<PAGE>
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 June 26, 1998
Commission file Number 0-6508
IEC ELECTRONICS CORP.
-----------------------------------------------------
(Exact name of registrant as specified in its charter.)
Delaware 13-3458955
----------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
105 Norton Street, Newark, New York 14513
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices (Zip Code)
(315) 331-7742
- --------------------------------------------------------------------------------
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, $0.01 Par Value - 7,559,951 shares as of August 10, 1998.
Page 1 of 15
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PART 1 FINANCIAL INFORMATION
Page
Number
Item 1. Financial Statements
Consolidated Balance Sheets as of :
June 26, 1998 (Unaudited) and September 30, 1997............. 4
Consolidated Statements of Income
for the three months ended:
June 26, 1998 (Unaudited) and
June 27, 1997 (Unaudited).................................... 5
Consolidated Statements of Income
for the nine months ended:
June 26, 1998 (Unaudited) and
June 27, 1997 (Unaudited).................................... 6
Consolidated Statement of Cash Flows
for the nine months ended:
June 26, 1998 (Unaudited) and
June 27, 1997 (Unaudited).................................... 7
Notes to Consolidated Financial
Statements (Unaudited)....................................... 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................... 11
PART II
Item 1. Legal Proceedings.............................................. 14
Item 2. Changes in Securities.......................................... 14
Page 2 of 15
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Item 3. Defaults Upon Senior Securities................................ 14
Item 4. Submission of Matters to a Vote of Security Holders............ 14
Item 5. Other Information.............................................. 14
Item 6. Exhibits and Reports on Form 8-K............................... 14
Signature ............................................................. 15
Page 3 of 15
<PAGE>
<TABLE>
IEC ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 26, 1998 AND SEPTEMBER 30, 1997
(in thousands, except for share and per share data)
<CAPTION>
June 26,1998 SEPTEMBER 30,1997
---------------- ------------------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $7,733 $3,921
Accounts receivable 21,656 49,045
Inventories 24,362 45,360
Income taxes receivable 1,185 -
Deferred income taxes 1,900 1,900
Other current assets 525 98
--------- ----------
Total current assets 57,361 100,324
--------- ----------
Property, Plant and Equipment, net 38,304 39,391
---------- ----------
Other Assets:
Cost in excess of net assets acquired, net 11,993 12,346
Other assets 9 9
----------- ----------
Total other assets 12,002 12,355
----------- ----------
$107,667 $152,070
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Borrowings under lines of credit $ - $10,530
Current portion of long-term debt 62 3,291
Accounts payable 10,985 43,904
Accrued payroll and related expenses 3,127 5,611
Accrued income taxes - 1,887
Other accrued expenses 1,794 479
------- -------
Total current liabilities 15,968 65,702
------- -------
Deferred Income Taxes 3,919 3,919
------- -------
Long-Term Debt 12,172 6,988
------- -------
Shareholders' Equity:
Preferred stock, par value $.01 per share
Authorized - 500,000 shares
Outstanding - 0 shares - -
Common stock, par value $.01 per share
Authorized - 50,000,000 shares
Outstanding - 7,559,951 shares and
7,552,201 shares 75 75
Additional paid-in capital 38,478 38,430
Retained earnings 37,466 37,367
Treasury Stock, at cost - 20,573 shares -411 -411
------- -------
Total shareholders' equity 75,608 75,461
------- -------
$107,667 $152,070
======= =======
<FN>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these balance sheets
</FN>
</TABLE>
Page 4 of 15
<PAGE>
<TABLE>
IEC ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 26, 1998 AND JUNE 27, 1997
(in thousands, except per share data)
<CAPTION>
3 MONTHS ENDED 3 MONTHS ENDED
JUNE 26, 1998 JUNE 27, 1997
-------------- ------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net sales $43,125 $62,798
Cost of sales 41,867 54,895
------- -------
Gross profit 1,258 7,903
Selling and administrative expenses 3,195 4,931
Customer bankruptcy write-off - -
------- -------
Operating income(loss) (1,937) 2,972
Interest expense (348) (397)
Other income, net 109 229
------- -------
Income (loss) before income taxes (2,176) 2,804
Provision for(Benefit from)Income taxes (839) 981
------- -------
Net Income(Loss) ($1,337) $1,823
======= =======
Net income (loss) per share:
Basic ($0.18) $0.25
Diluted ($0.18) $0.24
Weighted average number of shares:
Basic 7,539 7,421
Diluted 7,561 7,586
<FN>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these financial statements.
</FN>
</TABLE>
Page 5 of 15
<PAGE>
<TABLE>
IEC ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED JUNE 26, 1998 AND JUNE 27, 1997
(in thousands, except per share data)
<CAPTION>
9 MONTHS ENDED 9 MONTHS ENDED
JUNE 26, 1998 JUNE 27, 1997
-------------- ------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net sales $208,286 $174,423
Cost of sales 194,033 154,724
------- -------
Gross profit 14,253 19,699
Selling and administrative expenses 11,537 11,489
Customer bankruptcy write-off 1,130 -
------- -------
Operating income 1,586 8,210
Interest expense (1,538) (1,170)
Other income, net 113 406
------- -------
Income before income taxes 161 7,446
Provision for Income taxes 62 2,838
------- -------
Net Income $ 99 $4,608
======= =======
Net income per share:
Basic $0.01 $0.62
Diluted $0.01 $0.61
Weighted average number of shares:
Basic 7,537 7,417
Diluted 7,665 7,527
<FN>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these financial statements.
</FN>
</TABLE>
Page 6 of 15
<PAGE>
<TABLE>
IEC ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MOTHS ENDED JUNE 26, 1998 AND JUNE 27, 1997
(in thousands)
<CAPTION>
9 MONTHS 9 MONTHS
ENDED ENDED
JUNE 26, JUNE 27,
1998 1997
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $99 $4,608
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 7,350 7,056
Increase in other assets - (38)
Gain on sale of fixed assets (80) (70)
Amortization of cost in excess of net assets
acquired 355 355
Changes in operating assets and liabilities:
Decrease (Increase)in accounts receivable 27,390 (4,676)
Decrease (Increase) in inventories 20,999 (14,420)
(Increase)Decrease in income taxes receivable (1,185) 757
(Increase)Decrease in other current assets (427) 241
(Decrease)Increase in accounts payable (32,919) 9,145
(Decrease)Increase in accrued payroll and related
expenses (2,484) 1,327
(Decrease)Increase in accrued income taxes (1,887) 1,340
Increase(Decrease)in other accrued expenses 1,315 (38)
------- -------
Net cash provided by operating activities 18,526 5,587
------- -------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment (6,256) (4,377)
Proceeds from sale of property 73 278
Merger related costs (3) (1)
------- --------
Net cash used in investing activities (6,186) (4,100)
------- --------
Cash Flows from Financing Activities:
Exercise of stock options 48 576
Net borrowings under line of credit agreements 13,000 1,000
Line of Credit repayments (10,030) -
Principal payments on long-term debt (11,546) (2,261)
-------- ---------
Net cash provided by(used in)financing activities (8,528) (685)
-------- ---------
Net (decrease)increase in cash and cash equivalents 3,812 802
Cash and cash equivalents at beginning of period 3,921 1,482
-------- ---------
Cash and cash equivalents at end of period $7,733 $2,284
========== ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $1,512 $1,178
========== ==========
Income taxes $3,134 $1,633
========== ==========
Cash received during the period for:
Income taxes $ - $656 -
========== ==========
<FN>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these financial statements.
</FN>
</TABLE>
Page 7 of 15
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IEC ELECTRONICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 26, 1998
Dollar amounts are presented in thousands
(1) Business and Summary of Significant Accounting Policies
Business
- --------
IEC Electronics Corp. (IEC) is an independent contract manufacturer of complex
printed circuit board assemblies and electronic products and systems. IEC offers
its customers a wide range of manufacturing services, on either a turnkey or
consignment basis, including material procurement and control, manufacturing and
test engineering support, statistical quality assurance and complete resource
management.
Consolidation
- -------------
The consolidated financial statements include the accounts of IEC and its
wholly-owned subsidiaries, IEC-Edinburg, Texas Inc. (previously Calidad
Electronics Inc.)and IEC Arab, Alabama Inc. (previously Accutek, Inc.)
(collectively, the Company). All significant intercompany transactions and
accounts have been eliminated.
Revenue Recognition
- -------------------
The Company recognizes revenues upon shipment of product for both turnkey and
consignment contracts.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents include money market and bank account balances. The
Company's cash and cash equivlents are held and managed by institutions which
follow the Company's investment policy. The fair value of the Company's
finanical instruments approximates carrying amounts due to the relatively short
maturies and variable interest rates of the instruments, which approximate
current market interest rates.
Inventories
- -----------
Inventories are stated at the lower of cost (first-in, first-out) or market. The
major classifications of inventories are as follows at period end:
June 26, 1998 September 30, 1997
---------------- ----------------
(Unaudited)
Raw materials $15,617 $38,209
Work-in-process 8,745 7,151
---------------- ----------------
$24,362 $45,360
================ ================
Unaudited Financial Statements
- ------------------------------
The accompaning unaudited financial statements as of June 26, 1998, and for the
three and nine months ended June 26, 1998 have been prepared in accordance with
generally accepted accounting princples for the interm finanica1 information. In
the opinion of management, all adjustments considered necessary for a fair
presenation, which consist solely of normal recurring adjustments have been
included. The accompaning financial statements should be read in conjuction with
the finanical statements and notes thereto included in the Company's September
30, 1997 Annual Report on Form 10-K.
Page 8 of 15
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IEC ELECTRONICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 26, 1998
Dollar amounts are presented in thousands
Earnings per Share
- ------------------
The Company has adopted Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 128 "Earnings per Share" (SFAS No.128), and
restated previously reported earnings per share. Basic earnings per common share
were computed by dividing net income by the weighted average number of shares of
common stock outstanding during the three and nine month periods ending June 26,
1998 and June 27, 1997. Diluted earnings earnings per share were computed by the
weighted number of common shares outstanding and common stock equivalents using
the treasury stock method for the three and nine month periods ending June 27,
1998 and June 27, 1997.
All references to net income per share should be assumed to have been calculated
under SFAS No.128.
The following table sets forth the computation of basic and diluted earnings per
share for the three and nine month periods ended June 26, 1998 and June 27,
1997.
3 MONTHS ENDED 3 MONTHS ENDED
June 26, 1998 June 27, 1997
--------------- ------------------
Net income(loss) - basic $(1,337) $1,823
------ ------
Net income(loss) - diluted $(1,337) $1,823
===== ======
Shares used to compute net income per share:
Basic:
Weighted average Shares 7,539 7,421
====== ======
Diluted:
Weighted average Shares 7,539 7,421
Common stock equivalents-
stock options 22 165
--- --
Total diluted shares 7,561 7,586
===== =====
Net Income(Loss)per share - basic (.18) .25
==== ====
Net Income per(Loss)share - diluted (.18) .24
==== ====
9 MONTHS ENDED 9 MONTHS ENDED
June 26, 1998 June 27, 1997
--------------- ------------------
Net income - basic $99 $4,608
------ ------
Net income - diluted $99 $4,608
====== ======
Shares used to compute net income per share:
Basic:
Weighted average Shares 7,537 7,417
===== =====
Diluted:
Weighted average Shares 7,537 7,415
Common stock equivalents-
stock options 127 110
--- --
Total diluted shares 7,665 7,527
===== =====
Net Income per share - basic .01 .62
==== ====
Net Income per share - diluted .01 .61
==== ====
Page 9 of 15
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IEC ELECTRONICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 26, 1998
Dollar amounts are presented in thousands
Financing Arrangements
- ----------------------
In May 1998, the Company closed on a $65 million credit facility, which replaced
the previous $33 million credit facility. At June 26, 1998, $12,000,000 was
outstanding under the new 3 year credit facility.
Legal Matters
- -------------
There are no material legal proceedings pending to which the Company or any of
its subsidiaries is a party or to which any of the Company's or subsidiaries'
property is subject. To the Company's knowledge, there are no material legal
proceedings to which any director, officer or affiliate of the Company, or any
beneficial owner of more than 5 percent (5%) of Common Stock, or any associate
of any of the foregoing, is a party adverse to the Company or any of its
subsidiaries.
Page 10 of 15
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Management's Discussion and Analysis
------------------------------------
Results of Operations - Three Months Ended June 26, 1998, Compared to the
- --------------------------------------------------------------------------
Three Months Ended June 27, 1997.
- ----------------------------------
Net sales for the three months ended June 26, 1998, were $43.1 million, compared
to $62.8 million in the same quarter a year ago, a decrease of 31.4 percent. The
decrease in sales is primarily due to a general softness in the customer base
and, in particular, the Company's second largest customer which has experienced
production introduction delays and other material issues. Turnkey sales
represented 94 percent of net sales in the third quarter of fiscal 1998 and
1997, respectively.
The Company is focused on new business development as it transitions from its
historical dependency on the personal computer industry and into more diverse
portfolio of customers.
Gross profit as a percentage of sales was 2.9 percent in the three months ended
June 27, 1998, down from 12.6 percent in the comparable period of the prior
year. This decrease is caused by a decline in capacity utilization as a result
of customer demand softness, lower overhead absorption due to a lower
production volume and a less favorable sales mix. The Company is aggressively
implementing cost reductions and has reduced headcount by approximately 1,400
people since January 1, 1998, including nearly 600 employees in the third
quarter.
Selling and administrative expenses decreased to $3.2 million for the three
months ended June 26, 1998, from $4.9 million in the comparable quarter of the
prior fiscal year. This decrease results mainly from a combination of the
elimination of employee bonuses and lower sales commissions. As a percentage of
sales, selling and administrative expenses decreased to 7.4 percent from 7.9
percent in the same quarter of the prior year.
For the quarter, the Company posted a net loss of $1.3 million, or a $.18 loss
per share compared to net income for the second quarter of fiscal 1997 of $1.8
million, or $.24 diluted earnings per share.
Page 11 of 15
<PAGE>
Results of Operations - Nine months Ended June 26, 1998, Compared to Nine
- ------------------------------------------------------------------------
Months Ended June 27, 1997.
- ----------------------------
Net sales for the nine-month period ended June 26, 1998, were $208.3 million, an
increase of 19.4 percent over the first nine months of fiscal 1997. The increase
in sales is primarily due to a higher material content, especially one large job
in the first quarter of fiscal 1998 with an unusually high material content, as
well as a further shift to turnkey sales. Turnkey sales represented 98 percent
and 94 percent of net sales in the first nine months of fiscal 1998 and 1997,
respectively.
Gross profit as a percentage of sales was 6.8 percent for the nine months ended
June 26, 1998, down from 11.3 percent in the comparable period of the prior
year. This decrease results from a decline in capacity utilization in the second
and third quarters of fiscal 1998 compared to the same quarters of fiscal 1997,
as well as the high material content noted in the sales discussion.
Selling and administrative expenses at $11.5 million for the nine
months ended June 26, 1998, were comparable with the same period last year.
This results from higher selling expenses and additional sales salaries offset
by the elimination of management and plant bonuses. As a percentage of sales,
selling and administrative expenses decreased to 5.5 percent from 6.6 percent in
the first nine months of fiscal 1998 and 1997, respectively.
Interest expense of $1.5 million for the nine months ended June 26, 1998, was
higher than the $1.2 million of interest expense in the comparable period last
year as a result of higher average borrowing levels.
For the nine months ending June 26, 1998, net income was $99,000, or $.01
earnings per share compared to net income for the first nine months of fiscal
1997 of $4.6 million, or $.61 earnings per share.
The cost of sales and resulting gross profit as a percentage of sales can vary
widely among different jobs, within both turnkey and consignment sales and are
affected by a number of factors including the mix of consignment and turnkey
contracts, the percentage of material content, the percentage of labor content,
quantities ordered, the complexity of the assemblies, the degree of automation
utilized in the assembly process and the efficiencies achieved by the Company in
managing material procurement costs, inventory levels and manufacturing
processes.
Historically, from time to time, the Company has experienced component shortages
which cause inefficiencies due to frequent customer rescheduling, short
manufacturing lot sizes, production interruptions and retsarts, set-up
duplication and production line downtime. Other rescheduling has been the result
of customers adjusting to their current business conditions.
All of these factors are continually changing and are interrelated. The effect
of each factor cannot be separately determined.
If component shortages should occur in future months, they may have an impact on
the Company's results. However, the scope and magnitude of their aggregate
effects on sales and profits cannot be determined until close to the end of a
given quarter when it becomes known that the short material in question will
not arrive before quarter end and therefore will have a determinable effect on
the resultant mix of production and delivery schedules. Accordingly, these
factors may result in quarter to quarter fluctuations in both future revenues
and earnings.
Page 12 of 15
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Liquidity and Capital Resources
- -------------------------------
Net sales for the month of June 1998 were $15.7 million, representing 36% of the
total net sales for the three month period ending June 26, 1998. The Company
operates on a fiscal quarter consisting of four weeks in the first and second
months and five weeks in the third month.
In May 1998, the Company closed on a $65 million senior credit facility.
At June 26, 1998, $12.2 million was outstanding under this new facility.
The Company believes that its cash balances, funds generated from operations and
its existing credit facilitites will be sufficient for the Company to meet its
capital expenditures and working capital needs for its operations as presently
conducted. As part of its overall business strategy, the Company may from time
to time evaluate acquistion opportunities. The funding for these future
transactions, if any, may require the Company to obtain additional sources of
financing.
The impact of inflation on the Company's operations has been minimal due to the
fact that it is able to adjust its bids to reflect any inflationary increases in
cost.
During fiscal 1997, the Company established a team to coordinate the
identification, evaluation and implementation of changes to computer systems and
software necessary to acheive a year 2000 date conversion. The Company's
objective is to ensure that computer systems and software will recognize and
process the year 2000 and beyond with no effect on customers or disruptions to
business operations. The total cost of this effort and its effect on the
Company's future results of operations is not expected to be material.
Forward-looking Statements
- --------------------------
Except for historical information, statements in this quarterly report are
forward-looking made pursuant to the safe harbor created by the Private
Securities Litigation Reform Act of 1995 and are therefore subject to certain
risks and uncertainties including timing of orders and shipments, availability
of material, product mix and general market conditions that could cause actual
results to differ materially from those projected in the forward looking
statements. Investors should consider the risks and uncertainties discussed in
the September 30, 1997, Form 10K and its other filings with the Securities and
Exchange Commission.
Page 13 of 15
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PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
None.
Item 2 -- Changes in Securities
None.
Item 3 -- Defaults Upon Senior Securities
None.
Item 4 -- Submission of Matters to a Vote of Security Holders
None.
Item 5 -- Other Information
None.
Item 6 -- Exhibits and Reports on Form 8-K
a. Exhibits
10.1 CREDIT AGREEMENT dated as of May 15, 1998 among IEC ELECTRONICS CORP.
and ANY DESIGNATED AFFILIATE BORROWER(S) as "Borrowers" with The
Lenders signatory thereto and THE CHASE MANHATTAN BANK as
Administrative Agent
b. Reports on Form 8-K
None.
Page 14 of 15
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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.
IEC ELECTRONICS CORP.
REGISTRANT
Dated: August 10, 1998 /s/Russell E. Stingel
-----------------------------
Russell E. Stingel
Chief Executive Officer
Dated: August 10, 1998 /s/Diana R. Kurty
------------------------------
Diana R. Kurty
Vice President of Finance,
Chief Financial Officer and
Treasurer
Page 15 of 15
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EXHIBIT 10.1 CREDIT AGREEMENT dated as of May 15, 1998 among IEC ELECTRONICS
CORP. and ANY DESIGNATED AFFILIATE BORROWER(S) as "Borrowers" with The
Lenders signatory thereto and THE CHASE MANHATTAN BANK as
Administrative Agent
CREDIT AGREEMENT
dated as of May 15, 1998
among
IEC ELECTRONICS CORP.
and
ANY DESIGNATED AFFILIATE BORROWER(S)
as "Borrowers"
with
The Lenders signatory hereto
and
THE CHASE MANHATTAN BANK
as Administrative Agent
<PAGE>
==============================================================================
TABLE OF CONTENTS
ARTICLE IDefinitions......................9
SECTION 1.01.Defined Terms...................................................9
SECTION 1.02.Classification of Loans and Borrowings.........................25
SECTION 1.03.Terms Generally................................................25
SECTION 1.04.Accounting Terms; GAAP.........................................26
SECTION 1.05.Currency Equivalents; Currency Fluctuations....................26
ARTICLE IIThe Credits.....................26
SECTION 2.01.Commitments....................................................26
SECTION 2.02.Loans and Borrowings...........................................27
SECTION 2.03.Requests for Revolving Borrowings..............................28
SECTION 2.04.Competitive Bid Procedure......................................29
SECTION 2.05.Extension of Maturity Date.....................................31
SECTION 2.06.Letters of Credit..............................................31
SECTION 2.07.Funding of Borrowings..........................................35
SECTION 2.08.Interest Elections for Revolving Borrowings....................36
SECTION 2.09.Termination and Reduction of Commitments.......................37
SECTION 2.10.Repayment of Loans; Evidence of Debt...........................38
SECTION 2.11.Prepayment of Loans............................................39
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SECTION 2.12Fees............................................................41
SECTION 2.13.Interest.......................................................42
SECTION 2.14.Alternate Rate of Interest.....................................42
SECTION 2.15.Increased Costs................................................43
SECTION 2.16.Break Funding Payments.........................................45
SECTION 2.17.Taxes..........................................................46
SECTION 2.18.Payments Generally; Pro Rata Treatment; Sharing of Set-offs....46
SECTION 2.19.Mitigation Obligations; Replacement of Lenders.................48
SECTION 2.20.European Economic and Monetary Union...........................49
ARTICLE III
Representations, Warranties and Covenants of Borrower.......................52
SECTION 3.01.Existence, Ownership and Legal Power...........................52
SECTION 3.02.Right to Act...................................................53
SECTION 3.03.Approval by Necessary Organizational Action....................53
SECTION 3.04.Financial Statements...........................................53
SECTION 3.05.Litigation; Regulatory Compliance..............................54
SECTION 3.06.Plan Compliance................................................54
SECTION 3.07.Title and Freedom from Liens...................................54
SECTION 3.08.Absence of Default.............................................55
SECTION 3.09.Existing Debts.................................................55
SECTION 3.10.Margin Stock...................................................55
SECTION 3.11.Compliance with Conditions Precedent...........................55
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SECTION 3.12.Relationship between Texas Sub, Alabama Sub and Primary
Borrower..............................................................56
SECTION 3.13. Environmental Matters.........................................56
SECTION 3.14.Taxes..........................................................56
SECTION 3.15.Disclosure.....................................................56
SECTION 3.16.Loan Documents.................................................57
SECTION 3.17.Labor Matters..................................................57
SECTION 3.18.Existing Letters of Credit. ..................................57
SECTION 3.19.Investment and Holding Company Status..........................57
SECTION 3.20.Locations of Assets............................................57
SECTION 3.21.Insurance Program..............................................57
ARTICLE IVConditions......................58
SECTION 4.01.Effective Date.................................................58
SECTION 4.02.Each Credit Event..............................................60
ARTICLE V
Affirmative and Negative Covenants..........................................60
SECTION 5.01.Punctual Payment...............................................60
SECTION 5.02.Financial Information..........................................60
SECTION 5.03.Inspection of Borrowers' Property and Records..................62
SECTION 5.04.Preservation of Borrowers' Existence and Business..............62
SECTION 5.05.Payment of Debts and Obligations...............................63
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SECTION 5.06.Insurance Coverage.............................................63
SECTION 5.07.Litigation.....................................................63
SECTION 5.08.ERISA Compliance...............................................63
SECTION 5.09.FLSA Compliance................................................63
SECTION 5.10.Compliance with All Laws, Etc..................................63
SECTION 5.11.Mergers, Acquisitions, Bulk Sales and Reorganization...........63
SECTION 5.12.Subsidiaries...................................................64
SECTION 5.13.Maintenance of Properties......................................64
SECTION 5.14.Notice to Lenders and Administrative Agent of Default..........64
SECTION 5.15.Consolidated Total Indebtedness to Consolidated Tangible Net
Worth..........................................................64
SECTION 5.16.Leverage Ratio.................................................64
SECTION 5.17.Interest Coverage..............................................64
SECTION 5.18.Consolidated Current Assets to Consolidated Total
Indebtedness...................................................64
SECTION 5.19.Restrictions on Use of Proceeds................................65
SECTION 5.20.Indebtedness...................................................65
SECTION 5.21.Liens..........................................................66
SECTION 5.22.Investments, Loans, Advances, Guarantees and Acquisitions......66
SECTION 5.23.Restricted Payments............................................67
SECTION 5.24.Transactions with Affiliates...................................67
SECTION 5.25.Restrictive Agreements.........................................67
SECTION 5.26.Sale of Assets.................................................68
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SECTION 5.27.Acquisitions...................................................68
SECTION 5.28.Certain Management Changes.....................................69
SECTION 5.29 Location of Assets.............................................69
SECTION 5.30 Intercompany Loans/Payments....................................69
ARTICLE VIGuarantee.......................70
ARTICLE VIIEvents of Default..............72
ARTICLE VIIIThe Administrative Agent.......75
ARTICLE IXMiscellaneous...................77
SECTION 9.01.Notices........................................................77
SECTION 9.02.Waivers; Amendments............................................77
SECTION 9.03.Expenses; Indemnity; Damage Waiver.............................78
SECTION 9.04.Successors and Assigns.........................................79
SECTION 9.05.Survival.......................................................81
SECTION 9.06.Counterparts; Integration; Effectiveness.......................82
SECTION 9.07.Severability...................................................82
SECTION 9.08.Right of Setoff................................................82
SECTION 9.09.Governing Law; Jurisdiction; Consent to Service of Process.....82
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SECTION 9.10.WAIVER OF JURY TRIAL...........................................83
SECTION 9.11.Headings.......................................................83
SECTION 9.12.Confidentiality................................................83
SECTION 9.13.Interest Rate Limitation.......................................84
SECTION 9.14.Judgment Currency. ...........................................84
SECTION 9.15.Affiliate Borrowers/Foreign Currencies .......................84
SECTION 9.16.Insurance Program..............................................85
SCHEDULES
SCHEDULE 1.01AAssignment and Acceptance..... ...............................90
SCHEDULE 2.01Commitments....................................................93
SCHEDULE 3.01Borrower and Subsidiaries Existence and Qualification..........94
SCHEDULE 3.04Material Adverse Effect Since March 27, 1998...................95
SCHEDULE 3.07Mortgages, Liens, Security Interests or Encumbrances...........96
SCHEDULE 3.09Existing Debts.................................................97
SCHEDULE 3.17Labor Matters: Strikes, Lockouts, or Slowdowns.................98
SCHEDULE 3.18Existing Letters of Credit.....................................99
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SCHEDULE 3.20Locations of Assets...........................................100
SCHEDULE 3.21Insurance Program.............................................101
SCHEDULE 4.01(b)Opinion of Primary Borrower Counsel........................102
SCHEDULE 4.01(b-1)Opinion of Counsel for Texas Sub.. ......................104
SCHEDULE 4.01(b-2)Opinion of Counsel for Alabama Sub.......................106
SCHEDULE 4.01(f)Guarantee of Texas Sub.....................................108
SCHEDULE 4.01(g)Primary Guarantee of Alabama Sub...........................119
SCHEDULE 4.01(g-1)Secondary Guarantee of Alabama Sub.......................130
SCHEDULE 4.01(h)Security Agreement of Primary Borrower.....................141
SCHEDULE 4.01(i)
Form of General Security Agreement for Texas Sub and Alabama Sub...........170
SCHEDULE 4.01 (j)
Form of Security Agreement, Including Fixtures, for Alabama Sub............196
SCHEDULE 4.01 (l)Indebtedness to be Repaid.................................222
SCHEDULE 5.22Investments...................................................223
SCHEDULE 5.23Certain Benefits Plans........................................224
SCHEDULE 5.25Restrictive Agreements........................................225
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of May 15, 1998, is among IEC ELECTRONICS
CORP., a Delaware corporation with its principal office located at 105 Norton
Street, Newark, New York 14513 (the "Primary Borrower"), any subsidiary or
subsidiaries of the Primary Borrower that may become an "Affiliate Borrower" in
accordance with this Agreement (each an "Affiliate Borrower"), (the Primary
Borrower and the Affiliate Borrowers being hereinafter collectively referred to
as the "Borrowers"), the Lenders signatory to this Agreement (each a "Lender"),
and THE CHASE MANHATTAN BANK, a New York banking corporation with its principal
office located at 270 Park Avenue, New York, New York 10017 and having a
regional office at One Chase Square, Rochester, New York 14643, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent").
Lenders, Borrowers and the Administrative Agent hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below, subject to the provisions of
Section 2.20:
"ABR", when used in reference to any Loan or Borrowing denominated in
Dollars, refers to whether such Loan, or the Loans comprising such Borrowing,
are bearing interest at a rate determined by reference to the Alternate Base
Rate.
"Acceptable Acquisition" has the meaning set forth in Section 5.27.
"Adjusted LIBO Rate" means, with respect to any Eurocurrency Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period, (b)
multiplied by the Statutory Reserve Rate, if any.
"Administrative Agent" means The Chase Manhattan Bank, in its capacity as
administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
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"Affiliate Borrower" means any Subsidiary of the Primary Borrower as may
be designated as an "Affiliate Borrower" pursuant to Section 9.15.
"Alabama Sub" means IEC Arab, Alabama, Inc., an Alabama corporation that
is a Subsidiary.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Lender, the percentage
of the total Revolving Credit Commitments represented by such Lender's Revolving
Credit Commitment. If any of the Revolving Credit Commitments have terminated,
reduced or expired, the Applicable Percentages shall be based upon the Revolving
Credit Commitments in effect on the date of determination, giving effect to any
assignments.
"Applicable Rate" means, for any day, with respect to any Eurocurrency
Revolving Loan, or with respect to the facility and Letter of Credit fees
payable hereunder, as the case may be, the applicable rate per annum, expressed
as basis points, set forth below after the caption "Eurocurrency Revolving
Spread", "Letter of Credit Fee Rate", or "Facility Fee Rate", as the case may
be, based upon the Leverage Ratio as in effect on such day. The Leverage Ratio
shall be determined and adjusted on the date (each a "Ratio Calculation Date")
five Business Days after the date by which the Primary Borrower is required to
provide the Financial Officer's certificate in accordance with the provisions of
Section 5.02(h). The initial Applicable Rate shall be based on a Financial
Officer's certificate, delivered pursuant to Section 4.01(m), setting forth a
computation of the Leverage Ratio as of the end of the Fiscal Quarter ended
March 27, 1998, and shall remain in effect until the first Ratio Calculation
Date subsequent to June 26, 1998. If the Primary Borrower fails to provide the
Financial Officer's certificate required by Section 5.02(h) on or before any
Ratio Calculation Date, the Applicable Rate shall be based on Tier V from such
Ratio Calculation Date until such time that an appropriate Financial Officer's
certificate is provided, whereupon the Applicable Rate shall be determined by
the Leverage Ratio reflected on such Financial Officer's Certificate, until the
next Ratio Calculation Date. Subject to the preceding sentence, each
determination of the Applicable Rate shall be effective from one Ratio
Calculation Date until the next Ratio Calculation Date. Any adjustment in the
Applicable Rate shall be applicable to all existing Loans and Letters of Credit
as well as any new Loans made or Letters of Credit issued.
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Tier I II III IV V
Leverage Ratio lte1.00gt1.00 lte1.50gt1.50 lte2.00gt2.00 lte2.50gt2.50 lte3.00
Facility Fee Rate 10.0 12.5 15.0 25.0 30.0
Eurocurrency 45.0 65.0 85.0 110 135
Revolving Spread
Letter of Credit 45.0 65.0 85.0 110 135
Fee Rate
lte means less than or equal to
gt means greater than
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Schedule 1.01A or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the Effective
Date to, but excluding, the earlier of the Maturity Date and the date of
termination of the Revolving Credit Commitments.
"Board" means the Board of Governors of the Federal Reserve System of the
U.S..
"Borrower" and "Borrowers" have the meanings set forth in the introductory
paragraph of this Agreement, and where the context requires, the term "Borrower"
shall refer to the Person that borrowed a particular Borrowing and such term
includes any Subsidiary that may become an "Affiliate Borrower" pursuant to
Section 9.15.
"Borrowers' Affiliates" means any Subsidiary and any other Person, now
existing or formed hereafter, that is Controlled by the Primary Borrower.
"Borrowing" means (a) Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurocurrency Loans, as to which a
single Interest Period is in effect, (b) a Competitive Loan or group of
Competitive Loans of the same Type made on the same date and as to which a
single Interest Period is in effect.
"Borrowing Request" means a request by a Borrower for a Revolving
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
remain closed; provided that, (a) when used in connection with a Eurocurrency
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in Dollar and Foreign Currency deposits in the London
interbank market, and (b) when used in connection with either funding under
Section
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2.07(a), or a payment of a Borrowing denominated in a Foreign Currency, the term
"Business Day" shall also exclude any day in which banks are not open in the
principal financial center of the country of such Currency for dealings in
deposits of such Currency.
"Calculation Date" means the last Business Day of each calendar month.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) of shares
representing more than 25% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Primary Borrower, except for
such acquisitions by Heartland Advisors Inc. and its Affiliates, provided that
such acquisitions do not result in ownership of more than 40% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
the Primary Borrower; or (b) occupation of a majority of the seats (other than
vacant seats) on the board of directors of the Primary Borrower by Persons who
were neither (i) nominated by the board of directors of the Primary Borrower nor
(ii) appointed by directors so nominated.
"Change in Law" means (a) the adoption of any law, rule or regulation by
any Governmental Authority after the date of this Agreement, (b) any change in
any law, rule or regulation or in the interpretation or application thereof by
any Governmental Authority after the date of this Agreement or (c) compliance by
any Lender or the Issuing Bank (or, for purposes of Section 2.15(b), by any
lending office of such Lender or by such Lender's or the Issuing Bank's holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Competitive Loans.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitments" means, with respect to each Lender, such Lender's Revolving
Credit Commitment. The initial aggregate amount of the Commitments is
$75,000,000.00 and the initial Commitment of each Lender signatory to this
Agreement is set forth in Schedule 2.01.
"Competitive Bid" means an offer by a Lender to make a Competitive Loan in
accordance with Section 2.04.
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"Competitive Bid Rate" means, with respect to any Competitive Bid, the
Margin or the Fixed Rate, as applicable, offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" means a request by the Borrower for Competitive
Bids in accordance with Section 2.04.
"Competitive Loan" means a Loan made pursuant to Section 2.04.
"Competitive Loan Exposure" means, with respect to any Lender at any time,
the aggregate principal amount at such time of such Lender's Competitive Loans
denominated in Dollars and the U.S. Dollar Equivalent of such Lender's
Competitive Loans denominated in Foreign Currencies.
"Consolidated Funded Indebtedness" means all Funded Indebtedness of the
Primary Borrower and its Consolidated Subsidiaries after eliminating
inter-company items, including any Indebtedness outstanding pursuant to and
under this Agreement, as it appears on the consolidated balance sheet of the
Primary Borrower.
"Consolidated Interest Expense" means for any period for which such amount
is being determined, the interest expense of the Primary Borrower and the
Consolidated Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP, including (i) the amortization of debt discounts to the
extent included in interest expense in accordance with GAAP, (ii) the
amortization of all fees (including fees with respect to Hedging Agreements)
payable in connection with the incurrence of Indebtedness to the extent included
in interest expense in accordance with GAAP and (iii) the portion of any rents
payable under Capital Lease Obligations allocable to interest expense in
accordance with GAAP.
"Consolidated Net Income" means the net income of the Primary Borrower and
its Consolidated Subsidiaries, after taxes and after extraordinary items, as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Worth" means the total of shareholders' equity of the
Primary Borrower and its Consolidated Subsidiaries as it appears on the
consolidated balance sheet of the Primary Borrower.
"Consolidated Subsidiaries" means Subsidiaries whose accounts are
consolidated with the accounts of the Primary Borrower in the Primary Borrower's
consolidated financial statements prepared in accordance with GAAP.
"Consolidated Tangible Net Worth" means Consolidated Net Worth minus any
share capital discount and expense, any unamortized discount and expense on
indebtedness, any write-up of assets, any excess of cost over market value of
investments, any development, pre-operating, pre-production, and start-up
expenses, goodwill, and any other intangible assets, to the extent included in
Consolidated Net Worth.
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"Consolidated Total Indebtedness" means the aggregate amount of
Indebtedness of the Primary Borrower and its Consolidated Subsidiaries, after
eliminating inter-company items, that appears on the consolidated balance sheet
of the Primary Borrower.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Currency" means either Dollars or a Foreign Currency.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Dollars" or "$" refers to lawful money of the U.S..
"EBITDA" means the sum of the following items measured for the twelve (12)
month period ending on the last day of each Fiscal Quarter:
(i) Consolidated Net Income calculated after eliminating
extraordinary gains or losses and unusual items, to the
extent included in the determination of Consolidated Net
Income, plus
(ii) depreciation, amortization, and all other non-cash charges,
plus
(iii) income taxes to the extent they reduce Consolidated Net
Income,
plus
(iv) Consolidated Interest Expense.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, or the management, release or threatened release of any Hazardous
Material.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Primary Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
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"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with a Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Primary Borrower or any of its ERISA Affiliates
of any liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by the Primary Borrower or any ERISA Affiliate from the
PBGC or a plan administrator of any notice relating to an intention to terminate
any Plan or Plans or to appoint a trustee to administer any Plan; (f) the
incurrence by the Primary Borrower or any of its ERISA Affiliates of any
liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Primary Borrower or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Primary Borrower or any ERISA Affiliate of any notice, concerning the imposition
of Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
"Eurocurrency", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate (or, in the case of
a Competitive Loan, the LIBO Rate).
"Event of Default" has the meaning assigned to such term in Article VII.
