal of any
Hazardous Materials on, under, in, above or about any of its real
estate or the transportation of any Hazardous Materials to or from
any real estate where such Release or such presence, use,
generation, manufacture, installation, Release, discharge, storage
or disposal would violate, or form the basis for liability under,
any Environmental Laws. If an Event of Default shall have occurred
and be continuing, Borrower, at its own expense, shall cause the
performance of such environmental audits and preparation of such
environmental reports as Agent may from time to time request as to
any location at which Collateral is then located, by reputable
environmental consulting firms acceptable to Agent, and in form and
substance acceptable to Agent.
6.13 Sale-Leasebacks. Neither Borrower nor any
Subsidiary of Borrower shall engage in any sale-leaseback or
similar transaction involving any of its assets, except (A) sale-
leaseback transactions with respect to Material Assets permitted in
accordance with Section 6.26 hereof and (B) so long as no Default
or Event of Default shall have occurred and be continuing, sale-
leaseback transactions of equipment or real estate not constituting
Material Assets; provided that (i) such sale-leaseback transactions
shall be subject to the terms governing sale-leaseback transactions
set forth in Section 6.26 hereof and (ii) the aggregate capitalized
liabilities outstanding with respect to such sale lease-back
transactions shall not exceed $20,000,000 in the aggregate at any
time.
6.14 Cancellation of Indebtedness. Neither Borrower nor
any Subsidiary of Borrower shall cancel any claim or debt owing to
it, except for (A) reasonable consideration negotiated on an arms
length basis and in the ordinary course of its business consistent
with past practices and (B) cancellation of Intercompany Loans
permitted to be cancelled in accordance with Section 6.2 hereof.
6.15 Restricted Payments. Neither Borrower nor any
Subsidiary of Borrower shall make any Restricted Payment except for
the payment of dividends or other distributions by a Subsidiary of
Borrower directly to Borrower; provided, however, that so long as
no Default or Event of Default shall have occurred and be continu-
ing, or would result after giving effect to the payment thereof,
Borrower may pay cash dividends with respect to preferred stock
permitted to be issued by it in accordance with Section 6.18 hereof
in an amount not to exceed $5,000,000 in each Fiscal Year.
6.16 Fiscal Year. Neither Borrower nor any Subsidiary of
Borrower shall change its Fiscal Year, except that Borrower and its
Subsidiaries may change their Fiscal Year to that date of each year
or the next succeeding year which is the Saturday closest to
December 31st of each year.
6.17 Change of Corporate Name. Neither Borrower nor any
Guarantor Subsidiary shall change its corporate name, except that
a Guarantor Subsidiary may change its name so long as no Default or
Event of Default shall have occurred and be continuing; provided
that at least thirty (30) days prior to such name change, the
Guarantor Subsidiary shall have given written notice thereof to
Agent and shall have delivered to Agent executed UCC-1s and such
other documents and filings as shall be necessary or desirable to
enable Agent to maintain its first priority security interest and
otherwise protect its security interest in the Collateral.
6.18 Sale of Stock. Neither Borrower nor any Subsidiary
of Borrower shall sell (whether in a public or private offering or
otherwise) any of its Stock, other than a sale of common stock of
Borrower solely for cash, and except for preferred stock or
convertible preferred stock with a per annum dividend rate not in
excess of 12.5% per annum.
6.19 Bank Accounts. Borrower shall not, and shall not
cause or permit any Subsidiary of Borrower to establish or maintain
any checking, depository, lock box or similar account other than
those accounts set forth on Schedule 3.21, accounts maintained by
Borrower's Foreign Subsidiaries outside the United States, and
those accounts, if any, in the United States which at all times
contain less than $50,000 per account and less than $250,000 for
all such accounts in the aggregate (without taking into account in
the calculation thereof amounts which are deposited into the cash
management system established and maintained in accordance with
Schedule C); provided that so long as no Default or Event of
Default shall have occurred and be continuing, (A) Borrower or any
Subsidiary may, upon at least fifteen (15) days' prior written
notice to Agent, establish additional disbursement or payroll
accounts; and (B) Borrower or any Subsidiary may, upon at least
thirty (30) days' prior written notice to the Agent, establish
additional depository or lock box accounts at banks acceptable to
Agent; provided, that, all such depository and lock box accounts
are subject to tri-party blocked account and/or lock box agreements
in form and substance satisfactory to Agent, in its sole
discretion, and such accounts are part of Borrower's cash
management systems established and maintained in accordance with
Schedule C.
6.20 Cash Management. Borrower shall not, and shall not
cause or permit any Subsidiary to accumulate or maintain cash (i)
in disbursement or payroll accounts as of any date of determination
in excess of checks outstanding against such accounts as of that
date and amounts necessary to meet minimum balance requirements;
(ii) in the case of all bank accounts of Borrower or any Subsidiary
(other than those accounts, if any, in the United States which at
all times contain less than $50,000 per account and less than
$250,000 for all such accounts in the aggregate (without taking
into account in the calculation thereof amounts which are deposited
into the cash management system established and maintained in
accordance with Schedule C)), in excess of the cash needs of
Borrower or that Subsidiary for working capital and Capital
Expenditures which it is contractually obligated to pay solely in
the ordinary course of Borrower's or that Subsidiary's business
during the period of ten (10) consecutive days following any date
of determination; (iii) in the case of Zenith Video Tech
Corporation-Florida, in the minimum amount necessary to comply with
applicable laws, rules and regulations of the State of Florida; or
(iv) other than with respect to Zenith Electronics (Ireland)
Limited which shall not exceed 135,000 Irish pounda in the aggregate.