"Exchange Rate" means, with respect to any currency other than Dollars on
any date, the rate at which such currency may be exchanged into Dollars, as set
forth on such date on the applicable Reuters currency page. In the event that
such rate does not appear on the applicable Reuters currency page, the Exchange
Rate with respect to such currency shall be determined by reference to such
other publicly available service for displaying exchange rates as may be agreed
upon by the Administrative Agent and the Primary Borrower or, in the absence of
such agreement, such Exchange Rate shall instead be the Administrative Agent's
spot rate of exchange in the London interbank market or other market where the
Administrative Agent's foreign currency exchange operations in respect of such
currency are then being conducted, at or about 10:00 a.m., local time, on such
date for the purchase of Dollars with such currency for delivery two Business
Days later; provided, however, that if at the time of any such determination,
for any reason, no such spot rate is being quoted, the Administrative Agent may
use any reasonable method it deems appropriate to determine such rate, and such
determination shall be conclusive absent manifest error.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of any
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Borrower hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income by the U.S., or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the U.S. or any similar tax imposed by any other
jurisdiction in which any Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by any Borrower under
Section 2.19(b)), any withholding tax that is imposed by the U.S. on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender's failure to comply with Section 2.17(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from any Borrower with respect to such withholding tax
pursuant to Section 2.17(a).
"Facility Obligations" means any and all amounts owed by any Borrower to
any Lender under this Agreement or under any other Loan Document, including the
principal and interest owed on any Loan, reimbursement obligations related to LC
Disbursements, all fees and all expenses.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer of the Primary
Borrower.
"Fiscal Quarter" means each fiscal quarter-year period of the Primary
Borrower, consisting of periods of 13 weeks, the first of which shall begin on
the first day of each Fiscal year and the remainder of which shall begin on the
day following the last day of the preceding period, provided that the fourth
such period of each Fiscal Year shall end on the last day of the Fiscal Year.
"Fiscal Year" means the fiscal year of the Primary Borrower, which is a
twelve (12) month period commencing October 1 of each year and ending on
September 30 of the next calendar year.
"Fixed Rate" means, with respect to any Competitive Loan (other than a
Eurocurrency Competitive Loan), the fixed rate of interest per annum specified
by the Lender making such Competitive Loan in its related Competitive Bid.
"Fixed Rate Loan" means a Competitive Loan bearing interest at a Fixed
Rate.
"Foreign Currency" means any Currency, other than Dollars, that may be
designated as a "Foreign Currency" in Schedule 2.01; and when used in reference
to a Loan or Borrowing, such term refers to a Loan or Borrowing denominated in a
Foreign Currency.
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"Foreign Lender" means any Lender that is organized or incorporated under
the laws of a jurisdiction other than that in which the Borrower of one or more
Loans from such Lender is located. For purposes of this definition, the U.S.,
each State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
"Funded Indebtedness" means any outstanding indebtedness of a Person for
borrowed money, including all Indebtedness of the Primary Borrower and its
Subsidiaries to the Lenders and other financial institutions, domestic or
foreign, including all secured and unsecured notes payable, all industrial
revenue bonds, all Capital Lease Obligations and other similar debt obligations
and the current maturities thereof, but excluding all trade accounts payable,
customer advances, accrued expenses, income and other taxes payable, deferred
income and other taxes and accrued pension liabilities.
"GAAP" means generally accepted accounting principles in the U.S..
"Governmental Authority" means the government of the U.S., any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, including any
governing body of the European Union.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(a "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation of a primary obligor; provided, that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary course of
business.
"Guarantor" means a Person liable pursuant to a Guarantee of any of the
Facility Obligations, and includes each Initial Guarantor.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
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"Hedging Agreement" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" means and includes in respect of any Person, without
duplication, (a) all items which in accordance with GAAP consistently applied
would be included on the liability side of a balance sheet as at the date as of
which Indebtedness is to be determined, excluding capital stock, capital and
earned surplus, surplus reserves and deferred credits, (b) endorsements and
other similar contingent obligations in respect of indebtedness of others, (c)
indebtedness secured by any Lien existing on property owned by such Person,
whether or not the indebtedness secured thereby shall have been assumed, (d) all
obligations arising under any conditional sale, lease or title retention
agreement covering property acquired or used by such Person or any Subsidiaries,
including Capital Lease Obligations, (e) the full amount of all indebtedness or
other obligations of others with respect to which such Person is obligated
pursuant to Guarantees, (f) all obligations of such Person, contingent or
otherwise, as an account party in respect of letters of credit and letters of
guarantee, and (g) all obligations of such Person, contingent or otherwise, in
respect of bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Initial Guarantor" has the meaning set forth in the first paragraph of
Article VI.
"Interest Election Request" means a request by the Borrower to convert or
continue a Revolving Borrowing in accordance with Section 2.08.
"Interest Payment Date" means (a) with respect to any ABR Loan (other than
a Swingline Loan), the last day of each March, June, September and December, (b)
with respect to any Eurocurrency Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurocurrency Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period
and (c) with respect to any Fixed Rate Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Fixed Rate Borrowing with an Interest Period of more than 90 days' duration
(unless otherwise specified in the applicable Competitive Bid Request), each day
prior to the last day of such Interest Period that occurs at intervals of 90
days' duration after the first day of such Interest Period, and any other dates
that are specified in the applicable Competitive Bid Request as Interest Payment
Dates with respect to such Borrowing.
"Interest Period" means (a) with respect to any Eurocurrency Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect,
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(b) with respect to any Fixed Rate Borrowing, the period (which shall not be
less than thirty (30) days or more than one hundred eighty (180) days)
commencing on the date of such Borrowing and ending on the date specified in the
applicable Competitive Bid Request; provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of a
Eurocurrency Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day, and (ii) any Interest Period pertaining to a
Eurocurrency Borrowing that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as the
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.06(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"LC Exposure" means, at any time, the sum at such time of (a) the
aggregate undrawn amount of all outstanding Letters of Credit denominated in
Dollars, (b) the U.S. Dollar Equivalent of the aggregate undrawn amount of all
outstanding Letters of Credit denominated in a Foreign Currency, (c) the
aggregate amount of all LC Disbursements denominated in Dollars that have not
yet been reimbursed by or on behalf of the applicable Borrower and (d) the U.S.
Dollar Equivalent of the aggregate amount of all LC Disbursements denominated in
a Foreign Currency that have not yet been reimbursed by or on behalf of the
applicable Borrower.
"Lenders" means the Persons listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance.
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
"Leverage Ratio" at any time means the ratio of Consolidated Funded
Indebtedness as of the last day of the most recently completed Fiscal Quarter to
EBITDA for the twelve (12) month period ending on such day.
"LIBO Rate" means, (a) with respect to any Eurocurrency Borrowing
denominated in a Currency other than Irish Pounds, for any Interest Period, the
rate appearing on Page 3750 or Page 3740, as applicable, of the Telerate Service
(or on any successor or substitute pages of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable
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to those currently provided on such pages of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to deposits of the relevant Currency in the London
interbank market) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period, as the rate for deposits of
the relevant Currency with a maturity comparable to such Interest Period,
provided, that if such rate is not available at such time for any reason, then
the "LIBO Rate" with respect to such Eurocurrency Borrowing for such Interest
Period shall be the rate at which deposits of the relevant Currency for a
maturity comparable to such Interest Period are offered by the principal London
office of the Administrative Agent, in an amount comparable to the principal
amount of the Administrative Agent's share of the Borrowing to which such
Interest Period applies, in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period; and (b) with respect to any Eurocurrency
Borrowing denominated in Irish Pounds, for any Interest Period, the rate
appearing on the Reuters Screen DIBO Page at approximately 11:00 a.m., Dublin
time, two Business Days prior to the commencement of such Interest Period, as
the Dublin interbank offered rate for deposits in Irish Pounds with a maturity
comparable to such Interest Period (or if more than one rate is specified on the
Reuters Screen DIBO Page, the applicable rate shall be the arithmetic mean of
all such rates), provided, that if such rate is not available at such time for
any reason, then the "LIBO Rate" with respect to such Eurocurrency Borrowing for
such Interest Period shall be the rate at which deposits of Irish Pounds for a
maturity comparable to such Interest Period are offered by the principal Dublin
office of the Administrative Agent, in an amount comparable to the principal
amount of the Administrative Agent's share of the Borrowing to which such
Interest Period applies, in immediately available funds in the Dublin interbank
market at approximately 11:00 a.m., Dublin time, two Business Days prior to the
commencement of such Interest Period. For purposes of Clause (b) above, "Reuters
Screen DIBO Page" means the display designated as page "DIBO" on the Reuters
Monitor Money Rates Service (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to deposits of Irish Pounds in
the Dublin interbank market).
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
"Loan Documents" means this Agreement, each Security Agreement, and each
Guarantee of any of the Facility Obligations that may hereafter be in effect.
"Loans" means the loans made by the Lenders to the Borrowers pursuant to
this Agreement.
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"Margin" means, with respect to any Competitive Loan bearing interest at a
rate based on the LIBO Rate, the marginal rate of interest, if any, to be added
to or subtracted from the LIBO Rate to determine the rate of interest applicable
to such Loan, as specified by the Lender making such Loan in its related
Competitive Bid.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Primary Borrower or any of the Subsidiaries, (b) the ability of any Borrower
or any Subsidiary to perform any of its obligations under this Agreement or any
of the other Loan Documents or (c) the rights of or benefits available to the
Lenders under this Agreement or any of the other Loan Documents.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Primary Borrower and its Subsidiaries in an aggregate
principal amount exceeding $500,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of the Primary Borrower
or any Subsidiary in respect of any Hedging Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that the
Primary Borrower or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.
"Maturity Date" means March 31, 2001, unless extended pursuant to Section
2.05.
"Moody's" means Moody's Investor Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any Prepayment Event the U.S. Dollar
Equivalent as of the date of receipt of (a) the cash proceeds received by the
Primary Borrower or any Subsidiary in respect of such event including (i) any
cash subsequently received in respect of any proceeds or consideration
originally received in a form other than cash, but only as and when such cash is
received, (ii) in the case of a casualty, the amount of insurance proceeds, and
(iii) in the case of a condemnation or similar event, the amount of condemnation
awards and similar payments, net of (b) the sum of (i) all fees and
out-of-pocket expenses paid or payable by the Primary Borrower or such
Subsidiary to third parties (other than Affiliates of the Primary Borrower) in
connection with such event (which amounts may be reasonably estimated to the
extent not then known), or (ii) in the case of a sale or other disposition of an
asset (including pursuant to a casualty or condemnation), the amount of all
payments required to be made by the Primary Borrower or such Subsidiary as a
result of such event to repay Indebtedness (other than Loans) secured by such
asset or otherwise subject to mandatory prepayment as a result of such event,
and (iii) the amount of all taxes paid (or reasonably estimated to be payable)
by the Primary Borrower or such Subsidiary during the year that such event
occurred or the next succeeding year, and the amount of any reserves established
by the Primary Borrower or such Subsidiary to fund contingent liabilities
reasonably estimated to be payable, in each case that are directly attributable
to such event (as determined reasonably and in good faith by the chief financial
officer of the Primary Borrower); provided, however, that (x) any excess of
estimated fees and expenses under clause (b)(i) over the
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actual amounts thereof shall constitute Net Proceeds and be deemed to have been
received on the date such excess can be determined and (y) any excess of
estimated taxes or contingency reserves under clause (b)(iii) over the actual
amounts of taxes referred to in such clause or contingent liabilities payable
shall constitute Net Proceeds and be deemed to have been received at the end of
the period referred to in such clause, in the case of taxes, and at the time any
such excess portion of the contingency reserve is reversed (and in the amount of
such reversal), in the case of contingency reserves.
"Other Subsidiary" means a Subsidiary that is not an Affiliate Borrower.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement and under any other
Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.05;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 30 days or are being contested in compliance with Section 5.05;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary
course of business; and
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Primary Borrower or any
Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
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(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the U.S. (or by any
agency thereof to the extent such obligations are backed by the full faith
and credit of the U.S.), in each case maturing within one year from the
date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the U.S. or any State thereof which has a
combined capital and surplus and undivided profits of not less than
$500,000,000; and
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in
clause (c) above.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan (a) (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Primary
Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA, or (b) maintained by a Borrower or any Subsidiary organized,
incorporated or existing under the laws of a country other than the U.S. which
is subject to funding standards that are similar to those found in ERISA under
the laws of the Governmental Authority having jurisdiction over such plan.
"Prepayment Event" means:
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of the Primary
Borrower or any Subsidiary, other than (i) dispositions of inventory in
the ordinary course of business or (ii) dispositions in the ordinary
course of business of assets other than inventory, to the extent that all
such dispositions during any Fiscal Year result in aggregate Net Proceeds
less than Three Million Dollars ($3,000,000); or
(b) any casualty or casualties or other insured damages to, or any
takings under power of eminent domain or by condemnation or similar
proceeding of, any properties or assets of the Primary Borrower and its
Subsidiaries, to the extent that (i) Net Proceeds therefrom have been
received during or prior to any Fiscal Year, (ii) such Net Proceeds have
not been applied to repair, restore or functionally replace such
properties or assets within
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two hundred seventy (270) days after such Net Proceeds were received and
(iii) the total amount of such unapplied Net Proceeds with respect to
which such 270 day period expired during such Fiscal Year exceeds
$500,000. For purposes of this paragraph, Net Proceeds shall be deemed to
have been applied during any such two hundred seventy (270) day period if,
as of the expiration thereof, the required repair, restoration or
replacement has been commenced and it continues pursuant to a written
agreement therefor. The amount of Net Proceeds so applied as of a given
date shall be deemed to be the amount actually applied prior to such date
plus the amount remaining to be paid pursuant to such written agreement.
If the amount actually paid under any such written agreement is finally
determined to be less than the amount stipulated under such agreement, for
whatever reason, the amount of Net Proceeds deemed to have been applied
pursuant to the preceding sentence shall be recomputed as of the date the
actual amount paid is finally determined.
"Primary Borrower" means IEC Electronics Corp.
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Register" has the meaning set forth in Section 9.04(c).
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, 100% of the Lenders at such time.
"Reset Date" shall have the meaning assigned to such term in Section 1.05.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any shares of any class of
capital stock of the Primary Borrower or any Subsidiary, or any payment (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of capital stock of the Primary
Borrower or any Subsidiary or any option, warrant or other right to acquire any
such shares of capital stock of the Primary Borrower or any Subsidiary.
"Revolving Credit Commitment" means, with respect to each Lender, the
commitment of such Lender, expressed in Dollars, to make Revolving Loans and to
acquire participations in Letters of Credit hereunder, as such commitment may be
(a) permanently reduced from time to time pursuant to Section 2.09 and Section
2.11, and (b) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 9.04. The initial amount of each Lender's
Revolving Credit Commitment is set forth on Schedule 2.01, or in the Assignment
and Acceptance
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pursuant to which such Lender shall have assumed its Commitment, as applicable.
The initial aggregate amount of the Revolving Credit Commitments is $65,000,000.
"Revolving Credit Exposure" means, at any time, the sum of the outstanding
principal amount of Revolving Loans denominated in Dollars, the U.S. Dollar
Equivalent of Revolving Loans denominated in Foreign Currencies and the LC
Exposure at such time. The Revolving Credit Exposure of any Lender at any time
shall be the sum of the outstanding principal amount of such Lender's Revolving
Loans denominated in Dollars, the U.S. Dollar Equivalent of such Lender's
Revolving Loans denominated in Foreign Currencies and such Lender's Applicable
Percentage of the LC Exposure at such time.
"Revolving Credit Sublimit" means, with respect to any Affiliate Borrower,
its Revolving Credit Sublimit, if any, expressed in Dollars, set forth on
Schedule 2.01.
"Revolving Loan" means a Loan designated as such and made pursuant to
Section 2.03.
"S&P" means Standard & Poor's.
"Security Agreements" means the Security Agreements executed by the
Primary Borrower, Texas Sub and Alabama Sub pursuant to Sections 4.01(h), (i)
and (j) and such other security agreements as may hereafter be designated as
such by the Primary Borrower and the Administrative Agent, with the consent of
all of the Lenders.
"Statutory Reserve Rate" means with respect to any Currency, a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the maximum
reserve, liquid asset or similar percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by any
Governmental Authority of the United States or of the jurisdiction of such
Currency or in which any subject Loans in such Currency are made to which banks
in such jurisdiction are subject for any category of deposits or liabilities
customarily used to fund loans in such Currency or by reference to which
interest rates applicable to Loans in such Currency are determined. Such
reserve, liquid asset or similar percentages shall, in the case of Dollars,
include those imposed pursuant to Regulation D (and for purposes of Regulation
D, Eurocurrency Loans shall be deemed to constitute Eurocurrency Liabilities).
Loans shall be deemed to be subject to such reserve requirements without benefit
of or credit for proration, exemptions or offsets that may be available from
time to time to any Lender under Regulation D or any other applicable law, rule
or regulation. The Statutory Reserve Rate shall be adjusted automatically on and
as of the effective date of any change in any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the
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ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, Controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.
"Subsidiary" means any subsidiary of the Primary Borrower.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Texas Sub" means IEC Electronics - Edinburg, Texas, Inc., a Texas
corporation that is a Subsidiary.
"Transactions" means the execution, delivery and performance by the
Borrowers of this Agreement and by the parties to the other Loan Documents, the
borrowing of Loans, the use of the proceeds thereof and the issuance of Letters
of Credit hereunder.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate, the Alternate Base Rate or,
in the case of a Competitive Loan or Borrowing, the LIBO Rate or a Fixed Rate.
"U.S." means the United States of America.
"U.S. Dollar Equivalent" means, on any date of determination, with respect
to any amount in any Foreign Currency, the equivalent in Dollars of such amount,
determined by the Administrative Agent using the Exchange Rate with respect to
such Foreign Currency then in effect as determined pursuant to Section 1.05.
"Warehoused Inventory" means inventory (i) of the Primary Borrower that is
not located at 105 Norton Street, Newark, New York, or of Texas Sub that is not
located at 1920 S.E. Industrial Park Drive, Edinburg, Texas or of Alabama Sub
that is not located at 350 11th Street S.W., Arab, Alabama, (ii) that is located
at a warehouse, pursuant to a written agreement, which warehouse is not owned or
leased in its entirety by the Primary Borrower, Texas Sub or Alabama Sub, and
(iii) that is so located for the purpose of providing just in time delivery of
such inventory to a customer which is not an Affiliate of the Primary Borrower.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g., a "Eurocurrency Loan") or by Class and Type (e.g., a
"Eurocurrency Revolving Loan"). Borrowings also may be classified and referred
to by Class (e.g., a "Revolving Borrowing") or by
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Type (e.g., a "Eurocurrency Borrowing") or by Class and Type (e.g., a
"Eurocurrency Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, and Schedules shall be construed to refer to Articles and Sections of,
and Schedules to, this Agreement and (e) the words "asset" and "property" shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed, and all financial information and reports provided pursuant to this
Agreement shall be prepared, in accordance with GAAP, as in effect from time to
time; provided that, if the Primary Borrower notifies the Administrative Agent
that the Primary Borrower requests an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or in
the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Primary Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.
SECTION 1.05. Currency Equivalents; Currency Fluctuations. Not later than
1:00 p.m., New York City time, on each Calculation Date, the Administrative
Agent shall (i) determine the Exchange Rate as of such Calculation Date with
respect to each Foreign Currency and (ii) give notice thereof to the Primary
Borrower and the Lenders. The Exchange Rates so determined shall become
effective on the first Business Day immediately following the relevant
Calculation Date (each a "Reset Date"), shall remain effective until the next
succeeding Reset Date and shall during the period of their effectiveness be
employed in making any computation of Currency equivalents required to be made
under this Agreement (other than any computation required under Section 9.14).
Not later than 5:00 p.m., New York City time, on the date of each Borrowing, on
the date of each issuance of any Letter of Credit and on the date of each
reduction under Section 2.09 or prepayment under Section 2.11 involving any
Foreign Currency, the Administrative Agent shall (i) determine the U.S. Dollar
Equivalents, based on the Exchange Rates in effect as provided in the
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preceding sentence, of each Foreign Currency Loan and each Letter of Credit and
LC Disbursement then outstanding denominated in a Foreign Currency (after giving
effect to any Foreign Currency Loan made or repaid on such date and any Letter
of Credit or LC Disbursement denominated in a Foreign Currency issued, retired,
made or repaid, as applicable, on such date) and (ii) notify the Primary
Borrower and the Lenders of the results of such determination.
ARTICLE II
The Credits
SECTION 2.01. Commitments.
(a) Subject to the terms and conditions set forth herein, each
Lender agrees to make Revolving Loans to any Borrower in any Currency from time
to time during the Availability Period; provided, that no Borrowing shall be
made hereunder that would result in (i) the Revolving Credit Exposure of such
Lender exceeding (or further exceeding) such Lender's Revolving Credit
Commitment, the initial amount of which is set forth in Schedule 2.01, or (ii)
the sum of the Revolving Credit Exposure and the total of all Competitive Loan
Exposures exceeding (or further exceeding) the total Revolving Credit
Commitments. Each Revolving Borrowing shall be made on a pro rata basis by the
Lenders based upon their respective Applicable Percentages. Within the foregoing
limits and subject to the terms and conditions set forth herein, any Borrower
may borrow, prepay and reborrow Revolving Loans.
(b) (i) No Affiliate Borrower shall have the right to borrow any
Revolving Loan or Competitive Loan that would cause the sum of the portions of
the total Revolving Credit Exposure and the total Competitive Loan Exposures
outstanding to such Borrower to exceed such Borrower's Revolving Credit
Sublimit, as set forth in Schedule 2.01.
(ii)For purposes of clause (i) above, if, at any time, the
proceeds of any Loans are advanced, loaned or contributed as equity to any
Affiliate Borrower by any other Borrower, either directly or through an Other
Subsidiary, and such proceeds have not been repaid or returned by such Affiliate
Borrower, such Affiliate Borrower's unused Revolving Credit Sublimit shall be
deemed reduced by the amount that has not been repaid or returned, as if such
Affiliate Borrower had borrowed a Revolving Loan in that amount directly from
the Lenders.
SECTION 2.02. Loans and Borrowings.
(a) Each Revolving Loan shall be made as part of a Borrowing
consisting of such Loans made by the Lenders ratably in accordance with their
respective Applicable Percentages.
Each Competitive Loan shall be made in accordance with the procedures set forth
in Section 2.04. The failure of any Lender to make any Loan required to be made
by it shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments and Competitive Bids of the Lenders are several and no
Lender shall be responsible for any other Lender's failure to make Loans as
required.
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(b) Subject to Sections 2.14 and 2.15, (i) each Revolving Borrowing
of Dollars shall be comprised entirely of ABR Loans or Eurocurrency Loans as a
Borrower may request in accordance herewith, (ii) each Revolving Borrowing of a
Foreign Currency shall be comprised entirely of Eurocurrency Loans, and (iii)
each Competitive Borrowing shall be comprised entirely of Eurocurrency Loans or
Fixed Rate Loans as a Borrower may request in accordance herewith. Each Lender
at its option may make any Eurocurrency Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan; provided that any exercise
of such option shall not affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurocurrency
Revolving Borrowing, such Borrowing shall be in an aggregate amount that (i) if
such Borrowing is denominated in Dollars, is an integral multiple of Five
Hundred Thousand Dollars ($500,000.00) and not less than Five Hundred Thousand
Dollars ($500,000.00) and (ii) if such Borrowing is not denominated in Dollars,
is in an aggregate principal amount the U.S. Dollar Equivalent of which is not
less than $500,000. At the time that each ABR Revolving Borrowing is made, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $200,000; provided that an ABR Revolving Borrowing
may be in a lesser aggregate amount that is equal to the entire unused balance
of the total Revolving Credit Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.06(e). Each
Competitive Borrowing shall be in an aggregate amount that is an integral
multiple of One Million Dollars ($1,000,000.00) and not less than Five Million
Dollars ($5,000,000.00). Borrowings of more than one Type and Class may be
outstanding at the same time; provided that there shall not at any time be more
than a total of ten Eurocurrency Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, a
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, a Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurocurrency Borrowing, not later than 11:00
a.m., New York City time, four Business Days (three Business Days for Borrowings
denominated in Dollars) before the date of the proposed Borrowing, or (b) in the
case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the
Business Day of the proposed Borrowing; provided that any such notice of an ABR
Revolving Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.06(e) may be given not later than 10:00 a.m., New York
City time, on the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Borrower thereof. Each
such telephonic and written Borrowing Request shall specify the following
information:
(i) the identity of the Borrower, the Type of Borrowing, and the
aggregate amount and the Currency of the requested Borrowing;
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(ii) the date of such Borrowing, which shall be a Business Day;
(iii) if the Borrowing Currency is Dollars, whether such Borrowing
is to be an ABR Borrowing or a Eurocurrency Borrowing;
(iv) in the case of a Eurocurrency Borrowing, the initial
Interest Period to be applicable thereto, which shall be a
period contemplated by the definition of the term "Interest
Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the
requirements of Section 2.07.
If no election as to the Type of Borrowing of Dollars is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurocurrency Borrowing, then the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. If no election as to Currency is specified with respect to any
Eurocurrency Revolving Borrowing, then the applicable Borrower shall be deemed
to have selected Dollars. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender's Loan to be made as
part of the requested Borrowing.
SECTION 2.04. Competitive Bid Procedure.
(a) Subject to the terms and conditions set forth herein, from time
to time during the Availability Period any Borrower may request Competitive Bids
and may (but shall not have any obligation to) accept Competitive Bids and
borrow Competitive Loans; provided that (i) the sum of the Revolving Credit
Exposure plus the total Competitive Loan Exposures at any time shall not exceed
the total Revolving Credit Commitments, (ii) with respect to any Affiliate
Borrower, the sum of the portions of the Revolving Credit Exposure and of the
total of all Competitive Loan Exposures that are attributable to such Affiliate
Borrower at any time shall not exceed such Affiliate Borrower's Revolving Credit
Sublimit, as computed in accordance with Section 2.01 (b) and (iii) the sum of
the Competitive Loan Exposures of all Lenders at any time shall not exceed
$20,000,000. To request Competitive Bids, a Borrower shall notify the
Administrative Agent of such request by telephone, in the case of a Eurocurrency
Borrowing, not later than 11:00 a.m., New York City time, five Business Days
(four Business Days for Borrowings denominated in Dollars) before the date of
the proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later
than 10:00 a.m., New York City time, one Business Day before the date of the
proposed Borrowing; provided that the Borrower may submit up to (but not more
than) 2 Competitive Bid Requests on the same day, but a Competitive Bid Request
shall not be made within six Business Days (five Business Days for Borrowings
denominated in Dollars) after the date of any previous Competitive Bid Request,
unless any and all such previous Competitive Bid Requests shall have been
withdrawn or all Competitive Bids received in response thereto rejected. Each
such telephonic Competitive Bid Request shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Competitive Bid
Request in a form approved by the Administrative Agent and signed by the
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Borrower. Each such telephonic and written Competitive Bid Request shall
specify the following information:
(i) the identity of the Borrower and the aggregate amount and
Currency of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a Eurocurrency Borrowing or
a Fixed Rate Borrowing;
(iv) the Interest Period to be applicable to such Borrowing,
which shall be a period contemplated by the definition of
the term "Interest Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the
requirements of Section 2.07.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section, the Administrative Agent shall notify the Lenders of the details
thereof by telecopy, inviting the Lenders to submit Competitive Bids.
(b) Each Lender may (but shall not have any obligation to) make one
or more Competitive Bids to the requesting Borrower in response to a Competitive
Bid Request. Each Competitive Bid by a Lender must be in a form approved by the
Administrative Agent and must be received by the Administrative Agent by
telecopy, in the case of a Eurocurrency Competitive Borrowing, not later than
9:30 a.m., New York City time, three Business Days before the proposed date of
such Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later
than 9:30 a.m., New York City time, on the Business Day of the proposed date of
such Competitive Borrowing. Competitive Bids that do not conform substantially
to the form approved by the Administrative Agent may be rejected by the
Administrative Agent, and the Administrative Agent shall notify the applicable
Lender as promptly as practicable. Each Competitive Bid, including each
Competitive Bid that is submitted when more than one Competitive Bid Request is
outstanding, shall specify (i) the principal amount (which in the case of a
Competitive Bid in respect of Competitive Loans denominated in Dollars shall be
a minimum of Five Million Dollars ($5,000,000.00) and an integral multiple of
One Million Dollars ($1,000,000.00) and in the case of a Competitive Bid in
respect of Competitive Loans denominated in a Foreign Currency shall have a
minimum U.S. Dollar Equivalent which is not less than $5,000,000 and which may
equal the entire principal amount of the Competitive Borrowing requested by the
Borrower) of the Competitive Loan or Loans that the Lender is willing to make,
(ii) the Competitive Bid Rate or Rates at which the Lender is prepared to make
such Loan or Loans (expressed as a percentage rate per annum in the form of a
decimal to no more than four decimal places) and (iii) the Interest Period
applicable to each such Loan and the last day thereof.
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(c) The Administrative Agent shall promptly notify the Borrower by
telecopy of the Competitive Bid Rate and the principal amount specified in each
Competitive Bid and the identity of the Lender that shall have made such
Competitive Bid.
(d) Subject only to the provisions of this paragraph, the Borrower
may accept or reject any Competitive Bid. The Borrower shall notify the
Administrative Agent by telephone, confirmed by telecopy in a form approved by
the Administrative Agent, whether and to what extent it has decided to accept or
reject each Competitive Bid, in the case of a Eurocurrency Competitive
Borrowing, not later than 11:00 a.m., New York City time, three Business Days
before the date of the proposed Competitive Borrowing, and in the case of a
Fixed Rate Borrowing, not later than 11:00 a.m., New York City time, on the
Business Day of the proposed date of the Competitive Borrowing; provided that
(i) the failure of the Borrower to give such notice shall be deemed to be a
rejection of each Competitive Bid, (ii) the Borrower shall not accept a
Competitive Bid made at a particular Competitive Bid Rate if the Borrower
rejects a Competitive Bid made at a lower Competitive Bid Rate, (iii) the
aggregate amount of the Competitive Bids accepted by the Borrower shall not
exceed the aggregate amount of the requested Competitive Borrowing specified in
the related Competitive Bid Request, (iv) to the extent necessary to comply with
clause (iii) above, the Borrower may accept Competitive Bids at the same
Competitive Bid Rate in part, which acceptance, in the case of multiple
Competitive Bids at such Competitive Bid Rate, shall be made pro rata in
accordance with the amount of each such Competitive Bid, and (v) except pursuant
to clause (iv) above, no Competitive Bid shall be accepted for a Competitive
Loan unless such Competitive Loan is, if denominated in Dollars, in a minimum
principal amount of Five Million Dollars ($5,000,000.00) and an integral
multiple of One Million Dollars ($1,000,000.00) or, if denominated in a Foreign
Currency, an amount the U.S. Dollar Equivalent of which is not less than
$5,000,000; provided further that if a Competitive Loan must be in an amount
less than $5,000,000 or the U.S. Dollar Equivalent thereof in the applicable
Currency because of the provisions of clause (iv) above, such Competitive Loan
may be for a minimum of One Million Dollars ($1,000,000.00) or the U.S. Dollar
Equivalent thereof in the applicable Currency or any integral multiple thereof,
and in calculating the pro rata allocation of acceptances of portions of
multiple Competitive Bids at a particular Competitive Bid Rate pursuant to
clause (iv) the amounts shall be rounded up or down to integral multiples of One
Million Dollars ($1,000,000.00), or the U.S. Dollar Equivalent thereof in the
applicable Currency, in a manner determined by the Borrower. A notice given by
the Borrower pursuant to this paragraph shall be irrevocable.
(e) The Administrative Agent shall promptly notify each bidding
Lender by telecopy whether or not its Competitive Bid has been accepted (and, if
so, the amount and Competitive Bid Rate so accepted), and each successful bidder
will thereupon become bound, subject to the terms and conditions hereof, to make
the Competitive Loan in respect of which its Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a Competitive
Bid in its capacity as a Lender, it shall submit such Competitive Bid directly
to the Borrower at least one quarter of an hour earlier than the time by which
the other Lenders are required to submit their Competitive Bids to the
Administrative Agent pursuant to paragraph (b) of this Section.
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SECTION 2.05. Extension of Maturity Date.
The Primary Borrower shall have the option to extend the Maturity
Date for an additional year, to March 31, 2002, by giving written notice to the
Administrative Agent after September 1, 2000 and before October 1, 2000;
provided, however, that the Maturity Date shall not be so extended if, after
September 1, 2000 and before November 30, 2000, the Administrative Agent shall
notify the Primary Borrower that any Lender has notified the Administrative
Agent, in a written notice, that such extension shall not be permitted. The
Administrative Agent shall promptly transmit to the other parties any notice
received by it pursuant to this Section from any party to this Agreement.
SECTION 2.06. Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein,
any Borrower may request the issuance of Letters of Credit for its own account,
denominated in any Currency in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Availability Period. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by a Borrower to,
or entered into by a Borrower with, the Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), a Borrower shall hand
deliver or telecopy (or transmit by electronic communication, if arrangements
for doing so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
the date of issuance, amendment, renewal or extension, the date on which such
Letter of Credit is to expire (which shall comply with paragraph (c) of this
Section), the amount and Currency of such Letter of Credit, the name and address
of the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
Issuing Bank, the requesting Borrower also shall submit a letter of credit
application on the Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall not be issued, amended, renewed
or extended if after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure would exceed $5,000,000.00, (ii) the Revolving
Credit Exposure of any Lender would exceed such Lender's Revolving Credit
Commitment or (iii) the sum of the total Revolving Credit Exposure and the total
Competitive Loan Exposures would exceed the total Revolving Credit Commitments;
and upon issuance, amendment, renewal or extension of each Letter of Credit the
requesting Borrower shall be deemed to represent and warrant that none of the
foregoing consequences will result.
(c) Expiration Date. Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit
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(or, in the case of any renewal or extension thereof, one year after such
renewal or extension) and (ii) the date that is five Business Days prior to the
Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, in the Currency in which such LC Disbursement
was made, and at the designated office of the Administrative Agent in New York,
for Dollar LC Disbursements, or in London, for LC Disbursements in a Foreign
Currency, such Lender's Applicable Percentage of each LC Disbursement made by
the Issuing Bank and not reimbursed by any Borrower on the date due as provided
in paragraph (e) of this Section, or of any reimbursement payment required to be
refunded to the Borrower for any reason. Each Lender acknowledges and agrees
that its obligation to acquire participations pursuant to this paragraph in
respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower for whom the Letter
of Credit was issued shall reimburse such LC Disbursement by paying to the
Administrative Agent, in the Currency in which such LC Disbursement was made,
and at the designated office of the Administrative Agent in New York, for Dollar
LC Disbursements, or in London, for LC Disbursements in a Foreign Currency, an
amount equal to such LC Disbursement not later than 2:00 p.m., New York City
time or London time, as appropriate, on the date that such LC Disbursement is
made, if the applicable Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City or London time, on such date,
or, if such notice has not been received by such Borrower prior to such time on
such date, then not later than 2:00 p.m., New York City or London time, on (i)
the Business Day that such Borrower receives such notice, if such notice is
received prior to 10:00 a.m., New York City or London time, on the day of
receipt, or (ii) the Business Day immediately following the day that such
Borrower receives such notice, if such notice is not received prior to such time
on the day of receipt; provided that, if such LC Disbursement is not less than
$1,000,000 or the U.S. Dollar Equivalent thereof in another applicable Currency,
such Borrower may, prior to the time as of which the reimbursement payment is
due, and subject to all conditions to borrowing set forth herein, request in
accordance with Section 2.03 that such payment be financed, in the case of an LC
Disbursement in Dollars, with an ABR Revolving Borrowing in an equivalent amount
or, in the case of an LC Disbursement in a Foreign Currency, with a Eurocurrency
Borrowing in such Foreign Currency in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Revolving Borrowing or Eurocurrency Borrowing. If
a Borrower fails to make such payment or such request prior to the time such
payment is due, the Administrative Agent shall notify each Lender of the
applicable LC
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Disbursement, the payment then due from the Borrower in respect thereof and such
Lender's Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same Currency as
the LC Disbursement and in the same manner as provided in Section 2.07 with
respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the Administrative
Agent shall promptly pay to the Issuing Bank in such Currency the amounts so
received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from a Borrower pursuant to this paragraph,
the Administrative Agent shall distribute such payment, in the Currency
received, to the Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders
and the Issuing Bank as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement
(other than the funding of ABR Revolving Loans, or Eurocurrency Loans as
contemplated above) shall not constitute a Loan and shall not relieve the
relevant Borrower of its obligation to reimburse such LC Disbursement. Each
Borrower will from time to time upon demand reimburse (i) the Issuing Bank for
costs or losses incurred by the Issuing Bank in currency transactions entered
into in connection with the making of Letters of Credit available to such
Borrower in any Foreign Currency and (ii) each Lender for costs or losses
incurred by such Lender in currency transactions entered into in connection with
any payment by such Lender pursuant to this paragraph (e) to the Administrative
Agent of such Lender's Applicable Percentage of any payment due from Borrower
under this paragraph (e).
(f) Obligations Absolute. Any Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether
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drafts and other documents presented under a Letter of Credit comply with the
terms thereof. The parties hereto expressly agree that, in the absence of gross
negligence or wilful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, or refuse to accept and make
payment upon such documents if such documents are not in strict compliance with
the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the appropriate Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether the Issuing Bank
has made or will make an LC Disbursement thereunder; provided that any failure
to give or delay in giving such notice shall not relieve such Borrower of its
obligation to reimburse the Issuing Bank and the Lenders with respect to any
such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower for whom the Letter of Credit was issued
shall reimburse such LC Disbursement in full on the date such LC Disbursement is
made, the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
such Borrower either reimburses such LC Disbursement or finances its
reimbursement obligation with a Borrowing pursuant to Paragraph (e) of this
Section, at the rate per annum then applicable to ABR Revolving Loans or, if
higher, in the case of any amount denominated in a Foreign Currency, the cost to
the Issuing Bank or the Lenders, as applicable, as determined by the
Administrative Agent, of maintaining such outstanding amount in the applicable
Currency; provided that, if such Borrower fails to reimburse or finance such LC
Disbursement when due pursuant to paragraph (e) of this Section, then Section
2.13(d) shall apply. Interest accrued pursuant to this paragraph shall be for
the account of the Issuing Bank, except that interest accrued on and after the
date of payment by any Lender pursuant to paragraph (e) of this Section to
reimburse the Issuing Bank shall be for the account of such Lender to the extent
of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced by another Lender at any time by written agreement among the Borrower,
the Administrative Agent, the replaced Issuing Bank and the successor Issuing
Bank. The Administrative Agent shall notify the Lenders of any such replacement
of the Issuing Bank. At the time any such replacement shall become effective,
each Borrower for whom an outstanding Letter of Credit was issued shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank
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hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.
(j) Cash Collateralization on Default. If any Event of Default shall
occur and be continuing, then either (i) on the Business Day that the Borrower
for whom an outstanding Letter of Credit was issued receives notice from the
Administrative Agent or the Required Lenders demanding the deposit of cash
collateral pursuant to this paragraph, or (ii) ten (10) days after the date on
which the Borrower receives such notice, if no part of the Loans then
outstanding have been declared due and payable pursuant to clause (ii) of the
concluding paragraph of Article VIII, each such Borrower shall deposit in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Lenders, an amount in cash in each Currency equal to
the portion of the LC Exposure denominated in such Currency as of such date plus
any accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to any such Borrower
described in clause (h) or (i) of Article VII. Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations of the depositing Borrower under this Agreement. The Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
sole discretion of the Administrative Agent and at the depositing Borrower's
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the depositing Borrower for the LC Exposure related to such
Borrower at such time or, if the maturity of the Loans has been accelerated (but
subject to the consent of the Required Lenders), be applied to satisfy other
obligations of the depositing Borrower under this Agreement. If any Borrower is
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the depositing Borrower within three Business
Days after all Events of Default have been cured or waived.
SECTION 2.07. Funding of Borrowings.
(a) Each Lender shall make each Loan to be made by it hereunder on
the proposed date thereof by wire transfer of immediately available funds in the
Currency being borrowed by 12:00 noon, New York City time, in the case of
Borrowings to be made available to the appropriate Borrower in New York City,
and not later than 12:00 noon, London time, in the case of Borrowings to be made
available to the appropriate Borrower in London, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders. The Administrative Agent will make such Loans available to the
appropriate Borrower by promptly crediting the amounts so received, in like
funds, to an account of such Borrower maintained with the Administrative Agent
in New York City, except that, if so designated in Schedule 2.01 with
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respect to one or more Foreign Currencies, Loans in such Currencies shall be
credited to an account of such Borrower, maintained with the Administrative
Agent in London; provided that Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.06(e) shall be remitted by the
Administrative Agent to the Issuing Bank. From time to time the Administrative
Agent may as it deems necessary or appropriate specify reasonable alternative
procedures for funding Foreign Currency Loans or for payments in respect of
Letters of Credit or LC Disbursements denominated in a Foreign Currency.
(b) Unless the Administrative Agent shall have received notice from
a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the appropriate
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and such Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to such Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to the subject Loan. If such Lender pays
such amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
SECTION 2.08. Interest Elections for Revolving Borrowings.
(a) Each Revolving Borrowing initially shall be of the Type
specified in the applicable Borrowing Request and, in the case of a Eurocurrency
Revolving Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert any such
Borrowing that is denominated in Dollars to a Borrowing of a different Type or
to continue such Borrowing as the same Type; and, in the case of any
Eurocurrency Borrowing, the Borrower may elect initial and successive Interest
Periods therefor, all as provided in this Section. Eurocurrency Borrowings in
Dollars may only be converted to ABR Borrowings at the end of an Interest
Period. Subject to Section 2.02(c), the Borrower may elect different options
with respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing. This Section 2.08 shall not apply to
Competitive Borrowings, which may not be converted or continued, and it shall
not be construed to permit any Borrower to change the Currency of any Borrowing
or to convert a Foreign Currency Borrowing to an ABR Borrowing, if such change
or conversion shall be prohibited by Section 2.14.
(b) To make an election pursuant to this Section, a Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a new Revolving Borrowing of the
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Type resulting from such election to be made on the effective date of such
election. Each such telephonic Interest Election Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a form approved
by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Sections 2.02 and 2.03:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) below shall be
specified for each resulting Borrowing);
(ii)the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii)in the case of a Dollar Borrowing, whether the
resulting Borrowing is to be an ABR Borrowing or a Eurocurrency
Borrowing; and
(iv)if the resulting Borrowing is a Eurocurrency Borrowing,
the Interest Period to be applicable thereto after giving effect to
such election, which shall be a period contemplated by the
definition of the term "Interest Period".
If any such Interest Election Request requests a Eurocurrency Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If a Borrower fails to deliver a timely Interest Election
Request with respect to a Eurocurrency Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the expiration of such Interest Period (i) such Borrowing
shall be converted to an ABR Borrowing, if such Borrowing is denominated in
Dollars, (ii) the Borrower will be deemed to have elected a one (1) month
Interest Period beginning with the day after the last day of the expired
Interest Period, if such Borrowing is denominated in a Foreign Currency and
(iii) the Borrower will upon demand reimburse each Lender for costs or losses
incurred by such Lender in currency transactions reasonably undertaken by such
Lender as a result of such failure. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no outstanding
Revolving Borrowing in Dollars may be converted to or continued as a
Eurocurrency Borrowing and (ii) unless
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repaid, each Eurocurrency Revolving Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.09. Termination and Reduction of Commitments.
(a) Unless previously terminated, the Revolving Credit Commitments
shall terminate on the Maturity Date.
(b) The Primary Borrower may at any time terminate, or from time to
time reduce, the Revolving Credit Commitments; provided that (x) each reduction
of the Revolving Credit Commitments shall be in an amount that is an integral
multiple of $1,000,000 and not less than $5,000,000, and (xx) the Primary
Borrower shall not terminate or reduce the Revolving Credit Commitments if,
after giving effect to any concurrent prepayment of the Revolving Credit Loans
in accordance with Section 2.11, (i) the Revolving Credit Exposure of any Lender
would exceed such Lender's Revolving Credit Commitment or (ii) the sum of the
total Revolving Credit Exposure and the total Competitive Loan Exposures would
exceed the total Revolving Credit Commitments.
(c) The Primary Borrower shall notify the Administrative Agent of
any election to terminate or reduce Commitments under paragraph (b) of this
Section at least three (3) Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Primary Borrower pursuant to this Section shall be irrevocable; provided that a
notice of termination of the Commitments delivered by the Primary Borrower may
state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Primary Borrower (by
notice to the Administrative Agent on or prior to the specified effective date)
if such condition is not satisfied. Any termination or reduction of the
Commitments shall be permanent. Each reduction of the Revolving Credit
Commitments shall be made ratably among the Lenders in accordance with their
respective Applicable Percentages.
SECTION 2.10. Repayment of Loans; Evidence of Debt.
(a) Each Borrower hereby unconditionally promises to pay (i) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each of its Revolving Loans on the Maturity Date and (ii) to the
Administrative Agent for the account of each Lender, as appropriate, the then
unpaid principal amount of each of its Competitive Loans on the last day of the
Interest Period applicable to such Loan. Principal and interest for each Loan
shall be repaid in the Currency in which it was advanced, except as provided in
Section 2.20.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of each Borrower to such
Lender resulting from each Loan made to such Borrower by such Lender, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
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(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the Borrower and amount of each Loan made hereunder, the Class
and Type thereof and the Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of any Borrower
to repay its Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it, other than Loans
to Borrowers located in the United Kingdom, be evidenced by a promissory note.
In such event, each Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to the order of such Lender (or, if requested by such
Lender, to such Lender and its registered assigns) and in a form approved by the
Administrative Agent and the Primary Borrower. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.11. Prepayment of Loans.
(a) Subject to the requirements of this Section applicable to
optional prepayments, each Borrower shall have the right at any time and from
time to time to prepay any Borrowing of which it is the Borrower, and the
Primary Borrower shall have the right to prepay any Borrowing, in whole or in
part, subject to prior notice in accordance with paragraph (f) of this Section;
provided that no Borrower shall have the right under this paragraph to prepay
any Competitive Loan without the prior consent of the Lender thereof.
(b) Prior to any optional prepayment of Borrowings under Section
2.11(a), a Borrower shall select the Borrowing or Borrowings to be prepaid and
shall specify such selection in the notice of such prepayment pursuant to
paragraph (f) of this Section.
(c) In the event and on each occasion that any Net Proceeds are
received by or on behalf of the Primary Borrower or any Subsidiary in respect of
any Prepayment Event, the Primary Borrower shall, not later than the Business
Day next following the day on which such Net Proceeds are received prepay
outstanding Borrowings (in accordance with this Section) in an aggregate amount
equal to such Net Proceeds (or the equivalent thereof in one or more other
currencies based upon Exchange Rates prevailing on the payment date in the case
of Borrowings in a Currency other than that of such Net Proceeds). For purposes
of this paragraph (c), Net Proceeds in respect of any Prepayment Event referred
to in clause (b) of the definition of "Prepayment Event" shall be deemed
received on the later of the date of actual receipt of such Net
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Proceeds by the Primary Borrower or any Subsidiary and the date on which the
relevant event becomes a Prepayment Event pursuant to clause (b) of such
definition.
(d) Mandatory prepayments of Borrowings under Paragraphs (c) and (e)
of this Section shall be applied first to all Revolving Borrowings, and then to
Competitive Borrowings in such manner as the Primary Borrower may determine. To
the extent that the Lenders receive a mandatory prepayment under Section 2.11(c)
Revolving Credit Commitments shall be reduced permanently by the amount of each
such principal prepayment, expressed in Dollars.
(e) If, during any period when Foreign Currency Loans are
outstanding, (i) the Revolving Credit Exposure of any Lender exceeds 105% of
such Lender's Revolving Credit Commitment or (ii) the sum of the total Revolving
Credit Exposure plus the total of the Competitive Loan Exposures exceeds 105% of
the total Revolving Credit Commitments, the Borrowers will prepay the Loans
which they have borrowed and/or the Borrowers for whom outstanding Letters of
Credit were issued will cash collateralize such Letters of Credit in accordance
with the provisions of Section 2.06(j), in such amounts as may be necessary to
eliminate such excess (treating the cash collateralized portion of outstanding
Letters of Credit, solely for purposes of the foregoing, as no longer being
outstanding); prior to the elimination of such excess, no further Loan may be
made and no new Letter of Credit may be issued if the result would be to
increase the amount of such excess.
(f) The relevant Borrower shall notify the Administrative Agent by
telephone or telecopy (confirmed by telecopy promptly following any such
telephonic notice) of any prepayment hereunder (i) in the case of prepayment of
a Eurocurrency Borrowing, not later than 11:00 a.m., New York City time (or
London time, in the case of Foreign Currency Borrowings), four Business Days
before the date of prepayment, or (ii) in the case of prepayment of an ABR
Borrowing, not later than 11:00 a.m., New York City time, on the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date, the principal amount of each Borrowing or portion thereof to be
prepaid and, in the case of a mandatory prepayment, a reasonably detailed
calculation of the amount of such prepayment; provided that, if a notice of
optional prepayment is given in connection with a conditional notice of
termination of the Revolving Credit Commitments as contemplated by Section 2.09,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.09. Promptly following receipt of any such
notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02, except as necessary to apply fully the required amount
of a mandatory prepayment. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing and shall be made in the
applicable Currency. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.13.
(g) In the event the amount of any mandatory prepayment required to
be made on any date pursuant to this Section shall exceed the amount of the
Loans of the relevant Borrowings that are ABR Borrowings or that have Interest
Periods ending on such date (the amount of any such excess being called the
"Excess Amount"), the relevant Borrower shall have the right,
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in lieu of making such prepayment in full, to prepay on such date all the
outstanding ABR Loans and Loans having Interest Periods ending on such date
within such Borrowings and to deposit an amount equal to the Excess Amount with
the Administrative Agent in a cash collateral account maintained (pursuant to
customary account documentation of the Administrative Agent approved by the
Primary Borrower) by and in the sole dominion and control of the Administrative
Agent, and otherwise subject to the terms of this paragraph (g). Any amounts so
deposited shall be held by the Administrative Agent as collateral for the
prepayment obligations of the relevant Borrower and applied to the prepayment of
the Eurocurrency Loans being prepaid at the end of the current Interest Periods
applicable thereto. On any Business Day on which (x) collected amounts remain on
deposit in or to the credit of such cash collateral account after giving effect
to the payments made on such date pursuant to this Section 2.11(g) and (y) the
relevant Borrower shall have delivered to the Administrative Agent a written
request or a telephonic request (which telephonic request shall be promptly
confirmed by telecopy) that such remaining collected amounts be invested in the
Permitted Investments specified in such request, the Administrative Agent shall
use its reasonable efforts to invest such remaining collected amounts in such
Permitted Investments; provided, however, that the Administrative Agent shall
have continuous dominion and full control over any such investments (and over
any interest that accrues thereon) to the same extent that it has dominion and
control over such cash collateral account and no Permitted Investment shall
mature after the end of the Interest Period for the Loans in respect of which it
is to be applied. The depositing Borrower shall not have any right to withdraw
any amount from such cash collateral account until the relevant Loans subject to
prepayment hereunder and accrued interest thereon are paid in full, at which
time the Administrative Agent shall, promptly upon the written request of the
relevant depositing Borrower, release to such Borrower the amount due such
Borrower from such cash collateral account, unless a Default or Event of Default
then exists or would result from such release.
SECTION 2.12 Fees.
(a) The Primary Borrower agrees to pay to the Administrative Agent
for the account of each Lender a facility fee, which shall accrue at the
Applicable Rate on the daily amount of the unused Revolving Credit Commitment of
such Lender during the period from and including the date of this Agreement to
but excluding the date on which its entire Revolving Credit Commitment
terminates. For purposes of computing the facility fee, outstanding Competitive
Loans shall not reduce the amount of the unused Revolving Credit Commitment of
any Lender. Accrued facility fees shall be payable in arrears on the last day of
March, June, September and December of each year and on the date on which the
Commitments are entirely terminated, commencing on the first such date to occur
after the date hereof; provided that any facility fees accruing after the date
on which the Revolving Credit Commitments terminate shall be payable on demand.
All facility fees shall be paid in Dollars and computed on the basis of a year
of three hundred sixty (360) days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
(b) Each Borrower at whose request a Letter of Credit is issued
agrees to pay (i) to the Administrative Agent for the account of each Lender a
participation fee with respect to its participations in such Letter of Credit,
which shall accrue at the Applicable Rate on the average
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daily amount of such Lender's LC Exposure related to such Letter of Credit
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date on which such Lender's Revolving Credit Commitment terminates
and the date on which such Lender ceases to have any LC Exposure related to such
Letter of Credit, and (ii) to the Issuing Bank a fronting fee, which shall be
paid in Dollars at the time the Letter of Credit is issued, at the rate of 1/8
of 1% on the face amount of the Letter of Credit, as well as the Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees
accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the Revolving
Credit Commitments terminate and any such fees accruing after the date on which
the Revolving Credit Commitments terminate shall be payable on demand. Any other
fees payable to the Issuing Bank pursuant to this paragraph shall be payable
within ten (10) days after demand. All participation fees shall be computed on
the basis of a year of three hundred sixty (360) days and shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day) in Dollars.
(c) The Primary Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Primary Borrower and the Administrative Agent in a
certain Fee Letter dated January 22, 1998 and as may hereafter be otherwise
agreed between them.
(d) All fees payable hereunder shall be paid in Dollars on the dates
due, in immediately available funds, to the Administrative Agent (or to the
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of facility fees and participation fees, to the Lenders. Fees paid shall be
fully earned and shall not be refundable under any circumstances, except in the
case of clerical error.
SECTION 2.13. Interest.
(a) The Loans comprising each ABR Borrowing shall bear interest at
the Alternate Base Rate.
(b) The Loans comprising each Eurocurrency Borrowing shall bear
interest (i) in the case of a Eurocurrency Revolving Loan, at the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable
Rate, or (ii) in the case of a Eurocurrency Competitive Loan, at the LIBO Rate
for the Interest Period in effect for such Borrowing plus (or minus, as
applicable) the Margin applicable to such Loan.
(c) Each Fixed Rate Loan shall bear interest at the Fixed Rate
applicable to such Loan.
(d) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by a Borrower hereunder is not
paid when due, whether at stated
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maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to (i) in
the case of overdue principal of any Loan, two percent (2%) plus the rate
otherwise applicable to such Loan as provided in the preceding paragraphs of
this Section or (ii) in the case of any other amount, two percent (2%) plus the
rate applicable to ABR Loans as provided in paragraph (a) of this Section.
(e) Accrued interest on each Loan shall be payable, in the Currency
in which such Loan was advanced, in arrears on each Interest Payment Date for
such Loan and, in the case of Revolving Loans, upon termination of the Revolving
Credit Commitments; provided that (i) interest accrued pursuant to paragraph (d)
of this Section shall be payable on demand, and (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving
Loan prior to the end of the Availability Period), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment.
(f) Except for interest on Loans denominated in Irish Pounds, which
shall be computed on the basis of a year of three hundred sixty-five (365) days,
all interest hereunder shall be computed on the basis of a year of three hundred
sixty (360) days; and in each case interest shall be payable for the actual
number of days elapsed (including the first day but excluding the last day). The
applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurocurrency Borrowing:
(a) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as
applicable, for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders (or,
in the case of a Eurocurrency Competitive Loan, the Lender that is
required to make such Loan) that the Adjusted LIBO Rate or the LIBO Rate,
as applicable, for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for such Interest
Period; or
(c) in the case of a Borrowing of Foreign Currency Loans, the
Administrative Agent determines (which determination shall be presumed
correct absent manifest error) that deposits in the applicable Foreign
Currency are not generally available, or cannot be obtained by the
Lenders, in the London interbank market;
then the Administrative Agent shall give notice thereof to Primary Borrower and
the Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies Primary Borrower and the Lenders that
the circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurocurrency Borrowing shall be ineffective,
and any Eurocurrency Borrowing so requested to be continued shall, at the option
of the Primary Borrower,
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be repaid on the last day of the then current Interest Period with respect
thereto or shall be converted to an ABR Borrowing (with any Foreign Currency
Borrowing being converted to a Borrowing denominated in Dollars at the Exchange
Rate determined by the Administrative Agent in accordance with this Agreement)
on the last day of the then current Interest Period with respect thereto, (ii)
if any Borrowing Request requests a Eurocurrency Revolving Borrowing (other than
a Borrowing of Foreign Currency Loans), such Borrowing shall be made as an ABR
Borrowing and (iii) any request by any Borrower for a Eurocurrency Competitive
Borrowing or a Borrowing of Foreign Currency Loans shall be ineffective;
provided that if the circumstances giving rise to such notice do not affect all
the Lenders, then requests for Eurocurrency Competitive Borrowings may be made
to Lenders that are not affected thereby and, if the circumstances giving rise
to such notice do not affect all applicable Currencies, then requests for
Eurocurrency Borrowings may be made in the Currencies that are not affected
thereby.
SECTION 2.15. Increased Costs.
(a) If any Change in Law shall impose on any Lender or the London
interbank market (or any other market in which the funding operations of such
Lender shall be conducted with respect to any Foreign Currency) any condition
affecting this Agreement or Eurocurrency Loans made by such Lender, and the
result thereof shall be to increase the cost to such Lender of making or
maintaining any Eurocurrency Loan or to reduce the amount of any sum received or
receivable by such Lender in respect thereof by an amount reasonably deemed by
such Lender to be material, then the Primary Borrower will pay or cause the
applicable Borrower to pay to such Lender such additional amount or amounts as
will compensate such Lender for such additional costs incurred or reduction
suffered.
(b) If any Lender or the Issuing Bank reasonably determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's or the Issuing Bank's capital or on
the capital of such Lender's or the Issuing Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in Letters
of Credit held by, such Lender, or the Letters of Credit issued by the Issuing
Bank, to a level below that which such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company could have achieved but for such
Change in Law (taking into consideration such Lender's or the Issuing Bank's
policies and the policies of such Lender's or the Issuing Bank's holding company
with respect to capital adequacy), then from time to time the Primary Borrower
will pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Primary Borrower. The Primary Borrower
shall pay such Lender or the Issuing Bank, as the case may be, the amount shown
as due on any such certificate within ten (10) days after receipt thereof.
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(d) Failure or delay on the part of any Lender or the Issuing Bank
to demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
that the Primary Borrower shall not be required to compensate a Lender or the
Issuing Bank pursuant to this Section for any increased costs or reductions
incurred more than sixty (60) days prior to the date that such Lender or the
Issuing Bank, as the case may be, notifies the Primary Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender's or
the Issuing Bank's intention to claim compensation therefor; provided further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the sixty (60) day period referred to above shall be extended
to include the period of retroactive effect thereof.
(e) Notwithstanding the foregoing provisions of this Section, a
Lender shall not be entitled to compensation pursuant to this Section in respect
of any Competitive Loan if the Change in Law that would otherwise entitle it to
such compensation shall have been publicly announced prior to submission of the
Competitive Bid pursuant to which such Loan was made.
(f) Notwithstanding any other provision of this Agreement, if, after
the date hereof, (i) any Change in Law shall make it unlawful for any Lender to
make or maintain any Eurocurrency Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurocurrency Loan, or (ii) there shall
have occurred any change in national or international financial, political or
economic conditions (including the imposition of any change in exchange
controls) or currency exchange rates which would make it impracticable for any
Lender to make Loans denominated in the relevant Foreign Currency to, or for the
account of, a Borrower, then, by written notice to the Primary Borrower and to
the Administrative Agent:
(i) such Lender may declare that Eurocurrency Loans in the
affected Currency or Currencies will not thereafter (for the
duration of such unlawfulness) be made by such Lender hereunder or
be continued for additional Interest Periods and ABR Loans will not
thereafter (for such duration) be converted into Eurocurrency Loans
if the affected Currency is Dollars, whereupon any request for a
Eurocurrency Borrowing in the affected Currency or Currencies, or to
convert an ABR Borrowing to a Eurocurrency Borrowing or to continue
a Eurocurrency Borrowing in the affected Currency or Currencies, as
the case may be, for an additional Interest Period shall, as to such
Lender only, be deemed a request for an ABR Loan or a request to
continue an ABR Loan as such or to convert a Eurocurrency Loan into
an ABR Loan, as the case may be, unless such declaration shall be
subsequently withdrawn; and
(ii)such Lender may require that all outstanding
Eurocurrency Loans in the affected Currency or Currencies, made by
it be converted to ABR Loans (at the then current U.S. Dollar
Equivalent in the case of any conversion of Foreign Currency Loans),
in which event all such Eurocurrency Loans (in the affected Currency
or Currencies) shall be automatically converted to ABR Loans as of
the effective date of such notice as provided in paragraph (g)
below.
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In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurocurrency Loans that would have been made by such Lender or the
converted Eurocurrency Loans of such Lender shall instead be applied to repay
the ABR Loans made by such Lender in lieu of, or resulting from the conversion
of, such Eurocurrency Loans.
(g) For purposes of this Section 2.15, a notice to the Primary
Borrower by any Lender shall be effective as to each Eurocurrency Loan made by
such Lender, if lawful, on the last day of the Interest Period currently
applicable to such Eurocurrency Loan; in all other cases such notice shall be
effective on the date of receipt by the Primary Borrower.
SECTION 2.16. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurocurrency Loan or Fixed Rate Loan other than on the last
day of an Interest Period applicable thereto (including as a result of an Event
of Default), (b) the conversion of any Eurocurrency Loan other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Revolving Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.11(f) and is revoked in accordance therewith), (d) the
failure to borrow any Competitive Loan after accepting the Competitive Bid to
make such Loan, (e) the assignment of any Eurocurrency Loan or Fixed Rate Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by a Borrower pursuant to Section 2.19, or (f) the conversion of
any Foreign Currency Loan to a Loan denominated in Dollars, required pursuant to
Section 2.14 or Section 2.15 then, in any such event, the Borrower involved
shall compensate each Lender for the loss, cost and expense attributable to such
event in the Currency in which the affected Loan is denominated, subject to the
provisions of Section 2.20 (and in the case of any conversion of Foreign
Currency Loans to Dollar denominated Loans, such loss, cost or expense shall
also include any loss, cost or expense sustained by a Lender as a result of such
conversion). In the case of a Eurocurrency Loan, such loss, cost or expense to
any Lender shall be deemed to include an amount determined by such Lender to be
the excess, if any, of (i) the amount of interest which would have accrued on
the principal amount of such Loan had such event not occurred, at the Adjusted
LIBO Rate that would have been applicable to such Loan, for the period from the
date of such event to the last day of the then current Interest Period therefor
(or, in the case of a failure to borrow, convert or continue, for the period
that would have been the Interest Period for such Loan), over either (ii) in all
cases set forth above, except for conversions described in clauses (b) or (f)
above, the amount of interest which would accrue on such principal amount for
such period at the interest rate which such Lender would bid were it to bid, at
the commencement of such period, for deposits in the Currency in which the
affected Loan is denominated of a comparable amount and period from other banks
in the London interbank market, or (iii) in the case of a conversion described
in clause (b) or (f) above, the amount of interest which will accrue on such
principal amount for such period as a result of the conversion. A certificate of
any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to such Borrower and shall
be conclusive absent manifest error. Such Borrower shall pay such Lender the
amount shown as due on any such certificate within ten (10) days after receipt
thereof.
SECTION 2.17. Taxes.
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(a) Any and all payments by or on account of any obligation of any
Borrower hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if any Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Lender or Issuing Bank (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Primary Borrower shall indemnify the Administrative Agent,
each Lender and the Issuing Bank, within ten (10) days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or the Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of any
Borrower hereunder or under any other Loan Documents (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to a Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by any Borrower to a Governmental Authority, such Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which any
Borrower is located, or in which any Loan is made, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to such Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by such
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.
(a) Except as may be specified by the Administrative Agent as it
from time to time deems necessary or appropriate with respect to any Foreign
Currency, each Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under
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Section 2.15, 2.16 or 2.17, or otherwise) prior to 12:00 noon, New York City or
London time, depending on the required place of payment, on the date when due,
in immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York, except that (i) payments with respect to Loans made available to
the Borrower in London pursuant to Section 2.07(a) shall be made to the
Administrative Agent at its offices at Trinity Tower, 9 Thomas More Street,
London, England, (ii) payments to be made directly to the Issuing Bank as
expressly provided herein shall be so made, (iii) payments pursuant to Sections
2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto
and (iv) payments pursuant to other Loan Documents shall be made as specified
therein. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment hereunder shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. Except as
provided in Section 2.20, all payments under each Loan Document shall be made in
the Currency as specified therein and in the absence of any specification, in
Dollars (based, if necessary, on the U.S. Dollar Equivalent in effect on the
date of payment).
(b) If at any time insufficient funds of a Borrower are received by
and available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due from such Borrower
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due from such Borrower hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due
from such Borrower to such parties, and (ii) second, towards payment of
principal and unreimbursed LC Disbursements then due from such Borrower
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due from such
Borrower to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in LC Disbursements resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Loans or participations in LC Disbursements and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans or participations in LC Disbursements of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans or participations in LC
Disbursements; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrowers pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in
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LC Disbursements to any assignee or participant, other than to the Primary
Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of
this paragraph shall apply). Each Borrower consents to the foregoing and agrees,
to the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
a Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that such
Borrower will not make such payment, the Administrative Agent may assume that
such Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, (i) in the
case of a Borrowing in Dollars, at the greater of the Federal Funds Effective
Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation and (ii) in the case of a
Borrowing in a Foreign Currency, at a rate reasonably determined by the
Administrative Agent to be the cost to it of funding such amount.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.06(d) or (e), 2.07(b) or 2.18(d), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.19. Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.15, or if
any Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or Affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be,
in the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Primary
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.15, or if a
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans
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hereunder, then such Borrower may, at its sole expense and effort, upon notice
to such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all its interests, rights and obligations under this
Agreement with respect to such Borrower (other than any outstanding Competitive
Loans held by it) to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (i) such Borrower shall have received the prior written consent of the
Administrative Agent (and, if a Commitment is being assigned, the Issuing Bank),
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
(other than Competitive Loans) and participations in LC Disbursements, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or such Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.15 or payments required to be made pursuant to Section 2.17, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling such Borrower to require such assignment and delegation cease to
apply.
SECTION 2.20. European Economic and Monetary Union.
(a) Definitions. In this Section 2.20 and in each other provision of
this Agreement to which reference is made in this Section expressly or
impliedly, the following terms have the meanings given to them in this Section:
"commencement of the third stage of EMU" means the date of
commencement of the third stage of EMU (at the date of this Agreement
expected to be January 1, 1999) or the date on which circumstances arise
which (in the opinion of the Administrative Agent) have substantially the
same effect and result in substantially the same consequences as
commencement of the third stage of EMU, as contemplated by the Treaty on
European Union;
"EMU" means economic and monetary union as contemplated in
the Treaty on European Union;
"EMU legislation" means legislative measures of the European
Council for the introduction of, changeover to or operation of a single or
unified European currency (whether known as the euro or otherwise), being
in part the implementation of the third stage of EMU;
"euro" means the single currency of participating member
states of the European Union;
"euro unit" means the currency unit of the euro;
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"national currency unit" means the unit of currency (other
than a euro unit) of a participating member state whose currency has been
designated as a Foreign Currency pursuant to Section 9.15;
"participating member state" means each state so described
in any EMU legislation; and
"Treaty on European Union" means the Treaty of Rome of March
25, 1957, as amended by the Single European Act 1986 and the Maastricht
Treaty (which was signed at Maastricht on February 7, 1992, and came into
force on November 1, 1993), as amended from time to time.
(b) Effectiveness of Provisions. The provision of paragraphs (c) to
(k) below (inclusive) shall be effective at and from the commencement of the
third stage of EMU, provided, that if and to the extent that any such provision
relates to any state (or the Foreign Currency of such state) that is not a
participating member state on the commencement of the third stage of EMU, such
provision shall become effective in relation to such state (and the national
currency unit of such state) at and from the date on which such state becomes a
participating member state.
(c) Redenomination and Alternative Currencies. Each obligation under
this Agreement of a party to this Agreement which has been denominated in the
national currency unit of a participating member state shall be redenominated
into the euro unit in accordance with EMU legislation, provided, that if and to
the extent that any EMU legislation provides that following the commencement of
the third stage of EMU an amount denominated either in the euro or in the
national currency unit of a participating member state and payable within that
participating member state by crediting an account of the creditor can be paid
by a debtor either in the euro unit or in that national currency unit, each
party to the Agreement shall, subject to paragraphs (d) and (g) below, be
entitled to pay or repay any such amount either in the euro unit or in such
national currency unit.
(d) Loans. Any new Loan denominated in the national currency unit of
a participating member state shall be made in the euro unit.
(e) Business Days. With respect to any amount denominated or to be
denominated in the euro or a national currency unit, any reference to a
"Business Day" shall be construed as a reference to a day (other than a Saturday
or Sunday) on which banks are generally open for business in (i) London and New
York City and (ii) Frankfurt am Main, Germany (or such principal financial
center or centers in such participating member state or states as the
Administrative Agent may from time to time nominate for this purpose).
(f) Payments to the Administrative Agent. Sections 2.07 and 2.18
shall be construed so that, in relation to the payment of any amount of euro
units or national currency units, such amount shall be made available to the
Administrative Agent in immediately available, freely transferable, cleared
funds to such account with such bank in Frankfurt am Main, Germany (or such
other principal financial center in such participating member state as the
Administrative Agent may
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from time to time nominate for this purpose) as the Administrative Agent shall
from time to time nominate for this purpose.
(g) Payments by the Administrative Agent to the Lenders. Any amount
payable by the Administrative Agent to the Lenders under this Agreement in a
national currency unit shall be paid in the euro unit.
(h) Payments by the Administrative Agent Generally. With respect to
the payment of any amount denominated in the euro or in a national currency
unit, the Administrative Agent shall not be liable to the Borrower or any of the
Lenders in any way whatsoever for any delay, or the consequences of any delay,
in the crediting to any account of any amount required by this Agreement to be
paid by the Administrative Agent if the Administrative Agent shall have taken
all relevant steps to achieve, on the date required by this Agreement, the
payment of such amount in immediately available, freely transferable, cleared
funds (in the euro unit or, as the case may be, in a national currency unit) to
the account with the bank in the principal financial center in the participating
member state which a Borrower or, as the case may be, any Lender shall have
specified for such purpose. In this paragraph (h), "all relevant steps" means
all such steps as may be prescribed from time to time by the regulations or
operating procedures of such clearing or settlement system as the Administrative
Agent may from time to time determine for the purpose of clearing or settling
payments of the euro.
(i) Basis of Accrual. If the basis of accrual of interest or fees
expressed in this Agreement with respect to the national currency unit of any
state that becomes a participating state shall be inconsistent with any
convention or practice in the London interbank market [or, as the case may be,
the Paris interbank market] for the basis of accrual of interest or fees in
respect of the euro, such convention or practice shall replace such expressed
basis effective as of and from the date on which such state becomes a
participating member state; provided, that if any Loan in the national currency
unit of such state is outstanding immediately prior to such date, such
replacement shall take effect, with respect to such Loan, at the end of the then
current Interest Period.
(j) Rounding and Other Consequential Changes. Without prejudice and
in addition to any method of conversion or rounding prescribed by any EMU
legislation and without prejudice to the respective liabilities for indebtedness
of a Borrower to the Lenders and the Lenders to the Borrowers under or pursuant
to this Agreement:
(i) each reference in this Agreement to a minimum amount (or
an integral multiple thereof) in a national currency unit to
be paid to or by the Administrative Agent shall be replaced
by a reference to such reasonably comparable and convenient
amount (or an integral multiple thereof) in the euro unit as
the Administrative Agent may from time to time specify; and
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(ii) except as expressly provided in this Section, each
provision of this Agreement shall be subject to such
reasonable changes of construction as the Administrative
Agent may from time to time specify to be necessary or
appropriate to reflect the introduction of or changeover to
the euro in participating member states.
(k) Foreign Currency. If one or more national currency units has
been designated as a Foreign Currency in Schedule 2.01, the euro shall
constitute a Foreign Currency.
(l) Increased Costs. The Borrower shall from time to time, at the
request of the Administrative Agent, pay to the Administrative Agent for the
account of each Lender or the Issuing Bank the amount of any cost or increased
cost incurred by, or of any reduction in any amount payable to or in the
effective return on its capital to, or of interest or other return foregone by,
such Lender or the Issuing Bank or any holding company of such Lender or the
issuing Bank as a consequence of this Agreement or the Loans and as a result of
the introduction of, changeover to or operation of the euro in any participating
member state. A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts reasonably deemed necessary to compensate such Lender or the
Issuing Bank or its holding company, as the case may be, as specified in this
paragraph shall be delivered to the Primary Borrower. The Primary Borrower shall
pay such Lender or the Issuing Bank, as the case may be, the amount shown as due
on any such certificate within ten (10) days after receipt thereof. Failure or
delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this paragraph shall not constitute a waiver of such Lender's or the
Issuing Bank's right to demand such compensation; provided that the Primary
Borrower shall not be required to compensate a Lender or the Issuing Bank
pursuant to this paragraph for any cost, increased costs or reductions incurred
more than sixty (60) days prior to the date that such Lender or the Issuing
Bank, as the case may be, notifies the Primary Borrower of the circumstances
giving rise to such cost, increased costs or reductions and of such Lender's or
the Issuing Bank's intention to claim compensation therefor; provided further
that, if the circumstances giving rise to such costs, increased costs or
reductions are retroactive, then the sixty (60) day period referred to above
shall be extended to include the period of retroactive effect thereof.
Notwithstanding the foregoing provisions of this paragraph, a Lender shall not
be entitled to compensation pursuant to this paragraph in respect of any
Competitive Loan if the circumstances that would otherwise entitle it to such
compensation shall have been publicly announced prior to submission of the
Competitive Bid pursuant to which such Loan was made.
ARTICLE III
Representations, Warranties and Covenants of Borrower
Primary Borrower represents, warrants and covenants, and each other
Borrower severally represents, warrants and covenants, with respect to itself
only, to the Lenders that:
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SECTION 3.01. Existence, Ownership and Legal Power.
(a) Each Borrower is an organization duly organized or incorporated,
validly existing and, where relevant, in good standing, under the laws of the
jurisdiction of its origination, as indicated on Schedule 3.01. At the Effective
Date, each Borrower is duly qualified to do business and, where relevant, is in
good standing, in all jurisdictions in which it owns substantial properties or
in which it conducts substantial business or in which any of its activities make
such qualification necessary, each of which jurisdictions is indicated on
Schedule 3.01, except in those jurisdictions in which failure to so qualify
would not result in a material adverse impact on such Borrower's ability to
conduct business or own properties. If, subsequent to the Effective Date, any
Borrower does not qualify in any such jurisdictions to do business or to own
properties, such Borrower shall give the Administrative Agent prompt written
notice of such change in circumstances.
(b) At the Effective Date, the Primary Borrower owns the interests
in the Subsidiaries specified in Schedule 3.01 which is attached hereto and made
a part hereof, each of which is duly organized or incorporated, validly existing
and, where relevant, in good standing, under the laws of the states or countries
of their organization and is duly qualified to do business in all jurisdictions
in which each owns substantial properties or conducts substantial business or in
which any of their activities make such qualification necessary, each of which
jurisdictions is indicated on Schedule 3.01, except in those jurisdictions in
which failure to so qualify would not result in a material adverse impact on
such Subsidiary's ability to conduct business or own properties. If, subsequent
to the Effective Date, any such Subsidiaries do not qualify in any such
jurisdictions to do business or to own properties, the Primary Borrower shall
give the Administrative Agent and the Lenders prompt written notice of such
change in circumstances. At the Effective Date, the Primary Borrower's record
and beneficial ownership, direct and indirect, of each Subsidiary is free from
any material restriction, equity, security interest, or other lien.