6.21 Non-Material Subsidiaries. Borrower shall not cause
or permit any Domestic Non-Guarantor Subsidiary or any other Non-Material
Subsidiary to own or hold any assets or assume or incur
any liabilities, other than (i) assets or liabilities consisting
solely of intercompany balances and/or intercompany allocation of
tax assets or liabilities, (ii) the Pennsylvania Liabilities, (iii)
the Ireland Assets or Liabilities, (iv) trade payables incurred in
the ordinary course of business consistent with past practices by
Interocean Advertising Corporation of California and Interocean
Advertising Corporation of Illinois, and (v) with respect to Non-
Material Subsidiaries other than Zenith Electronics Corporation of
Pennsylvania and Zenith Electronics (Ireland) Limited, other assets
which do not exceed $50,000 in value in the aggregate as to each
such Subsidiary of Borrower. Borrower shall not cause or permit
any Domestic Non-Guarantor Subsidiary or any other Non-Material
Subsidiary to engage in any trade or business, except that those
Domestic Non-Guarantor Subsidiaries acting as domestic advertising
agencies as of the Closing Date may continue to do so.
6.22 Foreign Subsidiaries. Borrower shall not cause or
permit any Foreign Subsidiary to (i) sell Inventory to any Account
Debtor located in the United States and agrees that all such sales
to domestic Account Debtors shall be by Borrower or a Guarantor
Subsidiary or (ii) accumulate or maintain more than three (3) days'
supply of finished goods Inventory, other than (a) Partes de
Television de Reynosa, S.A. de C.V., Productos de Magneticos de
Chihuahua, S.A. de C.V. and Cableproductos de Chihuahua, S.A. de
C.V., which may maintain a supply of finished goods Inventory in
the ordinary course of business consistent with past practices for
sale to customers in Mexico and which, in addition, may maintain a
supply of finished goods Inventory in the ordinary course of
business for sale to customers located in Central America and South
America and (b) Zenith Radio Canada, Ltd./Zenith Radio Canada
Ltee., which may maintain a supply of not more than $6,000,000 of
finished goods Inventory in the ordinary course of business
consistent with past practices for sale to customers in Canada.
Borrower shall cause Zenith Electronics Corporation of
Texas or Zenith Electronics Corporation of Arizona to maintain
ownership of and title to substantially all of the equipment used
by and substantially all of the Inventory processed or assembled by
the Foreign Subsidiaries located in Mexico; provided, however, that
Partes de Television de Reynosa, S.A. de C.V., Productos de
Magneticos de Chihuahua, S.A. de C.V. and Cableproductos de
Chihuahua, S.A. de C.V., may maintain a supply of finished goods
Inventory in the ordinary course of business consistent with past
practices for sale to customers in Mexico.
6.23 No Impairment of Upstreaming. Except in connection
with any current asset financing by a Foreign Subsidiary permitted
by and made in accordance with Section 6.26, Borrower shall not,
and shall not cause or permit any Subsidiary to, directly or
indirectly, enter into or become bound by any agreement,
instrument, indenture or other obligation which could directly or
indirectly restrict, prohibit or require the consent of any Person
with respect to the payment of dividends or distributions or the
making of Intercompany Loans by any Subsidiary to Borrower.
6.24 Amendment of Other Debt. Borrower shall not amend,
modify or permit to be amended or modified any of the documents
evidencing or governing the Subordinated Debt, the Convertible
Debentures, or any other Indebtedness if the documents evidencing
or governing the same were subject to the approval of Agent prior
to the execution thereof in accordance with this Agreement or any
other Loan Document.
6.25 Prepayments of Other Debt. Borrower shall not, and
shall not cause or permit any Subsidiary to, directly or
indirectly, prepay, repurchase, redeem, retire or otherwise prepay
the Subordinated Debt or the Convertible Debentures except (a) that
Borrower may cause the Subordinated Debt or the Convertible
Debentures to be converted into common stock of Borrower or, on
terms satisfactory to Agent in its sole discretion, into preferred
stock or subordinated debt of Borrower, (b) in the case of the
Subordinated Debt, as permitted pursuant to Section 1.5(iv) of the
Revolving Loan Agreement and (c) to the extent that Borrower is
obligated to repurchase some or all of the Convertible Debentures
as a result of the LGE Transaction.