(c) Each Borrower and each Subsidiary has all requisite power and
authority under the laws of the jurisdiction of its origination to carry on its
business and to enter into and carry out the terms of this Agreement and the
other Loan Documents to which it is a party.
SECTION 3.02. Right to Act. None of the execution and delivery of this
Agreement or the other Loan Documents, the consummation of Transactions
contemplated by those documents, nor compliance with their terms and provisions
will:
(a) conflict with or result in a breach of any of the terms,
conditions or provisions of the certificate of incorporation, by-laws, charter
or other constitutional or organizational documents of any Borrower or any
Subsidiary or any law or any regulation, order, writ, injunction or decree of
any court or Governmental Authority, or any agreement or instrument to which any
Borrower or any Subsidiary is a party or is subject or by which properties of
any Borrower or any Subsidiary may be bound, except as described in Schedule
5.25;
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(b) result in the creation or imposition of any Lien upon the
property or assets of any Borrower or any Subsidiary, except for the Liens
granted to the Lenders pursuant to this Agreement and the other Loan Documents;
(c) require the consent of any Person other than as indicated in
Schedule 5.25 or in Subparagraph (d) of this Section 3.02; or
(d) require any consent or approval of, registration or filing with,
or any other action by any Governmental Authority, except such as have been
obtained or made and are in full force and effect.
SECTION 3.03. Approval by Necessary Organizational Action. The execution
and delivery of this Agreement and the other Loan Documents, the making of the
Borrowings contemplated or permitted by this Agreement, and the other
Transactions have each been duly authorized by all necessary organizational
action on the part of each Borrower and each Other Subsidiary executing same.
The Agreement and the other Loan Documents have been duly and validly executed
and delivered by each Borrower and each Other Subsidiary executing same and
constitute the valid and legally binding agreements of each such Borrower and
Other Subsidiary enforceable in accordance with their terms, except as may be
limited by (a) bankruptcy, insolvency, or other laws of general application
relating to or affecting the enforcement of creditors' rights and remedies
generally and (b) where applicable, the exercise of judicial discretion in
accordance with general principles of equity.
SECTION 3.04. Financial Statements.
(a) At the Effective Date, each financial statement and all other
related information theretofore furnished to the Administrative Agent and the
Lenders by the Primary Borrower (i) have been prepared in accordance with GAAP
consistently applied in the preparation of the Primary Borrower's and any
Subsidiaries' previous financial statements and (ii) subject to the proviso
contained in Section 3.15 regarding projected financial information, are true
and complete, and fairly present the Primary Borrower's and any Subsidiaries'
financial condition and results of operations as of the date of each statement
or other information and for the respective period stated.
(b) Except as set forth in Schedule 3.04, there has been no change
that constitutes a Material Adverse Effect in the Primary Borrower's or any
Subsidiary's financial condition, properties, business or operations, since
March 27, 1998, the date of the Primary Borrower's most recent financial
statements delivered to the Administrative Agent and the Lenders prior to the
date of this Agreement.
(c) The Primary Borrower has delivered to the Administrative Agent
and the Lenders copies of its most recent annual and quarterly financial
statements.
SECTION 3.05. Litigation; Regulatory Compliance. Except as may be
described in the opinions of counsel delivered pursuant to Section 4.01:
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(a) At the Effective Date, there are no actions, suits or
proceedings pending or threatened against or affecting any Borrower or any
Subsidiary before any court or before any Governmental Authority which involve
the possibility of any judgment or liability not covered in full by insurance or
which could in one case or in the aggregate result in any Material Adverse
Effect on the business, operations, property, assets or financial condition of
the Primary Borrower or any of its Subsidiaries. If, subsequent to the Effective
Date, there are any such actions, suits or proceedings pending or threatened
against or affecting any Borrower or any Subsidiary, the Primary Borrower shall
give the Administrative Agent and the Lenders prompt written notice of such
actions, suits or proceedings.
(b) Neither any Borrower nor any Subsidiaries are in default with
respect to any order, writ, injunction or decree of any court, arbitrator or
Governmental Authority with which such Borrower or Subsidiary is obligated to
comply.
SECTION 3.06. Plan Compliance. At the Effective Date:
(a) Neither any Borrower nor any Subsidiary has incurred any
material accumulated funding deficiency within the meaning of ERISA nor has any
other ERISA Event occurred.
(b) Neither the PBGC nor any other Governmental Authority has
asserted that any Borrower or any Subsidiary has incurred any material liability
in connection with any Plan nor has any Borrower or any Subsidiary incurred any
such material liability.
(c) No Lien has been attached and no Person has threatened to attach
a Lien on any property of any Borrower or any Subsidiary as a result of any
Borrower's or any Subsidiary's failure to comply with any act or regulations
related to any Plan.
SECTION 3.07. Title and Freedom from Liens. At the Effective Date, each
Borrower and each Subsidiary has good, marketable and indefeasible title to all
of its properties and assets, real and personal, free and clear of all Liens and
encumbrances, except for the following:
(a) in the case of real properties, easements, restrictions,
exceptions, reservations or defects which, in the aggregate, do not interfere
materially with the continued use of such properties for the purposes for which
they are used and do not affect materially the value thereof;
(b) pledges, deposits or stay or appeal bonds to secure obligations
under workers' compensation laws or similar legislation or to secure performance
in connection with bids, tenders and contracts (other than contracts for the
payment of borrowed money) to which any Borrower or any Subsidiary is a party;
(c) deposits to secure public or statutory obligations of any
Borrower and any Subsidiaries or otherwise required by law or government
regulations as a condition of transacting business or executing any right,
privilege or license;
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(d) materialmen's, mechanics', carriers', workers' or other like
Liens arising in the ordinary course of business, or deposits of cash or United
States obligations to obtain the release of such Liens;
(e) Liens for taxes, assessments or governmental charges which are
not delinquent or are being contested in good faith and against which adequate
reserves have been provided; if any such amount is in excess of $100,000,
Borrower will notify the Administrative Agent and the Lenders as soon as
reasonably practicable;
(f) mortgages, liens, security interests or encumbrances granted to
the Lenders or as set out in Schedule 3.07 to this Agreement in existence as of
the Effective Date.
SECTION 3.08. Absence of Default. No Default or Event of Default has
occurred and is continuing.
SECTION 3.09. Existing Debts. On the Effective Date, no Borrower or
Subsidiary has Indebtedness except for (a) trade credit incurred in the ordinary
course of business and (b) other Indebtedness set forth in Schedule 3.09 to this
Agreement.
SECTION 3.10. Margin Stock. No Borrower or Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
or arranging for the extension of credit for the purpose of purchasing or
carrying "margin security" or "margin Stock" (as defined in Regulations G and U
issued by the Board). No Borrower or Subsidiary owns or intends to carry or
purchase any "margin security" or "margin Stock," except for stock of the
Primary Borrower purchased by the Primary Borrower as permitted by Section 5.23.
No Borrower or Subsidiary will use the proceeds of any Loan to purchase or carry
(or refinance any borrowings the proceeds of which were used to purchase or
carry) any "margin security" or "margin Stock," except for stock of the Primary
Borrower purchased by the Primary Borrower as permitted by Section 5.23.
SECTION 3.11. Compliance with Conditions Precedent. Each Borrower and each
Subsidiary has (a) executed and delivered to the Administrative Agent and the
Lenders the documents described in Section 4.01 hereto; (b) obtained and
delivered to the Administrative Agent and the Lenders the Opinions of Counsel
described in Section 4.01(b); and (c) otherwise complied with all other
conditions hereto.
SECTION 3.12. Relationship between Texas Sub, Alabama Sub and Primary
Borrower. Texas Sub and Alabama Sub (each a Guarantor) are separately
incorporated entities that operate independently from each other and from the
Primary Borrower. As of the Effective Date, each such Guarantor utilizes certain
accounting, management and other operational and organizational functions of the
Primary Borrower for operational and organizational efficiency, as well as to
assist in the preparation of tax returns on a consolidated basis. In the event
these functions were no longer provided to such Guarantors by the Primary
Borrower, such Guarantors would need to make the necessary adjustments in their
operations and organizational functions. As of the Effective Date, the majority
of the manufacturing and purchasing functions of such Guarantors are handled
independently from the Primary Borrower, although some of these functions are
occasionally
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shared for efficiency or as special circumstances warrant. As of the Effective
Date, the representations and warranties made by each of such Guarantors in its
respective Guarantee required to be executed and delivered pursuant to Sections
4.01(f) and (g) are true and correct; the Primary Borrower requires the Loan and
the Letter of Credit availability provided by this Agreement in order to
continue to support the Intercompany Loans described in such Guarantees and to
finance its own operations; and the Primary Borrower has determined that it is
advantageous to the Primary Borrower and its Subsidiaries, including such
Guarantors, for the Primary Borrower to concentrate the control of the cash and
working capital needs of the Primary Borrower and its Subsidiaries in the
management of the Primary Borrower.
SECTION 3.13. Environmental Matters. Except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, neither the Primary Borrower nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
SECTION 3.14. Taxes. Each of the Primary Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Primary Borrower or such Subsidiary,
as applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.15. Disclosure. The Primary Borrower has disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Primary
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains, as of the date such
material is furnished, any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Primary Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
SECTION 3.16. Loan Documents. All of the representations and
warranties contained in Security Agreements to be executed and delivered
pursuant to Sections 4.01(h) through (j) are true and correct.
SECTION 3.17. Labor Matters. Except as described in Schedule 3.17, as
of the Effective Date, there are no strikes, lockouts or slowdowns against the
Primary Borrower or any Subsidiary pending or, to the knowledge of the Primary
Borrower, threatened. The hours worked
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by and payments made to employees of the Primary Borrower and the 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 the Primary Borrower or any Subsidiary, or for which any claim
may be made against the Primary Borrower or any Subsidiary, on account of wages
and employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Primary Borrower or such Subsidiary.
The consummation of the Transactions will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Primary Borrower or any Subsidiary
is bound.
SECTION 3.18. Existing Letters of Credit. Schedule 3.18 describes all
letters of credit outstanding on the date of this Agreement and as of the
Effective Date and issued for the benefit of the Primary Borrower or any
Subsidiary.
SECTION 3.19. Investment and Holding Company Status. Neither the Primary
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.20. Locations of Assets. Each of the Primary Borrower, Texas Sub
and Alabama Sub is, as of the Effective Date, engaged in business at the
addresses listed on Schedule 3.20; and as of the Effective Date, the assets of
each, and all of its records relating to such assets, are kept at the addresses
indicated on such Schedule. As of the Effective Date, the inventory that is
described on Schedule 3.20 as "Warehoused Inventory" is (i) located at the
address or addresses indicated on such Schedule, (ii) is so located pursuant to
agreements with the Primary Borrower attached as part of such Schedule, (iii)
qualifies as "Warehoused Inventory" under the definition set forth in Section
1.01, (iv) has a book value as described in such Schedule and (v) is not covered
by any "documents of title", as such term is defined in Section 1-201(15) of the
Uniform Commercial Code of the State of New York.
SECTION 3.21. Insurance Program. As of the Effective Date, the
Borrower and its Subsidiaries maintain the insurance, with the insurance
companies, described in Schedule 3.21.
SECTION 3.22. Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Primary Borrower's and
its Subsidiaries' computer systems and (ii) equipment containing embedded
microchips (including systems and equipment supplied by others or with which
Primary Borrower's or it Subsidiaries' systems interface) and the testing of all
such systems and equipment, as so reprogrammed, will be completed without
resulting in any Default or any Material Adverse Effect. Subject to the proviso
contained in Section 3.15 regarding projected financial information, the cost to
the Primary Borrower and its Subsidiaries of such reprogramming and testing and
of the reasonably foreseeable consequences of year 2000 to the Primary Borrower
and its Subsidiaries (including, without limitation, reprogramming errors and
the failure of others who provide to the Primary Borrower or its Subsidiaries
computer services, systems or equipment) will not result in a Default or a
Material Adverse Effect. In the opinion of the management of the Primary
Borrower, except
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for such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Primary
Borrower and its Subsidiaries are and, with ordinary course replacement,
upgrading and maintenance, will continue for the term of this Agreement to be,
sufficient to permit the Primary Borrower to conduct its business without
Material Adverse Effect.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the Administrative
Agent (which may include telecopy transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of (i) Boylan, Brown, Code, Fowler, Vigdor & Wilson, counsel for
the Primary Borrower, substantially in the form of Schedule 4.01(b), and
covering such other matters relating to the Borrowers, this Agreement or the
Transactions as the Required Lenders shall reasonably request, (ii) J. Mark
Freeland, Esq., substantially in the form of Schedule 4.01(b-1), and covering
such other matters relating to Texas Sub, this Agreement or the Transactions
involving such Subsidiary as the Required Lenders shall reasonably request, and
(iii) counsel for Alabama Sub substantially in the form of Schedule 4.01 (b-2),
and covering such other matters relating to each such Subsidiary, this Agreement
or the Transactions involving such Subsidiary as the Required Lenders shall
reasonably request. The Primary Borrower hereby requests such counsel to deliver
such opinions.
(c) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by the President, a Vice President or a
Financial Officer of the Primary Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.02.
(d) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrowers hereunder.
(e) The Administrative Agent shall have received, for each of the
Primary Borrower, Texas Sub and Alabama Sub, a certificate of the Secretary for
each such corporation with attached supporting documents as follows:
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(i) resolutions duly adopted by the Board of Directors of such
corporation authorizing the execution, delivery and performance of this
Agreement and/or of the other Loan Documents to which such corporation is
a party, and of the Transactions;
(ii) an incumbency certificate;
(iii) copy of the Certificate of Incorporation and By-laws and
any amendments to either; and
(iv) certificate of good standing or similar subsistence
certificate in the corporation's state of incorporation and in each state
in which the corporation is qualified to do business.
(f) The Administrative Agent shall have received the Guarantee in
the form of Schedule 4.01(f) executed by Texas Sub, accompanied by the
documentation required to be delivered pursuant thereto.
(g) The Administrative Agent shall have received the Primary
Guarantee in the form of Schedule 4.01(g) executed by Alabama Sub, and the
Secondary Guarantee in the form of Schedule 4.01(g-1) executed by the Alabama
Sub, along with accompanying documentation required to be delivered pursuant to
each such Guarantee.
(h) The Administrative Agent shall have received the Security
Agreement in the form of Schedule 4.01(h) executed by The Primary Borrower,
along with accompanying documentation required to be delivered pursuant thereto.
(i) The Administrative Agent shall have received the General
Security Agreement in the form of Schedule 4.01(i) executed by the Texas Sub,
along with accompanying documentation required to be delivered pursuant thereto.
(j) The Administrative Agent shall have received the General
Security Agreement in the form of Schedule 4.01(i) executed by the Alabama Sub,
and the Security Agreement, Including Fixtures, in the form of Schedule 4.01(j)
executed by the Alabama Sub, along with accompanying documentation required to
be delivered pursuant to each.
(k) The Administrative Agent shall have received good standing,
franchise tax, judgment and UCC searches in the State of New York with respect
to the Primary Borrower, and in the State of Texas, with respect to the Primary
Borrower and Texas Sub, and in the State of Alabama, with respect to Alabama
Sub, [and in any other states in which assets are located as described in
Schedule 3.20] and the Administrative Agent shall have received such other
appropriate searches as may be requested by the Lenders and related to the
Security Agreements.
(l) Except as permitted under Section 5.20, all Indebtedness of the
Primary Borrower and its Subsidiaries (other than Indebtedness permitted
pursuant to Section 5.20) described in Schedule 4.01(l) shall have been paid in
full and all obligations thereunder and Liens
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related thereto that are not permitted pursuant to Section 5.20 shall have been
discharged, and the Agent shall have received satisfactory evidence of such
repayment or discharge.
(m) The Administrative Agent shall have received a Financial
Officer's certificate setting forth a computation of the Leverage Ratio as of
the end of the Fiscal Quarter ended December 26, 1997.
The Administrative Agent shall notify the Primary Borrower and the Lenders
of the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on April
30, 1998 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:
(a) The representations and warranties of the Borrowers set forth in
this Agreement shall be true and correct on and as of the date of such Borrowing
or the date of issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, provided, that representations and warranties that are
specifically made in this Agreement only as of the Effective Date must only have
been true and correct as of the Effective Date, and shall not be deemed made as
of any later date.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrowers on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE V
Affirmative and Negative Covenants
Until the Commitments have expired or been terminated in full and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, each Borrower covenants and
agrees with the Lenders that:
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SECTION 5.01. Punctual Payment. Each Borrower will punctually pay or cause
to be paid the principal and interest due in respect of each Borrowing made by
it according to the terms hereof and each Borrower will punctually pay or cause
to be paid the facility and other fees for which it is responsible pursuant to
Section 2.12 hereof. The Primary Borrower shall be jointly and severally liable
for all debts, liabilities and obligations of all Borrowers hereunder.
SECTION 5.02. Financial Information.
(a) The Primary Borrower will furnish to the Administrative Agent
for delivery to each of the Lenders annually within ninety (90) days after and
as at the close of each Fiscal Year its audited financial statements, including,
without limitation, consolidated and consolidating balance sheets and statements
of operations and earnings and changes in financial position, each examined and
reported upon by an independent certified public accounting firm of national
reputation, and the report of such accountants (i) shall not contain any
qualification or disclaimer of opinion by reason of going concern or audit
limitations imposed by the Primary Borrower and (ii) shall state that such
consolidated financial statements present fairly in all material respects the
financial condition and results of operations of the Primary Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied.
(b) The Primary Borrower will furnish to the Administrative Agent
for delivery to each of the Lenders within forty-five (45) days after and as of
the close of each Fiscal Quarter its financial statements, including, without
limitation, consolidated and consolidating balance sheets and related statements
of operations and earnings and changes in financial position of the Primary
Borrower for the previous Fiscal Quarter and from the beginning of the Fiscal
Year to the end of such Fiscal Quarter, together with comparisons to the
previous year, if appropriate, certified by a Financial Officer as presenting
fairly in all material respects the financial condition and results of
operations of the Primary Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied.
(c) The Primary Borrower will promptly furnish to the Administrative
Agent, for delivery to the Lenders, upon their becoming available, copies of all
regular and periodic financial reports, if any, which the Primary Borrower or
any of its Subsidiaries shall file with the Securities and Exchange Commission
or with any securities exchange.
(d) The Primary Borrower will promptly furnish to the Administrative
Agent, for delivery to the Lenders, upon their becoming available, copies of all
prospectuses of the Primary Borrower and all reports, proxy statements and
financial statements mailed by the Primary Borrower to its shareholders
generally.
(e) The Primary Borrower will promptly furnish to the Administrative
Agent for delivery to each of the Lenders on a quarterly basis within sixty (60)
days after and as at the close of each Fiscal Quarter a schedule of any
outstanding standby or performance letters of credit issued to a third party
beneficiary for the account of the Primary Borrower.
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(f) The Primary Borrower will furnish to the Administrative Agent
for delivery to each of the Lenders as soon as reasonably practicable with such
further information regarding the Primary Borrower's and its Subsidiaries'
business, condition, other credit sources, property, assets or operations,
financial or otherwise, as the Administrative Agent, at the instruction of the
Required Lenders, may from time to time reasonably request, all prepared in form
and detail reasonably satisfactory to the Administrative Agent and the Lenders.
(g) The Primary Borrower will at all times maintain true and
complete records and books of account including, without limiting the generality
of the foregoing, appropriate reserves for possible losses and liabilities, all
in accordance with GAAP consistently applied.
(h) Concurrently with any delivery of financial statements under
clauses (a) and (b) above, the Primary Borrower will furnish to the
Administrative Agent for delivery to each of the Lenders a certificate of a
Financial Officer of the Primary Borrower (i) certifying as to whether a Default
has occurred and, if a Default has occurred, specifying the details thereof and
any action taken or proposed to be taken with respect thereto, (ii) setting
forth reasonably detailed calculations demonstrating compliance with Sections
5.15, 5.16, 5.17 and 5.18 and computation of the Applicable Rate, (iii) stating
whether any change in GAAP or in the application thereof has occurred since the
date of the latest audited financial statements supplied by the Primary Borrower
to the Administrative Agent and, if any such change has occurred, specifying the
effect of such change on the financial statements accompanying such certificate,
(iv) if, during the period covered by such financial statements, any Subsidiary
was a designated Affiliate Borrower, describing generally the use made by each
Borrower of the Loans borrowed by it during the Fiscal Quarter covered by such
financial statements and relating such use to the unused Revolving Credit
Sublimit, as of the date of the financial statements with which such certificate
is delivered, of each Affiliate Borrower in sufficient detail to demonstrate
compliance with Section 2.01(b) (ii) as of such date, (v) setting forth the
information required to be reported pursuant to Section 4.2 of each of the
Security Agreements required to be executed and delivered by the Primary
Borrower, Texas Sub and Alabama Sub pursuant to Sections 4.01 (h), (i) and (j),
and certifying as to such Persons' compliance with Section 4.3.2 of each of such
Security Agreements and (vi) a balance sheet of each of Texas Sub and Alabama
Sub, as of the end of the most recent Fiscal Quarter, together with comparisons
to the previous year, prepared on the same basis as the balance sheet of each
such Subsidiary attached to its Guarantee executed pursuant to Section 4.01(f)
or (g), as the case may be.
(i) Concurrently with any delivery of financial statements under
clause (a) above, the Primary Borrower will furnish to the Administrative Agent
for delivery to each of the Lenders a certificate of the accounting firm that
reported on such financial statements stating whether they obtained knowledge
during the course of their examination of such financial statements of any
Default (which certificate may be limited to the extent required by accounting
rules or guidelines).
SECTION 5.03. Inspection of Borrowers' Property and Records. Each Borrower
shall permit and the Primary Borrower shall cause any Subsidiary to permit,
representatives of the Administrative Agent and the Lenders (a) to visit and
inspect any of the properties of such Borrower or any Subsidiary, (b) to examine
its or their corporate books and records, (c) to make extracts or copies of such
books and records, and (d) to discuss its or their affairs, finances and
accounts with
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its or their officers or partners, as applicable. The foregoing may be done at
any time within regular business hours upon one (1) Business Day's advance
notice.
SECTION 5.04. Preservation of Borrowers' Existence and Business.
(a) Each Borrower will preserve and keep in full force and effect
such Borrower's existence, rights, licenses and franchises and, except as
permitted under Section 5.11, the Primary Borrower will preserve and keep in
full force and effect those of Texas Sub and Alabama Sub, and any other
Subsidiaries which are necessary and material to the Primary Borrower's and
Subsidiaries' operations taken as a whole.
(b) No Borrower or Guarantor will make or permit to be made any
material change in the character of its business or operations, as opposed to
the method of conducting business.
SECTION 5.05. Payment of Debts and Obligations. Each Borrower will duly
pay and discharge, and the Primary Borrower will cause each of the Subsidiaries
to pay and discharge, all (i) its or their material obligations when due and
(ii) Taxes, assessments and governmental charges of which it has or they have
knowledge assessed against it or them or against its or their properties prior
to the dates on which penalties are attached thereto, unless and to the extent
only that such obligations, Taxes, assessments or charges are not material or
shall be contested in good faith and by appropriate proceedings by it (with
adequate book reserves in accordance with GAAP).
SECTION 5.06. Insurance Coverage. The Primary Borrower will maintain, and
cause any Subsidiaries to maintain, an adequate insurance program, with
financially sound and reputable insurance companies, covering all such
properties and risks as are customarily insured by, and in amounts not less than
those customarily carried by, corporations engaged in similar business and
similarly situated.
SECTION 5.07. Litigation. The Primary Borrower will promptly notify the
Administrative Agent and the Lenders in writing of the commencement of any
single litigation involving claims by or against any Borrower or any Subsidiary
in excess of Five Hundred Thousand Dollars ($500,000), or related litigations,
which, when aggregated, involve such claims in excess of One Million Dollars
($1,000,000), to which any Borrower or any Subsidiary, is a party defendant or
is a cross- or counter-defendant, except for litigation in which any Borrower's
contingent liability is fully covered by insurance. The Primary Borrower will
promptly notify the Administrative Agent and the Lenders in writing of any
judgment against any Borrower or Subsidiary in excess of $500,000.
SECTION 5.08. ERISA Compliance. (a) No Borrower subject to ERISA will
incur any accumulated funding deficiency within the meaning of ERISA and the
regulations thereunder, and no Borrower or Subsidiary maintaining or sponsoring
a Plan that is not subject to ERISA will incur or permit an accumulated funding
deficiency with respect to such Plan, to the extent that the amount of all such
deficiencies together is equal to or greater than $500,000, or (b) incur any
liability of comparable size to the Pension Benefit Guaranty Corporation; and
the Primary Borrower will give prompt written notice to the Administrative Agent
and each Lender of any ERISA Event.
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SECTION 5.09. FLSA Compliance. Each Borrower will and the Primary Borrower
will cause each Subsidiary to comply with the applicable provisions of the Fair
Labor Standards Act of 1938, as amended, or any other applicable federal, state,
local or foreign law dealing with such matters.
SECTION 5.10. Compliance with All Laws, Etc. No Borrower will knowingly
be, nor will the Primary Borrower permit any Subsidiary to knowingly be, in
violation of any law or regulation, order, writ, injunction or decree of any
court or Governmental Authority or in breach of any agreement or instrument to
which any Borrower or any Subsidiary is subject or in default thereunder, which
violation, breach or default could result in a Material Adverse Effect.
SECTION 5.11. Mergers, Acquisitions, Bulk Sales and Reorganization. No
Borrower will, nor will the Primary Borrower permit any Subsidiary to, enter
into or be a party to any merger, consolidation or reorganization, or sell,
transfer, convey, lease or otherwise dispose (in one transaction or a series of
transactions) of all or substantially all of its assets or business, or of any
of the shares of capital stock of any Affiliate Borrower or any Other
Subsidiary; provided, however, that (i) any wholly-owned Subsidiary may be
merged into the Primary Borrower; and (ii) any wholly-owned Other Subsidiary may
liquidate into the Primary Borrower if the Primary Borrower determines in good
faith that such liquidation is in the best interests of the Primary Borrower and
is not materially disadvantageous to the Lenders; and (iii) the Primary Borrower
may effect an Acceptable Acquisition permitted by Section 5.27; and (iv) the
Primary Borrower and any of its Subsidiaries may dispose of assets as permitted
pursuant to Section 5.26.
SECTION 5.12. Subsidiaries.
(a) No Borrower will organize or cause to exist any Subsidiaries,
except for the Subsidiaries listed in Schedule 3.01, unless each such new
Subsidiary shall provide the Lenders and the Administrative Agent with a
Guarantee of payment, and a Security Agreement securing such Guarantee, each in
a form acceptable to the Required Lenders and the Administrative Agent, of the
Facility Obligations.
(b) With regard to any Subsidiaries created after the Effective
Date, such Subsidiaries shall be duly organized, validly existing and in good
standing under the laws of the states or countries of their organization and
duly qualified to do business in all jurisdictions in which each owns
substantial properties or conducts substantial business or in which any of their
activities makes such qualification necessary except in those jurisdictions in
which failure to so qualify would not result in a Material Adverse Effect. If
any such Subsidiaries do not qualify in any such jurisdictions to do business or
to own properties, Primary Borrower shall give the Administrative Agent and the
Lenders prompt written notice of such circumstances.
SECTION 5.13. Maintenance of Properties. Each Borrower will maintain and
keep its properties in good condition, and from time to time make all repairs,
renewals and replacements, to the extent necessary for the conduct of its
business, and the Primary Borrower will cause the Subsidiaries to do the same.
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SECTION 5.14. Notice to Lenders and Administrative Agent of Default. The
Primary Borrower will immediately notify the Lenders and the Administrative
Agent in writing with full details of the occurrence of a Default or an Event of
Default or of any event which might cause a Material Adverse Effect.
SECTION 5.15. Consolidated Total Indebtedness to Consolidated Tangible Net
Worth. The Primary Borrower will not permit its Consolidated Total Indebtedness
to be more than 175% of its Consolidated Tangible Net Worth at the end of any
Fiscal Quarter.
SECTION 5.16. Leverage Ratio The Primary Borrower shall not permit the
Leverage Ratio as of the last day of any Fiscal Quarter to be greater than 3.0.
SECTION 5.17. Interest Coverage. The Primary Borrower shall not permit the
ratio of EBITDA to Consolidated Interest Expense to be less than 3.50 to 1.0 for
each twelve month period ending on the last day of each Fiscal Quarter.
SECTION 5.18. Consolidated Current Assets to Consolidated Total
Indebtedness. The Primary Borrower will not permit its ratio of Consolidated
Current Assets, less cash, to Consolidated Total Indebtedness to be less than
1.0 at the end of any Fiscal Quarter. For purposes of this Section,
"Consolidated Current Assets" shall mean all assets of the Primary Borrower and
its Consolidated Subsidiaries that are classified as current assets in
accordance with GAAP and that appear on the consolidated balance sheet of the
Primary Borrower.
SECTION 5.19. Restrictions on Use of Proceeds. Each Borrower shall use the
proceeds of Loans and Letters of Credit to fund capital expenditures, Acceptable
Acquisitions, working capital and other general corporate expenditures, and for
no other purposes. No proceeds of any of the Loans made pursuant to this
Agreement shall be used, whether directly or indirectly, for any purpose that
entails a violation of any of the regulations of the Board, including
Regulations G, T, U and X.
SECTION 5.20. Indebtedness. The Primary Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except Indebtedness created hereunder or pursuant hereto, and the
following additional Indebtedness:
(a) The Primary Borrower and its Subsidiaries together shall be
permitted to borrow from time to time and to have outstanding aggregate
principal Indebtedness for borrowed money that is not wholly or partially
secured by any Lien, of up to $2,000,000 (using the Exchange Rate with respect
to any Indebtedness denominated in a currency other than Dollars);
(b) Up to an aggregate of $524,804 of additional Indebtedness for
borrowed money owed by Texas Sub and Alabama Sub, as existing on the Effective
Date and described in Section A of Schedule 3.09, and up to an aggregate of
$223,731 of additional Indebtedness for borrowed money owed by the Primary
Borrower, as existing on the Effective Date and described in Section A of
Schedule 3.09 as the Wayne county IDA Capitalized lease obligation, the NY JDA
Mortgage note payable and the mortgage note payable to Lagana Associates, all of
which
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Indebtedness may be secured only by Liens as set forth on such Schedule;
provided, that no such Indebtedness may be renewed or refinanced except by
Borrowings pursuant to this Agreement and by borrowings permitted pursuant to
Section 5.20(a) above;
(c) Additional Indebtedness owed by Texas Sub and Alabama Sub to the
Primary Borrower, as existing on the Effective Date and described as
Intercompany Loans in Section B of Schedule 3.09; provided, that (i) the
Intercompany Loan of Texas Sub described in Section B of Schedule 3.09 as a long
term mortgage may continue to be secured by a mortgage on real property owned by
Texas Sub, as described in such Schedule, but such Indebtedness may not be
renewed or refinanced except by Borrowings pursuant to this Agreement, by
borrowings permitted pursuant to Section 5.20(a) above and by unsecured
Intercompany Loans from the Primary Borrower, and (ii) there shall be no limit
on the amount of unsecured Intercompany Loans owed to the Primary Borrower by
either Texas Sub or Alabama Sub; and
(d) Up to an aggregate additional Indebtedness not exceeding
$3,000,000 at any time outstanding, consisting of reimbursement obligations
related to letters of credit (other than Letters of Credit issued pursuant to
this Agreement), issued by one or more of the Lenders, which Indebtedness may be
secured pursuant to, and by the same collateral as is covered by, the Security
Agreement signed by the Primary Borrower pursuant to Section 4.01(h) as long as
(i) the Lien(s) securing such reimbursement obligations shall be pari passu with
the Lien(s) securing the Facility Obligations and (ii) such Lien(s) securing
such reimbursement obligations may not be foreclosed prior to the commencement
of foreclosure proceedings to enforce the Lien(s) pursuant to the Primary
Borrower's Security Agreement.
In computing all Dollar limitations relating to Indebtedness permitted
pursuant to paragraphs (a) and (d), if any Indebtedness of the Primary Borrower
or any Subsidiary is guaranteed by the Primary Borrower or another Subsidiary,
as the case may be, the amount of the Indebtedness so guaranteed shall only be
included as one Indebtedness.
SECTION 5.21. Liens. No Borrower will, nor will the Primary Borrower
permit any Subsidiary to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:
(a) Liens created pursuant to Security Agreements;
(b) Permitted Encumbrances; and
(c) Liens securing Indebtedness, to the extent permitted pursuant to
paragraphs (b), (c) and (d), of Section 5.20.
Without limiting the foregoing, if, subsequent to the Effective Date, any
Borrower or any Subsidiary shall grant or suffer to exist any Lien to a third
party on any of its or their properties or assets in a single transaction or in
related transactions in an amount in excess of Two Hundred
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Fifty Thousand Dollars ($250,000.00), the Primary Borrower shall provide the
Administrative Agent and the Lenders with written notice as soon as reasonably
practicable.
SECTION 5.22. Investments, Loans, Advances, Guarantees and Acquisitions.
The Primary Borrower will not, and will not permit any of its Subsidiaries to,
purchase, hold or acquire (including pursuant to any merger with any Person that
was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:
(a) Permitted Investments and investments in existence on the date
hereof and described on Schedule 5.22;
(b) stock, obligations or securities received in settlement of debts
(created in the ordinary course of business) owing to the Primary Borrower or
any such Subsidiary; and
(c) any Acceptable Acquisition permitted by Section 5.27;
(d) Guarantees constituting Indebtedness permitted by Section 5.20;
and
(e) loans, advances and equity investments made by the Primary
Borrower to or in any of its Subsidiaries that have executed Guarantees of the
Facility Obligations in form and substance satisfactory to the Lenders, provided
that any such loans, advances and equity investments are made only in cash.
SECTION 5.23. Restricted Payments. The Primary Borrower will not, and will
not permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except (a) the Primary Borrower
may declare and pay dividends with respect to its capital stock payable solely
in additional shares of its common stock, (b) wholly-owned Subsidiaries may
declare and pay dividends to the Primary Borrower with respect to their capital
stock, (c) the Primary Borrower may make Restricted Payments pursuant to and in
accordance with stock option plans or other benefit plans for management or
employees of the Primary Borrower that are described in Schedule 5.23, (d) as
long as no Default exists and is continuing, or would be created thereby, the
Primary Borrower may pay cash dividends with respect to its outstanding capital
stock and may repurchase shares of its outstanding capital stock and (e) the
Primary Borrower may issue to its shareholders rights to purchase shares of the
Primary Borrower's preferred stock pursuant to IEC Electronics Corp. and
ChaseMellon Shareholder Services, L.L.C., Rights Agent, Rights Agreement, a copy
of which is included in Schedule 5.23.
SECTION 5.24. Transactions with Affiliates. The Primary Borrower will not,
and will not permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) for sales of inventory and equipment in the
ordinary
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course of business for cash, at prices and on terms and conditions not less
favorable to the Primary Borrower or such Subsidiary than could be obtained on
an arm's-length basis from unrelated third parties, and (b) any Restricted
Payments permitted by Section 5.23, and (c) cash loans, advances and equity
investments permitted under Section 5.22(e), and (d) sales of equipment and
inventory from the Primary Borrower to its Subsidiaries, provided that all
assets so transferred are sold at a price that is not less than the net value at
which such assets are carried on the books of the Primary Borrower maintained
for financial reporting purposes and that such price is paid either in cash or
by an increase in the intercompany loans owed by such Subsidiary to the Primary
Borrower and (e) sales of equipment and inventory from any Subsidiary to the
Primary Borrower, provided that all assets so transferred are sold at a price
that is not less than the net value at which such assets are carried on the
books of the Subsidiary maintained for financial reporting purposes and that
such price is paid either in cash or by an adjustment in any intercompany loans
between such Subsidiary and the Primary Borrower, such that if the Subsidiary
owes the Primary Borrower intercompany loans the loan balance shall be reduced,
and if the Primary Borrower owes the Subsidiary intercompany loans, the loan
balance shall be increased, by the amount of the purchase price.
SECTION 5.25. Restrictive Agreements. The Primary Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of the Primary Borrower
or any Subsidiary to create, incur or permit to exist any Lien upon any of its
property or assets, or (b) the ability of any Subsidiary to pay dividends or
other distributions with respect to any shares of its capital stock or to make
or repay loans or advances to any Borrower or any other Subsidiary or to
Guarantee Indebtedness of any Borrower or any other Subsidiary; provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by the Loan Documents, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 5.25 (but shall
apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof.
SECTION 5.26. Sale of Assets. The Primary Borrower will not sell, lease,
assign, transfer or otherwise dispose of, or permit any of its Subsidiaries to
sell, lease, assign, transfer or otherwise dispose of, any of its or their now
owned or hereafter acquired assets (including, without limitation, shares of
stock and indebtedness of such Subsidiaries, receivables and leasehold
interests), except: (a) for inventory disposed of in the ordinary course of
business; (b) for transactions with Affiliates permitted under Section 5.24; and
(c) for the sale or other disposition of assets to Persons other than
Affiliates, provided that as of any date, no such disposition under this clause
(c) shall be permitted unless after giving effect to such disposition (i) the
aggregate
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value of all assets so disposed of subsequent to the date hereof will constitute
less than 5% of Consolidated Tangible Net Worth as of the end of the Fiscal Year
then most recently ended, and (ii) the assets so disposed of subsequent to the
date hereof will have contributed less than 10% of the Consolidated Net Income
of the Primary Borrower and its Consolidated Subsidiaries, for any of the three
Fiscal Years then most recently ended.