6.26 Permitted Asset Dispositions. Notwithstanding any
provision herein contained to the contrary, so long as no Default
or Event of Default has occurred and is continuing or would result
after giving effect thereto, Borrower may or may cause its
Subsidiaries, as applicable, to (i) sell those Material Assets
listed on Schedule 6.26 consisting of vacant or unused land or
buildings; (ii) sell or sell and lease back those Material Assets
designated as "Sale-Lease-Back Properties" on Schedule 6.26;
provided, however, that in the case of a sale and lease back of
real property at which Collateral is or may be kept, Borrower or
such Subsidiary shall have obtained a landlord waiver and consent
from the proposed owner of such property, in form and substance
satisfactory to Agent, in its sole discretion, prior to
consummation of such transaction; (iii) pledge, mortgage or
otherwise encumber those Material Assets and incur Indebtedness
secured by those Material Assets (other than the Tuning System
Patent Licenses) designated as "Pledge Assets" on Schedule 6.26,
subject to the following conditions:
(A) Any Material Assets sold in accordance herewith
shall be offered and sold on an arms' length basis to a Person that
is not an Affiliate of Borrower or any of its Subsidiaries; the
structure of any such Material Asset sale may be through a stock
sale, asset sale or any similar structure or combination thereof;
Borrower shall fully disclose the terms of any such sale to Agent
in writing not less than fifteen (15) Business Days prior to
becoming legally bound or committed thereto; all sales shall be
either for cash consideration only or for a combination of cash
consideration and non-cash consideration such that no more than
thirty-five percent (35%) of the total consideration shall consist
of non-cash consideration, unless Agent shall otherwise consent,
which consent shall not be unreasonably withheld, and all non-cash
consideration, if any, shall be pledged to Agent for the benefit of
the Lenders;
(B) In the case of sale-lease-back transactions of
Material Assets permitted hereby, Borrower shall fully disclose the
terms of any such transaction to Agent in writing not less than
fifteen (15) Business Days prior to becoming legally bound or
committed thereto; the terms of any such sale-lease-back
transaction shall be reasonably acceptable to Agent; and, in the
case of any such transaction involving lease or other payments by
Borrower and/or any of its Subsidiaries in excess of $5,000,000 in
the aggregate over the life of any such lease, the purchaser/lessor
shall have entered into an intercreditor agreement with Agent and
Lenders on terms reasonably satisfactory to Agent; and
(C) In the case of Indebtedness incurred pursuant to
clause (iii) above with respect to Pledge Assets, Borrower shall
fully disclose the terms of any transaction involving Pledge Assets
to Agent in writing not less than fifteen (15) Business Days prior
to becoming legally bound or committed thereto; the terms of any
such transaction involving Pledge Assets, including the terms of
any Indebtedness incurred in connection therewith, shall be
reasonably acceptable to Agent; and, in the case of any such
Indebtedness in excess of $5,000,000, the creditor holding the same
shall have entered into an intercreditor agreement with Agent and
Lenders on terms reasonably satisfactory to Agent.
7. TERM
7.1 Termination. Subject to the terms hereof, the
financing arrangement contemplated hereby shall be in effect until
the Commitment Termination Date; provided, however, that in the
event of a prepayment of any part of the Obligations, other than a
prepayment made in compliance with Section 6.26 in connection with
a Material Asset Disposition or from the proceeds of Indebtedness
permitted under Section 6.3(D), (H), (I), (J) or (K) prior to the
Commitment Termination Date with funds borrowed from any Person
other than Lenders pursuant to this Agreement, Borrower shall
simultaneously therewith pay to Agent, on behalf of Lenders, in
full, in immediately available funds all Obligations arising under
this Agreement or any of the other Loan Documents.
7.2 Survival of Obligations Upon Termination of
Financing Arrangement. Except as otherwise expressly provided for
in this Agreement or the other Loan Documents, no termination or
cancellation (regardless of cause or procedure) of any financing
arrangement under this Agreement shall in any way affect or impair
the obligations, duties and liabilities of Borrower or the rights
of Agent and Lenders relating to any unpaid Obligation, due or not
due, liquidated, contingent or unliquidated, or any transaction or
event occurring prior to such termination, or any transaction or
event the performance of which is not required until after the
Commitment Termination Date. Except as otherwise expressly
provided herein or in any other Loan Document, all undertakings,
agreements, covenants, warranties and representations of or binding
upon Borrower or any Subsidiary of Borrower, and all rights of
Agent and Lenders, all as contained in this Agreement or any of the
other Loan Documents shall not terminate or expire, but rather
shall survive such termination or cancellation and shall continue
in full force and effect until such time as all of the Obligations
have been indefeasibly paid in full or performed in accordance with
the terms of the agreements creating such Obligations.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or
more of the following events (regardless of the reason therefor)
shall constitute an "Event of Default" hereunder:
(a) Borrower shall fail to make any payment of principal
in respect of the Term Loan when due or declared due, or Borrower
shall fail to make any other payment in respect of the Obligations
within five days after such payment is due or declared due.
(b) Borrower or any Subsidiary of Borrower shall fail or
neglect to perform, keep or observe any of the provisions of
Section 1.10, Section 5.5(a), Section 5.12, or any of Sections 6.1
through 6.26, inclusive, including any of the provisions set forth
on Schedule C or Schedule 6.11.
(c) Borrower or any Subsidiary of Borrower shall fail or
neglect to perform, keep or observe any term or provision of this
Agreement (other than any such term or provision referred to in
paragraph (a) or (b) above) or any of the other Loan Documents, and
the same shall remain unremedied for a period ending thirty (30)
days after Borrower shall become aware thereof.
(d) A default shall occur and be continuing under any
other agreement, document or instrument to which Borrower or any
Subsidiary of Borrower is a party or by which Borrower or any
Subsidiary of Borrower or any of Borrower's or any Subsidiary of
Borrower's properties or other assets is bound and such default (i)
involves an event of default under the Revolving Loan Agreement,
(ii) involves any default or event of default under the
Subordinated Debt or Convertible Debentures, or (iii) causes, or
permits any holder of such Indebtedness or any trustee to cause,
such Indebtedness or a portion thereof in an amount exceeding
$5,000,000 for all such Indebtedness in the aggregate, to become
due prior to its stated maturity or prior to its regularly
scheduled dates of payment.
(e) Any representation or warranty herein or in any
other Loan Document or in any written statement pursuant hereto or
thereto, any report, financial statement or certificate made or
delivered to Agent or any Lender by Borrower or any Subsidiary of
Borrower shall be untrue or incorrect in any material respect, as
of the date when made or deemed made.