SECTION 5.27. Acquisitions. Without the prior written consent of the
Required Lenders, the Primary Borrower will not, and will not permit any of its
Subsidiaries to, make any Acquisition other than an Acceptable Acquisition.
"Acceptable Acquisition" means any separate individual Acquisition which
has been either (a) approved by the Board of Directors of the corporation, or
the comparable or appropriate body of any other Person, which is the subject of
such Acquisition or (b) recommended by such Board to the shareholders of such
corporation, or by such other body to the equity holders of such other Person,
and in each case (i) does not cause the aggregate cash consideration paid for
all such Acquisitions made during any Fiscal Year to exceed $10,000,000, and
(ii) does not cause the aggregate value of all forms of consideration paid for
all such Acquisitions made in such Fiscal Year to exceed $35,000,000, and (iii)
is made under circumstances in which no Default or Event of Default will either
exist or result therefrom, and in which pro forma financial statements including
the Primary Borrower, its Subsidiaries and the Person and/or assets to be
acquired, covering the most recent 12 month period for which financial
statements are available and the twelve months following the Acquisition, would
show that no Default or Event of Default will result from the Acquisition.
"Acquisition" means any transaction pursuant to which the Primary Borrower
or any of its Subsidiaries (a) acquires equity securities (or warrants, options
or other rights to acquire such securities) of any Person other than the Primary
Borrower or any Person which is not then a Subsidiary of the Primary Borrower,
pursuant to a solicitation of tenders therefor, or in one or more negotiated
block, market or other transactions not involving a tender offer, or a
combination of any of the foregoing, or (b) makes any Person a Subsidiary of the
Primary Borrower, or causes any such Person to be merged into the Primary
Borrower or any of its Subsidiaries, in any case pursuant to a merger, purchase
of assets or any reorganization providing for the delivery or issuance to the
holders of such Person's then outstanding securities, in exchange for such
securities, of cash or securities of the Primary Borrower or any of its
Subsidiaries, or a combination thereof, or (c) purchases all or substantially
all of the business or assets of any Person.
SECTION 5.28 Certain Management Changes. If any individual holding the
position of the Primary Borrower's Chairman, President and Chief Operating
Officer or Chief Financial Officer for any reason resigns, is removed from
office involuntarily, dies, is disabled for 90 days or more during any 12 month
period, or otherwise ceases to hold any such position for any reason, the
Primary Borrower will provide the Administrative Agent, for transmission to the
Lenders, within 30 days after such occurrence, with a written plan for replacing
such individual or for an alternative means of fulfilling the functions of such
individual.
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SECTION 5.29 Location of Assets. The assets of the Primary Borrower, Texas
Sub and Alabama Sub shall be kept at their respective addresses described in
Schedule 3.20 and no such Person shall change the location of any such assets
except in compliance with this Section, with Section 5.24 and with the Security
Agreement executed by it. However, if any of the Primary Borrower, Texas Sub or
Alabama Sub desires to warehouse inventory in one or more other locations for
the purpose of maintaining a stock that qualifies as Warehoused Inventory,
Primary Borrower, Texas Sub or Alabama sub shall be permitted to do so if either
(i) the Administrative Agent, as agent for the Lenders, has a first perfected
Lien on such Warehoused Inventory pursuant to a Security Agreement, in form and
substance satisfactory to the Lenders and the Administrative Agent, and the
Lenders are otherwise satisfied with the terms and conditions of such Lien and
the other documentation provided in connection therewith or (ii) with respect to
any Warehoused Inventory located outside of the U.S. that is not subject to a
first priority Lien meeting the conditions of clause (i) above, the book value
of all such Warehoused Inventory of Primary Borrower, Texas Sub and Alabama Sub
located at any single location outside the U.S. never exceeds $3,000,000, and
the book value of all such Warehoused Inventory of Primary Borrower, Texas Sub
and Alabama Sub at all locations never exceeds $6,000,000.
SECTION 5.30 Intercompany Loans/Payments. The Primary Borrower agrees with
the Lenders that (i) any payments made by either Alabama Sub or Texas Sub in
reduction of its obligation under the Guarantee(s) executed by it pursuant to
Sections 4.01(g) or (f), respectively, shall reduce Dollar for Dollar its
obligation to the Primary Borrower for repayment of its Intercompany Loans
referred to in its Guarantee(s) and (ii) the Primary Borrower will not demand,
enforce or accept any payments on account of either such Subsidiary's
Intercompany Loans at a time when such Subsidiary is insolvent or if such
payments could reasonably be expected to render such Subsidiary insolvent, to
leave it with unreasonably small capital for the business in which it is engaged
and in which it intends to engage, or to leave it unable to pay its other
Indebtedness as the same matures.
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ARTICLE VI
Guarantee
Without limitation of any obligation of any of the Borrowers or any rights
of the Lenders hereunder, Primary Borrower (herein "Initial Guarantor") hereby
unconditionally guarantees to the Lenders and the Administrative Agent the full,
prompt and punctual payment when due of any and all Facility Obligations owed at
any time by any of the Affiliate Borrowers.
The Initial Guarantor agrees and understands that its obligations under
this Article VI shall be unconditional, regardless of any circumstances which
might constitute a legal or equitable discharge of a surety or guarantor and
regardless of any law, rule, regulation, decree or order now or hereafter in
effect in any jurisdiction purporting to affect in any manner any of the terms
of the Facility Obligations or the rights of the Lenders or the Administrative
Agent under this Article VI, and the Initial Guarantor expressly waives each of
the foregoing. In furtherance, but not in limitation, of the foregoing, the
liability of the Initial Guarantor under this Article VI shall be unconditional
irrespective of the following:
(i) The lack of genuineness, validity, regularity or enforceability
of the Facility Obligations or of any debt, liability or obligation
evidenced thereby or contained therein;
(ii) Any extension of time of payment or renewal in whole or in part
of any Facility Obligation;
(iii) The failure of the Lenders or the Administrative Agent to
obtain rights in any collateral or to perfect rights in any collateral
which may now or hereafter secure payment of any Facility Obligation;
(iv) Any exchange or release of, or compromise or settlement with
respect to, any obligation or any collateral which may now or hereafter
secure payment of any Facility Obligation;
(v) Any change in or waiver of the time, manner or place of payment,
or any other terms, of any Facility Obligation;
(vi) The bankruptcy, insolvency, dissolution, reorganization,
merger, consolidation, sale of assets, discharge in bankruptcy, adjustment
or composition of debts, appointment of a trustee or receiver, or any
other proceeding or event, with respect to any Borrower;
(vii) The release of, or any compromise or settlement with, any
Guarantor, endorser or other party, person or entity liable primarily or
secondarily on any Facility Obligation;
(viii)Any delay or lack of promptness or diligence by the Lenders or
the Administrative Agent in enforcing the rights of the Lenders or the
Administrative Agent under any Loan Document;
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(ix) The existence of any claim, set-off or other rights which any
Borrower may have at any time against the Lenders or the Administrative
Agent or other corporation or person, whether in connection herewith or by
reason of any unrelated transactions, provided that nothing herein shall
prevent the assertion of any such claim by separate suit or compulsory
counterclaim;
(x) Any claim of invalidity or unenforceability relating to or
against any other Borrower or any Guarantor for any reason with respect to
the Facility Obligations, or any provision of applicable law or regulation
purporting to prohibit the payment by any other Borrower or any such
Guarantor of any Facility Obligation; or
(xi) Any other act or omission to act or delay of any kind by any
Borrower, any Guarantor, the Lenders or the Administrative Agent or any
other Person, or any other circumstance whatsoever which might, but for
the provisions of this paragraph, constitute a legal or equitable
discharge of any Guarantor's obligations under this Article VI.
The Initial Guarantor agrees that if the Lenders or the Administrative
Agent are ever required to repay all or any part of any amount or amounts
received by the Lenders or the Administrative Agent in payment or on account of
any Facility Obligation, by reason of any judgment, order or decree of any court
or administrative body, or by reason of any settlement or compromise of any
claim made upon the Lenders or the Administrative Agent to repay any such amount
or amounts, then any such judgment, order, decree, settlement or compromise
shall be binding upon Initial Guarantor notwithstanding any termination of this
Agreement or the cancellation of any Facility Obligation; and the Initial
Guarantor shall be and remain liable to the Lenders and the Administrative Agent
under this Article VI for the amounts so repaid to the same extent as if such
amounts had never originally been received by the Lenders or the Administrative
Agent.
The Lenders and the Administrative Agent may proceed to exercise any
rights or remedies which the Lenders and the Administrative Agent may have under
this Article VI without first pursuing or exhausting any other rights or
remedies which the Lenders or the Administrative Agent may have against any
Borrower, any collateral security for the payment of the Facility Obligations,
or any other Guarantor or other person or entity.
If a Borrower makes any payment pursuant to and under this Agreement,
including without limitation this Article VI, such Borrower shall not exercise
any right of subrogation or any right of contribution unless and until the
Lenders and the Administrative Agent have received payment in full of the
Facility Obligations.
This Article VI is a continuing Guarantee and shall remain in force and
effect until all of the Facility Obligations (including all expenses and
reasonable attorneys' fees which may be incurred in enforcing any rights of the
Lenders and the Administrative Agent under this Article VI) shall be paid or
performed.
Initial Guarantor hereby irrevocably waives notice of acceptance hereof,
presentment, demand, protest and any notice not provided for herein.
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All sums to the credit of Initial Guarantor and any property of Initial
Guarantor in the possession of any Lender or the Administrative Agent at any
time shall be deemed held by such Lender or the Administrative Agent as security
for payment of the Facility Obligations and Initial Guarantor hereby grants to
each Lender and the Administrative Agent the right, without notice to Initial
Guarantor, to set off such sums against any obligations of Initial Guarantor
hereunder.
Initial Guarantor shall have no right of subrogation, reimbursement,
indemnity or contribution from any Borrower (including another Initial
Guarantor) unless and until all Facility Obligations shall have been paid in
full.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) any Borrower or any Guarantor shall fail to pay any principal of
any Loan or any reimbursement obligation in respect of any LC Disbursement when
and as the same shall become due and payable, whether at the due date thereof or
at a date fixed for repayment thereof or otherwise, and such failure shall
continue unremedied for a period of three (3) Business Days;
(b) any Borrower or any Guarantor shall fail to pay any interest on
any Loan or any fee or any other amount (other than an amount referred to in
clause (a) of this Article) payable under this Agreement, when and as the same
shall become due and payable, and such failure shall continue unremedied for a
period of five Business Days;
(c) the Primary Borrower defaults in the performance of any covenant
contained in Section 5.15, 5.16, 5.17 or 5.18 of this Agreement; or the Primary
Borrower, Texas Sub or Alabama Sub, or any other Person, defaults in the
performance of any covenant, or obligation contained in Section 4.3.1 of the
Security Agreement to which it is a party; or the Primary Borrower, Texas Sub or
Alabama Sub, or any other Person, defaults in the performance of any covenant or
obligation contained in Section 4.1 of the Security Agreement to which it is a
party, provided, that, with respect to the first such default only, the same
shall not constitute an Event of Default until the expiration of five (5) days
after written notice of such default shall have been rendered to the Primary
Borrower by the Administrative Agent; or the Primary Borrower, Texas Sub or
Alabama Sub, or any other Person, defaults in the performance of any covenant or
obligation contained in Section 4.3.2, 4.4, 4.5, 4.6, 4.7, 4.10, 4.11, 4.12,
4.13 or 4.14 of the Security Agreement to which it is a party - and such Person
does not remedy that default within a period of fifteen (15) days after its
occurrence; or any representation or warranty made or deemed made by or on
behalf of any Borrower in Sections 3.04, 3.07, 3.09, 3.12, 3.15 or 3.16 of this
Agreement or in its Security Agreement, or by any Guarantor in its Guarantee, or
by Texas Sub or Alabama Sub, or any other Person, in the Security Agreement to
which it is a party, shall prove to have been incorrect or misleading in any
material respect when made or deemed made;
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(d) other than a default under clause (a), (b) or (c) of this
Article, (i) any Borrower defaults in the performance of any covenant or
obligation in this Agreement or in any other Loan Document, or (ii) or any
representation or warranty made or deemed made by or on behalf of any Borrower
or any Subsidiary in or in connection with this Agreement or any other Loan
Document, or any amendment or modification hereof or thereof, or waiver
hereunder or thereunder, or by any Borrower, any Subsidiary or any Guarantor in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any amendment or
modification hereof or waiver hereunder, shall prove to have been incorrect or
misleading in any material respect when made or deemed made, or (iii) any
Guarantor defaults in the performance of any covenant or obligation of a
Guarantee- and such Borrower or Guarantor or Subsidiary, as the case may be,
does not remedy that default within a period of thirty (30) days after written
notice of such default shall have been rendered to the Primary Borrower by the
Administrative Agent at the request of the Required Lenders;
(e) any Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable; or any
event or condition occurs that results in any Material Indebtedness becoming due
prior to its scheduled maturity or that enables or permits (with or without the
giving of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (e) shall not apply either (i) to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness or (ii) to non payment of liabilities
incurred in the ordinary course of business that are properly classified as
accounts payable in accordance with GAAP.
(f) (i) any event occurs or condition exists which, with notice or
lapse of time or both, would make any employee pension benefit plan of any
Borrower, any Subsidiary or any Guarantor subject to termination under
subsections (1), (2) and (3) of Section 4042(a) of ERISA, unless the
Administrative Agent at the request of the Required Lenders has first given its
prior written approval of such event or condition, which approval will not be
unreasonably withheld, or (ii) any Borrower, any Subsidiary, any Guarantor or
any of their respective plan administrators shall have received notice from the
Pension Benefit Guaranty Corporation indicating that it has made a determination
that an employee pension benefit plan of the Primary Borrower, any Subsidiary or
any Guarantor is subject to termination under Section 4042(a)(4) of ERISA, or
(iii) any Borrower, any Subsidiary or any Guarantor is subject to employer's
liability under Sections 4062, 4063, or 4064 or ERISA, in each case under ERISA
as now or hereafter amended, or (iv) an ERISA Event shall otherwise have
occurred that, in the opinion of the Required Lenders, when taken together with
all other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect.
(g) any Borrower, any Subsidiary or any Guarantor is generally not
paying its debts, respectively, as they become due in the ordinary course of its
business or shall admit in writing its inability to do so;
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(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, administration, winding-up,
reorganization or other relief in respect of any Borrower, any Subsidiary or any
Guarantor or its debts, or of a substantial part of its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator, administrator, liquidator or similar
official for any Borrower, any Subsidiary or any Guarantor or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for sixty (60) days or an order or decree approving or
ordering any of the foregoing shall be entered;
(i) any Borrower, any Subsidiary or any Guarantor shall (i)
voluntarily commence any proceeding or file any petition seeking liquidation,
administration, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver,
administrator, trustee, custodian, sequestrator, conservator, liquidator or
similar official for any Borrower, any Subsidiary or any Guarantor or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) the Borrower, any Subsidiary or any Guarantor shall become
unable, to pay its debts as they become due;
(k) one or more final judgments which when aggregated are in excess
of Five Hundred Thousand Dollars ($500,000) or more at any one time outstanding
are rendered against any Borrower, any Subsidiary or any Guarantor and are not
satisfied, bonded, stayed or insured for a period of thirty (30) days
thereafter, or any action shall be legally taken by a judgment creditor to
attach or levy upon any assets of any Borrower, any Subsidiary or any Guarantor
to enforce any such judgment;
(l) a Change in Control shall occur;
(m) any of the Guarantees actually delivered pursuant hereto shall
at any time not be in full force and effect and valid and binding with respect
to the Guarantor under such Guarantee for any reason whatsoever, except where
any such Guarantor has merged into the Primary Borrower or another Guarantor, or
has been liquidated an dissolved, if permitted under Section 5.11.
(n) any of the Security Agreements actually delivered pursuant
hereto shall at any time not be in full force and effect and valid and binding
with respect to the corporation executing same for any reason whatsoever, except
where any such corporation has merged into the Primary Borrower or another
Guarantor, or has been liquidated and dissolved, if permitted under Section
5.11.
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then, and in every such event (other than an event described in clause (h) or
(i) of this Article), and at any time thereafter during the continuance of such
event, the Administrative Agent may, and at the request of the Required Lenders
shall, by notice to the Primary Borrower, take either or both of the following
actions, at the same or different times: (i) terminate the Commitments, and
thereupon the Commitments shall terminate immediately, and (ii) declare the
Loans then outstanding to be due and payable in whole (or in part, in which case
any principal not so declared to be due and payable may thereafter be declared
to be due and payable), and thereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and all fees and
other obligations of each Borrower accrued hereunder, shall become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Borrower and (iii) require the
deposit of cash collateral pursuant to Section 2.06(j); and in case of any event
with respect to any Borrower described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of each Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by each Borrower.
ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent hereunder and under the other Loan Documents
and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the
terms hereof and thereof, together with such actions and powers as are
reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent. Such bank and
its Affiliates may accept deposits from, lend money to and generally engage in
any kind of business with any Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder. The Administrative
Agent may accept fees and other consideration from the Borrowers for services in
connection with this Agreement or otherwise without having to account for the
same to the Lenders.
The Administrative Agent shall not have any duties or obligations except
those expressly set forth herein and under the other Loan Documents. Without
limiting the generality of the foregoing, (a) the Administrative Agent shall not
be subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall not
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02 or as otherwise specifically
provided in the Loan Documents), and (c) except as expressly set forth herein,
the
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Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to any Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02 or as otherwise specifically provided in the Loan
Documents) or in the absence of its own gross negligence or wilful misconduct.
The Administrative Agent shall be deemed not to have knowledge of any Default
unless and until written notice thereof, specifying that a Default exists and
describing a such Default, is given to the Administrative Agent by the Primary
Borrower or a Lender. In the event that the Administrative Agent receives such a
notice of the occurrence of a Default, the Administrative Agent shall give
prompt notice thereof to the Lenders. The Administrative Agent shall (subject to
Article VII) take such action with respect to such Default which is continuing,
including the enforcement of any Lien securing the Facility Obligations, as
shall be directed by the Required Lenders; provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may take such action, or refrain from taking such action, with respect to
such Default and Lien as it shall deem advisable in the best interest of the
Lenders; and provided further that the Administrative Agent shall not be
required to take any such action which it determines to be contrary to law. The
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other Loan Document, or any other related agreement,
instrument or document, or for the perfection, priority or enforceability of any
Lien securing the Loans, fees and other Facility Obligations or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone or by other
means and believed by it to be made by the proper Person, and shall not incur
any liability for relying thereon. The Administrative Agent may consult with
legal counsel (who may be counsel for any Borrower), independent accountants and
other experts selected by it, and shall not be liable for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants
or experts.
Except for action expressly required of the Administrative Agent
hereunder, the Administrative Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall have received further
assurances (which may include cash collateral) of the indemnification
obligations of the Lenders under Section 9.03(c) in respect of any and all
liability and expense which may be incurred by it in the 90 days following
receipt of any such assurances by reason of taking or continuing to take any
such action.
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The Administrative Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders, the Issuing Bank and the Primary Borrower. In
addition, the Administrative Agent may be removed for cause at any time by the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right, in consultation with the Primary Borrower, to appoint a
successor, which shall be a Lender. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation or has
been removed, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrowers to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between all Borrowers and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, the other Loan Documents, and
any related agreement or any document furnished hereunder or thereunder.
None of the provisions of this Article VIII or of Section 9.03(c) shall
inure to the benefit of any Borrower or anyone other than the Administrative
Agent and the Lenders. Consequently, neither any Borrower or any other Person
shall be entitled to rely upon such provisions or to raise as a defense, in any
manner whatsoever, the failure of the Administrative Agent or any Lender to
comply with such provisions.
ARTICLE IX
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Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy to the Administrative Agent, to each
Borrower and to each Lender and its applicable lending office, at the
address(es) set forth on its respective signature page to this Agreement.
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 9.02. Waivers; Amendments.
(a) No failure or delay by the Administrative Agent, the Issuing
Bank or any Lender in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Administrative Agent, the
Issuing Bank and the Lenders hereunder are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provision of this Agreement or consent to any departure by any Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph(b) of this Section, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. Without
limiting the generality of the foregoing, the making of a Loan or issuance of a
Letter of Credit shall not be construed as a waiver of any Default, regardless
of whether the Administrative Agent, any Lender or the Issuing Bank may have had
notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by each Borrower and the Required Lenders or by each Borrower and
the Administrative Agent with the consent of the Required Lenders; provided that
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent or the Issuing Bank hereunder without the prior
written consent of the Administrative Agent or the Issuing Bank, as the case may
be. The Guarantees (other than that contained in Article VI) and the Security
Agreements may be waived, modified and amended as provided therein.
SECTION 9.03. Expenses; Indemnity; Damage Waiver.
(a) Each Borrower shall be jointly and severally obligated to pay
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent, in connection with the syndication of the
credit facilities provided for herein, the preparation and administration
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of this Agreement, the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred
by the Administrative Agent, the Issuing Bank or any Lender, including the
reasonable fees, charges and disbursements of any counsel for the Administrative
Agent, the Issuing Bank or any Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement and the other Loan
Documents, including its rights under this Section, or in connection with the
Loans made or Letters of Credit issued hereunder, including all such reasonable
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) Each Borrower shall indemnify the Administrative Agent, the
Issuing Bank and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of this
Agreement, the other Loan Documents or any other agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by the Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by any Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to any
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the fraud, gross negligence or
wilful misconduct of such Indemnitee.
(c) To the extent that any Borrower fails to pay any amount required
to be paid by it to the Administrative Agent or the Issuing Bank under paragraph
(a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as the case may be, such Lender's
share (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Issuing Bank in its capacity as such. Each Lender's
share of such unpaid amount shall be a fraction of such amount equal to the
aggregate unpaid principal amount of all of such Lender's Loans at the time of
determination, divided by the aggregate unpaid principal amount of all Loans at
such time. Each Lender shall be entitled to be indemnified by each Borrower for
any amounts paid to the Administrative Agent under this paragraph (c) pursuant
to paragraph (b) of this Section.
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(d) To the extent permitted by applicable law, no Borrower shall
assert, and each Borrower hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement, any Loan Document or any other
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 9.04. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto (except as provided in the last paragraph
of Article VIII) and their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
except that no Borrower may assign or otherwise transfer any of its rights or
obligations hereunder or under any other Loan Document without the prior written
consent of each Lender (and any attempted assignment or transfer by a Borrower
without such consent shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
including any Affiliate of the Issuing Bank that issues any Letter of Credit
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Administrative Agent, the Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement or under any other Loan
Document (including all or a portion of its Commitment and the Loans at the time
owing to it); provided that (i) except in the case of an assignment to a Lender
or an Affiliate of a Lender, each of the Primary Borrower and the Administrative
Agent (and, in the case of an assignment of all or a portion of a Commitment or
any Lender's obligations in respect of its LC Exposure, the Issuing Bank) must
give their prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment, the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Primary Borrower and the Administrative Agent otherwise consent, (iii) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender's rights and obligations under this Agreement and the other
Loan Documents, except that this clause (iii) shall not apply to rights in
respect of outstanding Competitive Loans, (iv) the parties to each assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500 for each
assignment, and (v) the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire; and provided further
that any consent of the Primary Borrower otherwise required under this paragraph
shall not be required if an Event of Default has
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occurred and is continuing. Subject to acceptance and recording thereof pursuant
to paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Primary Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment
of, and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and Borrowers, the Administrative Agent, the
Issuing Bank and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowers, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of any Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement and the other Loan Documents
(including all or a portion of its Commitment and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) each Borrower, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of
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the Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 9.02(b) that affects such Participant. Subject to
paragraph (f) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 9.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.18(c) as
though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.15 or 2.17 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Primary Borrower's prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 2.17
unless the Primary Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Primary
Borrower, to comply with Section 2.17(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by each Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating
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to the subject matter hereof. Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns (except as
provided in the last paragraph of Article VIII). Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of any Borrower
against any of and all the obligations of such Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process.
(a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York applicable to contracts made and to
be performed in such state, without regard to conflict of laws principles.
(b) Each Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in Monroe County and of the United States
District Court for the Western District of New York sitting in Monroe County,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against any Borrower or its properties in
the courts of any jurisdiction.
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(c) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Primary Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis from a source other
than any Borrower. For the purposes of this Section, "Information" means all
information received from any Borrower relating to any Borrower or its business,
other than any such information that is available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
such Borrower; provided that, in the case of information received from a
Borrower after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care
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to maintain the confidentiality of such Information as such Person would accord
to its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.14. Judgment Currency. (a) If, for the purpose of obtaining
judgment in any court, it is necessary to convert a sum owing hereunder in one
currency into another currency, each party hereto agrees, to the fullest extent
that it may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures in the relevant jurisdiction
the first currency could be purchased with such other currency on the Business
Day immediately preceding the day on which final judgment is given.
(b) The obligations of any Borrower in respect of any sum due to any
party hereto or any holder of the obligations owing hereunder (the "Applicable
Creditor") shall, notwithstanding any judgment in a currency (the "Judgment
Currency") other than the currency in which such sum is stated to be due
hereunder (the "Agreement Currency"), be discharged only to the extent that, on
the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, such Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrowers
contained in this Section 9.14 shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.
SECTION 9.15. Affiliate Borrowers/Foreign Currencies The parties may
designate one or more Subsidiaries of the Primary Borrower as Affiliate
Borrowers, and/or designate one or more additional Foreign Currencies, by
executing one or more amendments to this Agreement which provide for amending
Schedule 2.01 and such other provisions, and for such additional Loan Documents
and other documents, as the parties may agree.
SECTION 9.16. Insurance Program. The Lenders and the Administrative
Agent agree that the insurance program described in Schedule 3.21 meets the
requirements of Section 5.06.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
Address for Notices: IEC ELECTRONICS CORP.
105 Norton Street
Newark, New York 14513 By _________________________
Telephone: (315) 332-4205 Name: Diana R. Kurty
Facsimile: (315) 331-8186 Title: Vice President of Finance and
Chief Financial Officer
cc: Boylan, Brown, Code Fowler,
Vigdor & Wilson, LLP
2400 Chase Square
Rochester, New York 14604
Attn: Justin Vigdor
SEPARATE SIGNATURE PAGE FOR EACH LENDER, TO FOLLOW ON PAGES ___ THROUGH
- ---.
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THE CHASE MANHATTAN BANK,
as Administrative Agent,
By __________________________
Name:
Title:
Address for Notices:
One Chase Plaza
Loan and Agency Service Group - 8th Floor
New York, NY 10081
Attn: Jesus Sang
Telephone: (212) 552-7916
Facsimile: (212) 552-5662
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THE CHASE MANHATTAN BANK
By _________________________
Name
Title:
Lending Office and Address for Notices
One Chase Square, 9th Floor
Rochester, New York 14643
Attn: Gail G. Fiorini, Vice President
Telephone: (716) 258-5439
Facsimile: (716) 258-7604
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MARINE MIDLAND BANK
By __________________________
Name:
Title:
Lending Office and Address for Notices
==================================
==================================
Telephone:
Facsimile:
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KEYBANK NATIONAL ASSOCIATION
By __________________________
Name:
Title:
Lending Office and Address for Notices
==================================
==================================
Telephone:
Facsimile:
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SCHEDULE 1.01A
[FORM OF]
Assignment and Acceptance
Reference is made to the Credit Agreement dated as of [May ___, 1998] (as
amended and in effect on the date hereof, the "Credit Agreement"), among [ ],
the Lenders named therein and The Chase Manhattan Bank, as Administrative Agent
for the Lenders. Terms defined in the Credit Agreement are used herein with the
same meanings.
The Assignor named on the reverse hereof hereby sells and assigns, without
recourse, to the Assignee named on the reverse hereof, and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of the
Assignment Date set forth on the reverse hereof, (i) the interests set forth on
the reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment of the Assignor on
the Assignment Date and in Competitive Loans and Revolving Loans owing to the
Assignor which are outstanding on the Assignment Date, together with the
participations in Letters of Credit and LC Disbursements held by the Assignor on
the Assignment Date, but excluding accrued interest and fees to and excluding
the Assignment Date; and (ii) Assignor's rights under the Security Agreements
and under any Guarantees with respect to the Facility Obligations, to the extent
that such rights secure or guarantee the Assigned Interest. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder, (ii) the Assignor shall,
to the extent of the Assigned Interest, relinquish its rights and be released
from its obligations under the Credit Agreement, and (iii) the Assignee shall be
entitled to the benefits of the Security Agreements and any Guarantees with
respect to the Facility Obligations, to the extent that such rights secure or
guarantee the Assigned Interest.
This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 2.17(e) of the
Credit Agreement, duly completed and executed by the Assignee, and (ii) if the
Assignee is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The [Assignee/Assignor] shall pay the fee payable to the
Administrative Agent pursuant to Section 9.04(b) of the Credit Agreement.
This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
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Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date"):
Percentage Assigned of
Facility/Commitment (set
forth, to at least 8
Principal Amount decimals, as a
Assigned (and percentage of the
identifying informationFacility and the
as to individual aggregate Commitments
Competitive Loans) of all Lenders
Facility thereunder)
- -------- -----------
Revolving Credit $ %
Commitment Assigned:
Revolving Loans:
Competitive Loans:
========================== ====================== =========================
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor] , as Assignor
By ______________________________
Name:
Title:
[Name of Assignee] , as Assignee
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By: ______________________________
Name:
Title:
The undersigned hereby consent to the within assignment:
[Name of Borrower], The Chase Manhattan Bank,
as Administrative Agent,
By: ______________________ By: __________________________
Name: Name:
Title: Title:
The Chase Manhattan Bank,
as Issuing Bank
By: ___________________________
Name:
Title:
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SCHEDULE 2.01
Commitments
1. REVOLVING CREDIT COMMITMENTS, EXPRESSED IN DOLLARS
Lender Revolving
Credit
Commitment
The Chase Manhattan Bank $ 27,500,000
Marine Midland Bank $ 25,000,000
===============
KeyBank, National Association $ 12,500,000
===============
Totals $ 65,000,000
2. Affiliate Borrowers and Revolving Credit Sublimits None
3. Foreign Currencies
Currency Available in London
Irish Pounds Yes
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SCHEDULE 3.01
Borrower and Subsidiaries Existence and Qualification
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SCHEDULE 3.04
Material Adverse Effect Since March 27, 1998
NONE
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SCHEDULE 3.07
Mortgages, Liens, Security Interests or Encumbrances
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SCHEDULE 3.09
Existing Debts
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SCHEDULE 3.17
Labor Matters: Strikes, Lockouts, or Slowdowns
NONE
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SCHEDULE 3.18
Existing Letters of Credit
NONE
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SCHEDULE 3.20
Locations of Assets
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SCHEDULE 3.21
Insurance Program
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SCHEDULE 4.01(b)
Opinion of Primary Borrower Counsel
(Letterhead of counsel to the Primary Borrower)
[Closing Date]
The Chase Manhattan Bank, as Administrative Agent
One Chase Square
Rochester, New York 14643
Attn: Gail Fiorini, Vice President
And to the Lenders listed on Schedule A attached
Ladies and Gentlemen:
We have acted as counsel to IEC Electronics Corp. (the "Primary Borrower")
in connection with the execution and delivery of that certain Credit Agreement
(the "Credit Agreement") dated as of [ ] among the Primary Borrower, the Lenders
signatory thereto and The Chase Manhattan Bank, as Administrative Agent. Except
as otherwise defined herein, all terms used herein and defined in the Credit
Agreement or any agreement delivered thereunder shall have the meanings assigned
to them therein.
In connection with this opinion, we have examined executed copies of the
Loan Documents and such other documents, records, agreements and certificates as
we have deemed appropriate. We have also reviewed such matters of law as we have
considered relevant for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that:
1. The Primary Borrower and each of its Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its assets and to transact the business in which it is now engaged or proposed
to be engaged, and is duly qualified as a foreign corporation and in good
standing under the laws of each other jurisdiction in which such qualification
is required.
2. The execution, delivery and performance by each of the Primary
Borrower, Texas Sub and Alabama Sub of the Loan Documents to which it is a party
have been duly authorized by all necessary corporate action and do not and will
not: (a) require any consent or approval of its
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stockholders; (b) contravene its charter or by-laws; (c) violate any provision
of, or require any filing, registration, consent or approval under, any law,
rule, regulation (including without limitation, Regulation U), order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to the Primary Borrower or any of its Subsidiaries or Affiliates;
(d) result in a breach of or constitute a default or require any consent under
any indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Primary Borrower is a party or by which it or its
properties may be bound or affected; (e) result in, or require, the creation or
imposition of any Lien, upon or with respect to any of the properties now owned
or hereafter acquired by the Primary Borrower or any of its Subsidiaries, other
than Liens created pursuant to the Security Agreements; or (f) cause the Primary
Borrower (or any Subsidiary or Affiliate, as the case may be) to be in default
under any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease or instrument.
3. Each Facility Document executed by the Primary Borrower is a legal,
valid and binding obligation of the Primary Borrower, enforceable against the
Primary Borrower in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.
4. To the best of our knowledge (after due inquiry), there are no pending
or threatened actions, suits or proceedings against or affecting the Primary
Borrower or any of its Subsidiaries before any court, governmental agency or
arbitrator, which may, in any one case or in the aggregate, materially adversely
affect the financial condition, operations, properties or business of the
Primary Borrower or of any such Subsidiary or the ability of the Primary
Borrower or any Subsidiary to perform its obligations under the Loan Documents.
5. Pursuant to the Primary Borrower's Security Agreement, a security
interest has attached in all right, title and interest of the Primary Borrower
in the Collateral, as defined therein. Such security interest will be perfected
as to all right, title and interest of the Primary Borrower in Collateral
located in New York State, upon, and to the extent that perfection may be
obtained by, the filing of financing statements under Article 9 of the New York
Commercial Code.
Very truly yours,
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SCHEDULE 4.01(b-1)
Opinion of Counsel for Texas Sub
(Letterhead of counsel to the Texas Sub)
[Closing Date]
The Chase Manhattan Bank, as Administrative Agent
One Chase Square
Rochester, New York 14643
Attn: _________________
And to the Lenders listed on Schedule A attached
Ladies and Gentlemen:
We have acted as counsel to (a) IEC Electronics Corp. (the "Primary
Borrower") in connection with its execution and delivery of that certain
Security Agreement (the "IEC Security Agreement") pursuant to Section 4.01 (h)
of the Credit Agreement (the "Credit Agreement") dated as of [ ] among the
Primary Borrower, the Lenders signatory thereto and The Chase Manhattan Bank, as
Administrative Agent; and (b) IEC Electronics - Edinburg, Texas, Inc. ("Texas
Sub") in connection with the execution and delivery of the Guarantee executed by
it pursuant to Section 4.01 (f) of the Credit Agreement (the "Texas Sub
Guarantee") and the Security Agreement executed by it pursuant to Section 4.01
(i) of the Credit Agreement (the "Texas Sub Security Agreement"). The IEC
Security Agreement, the Texas Sub Guarantee and the Texas Sub Security Agreement
are hereinafter referred to as the "Facility Documents". Except as otherwise
defined herein, all terms used herein and defined in the Credit Agreement shall
have the meanings assigned to them therein.
In connection with this opinion, we have examined executed copies of the
Facility Documents and the Credit Agreement and such other documents, records,
agreements and certificates as we have deemed appropriate. We have also reviewed
such matters of law as we have considered relevant for the purpose of this
opinion.
Based upon the foregoing, we are of the opinion that:
1. Texas Sub is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Texas, has the corporate power and
authority to own its assets and to
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transact the business in which it is now engaged or proposed to be engaged.
Primary Borrower is duly qualified as a foreign corporation in good standing
under the laws of the State of Texas.
2. The execution, delivery and performance by the Texas Sub of the
Facility Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) require any consent or
approval of its stockholders; (b) contravene its charter or by-laws; (c) violate
any provision of, or require any filing, registration, consent or approval
under, any law, rule, regulation (including without limitation, Regulation U),
order, writ, judgment, injunction, decree, determination or award presently in
effect having applicability to the Texas Sub; (d) result in a breach of or
constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the Texas
Sub is a party or by which it or its properties may be bound or affected; (e)
result in, or require, the creation or imposition of any Lien, upon or with
respect to any of the properties now owned or hereafter acquired by the Texas
Sub, other than Liens created pursuant to the Texas Sub Security Agreement; or
(f) cause the Texas Sub to be in default under any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument.
3. The execution, delivery and performance by the Primary Borrower of the
IEC Security Agreement do not and will not violate any provision of, or require
any filing, registration, consent or approval under, any law, rule, regulation
of the State of Texas, or any order, writ, judgment, injunction, decree,
determination or award presently in effect in the State of Texas and applicable
to the Primary Borrower.
4. Each Facility Document executed by Texas Sub is a legal, valid and
binding obligation of the Texas Sub, enforceable against the Texas Sub in
accordance with its terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
5. Pursuant to the Texas Sub Security Agreement, a security interest in
favor of the Administrative Agent and the Lenders has attached in all right,
title and interest of the Texas Sub in the Collateral, as defined therein. Such
security interest will be perfected as to all right title and interest of the
Texas Sub in Collateral located in the State of Texas, upon and to the extent
that perfection may be obtained by the filing of financing statements under
Article 9 of the Texas Commercial Code.
Very truly yours,
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SCHEDULE 4.01(b-2)
Opinion of Counsel for Alabama Sub
(Letterhead of counsel to the Alabama Sub)
[Closing Date]
The Chase Manhattan Bank, as Administrative Agent
One Chase Square
Rochester, New York 14643
Attn: _________________
And to the Lenders listed on Schedule A attached
Ladies and Gentlemen:
We have acted as counsel to IEC Arab, Alabama, Inc. ("Alabama Sub") in
connection with the execution and delivery of the Guarantee executed by it
pursuant to Section 4.01 (g) of the Credit Agreement (the "Credit Agreement")
dated as of [ ] among the Primary Borrower, the Lenders signatory thereto and
The Chase Manhattan Bank, as Administrative Agent, (the "Alabama Sub Guarantee")
and the Security Agreement executed by it pursuant to Section 4.01 (j) of the
Credit Agreement (the "Alabama Sub Security Agreement"). The Alabama Sub
Guarantee and the Alabama Sub Security Agreement are hereinafter referred to as
the "Facility Documents". Except as otherwise defined herein, all terms used
herein and defined in the Credit Agreement shall have the meanings assigned to
them therein.