(f) Any of the assets of Borrower or any Material
Subsidiary of Borrower (including any Collateral) shall be
attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of Borrower or
any Material Subsidiary of Borrower and shall remain unstayed or
undismissed for forty (40) consecutive days; or any Person other
than Borrower shall apply for the appointment of a receiver,
trustee or custodian for any of Borrower's or any of its Material
Subsidiaries' assets and shall remain unstayed or undismissed for
forty (40) consecutive days; or Borrower or any Material Subsidiary
of Borrower shall have concealed, removed or permitted to be
concealed or removed, any part of its properties or other assets
with intent to hinder, delay or defraud its creditors or any of
them or made or suffered a transfer of any of its properties, or
obligation, which may be fraudulent under any bankruptcy,
fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced
against Borrower or any Material Subsidiary of Borrower in a court
having competent jurisdiction seeking a decree or order (i) under
Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of Borrower or any Material Subsidiary of Borrower or of
any substantial part of Borrower's or any Material Subsidiary of
Borrower's properties, or other assets, or (iii) ordering the
winding up or liquidation of the affairs of Borrower or any
Material Subsidiary of Borrower and such case or proceeding shall
remain undismissed or unstayed for forty (40) consecutive days or
such court shall enter a decree or order granting the relief sought
in such case or proceeding.
(h) Borrower or any Material Subsidiary of Borrower
shall (i) file a petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any
other applicable federal, state or foreign bankruptcy or other
similar law, (ii) make an assignment for the benefit of creditors,
(iii) consent to the institution of proceedings thereunder or to
the filing of any such petition or to the appointment of or taking
of possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of Borrower or any
Material Subsidiary of Borrower or of any substantial part of
Borrower's or any of its Material Subsidiaries' properties or other
assets, (iv) fail generally to pay its debts as such debts become
due, or (v) take any corporate action in furtherance of any such
action.
(i) A final judgment or judgments (after the expiration
of all times to appeal therefrom) for the payment of money in
excess of $5,000,000 in the aggregate during any Fiscal Year shall
be rendered against Borrower or any Subsidiary of Borrower unless
the same shall be (i) fully covered by insurance in accordance with
Section 5.5 and the insurer shall have accepted liability therefor
in writing or (ii) vacated, stayed, bonded, paid or discharged
within a period of fifteen (15) days from the date of such
judgment.
(j) Any other event shall have occurred which has a
Material Adverse Effect.
(k) Any provision of any Collateral Document, after
delivery thereof pursuant to Section 2.1, shall for any reason
cease to be valid, binding and enforceable in accordance with its
terms, or any security interest created under any Collateral
Document shall cease to be a valid and perfected security interest
or Lien having the first priority as to all of the Collateral
purported to be covered thereby, subject only to Liens permitted in
accordance with the terms of the Security Agreement.
(l) There shall be any Change in Control of Borrower.
8.2 Remedies. If any Default or Event of Default shall
have occurred and be continuing, Agent may, without notice, and, at
the request of the Requisite Lenders, shall, take any one or more
of the following actions: (a) increase the rate of interest
applicable to the Term Loan to the Default Rate, as provided in
Section 1.7(e), or (b) declare all or any portion of the
Obligations to be forthwith due and payable, whereupon such
Obligations shall become and be due and payable, without
presentment, demand, protest or further notice of any kind, all of
which are expressly waived by Borrower, and exercise any rights and
remedies provided to Agent under this Agreement and the other Loan
Documents and/or at law or equity, including all remedies provided
under the Code; provided, however, that upon the occurrence of an
Event of Default specified in Section 8.1(f), (g) or (h), all
Obligations shall automatically become immediately due and payable
without any declaration, notice or demand by Agent.
8.3 Waivers by Borrower. Except as otherwise provided
for in this Agreement, Borrower waives: (i) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of
any or all Loan Documents, Term Notes, commercial paper, accounts,
contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent or any Lender on which
Borrower may in any way be liable, and hereby ratifies and confirms
whatever Agent may do in this regard on behalf of Lenders, (ii) all
rights to notice and a hearing prior to Agent's taking possession
or control of, or to Agent's replevy, attachment or levy upon, the
Collateral or any bond or security which might be required by any
court prior to allowing Agent to exercise any of its or any
Lender's remedies, and (iii) the benefit of all valuation,
appraisal and exemption laws. Borrower acknowledges that it has
been advised by counsel of its choice with respect to this
Agreement, the other Loan Documents and the transactions evidenced
by this Agreement and the other Loan Documents and has knowingly
entered into this Agreement and each of the other Loan Documents.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations. GE Capital may
assign its rights and delegate its obligations as a Lender under
this Agreement and, further, may assign, or sell participations in,
all or any part of its Pro Rata Share of the Term Loan or any other
interest herein or in its Term Note to an Affiliate or to any
another Person.
Unless Agent shall have otherwise agreed in writing, no
other Lender shall assign any of its rights or delegate any of its
obligations under this Agreement or any of the other Loan Documents
or assign, or sell any participation in, all or any part of its Pro
Rata Share of the Term Loan or any other interest herein or in its
Term Note to any Affiliate or other Person.
In the case of an assignment by GE Capital under this
Section 9.1, (or in the event, if any, that Agent shall so agree in
writing, an assignment by another Lender), the assignee shall have,
to the extent of such assignment, the same rights, benefits and
obligations as it would if it were a Lender hereunder. The
assigning Lender shall be relieved of its obligations hereunder
with respect to its Term Loan. Borrower hereby acknowledges and
agrees that any assignment will give rise to a direct obligation of
Borrower to the assignee and that the assignee shall be considered
to be a "Lender."