In connection with this opinion, we have examined executed copies of the
Facility Documents and the Credit Agreement and such other documents, records,
agreements and certificates as we have deemed appropriate. We have also reviewed
such matters of law as we have considered relevant for the purpose of this
opinion.
Based upon the foregoing, we are of the opinion that:
1. Alabama Sub is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Alabama, has the corporate power
and authority to own its assets and to transact the business in which it is now
engaged or proposed to be engaged. Primary Borrower is duly qualified as a
foreign corporation in good standing under the laws of the State of Alabama.
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2. The execution, delivery and performance by the Alabama Sub of the
Facility Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) require any consent or
approval of its stockholders; (b) contravene its charter or by-laws; (c) violate
any provision of, or require any filing, registration, consent or approval
under, any law, rule, regulation (including without limitation, Regulation U),
order, writ, judgment, injunction, decree, determination or award presently in
effect having applicability to the Alabama Sub; (d) result in a breach of or
constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the
Alabama Sub is a party or by which it or its properties may be bound or
affected; (e) result in, or require, the creation or imposition of any Lien,
upon or with respect to any of the properties now owned or hereafter acquired by
the Alabama Sub, other than Liens created pursuant to the Alabama Sub Security
Agreement; or (f) cause the Alabama Sub to be in default under any such law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award or any such indenture, agreement, lease or instrument.
3. Each Facility Document executed by Alabama Sub is a legal, valid and
binding obligation of the Alabama Sub, enforceable against the Alabama Sub in
accordance with its terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
4. Pursuant to the Alabama Sub Security Agreement, a security interest in
favor of the Administrative Agent and the Lenders has attached in all right,
title and interest of the Alabama Sub in the Collateral, as defined therein.
Such security interest will be perfected as to all right title and interest of
the Alabama Sub in Collateral located in the State of Alabama, upon and to the
extent that perfection may be obtained by the filing of financing statements
under Article 9 of the Alabama Commercial Code.
Very truly yours,
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SCHEDULE 4.01(f)
Guarantee of Texas Sub
GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT, dated as of ________ __, 1998 (this
"Guarantee"), is made by IEC Electronics-Edinburg, Texas, Inc., a Texas
corporation (the "Guarantor"), of the obligations of IEC Electronics Corp., a
Delaware corporation ("Primary Borrower"), under the Credit Agreement (defined
below) among the Primary Borrower, The Chase Manhattan Bank, as Administrative
Agent (as defined below, the "Administrative Agent"), and the lenders from time
to time parties to the Credit Agreement (singly, a "Lender" and collectively,
the "Lenders").
RECITALS
R1. The Primary Borrower, the Administrative Agent and the Lenders have
entered into that certain Credit Agreement, dated as of ________ __, 1998 (said
Credit Agreement, as it may hereafter be amended or otherwise modified from time
to time, being the "Credit Agreement"). The capitalized terms not otherwise
defined herein have the meanings specified in the Credit Agreement.
R2. Pursuant to the Credit Agreement, the Primary Borrower may, subject to
the terms of the Credit Agreement and the other Loan Documents, request that the
Lenders make Loans, and that the Issuing Bank issue Letters of Credit, to the
Primary Borrower.
R3. Guarantor is a wholly owned Subsidiary of the Primary Borrower, and
Guarantor depends on the Primary Borrower to provide Guarantor with short term
demand loans ("Intercompany Loans"), without which Guarantor would be unable to
operate and to pay its obligations as they become due. As of April 24, 1998,
Guarantor owed the Primary Borrower the principal amount of $11,217,579 for
outstanding Intercompany Loans, and Guarantor would be unable to repay such
amount if immediate payment thereof were demanded by the Primary Borrower. It is
a condition to (i) the Lenders' obligations to make Loans to the Primary
Borrower under the Credit Agreement, (ii) the Primary Borrower's continued
forbearance with respect to outstanding Intercompany Loans to Guarantor, and
(iii) the making of additional Intercompany Loans by the Primary Borrower to the
Guarantor, that Guarantor guarantee repayment of a portion of the Facility
Obligations upon the terms and conditions set forth herein.
R4. Primary Borrower requires financing of the kind provided to it by the
Credit Agreement, in part, in order for the Primary Borrower to provide, in
turn, the above-described Intercompany Loan support to Guarantor.
R5. The Board of Directors of Guarantor has determined that (i) the
execution, delivery and performance of this Guarantee is necessary and
convenient to the conduct, promotion and attainment of Guarantor's business and
(ii) Guarantor may reasonably be expected to benefit, directly and indirectly,
from the Loans and the issuance of Letters of Credit.
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R6. Guarantor desires to induce the Lenders to make such Loans and the
Issuing Bank to issue, and the Lenders to participate in the issuance of,
Letters of Credit, which may reasonably be expected to benefit, directly and
indirectly, Guarantor.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Loans and issue, or participate in the issuance of, Letters of
Credit under the Credit Agreement, Guarantor hereby agrees with the
Administrative Agent, acting individually, as the Administrative Agent under the
Credit Agreement, and in its capacity under the Credit Agreement as agent for
each of the Lenders and the Issuing Bank, (in such capacities, the
"Administrative Agent") as follows:
1. Guarantee.
(a) Subject to the provisions of Paragraphs 1(b) and 1(c) hereof,
Guarantor hereby unconditionally guarantees to the Administrative Agent the
punctual payment of, and promises to pay to the Administrative Agent, when
due, whether at stated maturity, by mandatory prepayment, by acceleration
or otherwise, all obligations, indebtedness and liabilities of the Primary
Borrower to the Administrative Agent, the Lenders, the Issuing Bank and any
Related Parties, now or hereafter arising from, by virtue of or pursuant to
the Credit Agreement, or any other Loan Document and any and all
rearrangements, renewals and extensions thereof, or any part thereof, or
any amendments thereto, whether for principal, interest (including, without
limitation, interest, fees and other charges that would accrue or become
owing both prior to and subsequent to, and but for the commencement of, any
proceeding against or with respect to the Primary Borrower under any
chapter of the Bankruptcy Code of 1978, 11 U.S.C ss.101 et seq. (the
"Bankruptcy Code") whether or not a claim is allowed for the same in any
such proceeding), LC Disbursements, premium, fees, commissions, expenses or
otherwise (such obligations being the "Obligations") and agrees to pay to
the Administrative Agent, any and all reasonable costs, expenses and
charges (including, without limitation, fees and charges of external legal
counsel and costs allocated by any internal legal department) incurred by
the Administrative Agent, and any of the Lenders and the Issuing Bank in
the administration, enforcement or collection of all or any part of the
Obligations, whether such Obligations are direct, indirect, fixed,
contingent, joint, several or joint and several, and of any rights under
this Guarantee.
(b) The provisions of Paragraph 1(a) above to the contrary
notwithstanding, the Guarantor's liability under this Guarantee for payment
of the aggregate principal amount of Loans and LC Disbursements owed at any
time pursuant to the Credit Agreement and any other Loan Document and any
and all renewals and extensions thereof, or any part thereof, or any
amendments thereto, shall be limited to $21,500,000, which represents
approximately the outstanding principal balance of Intercompany Loans as of
the date hereof plus approximately 94% of the Guarantor's net worth as of
the Balance Sheet date, provided, that such limitation amount shall be
increased (but shall in no event decrease) by the amount, as of the first
day on which the Administrative Agent makes any demand for payment under
this Guarantee that is not subsequently withdrawn, of (i) the total amount
of any contributions to, and investments in the equity capital of the
Guarantor made by the Primary Borrower after the
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date hereof, plus (ii) the amount by which the unpaid principal balance of
all outstanding Intercompany Loans exceeds $11,217,579. The foregoing
limitation shall not limit the Guarantor's liability for the payment of any
Obligations other than the Obligations to pay such principal amounts; and
all payments and collections received from time to time by the
Administrative Agent, the Issuing Bank, or the Lenders from the Primary
Borrower or from any other Person or source other than the Guarantor,
either pursuant to this Guarantee or as a result of payment by the
Guarantor of Intercompany Loans, shall be deemed to be applied first to
that portion of the Obligations which are not guaranteed hereunder by
virtue of such limitation, and last to that portion of the Obligations
which are guaranteed hereunder and are within such limitation.
(c) Anything contained in this Guarantee to the contrary notwithstanding,
the obligations of Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of the Bankruptcy Code or under any applicable
provisions of state insolvency or fraudulent transfer laws, or other
comparable state laws (collectively, the "Fraudulent Transfer Laws"), in
each case after giving effect to all other liabilities of Guarantor,
contingent or otherwise, that are relevant under the Fraudulent Transfer
Laws (specifically excluding, however, any liabilities of Guarantor to the
Primary Borrower in respect of Intercompany Loans or other intercompany
indebtedness to other Affiliates of the Primary Borrower to the extent that
such indebtedness would be discharged in an amount equal to the amount paid
by Guarantor hereunder) and after giving effect as assets, subject to
Paragraph 4(a) hereof, to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement or contribution of Guarantor pursuant to (i) applicable laws,
rules and regulations, and any applicable orders, writs, injunctions or
decrees of any court or Governmental Authority (collectively, "Applicable
Law") or (ii) any agreement providing for an equitable allocation among
Guarantor and other Affiliates of the Primary Borrower of obligations
arising under Guarantees by such parties.
2. Guarantee Absolute. Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Credit Agreement, and the
other Loan Documents, regardless of any Applicable Law, now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Lender, the Issuing Bank or the Administrative Agent with respect thereto. The
obligations and liabilities of Guarantor hereunder are independent of the
obligations of the Primary Borrower under the Credit Agreement and any
Applicable Law. The liability of Guarantor under this Guarantee shall be
absolute and unconditional irrespective of:
(a) the taking or accepting of any other security or Guarantee for any
or all of the Obligations, or any reduction or termination of any
Commitment;
(b) any increase, reduction or payment in full at any time or from time to
time of any part of the Obligations;
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(c) any lack of validity or enforceability of the Credit Agreement, or any
other Loan Document or other agreement or instrument relating thereto,
including but not limited to the unenforceability of all or any part of the
Obligations by reason of the fact that (i) the Obligations, and/or the
interest paid or payable with respect thereto, exceeds the amount permitted
by Applicable Law, (ii) the act of creating the Obligations, or any part
thereof, is ultra vires, (iii) the officers creating same acted in excess
of their authority, or (iv) for any other reason;
(d) any lack of corporate power of the Primary Borrower or any other
Person at any time liable for the payment of any or all of the Obligations;
(e) any insolvency, bankruptcy, reorganization, receivership or other
proceeding under any applicable liquidation, conservatorship, bankruptcy,
moratorium, arrangement, receivership, insolvency, reorganization,
fraudulent transfer or similar laws from time to time in effect affecting
the rights of creditors generally (collectively, "Debtor Relief Laws")
involving the Primary Borrower, Guarantor or any other Person obligated on
any of the Obligations;
(f) any renewal, compromise, extension, acceleration or other change in
the time, manner or place of payment of, or in any other term of, all or
any of the Obligations; any adjustment, indulgence, forbearance, or
compromise that may be granted or given by any Lender to the Primary
Borrower, Guarantor, or any Person at any time liable for the payment of
any or all of the Obligations; or any other modification, amendment, or
waiver of or any consent to departure from the Credit Agreement, or any
other Loan Document or other agreement or instrument relating thereto,
without notification of Guarantor (the right to such notification being
herein specifically waived by Guarantor);
(g) any exchange, release, sale, subordination, compromise, or
non-perfection of any collateral or Lien securing the Obligations or any
part thereof, or any lack of validity or enforceability, change in
priority, destruction, reduction, or loss or impairment of value of any
such collateral or Lien;
(h) any invalidity, release, amendment, compromise or waiver of, or
consent to depart from, any other Guarantee for all or any of the
Obligations;
(i) the failure by any Lender, the Issuing Bank or the Administrative
Agent to make any demand upon or to bring any legal, equitable, or other
action against the Primary Borrower or any other Person (including without
limitation any other Guarantor), or the failure or delay by any Lender, the
Issuing Bank or the Administrative Agent to, or the manner in which any
Lender, the Issuing Bank or the Administrative Agent shall, proceed to
exhaust rights against any direct or indirect security for the Obligations;
(j) the existence of any claim, defense, set-off, or other rights which
the Primary Borrower, Guarantor or any other Person may have at any time
against the Primary Borrower, any Lender, the Issuing Bank, the
Administrative Agent, or Guarantor, or any other Person, whether in
connection with this Guarantee, the Loan Documents, the transactions
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contemplated thereby, or any other transaction;
(k) any failure of any Lender, the Issuing Bank or the Administrative
Agent to notify Guarantor of any renewal, extension, or assignment of the
Obligations or any part thereof, or of the non-perfection, compromise or
release of any security, or of any other action taken or refrained from
being taken by any Lender, the Issuing Bank or the Administrative Agent, it
being understood that the Lenders, the Issuing Bank and the Administrative
Agent shall not be required to give Guarantor any notice of any kind under
any circumstances whatsoever with respect to or in connection with the
Obligations;
(l) any payment by the Primary Borrower to any Lender, the Issuing Bank or
the Administrative Agent being held to constitute a preference under any
Debtor Relief Law or, for any other reason, any Lender, the Issuing Bank or
the Administrative Agent being required to refund such payment or pay the
amount thereof to another Person; or
(m) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Primary Borrower, Guarantor, any other
Person liable on the Obligations, including without limitation any defense
by reason of any disability or other defense of the Primary Borrower, or
the cessation from any cause whatsoever of the liability of the Primary
Borrower, or any claim that Guarantor's obligations hereunder exceed or are
more burdensome than those of the Primary Borrower.
This Guarantee shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any Obligations is rescinded or must
otherwise be returned by any Lender, the Issuing Bank, the Administrative Agent
or any other Person upon the insolvency, bankruptcy or reorganization of the
Primary Borrower, Guarantor or otherwise, all as though such payment had not
been made.
3. Waiver. To the extent not prohibited by Applicable Law, Guarantor hereby
waives: (a) promptness, protests, diligence, presentment, acceptance,
performance, demands for performance, notices of nonperformance, notices of
protests, notices of dishonor, notices of acceptance of this Guarantee and of
the existence, creation or incurrence of new or additional indebtedness, and any
of the events described in Section 2 and of any other occurrence or matter with
respect to any of the Obligations, this Guarantee or any of the other Loan
Documents; (b) any requirement that any Lender, the Issuing Bank or the
Administrative Agent protect, secure, perfect, or insure any Lien or security
interest or any property subject thereto or exhaust any right or take any action
against the Primary Borrower or any other Person or any collateral or pursue any
other remedy in any Lender's, the Issuing Bank's or the Administrative Agent's
power whatsoever; (c) any right to assert against any Lender, the Issuing Bank
or the Administrative Agent as a counterclaim, set-off or cross-claim, any
counterclaim, set-off or claim which it may now or hereafter have against the
Primary Borrower or other Person liable on the Obligations; (d) any right to
seek or enforce any remedy or right that any Lender, the Issuing Bank or the
Administrative Lender now has or may hereafter have against the Primary Borrower
or any other Guarantor; (e) any right to participate in any collateral or in any
right benefiting the Lenders, the Issuing Bank or the Administrative Agent in
respect of the Obligations; and (f) any right by which it might be entitled to
require suit on an
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accrued right of action in respect of any of the Obligations or require suit
against the Primary Borrower or any other Person, whether arising pursuant to
Section 34.02 of the Texas Business and Commerce Code, as amended, Section
17.001 of the Texas Civil Practice and Remedies Code, as amended, Rule 31 of the
Texas Rules of Civil Procedure, as amended, or otherwise.
4. Subrogation and Subordination.
(a) Notwithstanding any reference to subrogation contained herein to the
contrary, Guarantor hereby agrees that, until the Obligations have been
paid in full to the Lenders, the Issuing Bank and the Administrative Agent,
except as provided in Section 5.30 of the Credit Agreement, Guarantor shall
not be entitled to enforce, pursue or exercise any claim or other rights
which it may have or hereafter acquire against the Primary Borrower or
under any other Guarantee of any of the Obligations, that arise from the
existence, payment, performance or enforcement of Guarantor's obligations
under this Guarantee, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy of any Lender, the Issuing Bank
or the Administrative Agent against the Primary Borrower or in any
collateral which any of them now has or hereafter acquires, whether or not
such claim, remedy or right arises in equity, or under contract, statute or
common law, including without limitation, the right to take or receive from
the Primary Borrower, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account of such
claim or other rights. If any amount shall be paid to Guarantor in
violation of the preceding sentence and the Obligations shall not have been
paid in full, such amount shall be deemed to have been paid to Guarantor
for the benefit of, and held in trust for the benefit of, the Lenders, the
Issuing Bank and the Administrative Agent, and shall forthwith be paid to
the Administrative Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement.
(b) If Guarantor becomes the holder of any indebtedness payable by the
Primary Borrower, Guarantor hereby subordinates all indebtedness owing to
it from the Primary Borrower to all Obligations of the Primary Borrower to
any Lender, to the Issuing Bank or to the Administrative Agent, and agrees
that upon the occurrence and continuance of a Default or an Event of
Default, it shall not accept any payment on the same until payment in full
of all Obligations, and shall in no circumstance whatever attempt to
set-off or reduce any obligations hereunder because of such indebtedness.
If any amount shall nevertheless be paid to Guarantor by the Primary
Borrower prior to payment in full of the Obligations, such amount shall be
held in trust for the benefit of the Lenders, the Issuing Bank and the
Administrative Agent and shall forthwith be paid to the Administrative
Agent to be credited and applied to the Obligations, whether matured or
unmatured.
5. Representations and Warranties. Guarantor hereby represents and
warrants as follows:
(a) The execution, delivery and performance by it of this Guarantee have
been dulyauthorized by all necessary corporate action and do not and
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will not contravene its bylaws or its articles of incorporation.
(b) The execution, delivery and performance by it of this Guarantee do not
and will not contravene any Applicable Law or any contractual restriction
binding on or affecting it or any of its properties, and do not and will
not result in or require the creation of any Lien, security interest or
other charge or encumbrance upon or with respect to any of its properties,
except pursuant to the Security Agreement required to be executed by it
pursuant to the Credit Agreement.
(c) No authorization or approval or other action by, and no notice to or
filing with, any Person or entity not otherwise obtained is required for
the due execution, delivery and performance by it of this Guarantee.
(d) This Guarantee is a legal, valid and binding obligation of Guarantor,
enforceable against Guarantor, in accordance with its terms, subject to
Debtor Relief Laws.
(e) There is no action, suit or proceeding pending or, to the knowledge of
Guarantor, threatened against or otherwise affecting it before any
Governmental Authority or arbitrator which would prohibit the execution,
delivery and performance by it of this Guarantee.
(f) The statements set forth in Recitals R3 through R6 of this Guarantee
are correct in all respects.
(g) As of April 24, 1998, the Guarantor owed the Primary Borrower the
principal amount of $11,217,579 for outstanding Intercompany Loans made by
the Primary Borrower to the Guarantor.
(h) Attached to this Guarantee as Exhibit 5(h) is a balance sheet of the
Guarantor (the "Balance Sheet") dated as of March 27, 1998, (the "Balance
Sheet Date"), which (i) was prepared in accordance with generally accepted
accounting principles consistently applied in the preparation of the
Primary Borrower's and its Subsidiaries' consolidated financial statements,
(ii) is true and complete, (iii) and fairly presents the Guarantor's
financial condition as of the Balance Sheet Date. The Current Liabilities
line item on the Balance Sheet, "Intercompany Payables", represents
entirely amounts owed as of the Balance Sheet Date as Intercompany Loans by
the Guarantor to the Primary Borrower, and no intercompany payables are
owed as of the date hereof to any Person other than the Primary Borrower.
Of the amount set forth on the Balance Sheet as Long Term Debt,
approximately $866,481 consisted of mortgage and personal property secured
debt owed to the Primary Borrower, no other long term debt is owed by the
Guarantor to the Primary Borrower on the date hereof, and the Guarantor's
long term debt has not increased since the Balance Sheet Date. In the
opinion of the management of the Guarantor, the Guarantor's Total
Shareholders' Equity has not declined since the Balance Sheet Date. In the
opinion of the management of the Guarantor, the net realizable value of the
Guarantor's assets as of the date hereof is approximately equal to the
aggregate net value of such assets set forth on the Balance Sheet.
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The opinion expressed in the preceding sentence assumes (i) that the
Guarantor will continue to operate as a going concern, (ii) the collection
of Accounts Receivable and the sale of Inventory in the ordinary course of
business and (iii) the realization of the fair saleable value of the
Guarantor's Land, Buildings, Equipment, Furniture and Improvements, as
those terms are used on the Balance Sheet.
(i) As of the Effective Date, the Intercompany Loans are payable on demand
by the Primary Borrower. Despite the fact that the Intercompany Loans are
payable on demand, by virtue of the agreement of the Primary Borrower set
forth in clause (ii) of Section 5.30 of the Credit Agreement, the Guarantor
can reasonably be expected to remain solvent, to have sufficient capital
with which to operate and to be able to repay its indebtedness as it
becomes due.
(j) The Guarantor and the Primary Borrower are separately incorporated
entities that operate independently from each other. As of the Effective
Date, Guarantor utilizes certain accounting, cash management, management
and other operational and organizational functions of the Primary Borrower
for operational and organizational efficiency, as well as to assist in the
preparation of tax returns on a consolidated basis. In the event these
functions were no longer provided to the Guarantor by the Primary Borrower,
Guarantor would need to make the necessary adjustments in its operations
and organizational functions, in order to replace such functions. As of the
Effective Date hereof, the majority of the manufacturing and purchasing
functions of the Guarantor are handled independently from the Primary
Borrower, although some of these functions are occasionally shared for
efficiency or as special circumstances warrant.
6. Covenants. Guarantor hereby expressly assumes, confirms, and agrees to
perform, observe, and be bound by all conditions and covenants set forth in the
Credit Agreement, to the extent applicable to it, as if it were a signatory
thereto. Guarantor further covenants and agrees (a) punctually and properly to
perform all of Guarantor's covenants and duties under any other Loan Documents;
(b) from time to time promptly to furnish the Administrative Agent with any
information or writings which the Administrative Agent may reasonably request
concerning this Guarantee; and (c) promptly to notify the Administrative Agent
of any claim, action, or proceeding affecting this Guarantee.
7. Amendments, etc. No amendment or waiver of any provision of this
Guarantee nor consent to any departure by Guarantor therefrom shall in any event
be effective unless the same shall be in writing and signed by the
Administrative Agent, with the consent of all of the Lenders; and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
8. Addresses for Notices. Unless otherwise provided herein, all notices,
requests, consents and demands shall be in writing and shall be delivered by
hand or overnight courier service, mailed or sent by telecopy to the address
specified on the signature page hereof, in the case of the Guarantor, or in the
Credit Agreement, in the case of the Administrative Agent, or, as to either such
party, to such other addresses as may be designated by it in written notice to
the
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other. All notices, requests, consents and demands hereunder shall be deemed to
have been given on the date of receipt if delivered by hand or overnight courier
service or sent by telecopy, or if mailed, effective on the earlier of actual
receipt or three (3) days after being mailed by certified mail, return receipt
requested, postage prepaid, addressed as aforesaid.
9. No Waiver: Remedies. No failure on the part of the Administrative Agent,
the Issuing Bank or any Lender to exercise, and no delay in exercising, any
right hereunder or under any of the Loan Documents shall operate as a waiver
thereof, nor shall any single or partial exercise of any right hereunder or
under any of the Loan Documents preclude any other or further exercise thereof
or the exercise of any other right. Neither the Administrative Agent, the
Issuing Bank nor any Lender shall be required to (a) prosecute collection or
seek to enforce or resort to any remedies against the Primary Borrower or any
other Person liable on any of the Obligations, (b) join the Primary Borrower or
any other Person liable on any of the Obligations in any action in which the
Administrative Agent, the Issuing Bank or any Lender prosecutes collection or
seeks to enforce or resort to any remedies against the Primary Borrower or other
Person liable on any of the Obligations, or (c) seek to enforce or resort to any
remedies with respect to any Liens granted to (or benefiting, directly or
indirectly) the Administrative Agent, the Issuing Bank or any Lender by the
Primary Borrower or any other Person liable on any of the Obligations. Neither
the Administrative Agent, the Issuing Bank nor any Lender shall have any
obligation to protect, secure or insure any of the Liens or the properties or
interests in properties subject thereto. The remedies herein provided are
cumulative and not exclusive of any remedies provided by Applicable Law.
10. Right of Set-Off. Upon the occurrence and during the continuance of any
Event of Default, each Lender, the Issuing Bank and the Administrative Agent is
hereby authorized at any time and from time to time, to the fullest extent
permitted by Applicable Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender, the Issuing Bank and the
Administrative Agent to or for the credit or the account of Guarantor against
any and all of the obligations of Guarantor now or hereafter existing under this
Guarantee, irrespective of whether or not the Administrative Agent shall have
made any demand under this Guarantee. Upon the exercise of any such right of
set-off, each Lender, the Issuing Bank and the Administrative Agent shall be
deemed to agree promptly to notify Guarantor after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender, the Issuing
Bank and the Administrative Agent under this Section 10 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which it may have.
11. Liens. Guarantor agrees that the Administrative Agent, the Issuing Bank
or any Lender, in its discretion, may without notice or demand and without
affecting either the liability of Guarantor under this Guarantee, or the
liability of the Primary Borrower or any other Person liable on any of the
Obligations, or the Liens and security interests created by this Guarantee, or
any security interest or other Lien, upon the occurrence of an Event of Default,
foreclose any deed of trust or mortgage or similar Lien covering interests in
real or personal property, and the interests in real or personal property
secured thereby, by nonjudicial sale; and Guarantor hereby waives any defense to
the recovery by the Administrative Agent, the Issuing Bank or any Lender
hereunder against the Primary Borrower, Guarantor or any collateral of any
deficiency after a nonjudicial sale;
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and Guarantor expressly waives any defense or benefits that may be derived from
Chapter 34 of the Texas Business and Commerce Code, Section 51.003 of the Texas
Property Code, or any statute in effect in any other jurisdiction. Without
limiting the foregoing, Guarantor waives, to the extent not prohibited by
Applicable Law, any defense arising out of any such nonjudicial sale even though
such sale operates to impair or extinguish any right of reimbursement,
contribution or subrogation or any other right or remedy of Guarantor against
the Primary Borrower or any other Person or any other collateral. Guarantor
hereby agrees that Guarantor shall be liable, subject to the limitations of
Section 1 hereof, for any part of the Obligations remaining unpaid after any
foreclosure.
12. Continuing Guarantee; Transfer of Obligations. This Guarantee is an
irrevocable continuing guarantee of payment and not of collection, and shall (a)
remain in full force and effect until final payment in full of the Obligations
and all other amounts payable under this Guarantee, (b) be binding upon
Guarantor, its successors, and assigns, and (c) inure to the benefit of and be
enforceable by the Administrative Agent and its successors, assigns and
replacements as Administrative Agent under the Credit Agreement, acting on
behalf of itself, as Administrative Agent, and on behalf of each Lender and the
Issuing Bank and its respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), to the extent permitted by
the Credit Agreement, each Lender, the Issuing Bank and the Administrative Agent
may assign or otherwise transfer its rights under the Credit Agreement, or any
of the Loan Documents or any interest therein to any other Person; and such
other Person shall thereupon become vested with all the rights or any interest
herein, as appropriate, in respect hereof granted to the Administrative Agent on
behalf of itself, as Administrative Agent, and as agent for the Lender and the
Issuing Bank, herein or otherwise.
13. Information. Guarantor acknowledges and agrees that it shall have the
sole responsibility for obtaining from the Primary Borrower such information
concerning the Primary Borrower's financial condition or business operations as
Guarantor may require, and that neither the Administrative Agent, the Issuing
Bank nor any Lender has any duty at any time to disclose to Guarantor any
information relating to the business, operations or financial conditions of the
Primary Borrower.
14. Foreign Currencies. With respect to each of the Obligations (or portion
thereof) hereby guaranteed that is payable in a Foreign Currency, the following
provisions shall apply: The Guarantor shall be obligated to pay to the
Administrative Agent the unpaid amount of such Obligations in the same Foreign
Currency and place in which such Obligations are payable by their terms;
provided, however, that if for any reason whatsoever the Guarantor is unable to
effect payment of such unpaid amount as aforesaid, the Guarantor shall be
obligated to pay to the Administrative Agent at its office at 270 Park Avenue,
New York, New York, the equivalent of such unpaid amount in Dollars, computed at
the Administrative Agent's selling rate most recently in effect on or prior to
the date such Obligations become due, for cable transfers of such Foreign
Currency to the place where such Obligations are payable. In any case in which
the Guarantor shall make or shall be obligated to make such payment in Dollars,
the Guarantor shall hold each Lender and the Issuing Bank harmless from any loss
incurred by it arising from any change in the value of Dollars in relation to
such Foreign Currency between the date such Obligations become due and
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the date such Lender or the Issuing Bank is actually able, following the
conversion of the Dollars paid by the Guarantor into such Foreign Currency and
remittance of such Foreign Currency to the place where such Obligations are
payable, to apply such Foreign Currency to such Obligations.
15. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED WHOLLY WITHIN SUCH STATE, WITHOUT GIVING EFFECT TO ANY CONFLICTS
OF LAWS PRINCIPLES.
16. Jurisdiction and Venue. In the event that the Administrative Agent
commences any legal proceeding before any court in connection with the
enforcement of, or collection of any amount due under, this Guarantee, or if the
Guarantor commences any legal proceeding before any court in connection with
this Guarantee, Guarantor and the Administrative Agent, on behalf of itself and
as agent for the Lenders and the Issuing Bank, each consents that (a) the courts
of the State of New York and/or the United States Federal Courts located in the
State of New York, shall have jurisdiction over all parties and over any such
proceedings; and (b) the venue of any such action shall be in Monroe County, New
York and/or the United States District Court for the Western District of New
York, located in Monroe County, New York.
17. WAIVER OF JURY TRIAL. GUARANTOR AND THE ADMINISTRATIVE AGENT HEREBY
KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE, TO THE EXTENT
PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTEE OR ANY OF THE OTHER LOAN DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A MATERIAL
INDUCEMENT TO THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND EACH LENDER
ENTERING INTO THE CREDIT AGREEMENT.
18. Guarantor Insolvency. Should Guarantor become insolvent, fail to pay
its debts generally as they become due, voluntarily seek, consent to, or
acquiesce in the benefits of any Debtor Relief Law or become a party to or be
made the subject (other than as a creditor or claimant) of any proceeding
provided for by any Debtor Relief Law that is not dismissed in 60 days that
could suspend or otherwise adversely affect the rights of the Administrative
Agent granted hereunder, then the obligations of Guarantor under this Guarantee
shall be, as between Guarantor and the Administrative Agent, the fully-matured,
due and payable obligation of Guarantor to the Administrative Agent (without
regard to whether the Primary Borrower is then in Default under the Credit
Agreement or whether any part of the Obligations are then due and owing by the
Primary Borrower), payable in full by Guarantor to the Administrative Agent upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
19. ENTIRE AGREEMENT. THIS GUARANTEE, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
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IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
Address for Guarantor:
IEC Electronics-Edinburg, Texas, Inc.
By:___________________________________
Name:________________________________
Title:______________________________________
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SCHEDULE 4.01(g)
Primary Guarantee of Alabama Sub
PRIMARY GUARANTEE AGREEMENT
THIS PRIMARY GUARANTEE AGREEMENT, dated as of ________ __, 1998 (this
"Guarantee"), is made by IEC Arab, Alabama, Inc. an Alabama corporation (the
"Guarantor"), of obligations of IEC Electronics Corp., a Delaware corporation
("Primary Borrower"), under the Credit Agreement (defined below) among the
Primary Borrower, The Chase Manhattan Bank, as Administrative Agent (as defined
below, the "Administrative Agent"), and the lenders from time to time parties to
the Credit Agreement (singly, a "Lender" and collectively, the "Lenders").
RECITALS
R1. The Primary Borrower, the Administrative Agent and the Lenders have
entered into that certain Credit Agreement, dated as of ________ __, 1998 (said
Credit Agreement, as it may hereafter be amended or otherwise modified from time
to time, being the "Credit Agreement"). The capitalized terms not otherwise
defined herein have the meanings specified in the Credit Agreement.
R2. Pursuant to the Credit Agreement, the Primary Borrower may, subject to
the terms of the Credit Agreement and the other Loan Documents, request that the
Lenders make Loans, and that the Issuing Bank issue Letters of Credit, to the
Primary Borrower.
R3. Guarantor is a wholly owned Subsidiary of the Primary Borrower, and
Guarantor depends on the Primary Borrower to provide Guarantor with short term
demand loans ("Intercompany Loans"), without which Guarantor would be unable to
operate and to pay its obligations as they become due. As of April 24, 1998,
Guarantor owed the Primary Borrower the principal amount of $16,398,359 for
outstanding Intercompany Loans, and Guarantor would be unable to repay such
amount if immediate payment thereof were demanded by the Primary Borrower. It is
a condition to (i) the Lenders' obligations to make Loans to the Primary
Borrower under the Credit Agreement, (ii) the Primary Borrower's continued
forbearance with respect to outstanding Intercompany Loans to Guarantor, and
(iii) the making of additional Intercompany Loans by the Primary Borrower to the
Guarantor, that Guarantor guarantee repayment of a portion of the Facility
Obligations upon the terms and conditions set forth herein.
R4. Primary Borrower requires financing of the kind provided to it by the
Credit Agreement, in part, in order for the Primary Borrower to provide, in
turn, the above-described Intercompany Loan support to Guarantor.
R5. The Board of Directors of Guarantor has determined that (i) the
execution, delivery and performance of this Guarantee is necessary and
convenient to the conduct, promotion and attainment of Guarantor's business and
(ii) Guarantor may reasonably be expected to benefit, directly and indirectly,
from the Loans and the issuance of Letters of Credit.
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R6. Guarantor desires to induce the Lenders to make such Loans and the
Issuing Bank to issue, and the Lenders to participate in the issuance of,
Letters of Credit, which may reasonably be expected to benefit, directly and
indirectly, Guarantor.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Loans and issue, or participate in the issuance of, Letters of
Credit under the Credit Agreement, Guarantor hereby agrees with the
Administrative Agent, acting individually, as the Administrative Agent under the
Credit Agreement, and in its capacity under the Credit Agreement as agent for
each of the Lenders and the Issuing Bank, (in such capacities, the
"Administrative Agent") as follows:
1. Guarantee.
(a) Subject to the provisions of Paragraphs 1(b) and 1(c) hereof,
Guarantor hereby unconditionally guarantees to the Administrative Agent the
punctual payment of, and promises to pay to the Administrative Agent, when
due, whether at stated maturity, by mandatory prepayment, by acceleration
or otherwise, all obligations, indebtedness and liabilities of the Primary
Borrower to the Administrative Agent, the Lenders, the Issuing Bank and any
Related Parties, now or hereafter arising from, by virtue of or pursuant to
the Credit Agreement, or any other Loan Document and any and all
rearrangements, renewals and extensions thereof, or any part thereof, or
any amendments thereto, whether for principal, interest (including, without
limitation, interest, fees and other charges that would accrue or become
owing both prior to and subsequent to, and but for the commencement of, any
proceeding against or with respect to the Primary Borrower under any
chapter of the Bankruptcy Code of 1978, 11 U.S.C ss.101 et seq. (the
"Bankruptcy Code") whether or not a claim is allowed for the same in any
such proceeding), LC Disbursements, premium, fees, commissions, expenses or
otherwise (such obligations being the "Obligations") and agrees to pay to
the Administrative Agent, any and all reasonable costs, expenses and
charges (including, without limitation, fees and charges of external legal
counsel and costs allocated by any internal legal department) incurred by
the Administrative Agent, and any of the Lenders and the Issuing Bank in
the administration, enforcement or collection of all or any part of the
Obligations, whether such Obligations are direct, indirect, fixed,
contingent, joint, several or joint and several, and of any rights under
this Guarantee.
(b) The provisions of Paragraph 1(a) above to the contrary
notwithstanding, the Guarantor's liability under this Guarantee for payment
of the aggregate principal amount of Loans and LC Disbursements owed at any
time pursuant to the Credit Agreement and any other Loan Document and any
and all renewals and extensions thereof, or any part thereof, or any
amendments thereto, shall be limited to $11,450,000 which, together with
the amount of the Obligations guaranteed by Guarantor pursuant to a
Secondary Guarantee Agreement executed pursuant to Section 4.01(g) of the
Credit Agreement (the "Secondary Guarantee") represents approximately 86%
of the outstanding principal balance of Intercompany Loans as of the date
hereof; provided, that such limitation amount shall be increased (but shall
in no event decrease) by the amount, as of the first day on which the
Administrative Agent makes any demand for payment under this Guarantee that
is not subsequently withdrawn, (i) of the
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total amount of any contributions to and investments in the equity capital
of the Guarantor made by the Primary Borrower after the date hereof, plus
(ii) the amount by which the unpaid principal balance of all outstanding
Intercompany Loans exceeds $16,398,359. The foregoing limitation shall not
limit the Guarantor's liability for the payment of any Obligations other
than the Obligations to pay such principal amounts; and all payments and
collections received from time to time by the Administrative Agent, the
Issuing Bank, or the Lenders from the Primary Borrower or from any other
Person or source, other than the Guarantor either pursuant to this
Guarantee or as a result of payment by the Guarantor of Intercompany Loans,
shall be deemed to be applied (i) first to that portion of the Obligations
which are not guaranteed hereunder by virtue of such limitation or under
the Secondary Guarantee, (ii) second to that portion of the Obligations
which are guaranteed pursuant to the Secondary Guarantee and (iii) last to
that portion of the Obligations which are guaranteed hereunder and are
within such limitation.
(c) Anything contained in this Guarantee to the contrary notwithstanding,
the obligations of Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of the Bankruptcy Code or under any applicable
provisions of state insolvency or fraudulent transfer laws, or other
comparable state laws (collectively, the "Fraudulent Transfer Laws"), in
each case after giving effect to all other liabilities of Guarantor,
contingent or otherwise, that are relevant under the Fraudulent Transfer
Laws (specifically excluding, however, any liabilities of Guarantor to the
Primary Borrower in respect of Intercompany Loans or other intercompany
indebtedness to other Affiliates of the Primary Borrower to the extent that
such indebtedness would be discharged in an amount equal to the amount paid
by Guarantor hereunder and under the Secondary Guarantee) and after giving
effect as assets, subject to Paragraph 4(a) hereof, to the value (as
determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, reimbursement or contribution of Guarantor
pursuant to (i) applicable laws, rules and regulations, and any applicable
orders, writs, injunctions or decrees of any court or Governmental
Authority (collectively, "Applicable Law") or (ii) any agreement providing
for an equitable allocation among Guarantor and other Affiliates of the
Primary Borrower of obligations arising under Guarantees by such parties.
2. Guarantee Absolute. Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Credit Agreement, and the
other Loan Documents, regardless of any Applicable Law, now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Lender, the Issuing Bank or the Administrative Agent with respect thereto. The
obligations and liabilities of Guarantor hereunder are independent of the
obligations of the Primary Borrower under the Credit Agreement and any
Applicable Law. The liability of Guarantor under this Guarantee shall be
absolute and unconditional irrespective of:
(a) the taking or accepting of any other security or Guarantee for any
or all of the Obligations, or any reduction or termination of any
Commitment;
(b) any increase, reduction or payment in full at any time or from time to
time of any part
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of the Obligations;
(c) any lack of validity or enforceability of the Credit Agreement, or any
other Loan Document or other agreement or instrument relating thereto,
including but not limited to the unenforceability of all or any part of the
Obligations by reason of the fact that (i) the Obligations, and/or the
interest paid or payable with respect thereto, exceeds the amount permitted
by Applicable Law, (ii) the act of creating the Obligations, or any part
thereof, is ultra vires, (iii) the officers creating same acted in excess
of their authority, or (iv) for any other reason;
(d) any lack of corporate power of the Primary Borrower or any other
Person at any time liable for the payment of any or all of the Obligations;
(e) any insolvency, bankruptcy, reorganization, receivership or other
proceeding under any applicable liquidation, conservatorship, bankruptcy,
moratorium, arrangement, receivership, insolvency, reorganization,
fraudulent transfer or similar laws from time to time in effect affecting
the rights of creditors generally (collectively, "Debtor Relief Laws")
involving the Primary Borrower, Guarantor or any other Person obligated on
any of the Obligations;
(f) any renewal, compromise, extension, acceleration or other change in
the time, manner or place of payment of, or in any other term of, all or
any of the Obligations; any adjustment, indulgence, forbearance, or
compromise that may be granted or given by any Lender to the Primary
Borrower, Guarantor, or any Person at any time liable for the payment of
any or all of the Obligations; or any other modification, amendment, or
waiver of or any consent to departure from the Credit Agreement, or any
other Loan Document or other agreement or instrument relating thereto,
without notification of Guarantor (the right to such notification being
herein specifically waived by Guarantor);
(g) any exchange, release, sale, subordination, compromise, or
non-perfection of any collateral or Lien securing the Obligations or any
part thereof, or any lack of validity or enforceability, change in
priority, destruction, reduction, or loss or impairment of value of any
such collateral or Lien;
(h) any invalidity, release, amendment, compromise or waiver of, or
consent to depart from, any other Guarantee for all or any of the
Obligations;
(i) the failure by any Lender, the Issuing Bank or the Administrative
Agent to make any demand upon or to bring any legal, equitable, or other
action under the Secondary Guarantee or against the Primary Borrower or any
other Person (including without limitation any other Guarantor), or the
failure or delay by any Lender, the Issuing Bank or the Administrative
Agent to, or the manner in which any Lender, the Issuing Bank or the
Administrative Agent shall, proceed to exhaust rights against any direct or
indirect security for the Obligations;
(j) the existence of any claim, defense, set-off, or other rights which
the Primary Borrower, Guarantor or any other Person may have at any time
against the Primary Borrower,
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any Lender, the Issuing Bank, the Administrative Agent, or Guarantor, or
any other Person, whether under the Secondary Guarantee or in connection
with this Guarantee, the other Loan Documents, the transactions
contemplated thereby, or any other transaction;
(k) any failure of any Lender, the Issuing Bank or the Administrative
Agent to notify Guarantor of any renewal, extension, or assignment of the
Obligations or any part thereof, or of the non-perfection, compromise or
release of any security, or of any other action taken or refrained from
being taken by any Lender, the Issuing Bank or the Administrative Agent, it
being understood that the Lenders, the Issuing Bank and the Administrative
Agent shall not be required to give Guarantor any notice of any kind under
any circumstances whatsoever with respect to or in connection with the
Obligations;
(l) any payment by the Primary Borrower to any Lender, the Issuing Bank or
the Administrative Agent being held to constitute a preference under any
Debtor Relief Law or, for any other reason, any Lender, the Issuing Bank or
the Administrative Agent being required to refund such payment or pay the
amount thereof to another Person; or
(m) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Primary Borrower, Guarantor, any other
Person liable on the Obligations, including without limitation any defense
by reason of any disability or other defense of the Primary Borrower, or
the cessation from any cause whatsoever of the liability of the Primary
Borrower, or any claim that Guarantor's obligations hereunder exceed or are
more burdensome than those of the Primary Borrower.
This Guarantee shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any Obligations is rescinded or must
otherwise be returned by any Lender, the Issuing Bank, the Administrative Agent
or any other Person upon the insolvency, bankruptcy or reorganization of the
Primary Borrower, Guarantor or otherwise, all as though such payment had not
been made.
3. Waiver. To the extent not prohibited by Applicable Law, Guarantor hereby
waives: (a) promptness, protests, diligence, presentment, acceptance,
performance, demands for performance, notices of nonperformance, notices of
protests, notices of dishonor, notices of acceptance of this Guarantee and of
the existence, creation or incurrence of new or additional indebtedness, and any
of the events described in Section 2 and of any other occurrence or matter with
respect to any of the Obligations, this Guarantee or any of the other Loan
Documents; (b) any requirement that any Lender, the Issuing Bank or the
Administrative Agent protect, secure, perfect, or insure any Lien or security
interest or any property subject thereto or exhaust any right or take any action
against the Primary Borrower or any other Person or any collateral or pursue any
other remedy in any Lender's, the Issuing Bank's or the Administrative Agent's
power whatsoever; (c) any right to assert against any Lender, the Issuing Bank
or the Administrative Agent as a counterclaim, set-off or cross-claim, any
counterclaim, set-off or claim which it may now or hereafter have against the
Primary Borrower or other Person liable on the Obligations; (d) any right to
seek or enforce any remedy or right that any Lender, the Issuing Bank or the
Administrative Lender now has or may hereafter have against the Primary Borrower
or any other Guarantor or under the Secondary
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Guarantee; (e) any right to participate in any collateral or in any right
benefiting the Lenders, the Issuing Bank or the Administrative Agent in respect
of the Obligations; and (f) any right by which it might be entitled to require
suit on an accrued right of action in respect of any of the Obligations or
require suit against the Primary Borrower or any other Person.
4. Subrogation and Subordination.
(a) Notwithstanding any reference to subrogation contained herein to the
contrary, Guarantor hereby agrees that, until the Obligations have been
paid in full to the Lenders, the Issuing Bank and the Administrative Agent,
except as provided in Section 5.30 of the Credit Agreement, Guarantor shall
not be entitled to enforce, pursue or exercise any claim or other rights
which it may have or hereafter acquire against the Primary Borrower or
under any other Guarantee of any of the Obligations, that arise from the
existence, payment, performance or enforcement of Guarantor's obligations
under this Guarantee, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy of any Lender, the Issuing Bank
or the Administrative Agent against the Primary Borrower or in any
collateral which any of them now has or hereafter acquires, whether or not
such claim, remedy or right arises in equity, or under contract, statute or
common law, including without limitation, the right to take or receive from
the Primary Borrower, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account of such
claim or other rights. If any amount shall be paid to Guarantor in
violation of the preceding sentence and the Obligations shall not have been
paid in full, such amount shall be deemed to have been paid to Guarantor
for the benefit of, and held in trust for the benefit of, the Lenders, the
Issuing Bank and the Administrative Agent, and shall forthwith be paid to
the Administrative Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement.
(b) If Guarantor becomes the holder of any indebtedness payable by the
Primary Borrower, Guarantor hereby subordinates all indebtedness owing to
it from the Primary Borrower to all Obligations of the Primary Borrower to
any Lender, to the Issuing Bank or to the Administrative Agent, and agrees
that upon the occurrence and continuance of a Default or an Event of
Default, it shall not accept any payment on the same until payment in full
of all Obligations, and shall in no circumstance whatever attempt to
set-off or reduce any obligations hereunder because of such indebtedness.
If any amount shall nevertheless be paid to Guarantor by the Primary
Borrower prior to payment in full of the Obligations, such amount shall be
held in trust for the benefit of the Lenders, the Issuing Bank and the
Administrative Agent and shall forthwith be paid to the Administrative
Agent to be credited and applied to the Obligations, whether matured or
unmatured.
5. Representations and Warranties. Guarantor hereby represents and
warrants as follows:
(a) The execution, delivery and performance by it of this Guarantee have
been duly authorized by all necessary corporate action and do not and
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will not contravene its bylaws or its articles of incorporation.
(b) The execution, delivery and performance by it of this Guarantee do not
and will not contravene any Applicable Law or any contractual restriction
binding on or affecting it or any of its properties, and do not and will
not result in or require the creation of any Lien, security interest or
other charge or encumbrance upon or with respect to any of its properties,
except pursuant to the Security Agreement in the form of Schedule 4.01(i)
to the Credit Agreement, required to be executed by it pursuant to Section
4.01(j) of the Credit Agreement.
(c) No authorization or approval or other action by, and no notice to or
filing with, any Person or entity not otherwise obtained is required for
the due execution, delivery and performance by it of this Guarantee.
(d) This Guarantee is a legal, valid and binding obligation of Guarantor,
enforceable against Guarantor, in accordance with its terms, subject to
Debtor Relief Laws.
(e) There is no action, suit or proceeding pending or, to the knowledge of
Guarantor, threatened against or otherwise affecting it before any
Governmental Authority or arbitrator which would prohibit the execution,
delivery and performance by it of this Guarantee.
(f) The statements set forth in Recitals R3 through R6 of this Guarantee
are correct in all respects.
(g) As of April 24, 1998, the Guarantor owed the Primary Borrower the
principal amount of $16,398,359 for outstanding Intercompany Loans made by
the Primary Borrower to the Guarantor.
(h) Attached to this Guarantee as Exhibit 5(h) is a balance sheet of the
Guarantor (the "Balance Sheet") dated as of March 27, 1998, (the "Balance
Sheet Date"), which (i) was prepared in accordance with generally accepted
accounting principles consistently applied in the preparation of the
Primary Borrower's and its Subsidiaries' consolidated financial statements,
(ii) is true and complete, (iii) and fairly presents the Guarantor's
financial condition as of the Balance Sheet Date. The Current Liabilities
line item on the Balance Sheet, "Intercompany Payables", represents
entirely amounts owed as of the Balance Sheet Date as Intercompany Loans by
the Guarantor to the Primary Borrower, and no intercompany payables are
owed as of the date hereof to any Person other than the Primary Borrower.
No amount set forth on the Balance Sheet as Long Term Debt was owed to the
Primary Borrower, no long term debt is owed by the Guarantor to the Primary
Borrower on the date hereof, and the Guarantor's long term debt has not
increased since the Balance Sheet Date. In the opinion of the management of
the Guarantor, the Guarantor's Total Shareholders' Equity did not decline
by more than $180,000 between the Balance Sheet Date and April 24, 1998. In
the opinion of the management of the Guarantor, the net realizable value of
the Guarantor's assets, other than Goodwill, as of the date hereof is
approximately equal to the aggregate net value of such assets set forth on
the Balance Sheet. The opinion expressed in the preceding
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sentence assumes (i) that the Guarantor will continue to operate as a going
concern, (ii) the collection of Accounts Receivable and the sale of
Inventory in the ordinary course of business and (iii) the realization of
the fair saleable value of the Guarantor's Land, Buildings, Equipment,
Furniture and Improvements, as those terms are used on the Balance Sheet.
(i) As of the Effective Date, the Intercompany Loans are payable on demand
by the Primary Borrower. Despite the fact that the Intercompany Loans are
payable on demand, by virtue of the agreement of the Primary Borrower set
forth in clause (ii) of Section 5.30 of the Credit Agreement, the Guarantor
can reasonably be expected to remain solvent, to have sufficient capital
with which to operate and to be able to repay its indebtedness as it
becomes due.
(j) The Guarantor and the Primary Borrower are separately incorporated
entities that operate independently from each other. As of the Effective
Date, Guarantor utilizes certain accounting, cash management, management
and other operational and organizational functions of the Primary Borrower
for operational and organizational efficiency, as well as to assist in the
preparation of tax returns on a consolidated basis. In the event these
functions were no longer provided to the Guarantor by the Primary Borrower,
Guarantor would need to make the necessary adjustments in its operations
and organizational functions, in order to replace such functions. As of the
Effective Date hereof, the majority of the manufacturing and purchasing
functions of the Guarantor are handled independently from the Primary
Borrower, although some of these functions are occasionally shared for
efficiency or as special circumstances warrant.
(k) Schedule 5(k) to this Guarantee contains a complete list of
Guarantor's production equipment as of the date hereof, which in the
opinion of Guarantor's management has a fair saleable value in an orderly
liquidations of not more than approximately $2,300,000.
6. Covenants. Guarantor hereby expressly assumes, confirms, and agrees to
perform, observe, and be bound by all conditions and covenants set forth in the
Credit Agreement, to the extent applicable to it, as if it were a signatory
thereto. Guarantor further covenants and agrees (a) punctually and properly to
perform all of Guarantor's covenants and duties under any other Loan Documents;
(b) from time to time promptly to furnish the Administrative Agent with any
information or writings which the Administrative Agent may reasonably request
concerning this Guarantee; and (c) promptly to notify the Administrative Agent
of any claim, action, or proceeding affecting this Guarantee.
7. Amendments, etc. No amendment or waiver of any provision of this
Guarantee nor consent to any departure by Guarantor therefrom shall in any event
be effective unless the same shall be in writing and signed by the
Administrative Agent, with the consent of all of the Lenders; and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
8. Addresses for Notices. Unless otherwise provided herein, all
notices, requests, consents and demands shall be in writing and shall be
delivered by hand or overnight courier service, mailed or sent by telecopy
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to the address specified on the signature page hereof, in the case of the
Guarantor, or in the Credit Agreement, in the case of the Administrative Agent,
or, as to either such party, to such other addresses as may be designated by it
in written notice to the other. All notices, requests, consents and demands
hereunder shall be deemed to have been given on the date of receipt if delivered
by hand or overnight courier service or sent by telecopy, or if mailed,
effective on the earlier of actual receipt or three (3) days after being mailed
by certified mail, return receipt requested, postage prepaid, addressed as
aforesaid.
9. No Waiver: Remedies. No failure on the part of the Administrative Agent,
the Issuing Bank or any Lender to exercise, and no delay in exercising, any
right hereunder or under any of the other Loan Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
or under any of the other Loan Documents preclude any other or further exercise
thereof or the exercise of any other right. Neither the Administrative Agent,
the Issuing Bank nor any Lender shall be required to (a) prosecute collection or
seek to enforce or resort to any remedies against the Primary Borrower or any
other Person liable on any of the Obligations, or under the Secondary Guarantee,
(b) join the Primary Borrower or any other Person liable on any of the
Obligations in any action in which the Administrative Agent, the Issuing Bank or
any Lender prosecutes collection or seeks to enforce or resort to any remedies
against the Primary Borrower or other Person liable on any of the Obligations,
or (c) seek to enforce or resort to any remedies with respect to any Liens
granted to (or benefiting, directly or indirectly) the Administrative Agent, the
Issuing Bank or any Lender by the Primary Borrower or any other Person liable on
any of the Obligations. Neither the Administrative Agent, the Issuing Bank nor
any Lender shall have any obligation to protect, secure or insure any of the
Liens or the properties or interests in properties subject thereto. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
Applicable Law.
10. Right of Set-Off. Upon the occurrence and during the continuance of any
Event of Default, each Lender, the Issuing Bank and the Administrative Agent is
hereby authorized at any time and from time to time, to the fullest extent
permitted by Applicable Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender, the Issuing Bank and the
Administrative Agent to or for the credit or the account of Guarantor against
any and all of the obligations of Guarantor now or hereafter existing under this
Guarantee, irrespective of whether or not the Administrative Agent shall have
made any demand under this Guarantee. Upon the exercise of any such right of
set-off, each Lender, the Issuing Bank and the Administrative Agent shall be
deemed to agree promptly to notify Guarantor after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender, the Issuing
Bank and the Administrative Agent under this Section 10 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which it may have.
11. Liens. Guarantor agrees that the Administrative Agent, the Issuing Bank
or any Lender, in its discretion, may without notice or demand and without
affecting either the liability of Guarantor under this Guarantee, or the
liability of the Primary Borrower or any other Person liable on any of the
Obligations, or the Liens and security interests created by this Guarantee, or
any security interest or other Lien, upon the occurrence of an Event of Default,
foreclose any deed of
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trust or mortgage or similar Lien covering interests in real or personal
property, and the interests in real or personal property secured thereby, by
nonjudicial sale; and Guarantor hereby waives any defense to the recovery by the
Administrative Agent, the Issuing Bank or any Lender hereunder against the
Primary Borrower, Guarantor or any collateral of any deficiency after a
nonjudicial sale. Without limiting the foregoing, Guarantor waives, to the
extent not prohibited by Applicable Law, any defense arising out of any such
nonjudicial sale even though such sale operates to impair or extinguish any
right of reimbursement, contribution or subrogation or any other right or remedy
of Guarantor against the Primary Borrower or any other Person or any other
collateral. Guarantor hereby agrees that Guarantor shall be liable, subject to
the limitations of Section 1 hereof, for any part of the Obligations remaining
unpaid after any foreclosure.
12. Continuing Guarantee; Transfer of Obligations. This Guarantee is an
irrevocable continuing guarantee of payment and not of collection, and shall (a)
remain in full force and effect until final payment in full of the Obligations
and all other amounts payable under this Guarantee, (b) be binding upon
Guarantor, its successors and assigns, and (c) inure to the benefit of and be
enforceable by the Administrative Agent and its successors, assigns and/or
replacements as Administrative Agent under the Credit Agreement, acting on
behalf of itself, as Administrative Agent, and on behalf of each Lender and the
Issuing Bank and its respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), to the extent permitted by
the Credit Agreement, each Lender, the Issuing Bank and the Administrative Agent
may assign or otherwise transfer its rights under the Credit Agreement, or any
of the Loan Documents or any interest therein to any other Person; and such
other Person shall thereupon become vested with all the rights or any interest
herein, as appropriate, in respect hereof granted to the Administrative Agent on
behalf of itself, as Administrative Agent, and as agent for the Lender and the
Issuing Bank, herein or otherwise.
13. Information. Guarantor acknowledges and agrees that it shall have the
sole responsibility for obtaining from the Primary Borrower such information
concerning the Primary Borrower's financial condition or business operations as
Guarantor may require, and that neither the Administrative Agent, the Issuing
Bank nor any Lender has any duty at any time to disclose to Guarantor any
information relating to the business, operations or financial conditions of the
Primary Borrower.
14. Foreign Currencies. With respect to each of the Obligations (or portion
thereof) hereby guaranteed that is payable in a Foreign Currency, the following
provisions shall apply: The Guarantor shall be obligated to pay to the
Administrative Agent the unpaid amount of such Obligations in the same Foreign
Currency and place in which such Obligations are payable by their terms;
provided, however, that if for any reason whatsoever the Guarantor is unable to
effect payment of such unpaid amount as aforesaid, the Guarantor shall be
obligated to pay to the Administrative Agent at its office at 270 Park Avenue,
New York, New York, the equivalent of such unpaid amount in Dollars, computed at
the Administrative Agent's selling rate most recently in effect on or prior to
the date such Obligations become due, for cable transfers of such Foreign
Currency to the place where such Obligations are payable. In any case in which
the Guarantor shall make or shall be obligated to make such payment in Dollars,
the Guarantor shall hold each Lender and the Issuing Bank harmless from any loss
incurred by it arising from any change in the value of
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Dollars in relation to such Foreign Currency between the date such Obligations
become due and the date such Lender or the Issuing Bank is actually able,
following the conversion of the Dollars paid by the Guarantor into such Foreign
Currency and remittance of such Foreign Currency to the place where such
Obligations are payable, to apply such Foreign Currency to such Obligations.
15. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE, WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAWS PRINCIPLES.
16. Jurisdiction and Venue. In the event that the Administrative Agent
commences any legal proceeding before any court in connection with the
enforcement of, or collection of any amount due under, this Guarantee, or if the
Guarantor commences any legal proceeding before any court in connection with
this Guarantee, Guarantor and the Administrative Agent, on behalf of itself and
as agent for the Lenders and the Issuing Bank, each consents that (a) the courts
of the State of New York and/or the United States Federal Courts located in the
State of New York, shall have jurisdiction over all parties and over any such
proceedings; and (b) the venue of any such action shall be in Monroe County, New
York and/or the United States District Court for the Western District of New
York, located in Monroe County, New York.
17. WAIVER OF JURY TRIAL. GUARANTOR AND THE ADMINISTRATIVE AGENT HEREBY
KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE, TO THE EXTENT
PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTEE OR ANY OF THE OTHER LOAN DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A MATERIAL
INDUCEMENT TO THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND EACH LENDER
ENTERING INTO THE CREDIT AGREEMENT.
18. Guarantor Insolvency. Should Guarantor become insolvent, fail to pay
its debts generally as they become due, voluntarily seek, consent to, or
acquiesce in the benefits of any Debtor Relief Law or become a party to or be
made the subject (other than as a creditor or claimant) of any proceeding
provided for by any Debtor Relief Law that is not dismissed in 60 days that
could suspend or otherwise adversely affect the rights of the Administrative
Agent granted hereunder, then the obligations of Guarantor under this Guarantee
shall be, as between Guarantor and the Administrative Agent, the fully-matured,
due and payable obligation of Guarantor to the Administrative Agent (without
regard to whether the Primary Borrower is then in Default under the Credit
Agreement or whether any part of the Obligations are then due and owing by the
Primary Borrower), payable in full by Guarantor to the Administrative Agent upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
19. ENTIRE AGREEMENT. THIS GUARANTEE, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
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20. Relationship Between Primary and Secondary Guarantees. Any amounts
received from time to time by the Administrative Agent, the Issuing Bank, or any
Lender from the Guarantor as payments against Guarantor's obligations under
either this Guarantee or the Secondary Guarantee shall be applied first to the
portion of the Obligations guaranteed pursuant to the Secondary Guarantee and
second to the portion of the Obligations guaranteed pursuant to this Guarantee;
provided that any proceeds of Collateral (as such term is defined in the
Security Agreement securing this Guarantee) received by any such Person shall be
applied in accordance with such Security Agreement.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
Address for Guarantor:
IEC Arab, Alabama, Inc.
By:_______________________________
Name:______________________________
Title:_____________________________
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SCHEDULE 4.01(g-1)
Secondary Guarantee of Alabama Sub
SECONDARY GUARANTEE AGREEMENT
THIS SECONDARY GUARANTEE AGREEMENT, dated as of ________ __, 1998 (this
"Guarantee"), is made by IEC Arab, Alabama, Inc. an Alabama corporation (the
"Guarantor"), of obligations of IEC Electronics Corp., a Delaware corporation
("Primary Borrower"), under the Credit Agreement (defined below) among the
Primary Borrower, The Chase Manhattan Bank, as Administrative Agent (as defined
below, the "Administrative Agent"), and the lenders from time to time parties to
the Credit Agreement (singly, a "Lender" and collectively, the "Lenders").
RECITALS
R1. The Primary Borrower, the Administrative Agent and the Lenders have
entered into that certain Credit Agreement, dated as of ________ __, 1998 (said
Credit Agreement, as it may hereafter be amended or otherwise modified from time
to time, being the "Credit Agreement"). The capitalized terms not otherwise
defined herein have the meanings specified in the Credit Agreement.
R2. Pursuant to the Credit Agreement, the Primary Borrower may, subject to
the terms of the Credit Agreement and the other Loan Documents, request that the
Lenders make Loans, and that the Issuing Bank issue Letters of Credit, to the
Primary Borrower.
R3. Guarantor is a wholly owned Subsidiary of the Primary Borrower, and
Guarantor depends on the Primary Borrower to provide Guarantor with short term
demand loans ("Intercompany Loans"), without which Guarantor would be unable to
operate and to pay its obligations as they become due. As of April 24, 1998,
Guarantor owes the Primary Borrower the principal amount of approximately
$16,398,359 for outstanding Intercompany Loans, and Guarantor would be unable to
repay such amount if immediate payment thereof were demanded by the Primary
Borrower. It is a condition to (i) the Lenders' obligations to make Loans to the
Primary Borrower under the Credit Agreement, (ii) the Primary Borrower's
continued forbearance with respect to outstanding Intercompany Loans to
Guarantor, and (iii) the making of additional Intercompany Loans by the Primary
Borrower to the Guarantor, that Guarantor guarantee repayment of a portion of
the Facility Obligations upon the terms and conditions set forth herein.
R4. Primary Borrower requires financing of the kind provided to it by the
Credit Agreement, in part, in order for the Primary Borrower to provide, in
turn, the above-described Intercompany Loan support to Guarantor.
R5. The Board of Directors of Guarantor has determined that (i) the
execution, delivery and performance of this Guarantee is necessary and
convenient to the conduct, promotion and attainment of Guarantor's business and
(ii) Guarantor may reasonably be expected to benefit, directly and indirectly,
from the Loans and the issuance of Letters of Credit.
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R6. Guarantor desires to induce the Lenders to make such Loans and the
Issuing Bank to issue, and the Lenders to participate in the issuance of,
Letters of Credit, which may reasonably be expected to benefit, directly and
indirectly, Guarantor.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Loans and issue, or participate in the issuance of, Letters of
Credit under the Credit Agreement, Guarantor hereby agrees with the
Administrative Agent, acting individually, as the Administrative Agent under the
Credit Agreement, and in its capacity under the Credit Agreement as agent for
each of the Lenders and the Issuing Bank, (in such capacities, the
"Administrative Agent") as follows:
1. Guarantee.
(a) Subject to the provisions of Paragraphs 1(b) and 1(c) hereof,
Guarantor hereby unconditionally guarantees to the Administrative Agent the
punctual payment of, and promises to pay to the Administrative Agent, when
due, whether at stated maturity, by mandatory prepayment, by acceleration
or otherwise, all obligations, indebtedness and liabilities of the Primary
Borrower to the Administrative Agent, the Lenders, the Issuing Bank and any
Related Parties, now or hereafter arising from, by virtue of or pursuant to
the Credit Agreement, or any other Loan Document and any and all
rearrangements, renewals and extensions thereof, or any part thereof, or
any amendments thereto, whether for principal, interest (including, without
limitation, interest, fees and other charges that would accrue or become
owing both prior to and subsequent to, and but for the commencement of, any
proceeding against or with respect to the Primary Borrower under any
chapter of the Bankruptcy Code of 1978, 11 U.S.C ss.101 et seq. (the
"Bankruptcy Code") whether or not a claim is allowed for the same in any
such proceeding), LC Disbursements, premium, fees, commissions, expenses or
otherwise (such obligations being the "Obligations") and agrees to pay to
the Administrative Agent, any and all reasonable costs, expenses and
charges (including, without limitation, fees and charges of external legal
counsel and costs allocated by any internal legal department) incurred by
the Administrative Agent, and any of the Lenders and the Issuing Bank in
the administration, enforcement or collection of all or any part of the
Obligations, whether such Obligations are direct, indirect, fixed,
contingent, joint, several or joint and several, and of any rights under
this Guarantee.
(b) The provisions of Paragraph 1(a) above to the contrary
notwithstanding, the Guarantor's liability under this Guarantee for payment
of the Obligations shall be limited to $2,300,000. All payments and
collections received from time to time by the Administrative Agent, the
Issuing Bank, or the Lenders from the Primary Borrower or from any other
Person or source, other than the Guarantor either pursuant to this
Guarantee or as a result of payment by the Guarantor of Intercompany Loans,
shall be deemed to be applied (i) first to that portion of the Obligations
which are not guaranteed hereunder by virtue of such limitation or under
the Primary Guarantee Agreement executed by Guarantor pursuant to Section
4.01(g) of the Credit Agreement (the"Primary Guarantee"), (ii) second to
that portion of the Obligations which are guaranteed hereunder and are
within such limitation and (iii) finally to that portion of the Obligations
which are guaranteed pursuant to the Primary Guarantee.
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(c) Anything contained in this Guarantee to the contrary notwithstanding,
the obligations of Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of the Bankruptcy Code or under any applicable
provisions of state insolvency or fraudulent transfer laws, or other
comparable state laws (collectively, the "Fraudulent Transfer Laws"), in
each case after giving effect to all other liabilities of Guarantor,
contingent or otherwise, that are relevant under the Fraudulent Transfer
Laws (specifically excluding, however, any liabilities of Guarantor to the
Primary Borrower in respect of Intercompany Loans or other intercompany
indebtedness to other Affiliates of the Primary Borrower to the extent that
such indebtedness would be discharged in an amount equal to the amount paid
by Guarantor hereunder and under the Primary Guarantee) and after giving
effect as assets, subject to Paragraph 4(a) hereof, to the value (as
determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, reimbursement or contribution of Guarantor
pursuant to (i) applicable laws, rules and regulations, and any applicable
orders, writs, injunctions or decrees of any court or Governmental
Authority (collectively, "Applicable Law") or (ii) any agreement providing
for an equitable allocation among Guarantor and other Affiliates of the
Primary Borrower of obligations arising under Guarantees by such parties.
2. Guarantee Absolute. Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Credit Agreement, and the
other Loan Documents, regardless of any Applicable Law, now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Lender, the Issuing Bank or the Administrative Agent with respect thereto. The
obligations and liabilities of Guarantor hereunder are independent of the
obligations of the Primary Borrower under the Credit Agreement and any
Applicable Law. The liability of Guarantor under this Guarantee shall be
absolute and unconditional irrespective of:
(a) the taking or accepting of any other security or Guarantee for any
or all of the Obligations, or any reduction or termination of any
Commitment;
(b) any increase, reduction or payment in full at any time or from time to
time of any part of the Obligations;
(c) any lack of validity or enforceability of the Credit Agreement, or any
other Loan Document or other agreement or instrument relating thereto,
including but not limited to the unenforceability of all or any part of the
Obligations by reason of the fact that (i) the Obligations, and/or the
interest paid or payable with respect thereto, exceeds the amount permitted
by Applicable Law, (ii) the act of creating the Obligations, or any part
thereof, is ultra vires, (iii) the officers creating same acted in excess
of their authority, or (iv) for any other reason;
(d) any lack of corporate power of the Primary Borrower or any other
Person at any time liable for the payment of any or all of the Obligations;
(e) any insolvency, bankruptcy, reorganization, receivership or other
proceeding under
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any applicable liquidation, conservatorship, bankruptcy, moratorium,
arrangement, receivership, insolvency, reorganization, fraudulent transfer
or similar laws from time to time in effect affecting the rights of
creditors generally (collectively, "Debtor Relief Laws") involving the
Primary Borrower, Guarantor or any other Person obligated on any of the
Obligations;
(f) any renewal, compromise, extension, acceleration or other change in
the time, manner or place of payment of, or in any other term of, all or
any of the Obligations; any adjustment, indulgence, forbearance, or
compromise that may be granted or given by any Lender to the Primary
Borrower, Guarantor, or any Person at any time liable for the payment of
any or all of the Obligations; or any other modification, amendment, or
waiver of or any consent to departure from the Credit Agreement, or any
other Loan Document or other agreement or instrument relating thereto,
without notification of Guarantor (the right to such notification being
herein specifically waived by Guarantor);
(g) any exchange, release, sale, subordination, compromise, or
non-perfection of any collateral or Lien securing the Obligations or any
part thereof, or any lack of validity or enforceability, change in
priority, destruction, reduction, or loss or impairment of value of any
such collateral or Lien;
(h) any invalidity, release, amendment, compromise or waiver of, or
consent to depart from, any other Guarantee for all or any of the
Obligations;
(i) the failure by any Lender, the Issuing Bank or the Administrative
Agent to make any demand upon or to bring any legal, equitable, or other
action under the Primary Guarantee or against the Primary Borrower or any
other Person (including without limitation any other Guarantor), or the
failure or delay by any Lender, the Issuing Bank or the Administrative
Agent to, or the manner in which any Lender, the Issuing Bank or the
Administrative Agent shall, proceed to exhaust rights against any direct or
indirect security for the Obligations;
(j) the existence of any claim, defense, set-off, or other rights which
the Primary Borrower, Guarantor or any other Person may have at any time
against the Primary Borrower, any Lender, the Issuing Bank, the
Administrative Agent, or Guarantor, or any other Person, whether under the
Primary Guarantee or in connection with this Guarantee, the other Loan
Documents, the transactions contemplated thereby, or any other transaction;
(k) any failure of any Lender, the Issuing Bank or the Administrative
Agent to notify Guarantor of any renewal, extension, or assignment of the
Obligations or any part thereof, or of the non-perfection, compromise or
release of any security, or of any other action taken or refrained from
being taken by any Lender, the Issuing Bank or the Administrative Agent, it
being understood that the Lenders, the Issuing Bank and the Administrative
Agent shall not be required to give Guarantor any notice of any kind under
any circumstances whatsoever with respect to or in connection with the
Obligations;
(l) any payment by the Primary Borrower to any Lender, the Issuing Bank or
the Administrative Agent being held to constitute a preference under any
Debtor Relief Law or,
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for any other reason, any Lender, the Issuing Bank or the Administrative
Agent being required to refund such payment or pay the amount thereof to
another Person; or
(m) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Primary Borrower, Guarantor, any other
Person liable on the Obligations, including without limitation any defense
by reason of any disability or other defense of the Primary Borrower, or
the cessation from any cause whatsoever of the liability of the Primary
Borrower, or any claim that Guarantor's obligations hereunder exceed or are
more burdensome than those of the Primary Borrower.
This Guarantee shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any Obligations is rescinded or must
otherwise be returned by any Lender, the Issuing Bank, the Administrative Agent
or any other Person upon the insolvency, bankruptcy or reorganization of the
Primary Borrower, Guarantor or otherwise, all as though such payment had not
been made.
3. Waiver. To the extent not prohibited by Applicable Law, Guarantor hereby
waives: (a) promptness, protests, diligence, presentment, acceptance,
performance, demands for performance, notices of nonperformance, notices of
protests, notices of dishonor, notices of acceptance of this Guarantee and of
the existence, creation or incurrence of new or additional indebtedness, and any
of the events described in Section 2 and of any other occurrence or matter with
respect to any of the Obligations, this Guarantee or any of the other Loan
Documents; (b) any requirement that any Lender, the Issuing Bank or the
Administrative Agent protect, secure, perfect, or insure any Lien or security
interest or any property subject thereto or exhaust any right or take any action
against the Primary Borrower or any other Person or any collateral or pursue any
other remedy in any Lender's, the Issuing Bank's or the Administrative Agent's
power whatsoever; (c) any right to assert against any Lender, the Issuing Bank
or the Administrative Agent as a counterclaim, set-off or cross-claim, any
counterclaim, set-off or claim which it may now or hereafter have against the
Primary Borrower or other Person liable on the Obligations; (d) any right to
seek or enforce any remedy or right that any Lender, the Issuing Bank or the
Administrative Lender now has or may hereafter have against the Primary Borrower
or any other Guarantor or under the Primary Guarantee; (e) any right to
participate in any collateral or in any right benefiting the Lenders, the
Issuing Bank or the Administrative Agent in respect of the Obligations; and (f)
any right by which it might be entitled to require suit on an accrued right of
action in respect of any of the Obligations or require suit against the Primary
Borrower or any other Person.
4. Subrogation and Subordination.
(a) Notwithstanding any reference to subrogation contained herein to the
contrary, Guarantor hereby agrees that, until the Obligations have been
paid in full to the Lenders, the Issuing Bank and the Administrative Agent,
except as provided in Section 5.30 of the Credit Agreement, Guarantor shall
not be entitled to enforce, pursue or exercise any claim or other rights
which it may have or hereafter acquire against the Primary Borrower or
under any other Guarantee of any of the Obligations, that arise from the
existence, payment, performance or enforcement of Guarantor's obligations
under this Guarantee, including, without limitation, any
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right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of any
Lender, the Issuing Bank or the Administrative Agent against the Primary
Borrower or in any collateral which any of them now has or hereafter
acquires, whether or not such claim, remedy or right arises in equity, or
under contract, statute or common law, including without limitation, the
right to take or receive from the Primary Borrower, directly or indirectly,
in cash or other property or by set-off or in any other manner, payment or
security on account of such claim or other rights. If any amount shall be
paid to Guarantor in violation of the preceding sentence and the
Obligations shall not have been paid in full, such amount shall be deemed
to have been paid to Guarantor for the benefit of, and held in trust for
the benefit of, the Lenders, the Issuing Bank and the Administrative Agent,
and shall forthwith be paid to the Administrative Agent to be credited and
applied upon the Obligations, whether matured or unmatured, in accordance
with the terms of the Credit Agreement.