GE Capital may (or, in the event, if any, that Agent
shall so agree in advance in writing, another Lender may) sell
participations in all or any part of its Pro Rata Share of the Term
Loan to an Affiliate or any other Person; provided that all amounts
payable by Borrower hereunder shall be determined as if that Lender
had not sold such participation and the holder of any such
participation shall not be entitled to require such Lender to take
or omit to take any action hereunder except action directly
affecting (a) any reduction in the principal amount, interest rate
or fees payable with respect to the Term Loan; (b) any extension of
the final Scheduled Installment; and (c) any release of any
Collateral with a value in excess of $2,500,000 in the aggregate
(other than in accordance with the terms of this Agreement, the
Collateral Documents or the other Loan Documents). Borrower hereby
acknowledges and agrees that any participation will give rise to a
direct obligation of Borrower to the participant and the
participant shall for purposes of Sections 1.14, 1.16 and 9.3 be
considered to be a "Lender."
Any Lender permitted to sell assignments and
participations under this Section 9.1 may furnish any information
concerning Borrower and its Subsidiaries in the possession of that
Lender from time to time to assignees and participants (including
prospective assignees and participants).
Borrower shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 in whatever
manner necessary in order to enable or effect any such assignment
or participation, including the execution and delivery of any and
all agreements, notes and other documents and instruments as shall
be requested and the preparation of informational materials for,
and the participation of relevant management in meetings with,
potential assignees or participants. Borrower shall certify the
correctness, completeness and accuracy of all descriptions of
Borrower and its affairs contained in any selling materials and all
information provided by it and included in such materials. No
information provided to potential co-Lenders or participants shall
be provided unless and until such potential co-Lenders or
participants have signed a confidentiality agreement substantially
in the form provided to Borrower and used by Agent prior to the
Closing Date.
9.2 Appointment of Agent. GE Capital is hereby
appointed Agent hereunder to act on behalf of all Lenders as Agent
under this Agreement and the other Loan Documents. The provisions
of this Section 9.2 are solely for the benefit of Agent and Lenders
and neither Borrower or any Subsidiary of Borrower nor any other
Person shall have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties
under this Agreement and the other Loan Documents, Agent shall act
solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrower, any Subsidiary of Borrower or
any other Person. Agent shall have no duties or responsibilities
except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and
administrative in nature and Agent shall not have, or be deemed to
have, by reason of this Agreement, any other Loan Document or
otherwise a fiduciary relationship in respect of any Lender.
Neither Agent nor any of its officers, directors, employees, agents
or representatives shall be liable to any Lender for any action
taken or omitted to be taken by it hereunder or under any other
Loan Document, or in connection herewith or therewith, unless
caused by its or their own gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction after
all possible appeals have been exhausted.
The agency hereby created shall in no way impose any of
the rights and powers of, or impose any duties or obligations upon,
Agent in its individual capacity as a Lender hereunder. Agent
shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not performing the
duties and functions delegated to it hereunder. Agent may resign
at any time by giving thirty (30) days prior written notice thereof
to Lenders and Borrower. Upon any such resignation, Requisite
Lenders shall have the right, upon five (5) days notice to
Borrower, to appoint a successor Agent. Upon acceptance of
appointment, the successor Agent shall succeed to and become vested
with all rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from all of its
duties and obligations under this Agreement and the other Loan
Documents.
If Agent shall request instructions from Requisite
Lenders with respect to any act or action (including failure to
act) in connection with this Agreement or any other Loan Document,
then Agent shall be entitled to refrain from such act or taking
such action unless and until Agent shall have received instructions
from Requisite Lenders; and Agent shall not incur liability to any
Person by reason of so refraining. Agent shall be fully justified
in failing or refusing to take any action hereunder or under any
other Loan Document (a) if such action would, in the opinion of
Agent, be contrary to law or the terms of this Agreement or any
other Loan Document or (b) if Agent shall not first be indemnified
to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any
such action. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Loan
Document in accordance with the instructions of Requisite Lenders.
9.3 Set Off and Sharing of Payments. In addition to any
rights now or hereafter granted under applicable law and not by way
of limitation of any such rights, upon the occurrence and during
the continuance of any Event of Default, each Lender and each
holder of any Term Note is hereby authorized at any time or from
time to time, without notice to Borrower or to any other Person,
any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all balances held by it at any of
its offices for the account of Borrower or any Guarantor Subsidiary
(regardless of whether such balances are then due to Borrower or
such Guarantor Subsidiary) and any other properties or assets any
time held or owing by that Lender or that holder to or for the
credit or for the account of Borrower or any Guarantor Subsidiary
against and on account of any of the Obligations which are not paid
when due. Any Lender or holder of any Term Note having a right to
set off shall, to the extent the amount of any such set off exceeds
its Pro Rata Share of the Obligations, purchase for cash (and the
other Lenders or holders shall sell) such participations in each
such other Lender's or holder's Pro Rata Share of the Obligations
as would be necessary to cause such Lender to share such excess
with each other Lender or holder in accordance with their
respective Pro Rata Shares. Borrower agrees, to the fullest extent
permitted by law, that (a) any Lender or holder may exercise its
right to set off with respect to amounts in excess of its Pro Rata
Share of the Obligations and may sell participations in such excess
to other Lenders and holders and (b) any Lender or holders so
purchasing a participation in any Pro Rata Share of the Term Loan
or other Obligations held by other Lenders or holders may exercise
all rights of set-off, bankers' lien, counterclaim or similar
rights with respect to such participation as fully as if such
Lender or holder were a direct holder of such Pro Rata Share of the
Term Loan and other Obligations in the amount of such
participation.
9.4 Disbursements of Payments and Information. (a)
The Agent shall disburse by wire transfer of good funds to
each Lender its Pro Rata Share of all principal, interest, and, if
applicable, Fees received by Agent with respect to the Term Loan
within one (1) Business Day after Agent's receipt of the
corresponding payment from Borrower.
(b) Return of Payments.
(1) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has
been or will be received by Agent from Borrower and such related
payment is not received by Agent, then Agent will be entitled to
recover such amount from such Lender on demand without set-off,
counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to
Borrower or paid to any other Person pursuant to any insolvency law
or otherwise, then, notwithstanding any other term or condition of
this Agreement or any other Loan Document, Agent will not be
required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together
with interest at such rate, if any, as Agent is required to pay to
Borrower or such other Person, without set-off, counterclaim or
deduction of any kind.
(c) Dissemination of Information.
Agent will use reasonable efforts to provide Lenders with
any information received by Agent from Borrower which is required
to be provided to Lenders hereunder, with any notice of Default or
Event of Default received by Agent from Borrower, with any notice
of Default or Event of Default delivered by Agent to Borrower, with
notice of any Default or Event of Default of which Agent has become
aware and with notice of any action taken by Agent following any
Default or Event of Default; provided, however, that Agent shall
not be liable to any Lender for any failure to do so, except to the
extent that such failure is attributable to Agent's gross
negligence or willful misconduct as finally determined by a court
of competent jurisdiction after all possible appeals have been
exhausted.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the
other Loan Documents shall be binding on and shall inure to the
benefit of Borrower, the Domestic Subsidiaries, Agent, Lenders and
their respective successors and assigns, except as otherwise
provided herein or therein. Neither Borrower nor any Domestic
Subsidiary shall assign, transfer, hypothecate or otherwise convey
any of its rights, benefits, obligations or duties hereunder or
under any of the other Loan Documents to any Person without the
prior express written consent of Agent and Requisite Lenders. Any
such purported assignment, transfer, hypothecation or other
conveyance by Borrower or any Domestic Subsidiary without the prior
express written consent of Agent shall be void. The terms and
provisions of this Agreement are for the purpose of defining the
relative rights and obligations of Borrower, the Domestic
Subsidiaries, Agent and Lenders with respect to the transactions
contemplated hereby and there shall be no third party beneficiaries
of any of the terms or provisions of this Agreement or any of the
other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. This
Agreement and the other Loan Documents constitute the complete
agreement between the parties with respect to the subject matter
thereof and may not be modified, altered or amended except as set
forth in Section 11.2 below. Any letter of interest or commitment
letter between Borrower and GE Capital or any of its affiliates, or
between Borrower and BNYCC, predating this Agreement and relating
to a financing of substantially similar form, purpose or effect
shall be superseded by this Agreement.
11.2 Amendments and Waivers.
(a) Except as otherwise provided herein, no amendment,
modification, termination or waiver of any provision of this
Agreement or any of the Term Notes, or consent to any departure by
Borrower or any Subsidiary of Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed
by Requisite Lenders and Borrower.
(b) Except to the extent permitted by any applicable
Lender Addition Agreement, no amendment, modification, termination
or waiver shall, unless in writing and signed by each affected
Lender, do any of the following: (a) reduce the principal of, rate
of interest on or Fees payable with respect to the Term Loan; (b)
extend the final scheduled maturity date of the principal amount of
the Term Loan; (c) waive, forgive, defer, extend or postpone any
payment required hereunder; (d) release any Guarantor with gross
assets in excess of $2,500,000; (e) except as otherwise
contemplated herein or in one of the other Loan Documents, permit
Borrower or any Guarantor Subsidiary to sell or otherwise dispose
of any Collateral with a value exceeding $2,500,000 in the
aggregate; (f) change the percentage of the Term Loan or of the
aggregate unpaid principal amount of the Term Loan which shall be
required for Lenders or any of them to take any action hereunder;
(g) release Collateral with a value exceeding $2,500,000 in the
aggregate (except if the sale or other disposition of such
Collateral is permitted under the Loan Documents); (h) amend or
waive Section 1.3(b); (i) amend or waive clause (ii) of the
definition of "Enforcement Period" contained in the Intercreditor
Agreement; and (j) amend or waive this Section 11.2 or the
definitions of the terms used in this Section 11.2 insofar as the
definitions affect the substance of this Section 11.2; and
provided, further, that no amendment, modification, termination or
waiver affecting the rights or duties of Agent under this Agreement
or any other Loan Document shall in any event be effective, unless
in writing and signed by Agent, in addition to Lenders required
hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No
amendment, modification, termination or waiver shall be required
for Agent to take additional Collateral pursuant to any Loan
Document. No amendment, modification, termination or waiver of any
provision of any Term Note shall be effective without the written
concurrence of the holder of that Term Note . No notice to or
demand on Borrower in any case shall entitle Borrower to any other
or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in
accordance with this Section 11.2 shall be binding upon each holder
of the Term Notes at the time outstanding and each future holder of
the Term Notes.
11.3 Fees and Expenses. Borrower shall reimburse Agent
for all of its out-of-pocket expenses incurred in connection with
(i) the preparation of this Agreement and the other Loan Documents
(including the fees and expenses of Agent's counsel, advisors,
consultants and auditors retained in connection with this Agreement
and the other Loan Documents and the transactions contemplated
hereby and thereby and advice in connection therewith), and (ii)
wire transfers to the account of Borrower. Borrower shall
reimburse Agent for all fees, costs and expenses, including the
fees, costs and expenses of counsel and other advisors (including
environmental and management consultants), for advice, assistance
or other representation in connection with:
(a) any amendment, modification or waiver of, or consent
with respect to, this Agreement or any of the other Loan Documents
or advice in connection with the administration of the loans made
pursuant hereto or Agent's or any Lender's rights hereunder or
thereunder;
(b) any litigation, contest, dispute, suit, proceeding
or action (whether instituted by Agent, any Lender, Borrower, any
Subsidiary of Borrower or any other Person) in any way relating to
the Collateral, this Agreement or any of the other Loan Documents
or any other agreement to be executed or delivered in connection
therewith or herewith, whether as a party, witness or otherwise,
including any litigation, contest, dispute, suit, case, proceeding
or action, and any appeal or review thereof, in connection with a
case commenced by or against Borrower, any Subsidiary of Borrower
or any other Person that may be obligated to Agent or Lenders by
virtue of this Agreement or any of the other Loan Documents;
(c) any attempt to enforce any rights of Agent or any
Lender against Borrower, any Subsidiary of Borrower or any other
Person that may be obligated to Agent or any Lender by virtue of
this Agreement or any of the other Loan Documents; or
(d) any attempt to (i) monitor the Obligations, (ii)
evaluate, observe or assess Borrower, any of its Subsidiaries or
Borrower's or any of its Subsidiaries' affairs or (iii) verify,
protect, evaluate, assess, appraise, collect, sell, liquidate or
otherwise dispose of any of the Collateral;
including all the attorneys' and other professional and service
providers' fees arising from such services, including those in
connection with any appellate proceedings; and all expenses, costs,
charges and other fees incurred by such counsel and others in any
way or respect arising in connection with or relating to any of the
events or actions described in this Section 11.3 shall be payable,
on demand, by Borrower to Agent. Without limiting the generality
of the foregoing, such expenses, costs, charges and fees shall
include: fees, costs and expenses of environmental advisors to
advise Agent, but not to conduct any on site environmental review
or testing, appraisers, management and other consultants,
paralegals, court costs and expenses, photocopying and duplication
expenses, court reporter fees, costs and expenses, long distance
telephone charges, air express charges, telegram charges,
secretarial overtime charges, expenses for travel, lodging and food
paid or incurred in connection with the performance of such legal
or other advisory services, and, in accordance with the GE Capital
Fee Letter, fees, costs and expenses of Agent's internal collateral
auditors, provided that so long as no Default or Event of Default
has occurred and is continuing such collateral audits or
examinations shall be conducted not more frequently than four (4)
times in any Fiscal Year; and, following the occurrence and during
the continuance of any Default or Event of Default, environmental
advisors for any reason, including to conduct on site environmental
reviews and testing, outside accountants, and investment bankers.
11.4 No Waiver. Agent's or any Lender's failure, at any
time or times, to require strict performance of any provision of
this Agreement or any of the other Loan Documents shall not waive,
affect or diminish any right of Agent or such Lender thereafter to
demand strict compliance and performance therewith. Any suspension
or waiver of an Event of Default under the Loan Documents shall not
suspend, waive or affect any other Event of Default under this
Agreement or any of the other Loan Documents whether the same is
prior or subsequent thereto and whether of the same or a different
type. None of the undertakings, agreements, warranties, covenants
and representations of Borrower and its Subsidiaries contained in
this Agreement or any of the other Loan Documents and no Default or
Event of Default under this Agreement and no defaults or events of
default under any of the other Loan Documents shall be deemed to
have been suspended or waived by Agent or any Lender, unless such
waiver or suspension is by an instrument in writing signed by an
officer of or other authorized employee of Agent and Requisite
Lenders and directed to Borrower specifying such suspension or
waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies
under this Agreement shall be cumulative and nonexclusive of any
other rights and remedies which Agent or any Lender may have under
any other agreement, including the Loan Documents, by operation of
law or otherwise. Recourse to the Collateral shall not be
required.
11.6 Severability. Wherever possible, each provision of
this Agreement and the other Loan Documents shall be interpreted in
such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement or any other Loan Document
shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibi-
tion or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement and the
other Loan Documents.
11.7 Conflict of Terms. Except as otherwise provided in
this Agreement or any of the other Loan Documents by specific
reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or
inconsistent with, any provision contained in any of the other Loan
Documents, the provision contained in this Agreement shall govern
and control.
11.8 Authorized Signature. Until Agent shall be notified
by Borrower to the contrary, the signature upon any document or
instrument delivered pursuant hereto of an officer of Borrower or
a Guarantor Subsidiary, as appropriate, listed on Schedule 11.8
shall bind Borrower or such Guarantor Subsidiary, as the case may
be, and be deemed to be the act of Borrower or such Guarantor
Subsidiary, as the case may be, affixed pursuant to and in
accordance with resolutions duly adopted by Borrower's Board of
Directors or such Guarantor Subsidiary's Board of Directors, as
appropriate. Agent shall be entitled to assume the authenticity of
each signature and the authority of each Person whose signature it
is or appears to be unless the responsible Person of Agent acting
in reliance thereupon shall have actual knowledge, at the time of
reliance thereon, of the fact that such signature is false or the
Person whose signature or purported signature is presented is
without authority.
11.9 GOVERNING LAW; CONSENT TO JURISDICTION. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUC-
TION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. BORROWER, AGENT AND LENDERS HEREBY
CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN COOK
COUNTY, ILLINOIS, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER, ANY GUARANTOR
SUBSIDIARY, AGENT OR ANY LENDER PERTAINING TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS, BORROWER AND EACH GUARANTOR
SUBSIDIARY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE OF COOK COUNTY, ILLINOIS
AND, PROVIDED, FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT OR LENDERS.
BORROWER, EACH GUARANTOR SUBSIDIARY, AGENT AND LENDERS EXPRESSLY
SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER, EACH GUARANTOR
SUBSIDIARY, AGENT AND LENDERS HEREBY WAIVE ANY OBJECTION WHICH THEY
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HEREBY CONSENT TO THE GRANTING OF SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
BORROWER, EACH GUARANTOR SUBSIDIARY, AGENT AND LENDERS HEREBY WAIVE
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
IN ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED, IN THE CASE OF NOTICE TO BORROWER OR ANY GUARANTOR
SUBSIDIARY, TO BORROWER, IN THE CASE OF NOTICE TO AGENT, TO AGENT,
IN THE CASE OF NOTICE TO A LENDER, TO SUCH LENDER, AT THEIR
RESPECTIVE ADDRESSES SET FORTH ON SCHEDULE 11.10 OF THIS AGREEMENT
AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER
OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may
be given to or served upon any of the parties by any other party,
or whenever any the parties desires to give or serve upon any other
party any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been
validly served, given or delivered (i) upon the earlier of actual
receipt and three (3) days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper
postage prepaid, (ii) upon transmission, when sent by telecopy or
other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal
delivery or United States Mail as otherwise provided in this
Section 11.10), (iii) one (1) Business Day after deposit with a
reputable overnight courier with all charges prepaid or (iv) when
delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address or
facsimile number indicated on Schedule 11.10 or to such other
address (or facsimile number) as may be substituted by notice given
as herein provided. The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such
notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communica-
tion to any Person (other than Borrower or Agent) designated on
Schedule 11.10 to receive copies shall in no way adversely affect
the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of
Contents contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not
a part of the agreement between the parties hereto.
11.12 Counterparts. This Agreement may be executed in
any number of separate counterparts, each of which shall collec-
tively and separately constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER
THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM
AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN
AGENT, LENDERS, BORROWER OR ANY DOMESTIC SUBSIDIARY ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.
11.14 Confidentiality. Each of the Lenders and Agent
agrees to exercise reasonable efforts to keep any non-public
information delivered or made available to it pursuant to this
Agreement or any other Loan Document, which Borrower has identified
in writing as confidential information, confidential from any
Person other than officers, employees, agents, designees or
representatives of such Lender or Agent who are or are expected to
become engaged in evaluating, approving, structuring or
administering this Agreement or any of the other Loan Documents or
any other transaction contemplated hereby or thereby; provided,
that, nothing herein shall prevent Agent or any Lender from
disclosing such information to any bona fide assignee, transferee
or participant that has agreed in writing to comply with this
Section 11.14 in connection with the contemplated assignment or
transfer of any portion of the Term Loan or participations therein;
to any of its Affiliates to the extent any such Affiliates require
such information in the ordinary course of Agent's or such Lender's
credit committee or asset management procedures; or as required or
requested by any Governmental Authority or representative thereof
or pursuant to legal process or as required in connection with the
exercise of any remedy under this Agreement or any of the other
Loan Documents.
11.15 Reaffirmation of Guaranty. Each Guarantor
Subsidiary hereby reaffirms all of its covenants and obligations
under the Guaranty and the Contribution Agreement, each dated as of
May 10, 1995 and delivered in connection with the Prior Term Loan
Agreement.
[signature pages follow]
IN WITNESS WHEREOF, this First Amended and Restated Term
Loan Agreement has been duly executed as of the date first written
above.
ZENITH ELECTRONICS CORPORATION
By: /s/ Willard C. McNItt
________________________________
Title: Vice President, Treasurer
_____________________________
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Robert Battle
________________________________
Title: Duly Authorized Signatory
____________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: /s/ Stephen V. Mangiante
________________________________
Title: Vice President
_____________________________
CONGRESS FINANCIAL CORPORATION
By: /s/ Kenneth Donahue
________________________________
Title: Assistant Vice President
_____________________________
ACKNOWLEDGED AND AGREE TO BE
BOUND BY ANY AND ALL PROVISIONS
HEREOF AFFECTING THEM:
ZENITH DISTRIBUTING CORPORATION
OF ILLINOIS
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH DISTRIBUTING CORPORATION -
MIDSTATES
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH DISTRIBUTING CORPORATION
OF NEW ENGLAND
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH DISTRIBUTING CORPORATION
OF NEW YORK
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH DISTRIBUTING CORPORATION -
SOUTHEAST
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH DISTRIBUTING CORPORATION -
WEST
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH/INTEQ, INC.
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH ELECTRONICS CORPORATION
OF ARIZONA
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH ELECTRONICS CORPORATION
OF TEXAS
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH MICROCIRCUITS CORPORATION
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH VIDEO TECH CORPORATION
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENITH VIDEO TECH CORPORATION -
FLORIDA
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
ZENTRANS, INC.
By: /s/ Willard C. McNitt
____________________________
Title: Treasurer
_________________________
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
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0
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<SALES> 879
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