(b) If Guarantor becomes the holder of any indebtedness payable by the
Primary Borrower, Guarantor hereby subordinates all indebtedness owing to
it from the Primary Borrower to all Obligations of the Primary Borrower to
any Lender, to the Issuing Bank or to the Administrative Agent, and agrees
that upon the occurrence and continuance of a Default or an Event of
Default, it shall not accept any payment on the same until payment in full
of all Obligations, and shall in no circumstance whatever attempt to
set-off or reduce any obligations hereunder because of such indebtedness.
If any amount shall nevertheless be paid to Guarantor by the Primary
Borrower prior to payment in full of the Obligations, such amount shall be
held in trust for the benefit of the Lenders, the Issuing Bank and the
Administrative Agent and shall forthwith be paid to the Administrative
Agent to be credited and applied to the Obligations, whether matured or
unmatured.
5. Representations and Warranties. Guarantor hereby represents and
warrants as follows:
(a) The execution, delivery and performance by it of this Guarantee have
been duly authorized by all necessary corporate action and do not and will
not contravene its bylaws or its articles of incorporation.
(b) The execution, delivery and performance by it of this Guarantee do not
and will not contravene any Applicable Law or any contractual restriction
binding on or affecting it or any of its properties, and do not and will
not result in or require the creation of any Lien, security interest or
other charge or encumbrance upon or with respect to any of its properties,
except pursuant to the Security Agreement in the form of Schedule 4.01(j)
to the Credit Agreement, required to be executed by it pursuant to Section
4.01(j) of the Credit Agreement.
(c) No authorization or approval or other action by, and no notice to or
filing with, any Person or entity not otherwise obtained is required for
the due execution, delivery and performance by it of this Guarantee.
(d) This Guarantee is a legal, valid and binding obligation of Guarantor,
enforceable
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against Guarantor, in accordance with its terms, subject to Debtor Relief
Laws.
(e) There is no action, suit or proceeding pending or, to the knowledge of
Guarantor, threatened against or otherwise affecting it before any
Governmental Authority or arbitrator which would prohibit the execution,
delivery and performance by it of this Guarantee.
(f) The statements set forth in Recitals R3 through R6 of this Guarantee
are correct in all respects.
(g) As of April 24, 1998, the Guarantor owed the Primary Borrower the
principal amount of $16,398,359 for outstanding Intercompany Loans made by
the Primary Borrower to the Guarantor.
(h) Attached to this Guarantee as Exhibit 5(h) is a balance sheet of the
Guarantor (the "Balance Sheet") dated as of March 27, 1998, (the "Balance
Sheet Date"), which (i) was prepared in accordance with generally accepted
accounting principles consistently applied in the preparation of the
Primary Borrower's and its Subsidiaries' consolidated financial statements,
(ii) is true and complete, (iii) and fairly presents the Guarantor's
financial condition as of the Balance Sheet Date. The Current Liabilities
line item on the Balance Sheet, "Intercompany Payables", represents
entirely amounts owed as of the Balance Sheet Date as Intercompany Loans by
the Guarantor to the Primary Borrower, and no intercompany payables are
owed as of the date hereof to any Person other than the Primary Borrower.
No amount set forth on the Balance Sheet as Long Term Debt was owed to the
Primary Borrower, no long term debt is owed by the Guarantor to the Primary
Borrower on the date hereof, and the Guarantor's long term debt has not
increased since the Balance Sheet Date. In the opinion of the management of
the Guarantor, the Guarantor's Total Shareholders' Equity did not decline
by more than $180,000 between the Balance Sheet Date and April 24, 1998. In
the opinion of the management of the Guarantor, the net realizable value of
the Guarantor's assets, other than Goodwill, as of the date hereof is
approximately equal to the aggregate net value of such assets set forth on
the Balance Sheet. The opinion expressed in the preceding sentence assumes
(i) that the Guarantor will continue to operate as a going concern, (ii)
the collection of Accounts Receivable and the sale of Inventory in the
ordinary course of business and (iii) the realization of the fair saleable
value of the Guarantor's Land, Buildings, Equipment, Furniture and
Improvements, as those terms are used on the Balance Sheet.
(i) As of the Effective Date, the Intercompany Loans are payable on demand
by the Primary Borrower. Despite the fact that the Intercompany Loans are
payable on demand, by virtue of the agreement of the Primary Borrower set
forth in clause (ii) of Section 5.30 of the Credit Agreement, the Guarantor
can reasonably be expected to remain solvent, to have sufficient capital
with which to operate and to be able to repay its indebtedness as it
becomes due.
(j) The Guarantor and the Primary Borrower are separately incorporated
entities that operate independently from each other. As of the Effective
Date, Guarantor utilizes certain accounting, cash management, management
and other operational and organizational
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functions of the Primary Borrower for operational and organizational
efficiency, as well as to assist in the preparation of tax returns on a
consolidated basis. In the event these functions were no longer provided to
the Guarantor by the Primary Borrower, Guarantor would need to make the
necessary adjustments in its operations and organizational functions, in
order to replace such functions. As of the Effective Date hereof, the
majority of the manufacturing and purchasing functions of the Guarantor are
handled independently from the Primary Borrower, although some of these
functions are occasionally shared for efficiency or as special
circumstances warrant.
6. Covenants. Guarantor hereby expressly assumes, confirms, and agrees to
perform, observe, and be bound by all conditions and covenants set forth in the
Credit Agreement, to the extent applicable to it, as if it were a signatory
thereto. Guarantor further covenants and agrees (a) punctually and properly to
perform all of Guarantor's covenants and duties under any other Loan Documents;
(b) from time to time promptly to furnish the Administrative Agent with any
information or writings which the Administrative Agent may reasonably request
concerning this Guarantee; and (c) promptly to notify the Administrative Agent
of any claim, action, or proceeding affecting this Guarantee.
7. Amendments, etc. No amendment or waiver of any provision of this
Guarantee nor consent to any departure by Guarantor therefrom shall in any event
be effective unless the same shall be in writing and signed by the
Administrative Agent, with the consent of all of the Lenders; and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
8. Addresses for Notices. Unless otherwise provided herein, all notices,
requests, consents and demands shall be in writing and shall be delivered by
hand or overnight courier service, mailed or sent by telecopy to the address
specified on the signature page hereof, in the case of the Guarantor, or in the
Credit Agreement, in the case of the Administrative Agent, or, as to either such
party, to such other addresses as may be designated by it in written notice to
the other. All notices, requests, consents and demands hereunder shall be deemed
to have been given on the date of receipt if delivered by hand or overnight
courier service or sent by telecopy, or if mailed, effective on the earlier of
actual receipt or three (3) days after being mailed by certified mail, return
receipt requested, postage prepaid, addressed as aforesaid.
9. No Waiver: Remedies. No failure on the part of the Administrative Agent,
the Issuing Bank or any Lender to exercise, and no delay in exercising, any
right hereunder or under any of the other Loan Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
or under any of the other Loan Documents preclude any other or further exercise
thereof or the exercise of any other right. Neither the Administrative Agent,
the Issuing Bank nor any Lender shall be required to (a) prosecute collection or
seek to enforce or resort to any remedies against the Primary Borrower or any
other Person liable on any of the Obligations or under the Primary Guarantee,
(b) join the Primary Borrower or any other Person liable on any of the
Obligations in any action in which the Administrative Agent, the Issuing Bank or
any Lender prosecutes collection or seeks to enforce or resort to any remedies
against the Primary Borrower or other Person liable on any of the Obligations,
or (c) seek to enforce or resort to any remedies
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with respect to any Liens granted to (or benefiting, directly or indirectly) the
Administrative Agent, the Issuing Bank or any Lender by the Primary Borrower or
any other Person liable on any of the Obligations. Neither the Administrative
Agent, the Issuing Bank nor any Lender shall have any obligation to protect,
secure or insure any of the Liens or the properties or interests in properties
subject thereto. The remedies herein provided are cumulative and not exclusive
of any remedies provided by Applicable Law.
10. Right of Set-Off. Upon the occurrence and during the continuance of any
Event of Default, each Lender, the Issuing Bank and the Administrative Agent is
hereby authorized at any time and from time to time, to the fullest extent
permitted by Applicable Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender, the Issuing Bank and the
Administrative Agent to or for the credit or the account of Guarantor against
any and all of the obligations of Guarantor now or hereafter existing under this
Guarantee, irrespective of whether or not the Administrative Agent shall have
made any demand under this Guarantee. Upon the exercise of any such right of
set-off, each Lender, the Issuing Bank and the Administrative Agent shall be
deemed to agree promptly to notify Guarantor after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender, the Issuing
Bank and the Administrative Agent under this Section 10 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which it may have.
11. Liens. Guarantor agrees that the Administrative Agent, the Issuing Bank
or any Lender, in its discretion, may without notice or demand and without
affecting either the liability of Guarantor under this Guarantee, or the
liability of the Primary Borrower or any other Person liable on any of the
Obligations, or the Liens and security interests created by this Guarantee, or
any security interest or other Lien, upon the occurrence of an Event of Default,
foreclose any deed of trust or mortgage or similar Lien covering interests in
real or personal property, and the interests in real or personal property
secured thereby, by nonjudicial sale; and Guarantor hereby waives any defense to
the recovery by the Administrative Agent, the Issuing Bank or any Lender
hereunder against the Primary Borrower, Guarantor or any collateral of any
deficiency after a nonjudicial sale. Without limiting the foregoing, Guarantor
waives, to the extent not prohibited by Applicable Law, any defense arising out
of any such nonjudicial sale even though such sale operates to impair or
extinguish any right of reimbursement, contribution or subrogation or any other
right or remedy of Guarantor against the Primary Borrower or any other Person or
any other collateral. Guarantor hereby agrees that Guarantor shall be liable,
subject to the limitations of Section 1 hereof, for any part of the Obligations
remaining unpaid after any foreclosure.
12. Continuing Guarantee; Transfer of Obligations. This Guarantee is an
irrevocable continuing guarantee of payment and not of collection, and shall (a)
remain in full force and effect until final payment in full of the Obligations
and all other amounts payable under this Guarantee, (b) be binding upon
Guarantor, its successors and assigns, and (c) inure to the benefit of and be
enforceable by the Administrative Agent and its successors, assigns and/or
replacements as Administrative Agent under the Credit Agreement, acting on
behalf of itself, as Administrative Agent, and on behalf of each Lender and the
Issuing Bank and its respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), to the extent
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permitted by the Credit Agreement, each Lender, the Issuing Bank and the
Administrative Agent may assign or otherwise transfer its rights under the
Credit Agreement, or any of the Loan Documents or any interest therein to any
other Person; and such other Person shall thereupon become vested with all the
rights or any interest herein, as appropriate, in respect hereof granted to the
Administrative Agent on behalf of itself, as Administrative Agent, and as agent
for the Lender and the Issuing Bank, herein or otherwise.
13. Information. Guarantor acknowledges and agrees that it shall have the
sole responsibility for obtaining from the Primary Borrower such information
concerning the Primary Borrower's financial condition or business operations as
Guarantor may require, and that neither the Administrative Agent, the Issuing
Bank nor any Lender has any duty at any time to disclose to Guarantor any
information relating to the business, operations or financial conditions of the
Primary Borrower.
14. Foreign Currencies. With respect to each of the Obligations (or portion
thereof) hereby guaranteed that is payable in a Foreign Currency, the following
provisions shall apply: The Guarantor shall be obligated to pay to the
Administrative Agent the unpaid amount of such Obligations in the same Foreign
Currency and place in which such Obligations are payable by their terms;
provided, however, that if for any reason whatsoever the Guarantor is unable to
effect payment of such unpaid amount as aforesaid, the Guarantor shall be
obligated to pay to the Administrative Agent at its office at 270 Park Avenue,
New York, New York, the equivalent of such unpaid amount in Dollars, computed at
the Administrative Agent's selling rate most recently in effect on or prior to
the date such Obligations become due, for cable transfers of such Foreign
Currency to the place where such Obligations are payable. In any case in which
the Guarantor shall make or shall be obligated to make such payment in Dollars,
the Guarantor shall hold each Lender and the Issuing Bank harmless from any loss
incurred by it arising from any change in the value of Dollars in relation to
such Foreign Currency between the date such Obligations become due and the date
such Lender or the Issuing Bank is actually able, following the conversion of
the Dollars paid by the Guarantor into such Foreign Currency and remittance of
such Foreign Currency to the place where such Obligations are payable, to apply
such Foreign Currency to such Obligations.
15. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE, WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAWS PRINCIPLES.
16. Jurisdiction and Venue. In the event that the Administrative Agent
commences any legal proceeding before any court in connection with the
enforcement of, or collection of any amount due under, this Guarantee, or if the
Guarantor commences any legal proceeding before any court in connection with
this Guarantee, Guarantor and the Administrative Agent, on behalf of itself and
as agent for the Lenders and the Issuing Bank, each consents that (a) the courts
of the State of New York and/or the United States Federal Courts located in the
State of New York, shall have jurisdiction over all parties and over any such
proceedings; and (b) the venue of any such action shall be in Monroe County, New
York and/or the United States District Court for the Western District of New
York, located in Monroe County, New York.
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17. WAIVER OF JURY TRIAL. GUARANTOR AND THE ADMINISTRATIVE AGENT HEREBY
KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE, TO THE EXTENT
PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTEE OR ANY OF THE OTHER LOAN DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A MATERIAL
INDUCEMENT TO THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND EACH LENDER
ENTERING INTO THE CREDIT AGREEMENT.
18. Guarantor Insolvency. Should Guarantor become insolvent, fail to pay
its debts generally as they become due, voluntarily seek, consent to, or
acquiesce in the benefits of any Debtor Relief Law or become a party to or be
made the subject (other than as a creditor or claimant) of any proceeding
provided for by any Debtor Relief Law that is not dismissed in 60 days that
could suspend or otherwise adversely affect the rights of the Administrative
Agent granted hereunder, then the obligations of Guarantor under this Guarantee
shall be, as between Guarantor and the Administrative Agent, the fully-matured,
due and payable obligation of Guarantor to the Administrative Agent (without
regard to whether the Primary Borrower is then in Default under the Credit
Agreement or whether any part of the Obligations are then due and owing by the
Primary Borrower), payable in full by Guarantor to the Administrative Agent upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
19. ENTIRE AGREEMENT. THIS GUARANTEE, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
20. Relationship Between Primary and Secondary Guarantees. Any amounts
received from time to time by the Administrative Agent, the Issuing Bank, or any
Lender from the Guarantor as payments against Guarantor's obligations under
either this Guarantee or the Primary Guarantee shall be applied first to that
portion of the Obligations guaranteed pursuant to this Guarantee and second to
that portion of the Obligations guaranteed pursuant to the Primary Guarantee;
provided that any proceeds of Collateral (as that term is defined in the
Security Agreement securing this Guarantee) received by any such Person shall be
applied in accordance with the Security Agreement securing this Guarantee.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
Address for Guarantor:
IEC Arab, Alabama, Inc.
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By:_______________________________
Name:______________________________
Title:________________________________
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SCHEDULE 4.01(h)
Security Agreement of Primary Borrower
SECURITY AGREEMENT
This Security Agreement, dated as of _______________, is granted by IEC
Electronics Corp. (the "Debtor") to The Chase Manhattan Bank, as Administrative
Agent (the "Administrative Agent") for all financial institutions who are and
may become either lenders or the Issuing Bank pursuant to and under the Credit
Agreement as defined below (collectively, the "Lenders") and to the Lenders.
Statement of the Premises.
The Debtor is concurrently herewith entering into a Credit Agreement of
even date (as it may be amended or otherwise modified from time to time, the
"Credit Agreement") with the Administrative Agent and the Lenders thereunder.
The obligations of the Lenders to make loans and to issue letters of credit
under the Credit Agreement are conditional on Debtor's execution of this
Security Agreement in favor of the Lenders and the Administrative Agent
(collectively, the "Secured Party").
Statement of Consideration.
To induce the Lenders to enter into the Credit Agreement, to make loans
and issue letters of credit thereunder and to issue letters of credit that
constitute "Qualifying Obligations", as hereinafter defined, the Debtor hereby
grants this Security Agreement to the Lenders and to the Administrative Agent,
as the "Secured Party".
Agreement
This Security Agreement shall be continuing and subsisting until canceled
by the Administrative Agent on behalf of and with the written consent of the
Lenders, in the Lenders' sole discretion.
1. Definitions.
1.1 Incorporation by Reference. All terms defined in Schedule A
annexed hereto are hereby incorporated by reference and all such terms and words
so defined are used herein with the same meanings as are therein set forth.
Except as otherwise defined in this Security Agreement, terms defined in the
Credit Agreement are used herein as so defined.
1.2 Additional Definitions. The following terms shall have the
following meanings for purposes of this Security Agreement (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
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"Administrative Agent" means the Administrative Agent appointed as such
pursuant to the Credit Agreement, and each successor thereto or replacement
therefore under the terms of the Credit Agreement.
"Collateral" means, collectively, all of the personal property of the
Debtor described on Schedule A annexed hereto.
"Corresponding", when used in conjunction with any defined term (the
"referred term"), "Corresponding" refers to such specific Persons, items or
documents to which such referred term pertains which are related or connected to
another defined term in the context.
"Event of Default" means any event, condition or act (including notice and
lapse of time, if specified) which is defined or described as an Event of
Default under the Credit Agreement or as an event of default in any other
Secured Loan Document.
"Financing Statements" mean all UCC-1 Financing Statements to be filed in
any public office to perfect the security interest granted under this Security
Agreement.
"Qualifying Obligations" has the meaning set forth in Section 1.2 hereof,
under Clause (b) of the definition of Secured Obligations.
"Secured Loan Document" means any Loan Document (as defined in the Credit
Agreement).
"Secured Obligations" means all debts, liabilities and obligations of the
Debtor (a) to any Secured Party pursuant to any of the Loan Documents, of every
nature, whether now existing or hereafter incurred at any time or times,
absolute or contingent, secured or unsecured, and any and all renewals or
extensions thereof or of any portion thereof, including without limitation all
principal, all interest, all prepayment premiums and breakage fees (if any), all
fees, all late charges and all penalties and all expenses of collection or
enforcement or attempted collection or enforcement thereof, including all
reasonable fees and disbursements of any Secured Party's counsel in connection
therewith, whether within or apart from any legal action or proceeding; and (b)
to any Lender for reimbursement obligations related to one or more letters of
credit issued by such Lender at the request of the Debtor, other than Letters of
Credit issued pursuant to the Credit Agreement, to the extent that such debts,
liabilities and obligations qualify as Secured Obligations pursuant to Section 7
hereof ("Qualifying Obligations").
"Secured Party" means the Lenders and the Administrative Agent,
collectively, and means each of the Lenders and the Administrative Agent,
severally.
"UCC" means the Uniform Commercial Code of the State of New York, as
amended and in effect as of the date hereof.
2. Security Interest.
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2.1 The Debtor hereby grants to the Secured Party, a security
interest in all of the Collateral as security for the payment of all Secured
Obligations.
2.2 The Debtor irrevocably appoints the Administrative Agent as its
lawful attorney and agent to execute any Financing Statements as contemplated by
this Security Agreement in the Debtor's name and on the Debtor's behalf, and to
file such Financing Statements against the Debtor signed by the Administrative
Agent alone in any appropriate public office.
2.3 This Security Agreement is in addition to and without limitation
of any right of any Secured Party under any of the Loan Documents or any other
security agreement, mortgage or Guarantee granted by the Debtor or any other
Person to or for the benefit of any Secured Party.
3. Representation and Warranties.
The Debtor represents and warrants to each Secured Party that:
3.1 Except as listed on Schedule 3.07 to the Credit Agreement, a
copy of which is attached hereto as Schedule 3.1, the Debtor has granted no
currently effective security interest in the Collateral to any Person other than
to the Administrative Agent, and no financing statement in favor of any such
other Person as a secured party covering any of the Collateral or any proceeds
thereof is on file in any public office, and the Collateral is free and clear of
any "Lien" (as such quoted term is defined in the Credit Agreement), charge or
encumbrance, except pursuant to and under this Security Agreement and as
permitted under Section 5.21 of the Credit Agreement.
3.2 The office location(s) of the Debtor set forth on Schedule 3.20
to the Credit Agreement, a copy of which is attached hereto as Schedule 3.2, are
the true and correct locations of the Debtor's principal place of business and
chief executive office and all other places of business as of the date hereof.
3.3 The locations of all Equipment, Inventory and Fixtures of the
Debtor set forth on Schedule 3.2 hereto is a true and complete listing of all of
the locations of the Debtor's Equipment, Inventory and Fixtures as of the date
hereof.
3.4 Except as noted on Schedule 3.2 hereto, as of the date hereof,
the Debtor conducts no business, whether directly or indirectly or through any
Subsidiary or division, under any name or trade name other than its name first
recited above.
3.5 Schedule 3.5 hereto is a true and complete list of all of the
Debtor's Patent Rights, Trademark Rights, Copyrights, Chattel Paper (where
Debtor is obligee), Instruments, Documents, Investment Property, Insurance and
Debtor's Security as of the date hereof.
3.6 Schedule 3.6 hereto is a true and complete list of all motor
vehicles, aircraft, ships and boats which are owned or leased by Debtor and are
subject to any certificate of title or title registration law, rule or
regulation as of the date hereof.
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4. Covenants and Agreements of Debtor.
The Debtor severally covenants and agrees that:
4.1 Any Secured Party shall have the right, by its employees,
accountants, attorneys and other agents, (i) to examine and inspect the
Collateral at any reasonable time and wherever located and (ii) to call at the
Debtor's place or places of business at reasonable intervals and upon reasonable
notice to inspect, audit, make test verifications and otherwise examine and make
extracts from the books, records, journals, orders, receipts, correspondence and
other data relating to any of the Collateral.
4.2 Pursuant to Section 5.02 (h), clause (v) of the Credit
Agreement, the Debtor will deliver reports to the Administrative Agent
describing any addition, deletion or modification as of the date of each such
report to the representations and warranties made in Section 3.5 above that
involves (i) Patent Rights, Trademark Rights, Copyrights or Investment Property
that in the opinion of Debtor's management have or has a fair saleable value
greater than $100,000 for any individual item, or $250,000 for all items in the
aggregate, (ii) Chattel Paper (where Debtor is obligee), Instruments, Investment
Property or Debtor's Security that represent or secure an obligation of $100,000
or more, for any individual item, or obligations greater than $250,000 for all
such items and (iii) any individual Document relating to personal property that
in the opinion of Debtor's management have or has a fair saleable value greater
than $100,000 or all Documents relating to personal property that in the opinion
of Debtor's management have or has a fair saleable value greater than $250,000
in the aggregate. Each report described in the preceding sentence will also
describe any addition, deletion or modification as of the date of such report to
the representations and warranties made in Section 3.6 above that involves
Collateral that in the opinion of Debtor's management have or has a fair
saleable value greater than $100,000 for any individual item, or greater than
$250,000 for all items in the aggregate and, at the request of the
Administrative Agent, the Debtor shall (a) provide appropriate proof that each
item of Equipment reflected on such report has been properly titled and
registered to the extent required by any applicable statute, rule or regulation,
(b) cause the interest of the Secured Party to be properly noted on each
certificate of title or registration to any such Equipment, and (c) deliver each
such certificate of title or registration received by the Debtor to the
Administrative Agent. The $100,000 and $250,000 limitations set forth in this
Section with respect to any type or category of Collateral shall not apply, and
shall not limit the items required to be included in any such report, if the
Collateral that would be excluded by virtue of such limitations would, in the
opinion of Debtor's management, have a fair saleable value, or represent or
secure obligations or have a face amount, as the case may be, of greater than
$300,000 in the aggregate, when all of excluded items of all such types and
categories are added together.
4.3 Subject to the limitations of this Security Agreement, the
Debtor will from time to time upon demand furnish to the Administrative Agent
such further information and will execute, acknowledge and deliver to the
Administrative Agent such financing statements and assignments and other papers,
pay any costs of searches and filing fees, and do all such other acts and things
as the Administrative Agent may reasonably request as being necessary or
appropriate to
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establish, perfect and maintain a valid security interest in the Collateral as
security for the Secured Obligations. Without limitation of the foregoing,
4.3.1 At the time this Security Agreement is executed and
delivered to the Administrative Agent, the Debtor (a) shall
execute and deliver to the Administrative Agent each financing
statement, notice of Lien, instrument of assignment and other
writing, and take such other action, as the Administrative
Agent may deem necessary or desirable to evidence or perfect
the security interest of the Administrative Agent in the
Collateral; (b) shall immediately deliver all original items
of Chattel Paper, Instruments and Documents, with each such
endorsement, instrument of assignment and other writing as the
Administrative Agent may request; (c) shall execute such
documents as the Administrative Agent may request in order to
provide the Administrative Agent with "control" over all
Investment Property owned by the Debtor, within the meaning of
Section 9-115 of the UCC; (d) will execute and deliver to the
Administrative Agent any document required to acknowledge,
register or perfect the security interest hereby granted in
any of the Patent Rights, Technical Information, Trademark
Rights or Copyrights and in any of the Collateral under the
Federal Assignment of Claims Act; (e) will take all such
action and execute all such documentation as the
Administrative Agent may request in order to perfect the
Secured Party's Lien in all Debtor's Security; and (f) will
deliver to the Administrative Agent an Acknowledgment, in the
form of Schedule 4.3.1, executed by each warehouse identified
in Schedule 3.20 of the Credit Agreement as a warehouse from
which Debtor is required to obtain such a document.
4.3.2 At the time of receipt or creation of any item or items
of Collateral with respect to which a report will be required
pursuant to Section 4.2, the Debtor will immediately notify
the Administrative Agent of such receipt or creation and (a)
will execute and deliver to the Administrative Agent any
document required to acknowledge, register or perfect the
security interest hereby granted in any of the Patent Rights,
Technical Information, Trademark Rights or Copyrights and in
any of the Collateral under the Federal Assignment of Claims
Act, (b) will immediately deliver to the Administrative
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Agent all original Chattel Paper, Instruments and Documents,
with each such endorsement, instrument of assignment and other
writing as the Administrative Agent may request; (c) will take
such action as the Administrative Agent may request in order
to provide the Administrative Agent, with "control" over each
item of Investment Property owned by the Debtor, within the
meaning of Section 9-115 of the UCC; and (d) will take all
such action and execute all such documentation as the
Administrative Agent may request in order to perfect the
Secured Party's Lien in all Debtor's Security.
4.4 The Debtor will defend the Collateral against all claims and
demands of all other Persons at any time claiming the same or an interest
therein. Except to the extent permitted in the Credit Agreement, Debtor shall
not grant any Lien with respect to any Collateral to any Person other than the
Secured Party, or sell, assign or transfer the Collateral or any right, title or
interest therein.
4.5 If any action or proceeding shall be commenced, other than any
action to collect the Secured Obligations, to which action or proceeding any
Secured Party is made a party and in which it becomes necessary to defend or
uphold such Secured Party's security interests hereunder, all costs incurred by
such Secured Party for the expenses of such litigation (including reasonable
fees and expenses of such Secured Party's external legal counsel and costs
allocated by and expenses of its internal legal department) shall be deemed part
of the Secured Obligations secured hereby, which the Debtor agrees to pay or
cause to be paid.
4.6 All Records of the Collateral will be located at the Debtor's
principal place of business. Except for transactions that comply with Section
5.24 or 5.29, as applicable, of the Credit Agreement, the Debtor shall not
change any location of any Equipment, Inventory, Records or any other Collateral
unless the Debtor gives the Administrative Agent prior written notice and the
Debtor executes such documents and takes such other actions related thereto as
the Administrative Agent may request.
4.7 The Debtor will have and maintain Insurance at its expense at
all times in such amounts, in such form, containing such terms and written by
such companies as may be reasonably satisfactory to Administrative Agent (and as
more particularly set forth in the Credit Agreement). All policies of Insurance
shall be payable to the Administrative Agent and the Debtor, as their interests
may appear, and shall provide for thirty (30) days' written notice of
cancellation or modification to the Administrative Agent. So long as any Event
of Default exists, (a) the Administrative Agent is authorized by the Debtor to
act as its attorney in collecting, adjusting, settling or canceling such
Insurance and endorsing any drafts drawn by insurers, (b) the Administrative
Agent may apply any proceeds of Insurance received by it to the Secured
Obligations, whether due or not; provided, however, that the Administrative
Agent will hold such proceeds as a special deposit for use by the Debtor in
replacing any damaged Collateral which gave rise to such proceeds, so long as
(i) no Prepayment Event (as defined in the Credit
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Agreement) has occurred with respect thereto, (ii) the Debtor is taking steps to
repair, restore or replace such Collateral with due diligence and in good faith
and (iii) no Event of Default shall have occurred. The Debtor will immediately
notify the Administrative Agent of any damage to or loss of the Collateral in
excess of $250,000. Not later than thirty (30) days prior to the expiration date
of each policy of Insurance then in effect, the Debtor shall deliver to the
Administrative Agent a certificate of Insurance certifying as to (i) the
extension of such policy or the issuance of a renewal policy therefor,
describing the same in reasonable detail satisfactory to the Administrative
Agent and (ii) the payment in full of the portion of the premium therefor then
due and payable (or accompanied by other proof of such payment satisfactory to
the Administrative Agent). The Debtor shall be required forthwith to notify the
Administrative Agent (by telephone, confirmed in writing) if the Debtor shall
determine at any time not to, or at any time be unable to, extend or renew any
such policy then in effect.
4.8 The Debtor will use the Collateral for business purposes and not
in violation of any law, regulation, order, writ, injunction or decree.
4.9 The Debtor will pay promptly when due all taxes and assessments
upon the Collateral or upon its use or sale ("Taxes"), to the extent required
pursuant to the Credit Agreement.
4.10 The Debtor will at all times keep accurate and complete records
of the Accounts, Instruments, Chattel Paper, Documents, Investment Property,
General Intangibles and other Collateral and will deliver such reconciliation
reports and other financial information to the Administrative Agent as the
Administrative Agent or any other Secured Party may at any time reasonably
request.
4.11 Upon the occurrence of an Event of Default, the Debtor agrees
to stamp all books and records pertaining to Accounts, Instruments, Chattel
Paper, Documents, Investment Property and General Intangibles to evidence the
Secured Party's security interest therein in form satisfactory to the
Administrative Agent immediately upon the Administrative Agent's written demand.
4.12 At its option, during the existence of any Event of Default,
the Administrative Agent may discharge taxes, Liens or other encumbrances at any
time levied against or placed on the Collateral which have not been stayed as to
execution and contested with due diligence in appropriate legal proceedings, and
the Administrative Agent may pay for Insurance on the Collateral and may pay for
maintenance and preservation of the Collateral and in connection therewith, the
Debtor will, upon demand, remit to the Administrative Agent forthwith:
4.12.1 The amount of any such Taxes, assessments, Insurance or
other expenses which the Administrative Agent shall have been
required or shall have elected to pay; and
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4.12.2 The amount of any and all out-of-pocket expenses which
the Administrative Agent may incur in connection with the
exercise by the Administrative Agent of any of the powers
conferred upon it hereunder; and
4.12.3 Interest on any amounts described
under Subsections 4.12.1 and 4.12.2 of this
Section 4.12 from the date of such
expenditure to the date of repayment in full
to the Administrative Agent at a rate per
annum which shall automatically increase and
decrease so that at all times such rate
shall remain 2% higher than the Prime Rate.
4.13 The Debtor will notify the Administrative Agent in writing at
least thirty (30) days prior to changing its name or conducting business under
any name or trade name other than as warranted under Section 3.4 hereof, in each
case specifying the names involved.
4.14 The Debtor will use its best efforts to obtain the consent of
any Person or Governmental Authority to the assignment hereunder of any Account
or General Intangible, or of any Instrument, Document or Chattel Paper required
to be delivered pursuant to Section 4.3, if such consent may be required by the
terms of any contract or statute or if such consent is reasonably necessary to
support the security interest hereunder or if the Administrative Agent so
requests in its discretion reasonably exercised.
4.15 During the existence of any Event of Default, the
Administrative Agent shall have the right to notify the account debtors
obligated on any or all of a Debtor's Accounts, Chattel Paper, Instruments,
Documents, Investment Property, Debtor's Security or General Intangibles to make
payment thereof directly to the Administrative Agent, and the Administrative
Agent may take control of all proceeds of any thereof. The form of such notice
to the account debtors shall be in the form of Schedule 4.15 annexed hereto.
4.16 At the time of execution and delivery of this Security
Agreement by the Debtor, and at any future time as of which any Collateral may
be affixed to or located on any real property other than that described in
Schedule 3.2 hereto, the Debtor shall provide the Administrative Agent a
document, in form and substance satisfactory to the Administrative Agent,
executed by each Person having an interest in such real property, either as
lessor, lessee, owner or mortgagee thereof, to which any Collateral is affixed
or in which any Collateral is located (a) disclaiming any interest by such
owner, lessor, lessee or mortgagee in any such Collateral and (b) containing the
agreement of such owner, lessor, lessee or mortgagee permitting the
Administrative Agent to enter such real property and take possession of and
remove from such real property any Collateral affixed thereto or located therein
and retaining possession of such real property for the purpose of selling,
leasing or otherwise disposing of such Collateral without by doing so incurring
any liability to such owner, lessor, lessee or mortgagee other than liability
that would be incurred by the Debtor pursuant to any lease or mortgage between
the Debtor and such owner, lessor, lessee or mortgagee.
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4.17 The Debtor will not amend any agreements with third parties
relating to Warehoused Inventory without prior written notice to the
Administrative Agent, which shall promptly forward same to the Lenders, and
without the written consent of the Administrative Agent, provided at the
direction of the Required Lenders.
5. Events of Default.
5.1 Upon the occurrence of an Event of Default, the Administrative
Agent shall have, and shall exercise at the direction of the Required Lenders,
all of the rights, powers and remedies set forth in the Loan Documents, together
with the rights and remedies of a secured party under the UCC, including without
limitation, the right to sell, lease or otherwise dispose of any or all of the
Collateral, and to take possession of the Collateral, and for that purpose (a)
the Administrative Agent may enter peaceably any premises on which the
Collateral or any part thereof may be situated and remove the same therefrom and
the Debtor will not resist or interfere with such action, and (b) the
Administrative Agent may require the Debtor to assemble the Collateral and make
the same available to the Administrative Agent at a place to be designated by
the Administrative Agent which is reasonably convenient to both parties. The
Debtor hereby agrees that the place or places of location of the Collateral are
places reasonably convenient to it to assemble the Collateral. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Administrative Agent will send
the Debtor reasonable notice of the time and place of any public sale or
reasonable notice of the time after which any private sale or any other
disposition thereof is to be made. The requirement of sending reasonable notice
shall be met if such notice is mailed, postage prepaid, to a Debtor at least
five days before the time of the sale or disposition.
5.2 Upon demand by the Administrative Agent, given at the direction
of the Required Lenders, after an Event of Default, the Debtor will immediately
deliver to the Administrative Agent all proceeds of Collateral, and all original
evidences of Accounts, Chattel Paper, Instruments, Documents, Debtor's Security,
Investment Property or General Intangibles, including, without limitation, all
checks, drafts, cash and other remittances, notes, trade acceptances or other
instruments or contracts for the payment of money, appropriately endorsed to the
Administrative Agent's order and, regardless of the form of such endorsement,
the Debtor hereby waives presentment, demand, notice of dishonor, protest and
notice of protest and all other notices with respect thereto; and the Debtor
hereby appoints the Administrative Agent as the Debtor's agent and
attorney-in-fact to make such endorsement on behalf of and in the name of the
Debtor. Pending such deposit, the Debtor agrees that it will not commingle any
such checks, drafts, cash and other remittances with any of the Debtor's funds
or property, but will hold them separate and apart therefrom and upon an express
trust for the Administrative Agent until delivery thereof is made to the
Administrative Agent.
5.3 The costs of collection and enforcement of Accounts, Chattel
Paper, Instruments, Documents, Debtor's Security, Investment Property or General
Intangibles including attorneys' fees and out-of-pocket expenses, shall be borne
solely by the Debtor, whether the same are incurred by the Administrative Agent
or the Debtor. The Debtor will not, after the occurrence of an Event of Default,
except with the Administrative Agent's express written consent, extend,
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compromise, compound or settle any Accounts, Chattel Paper, Instruments,
Documents, Debtor's Security, Investment Property or General Intangibles, or
release, wholly or partly, any Person liable for payment thereof, or allow any
credit or discount thereon which is not customarily allowed by the Debtor in the
ordinary conduct of its business.
5.4 Effective immediately upon the occurrence of an Event of
Default, the Debtor hereby appoints the Administrative Agent to be the Debtor's
true and lawful attorney, with full power of substitution, in the Administrative
Agent's name or the Debtor's name or otherwise, for the Administrative Agent's
sole use and benefit, but at the Debtor's cost and expense, to exercise at any
time, at the direction of the Required Lenders, all or any of the following
powers with respect to all or any of the Accounts, Chattel Paper, Instruments,
Documents, Debtor's Security, Investment Property or General Intangibles:
5.4.1 to demand, sue for, enforce, collect, settle,
compromise, receive and give acquittance for any and all
moneys due or to become due upon or by virtue thereof and any
Liens securing any such Collateral;
5.4.2 to receive, take, endorse, assign and deliver any and
all checks, notes, drafts and other negotiable and
non-negotiable instruments taken or received by the
Administrative Agent in connection therewith, and the Debtor
waives notice of presentment, protest and non-payment of any
instrument so endorsed or assigned;
5.4.3 to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto;
5.4.4 to extend the time of payment of any or all thereof, to
make any allowances and other adjustments with reference
thereto;
5.4.5 to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof or the relevant
goods, as fully and effectually as if the Administrative Agent
were the absolute owner thereof;
5.4.6 to make any reasonable allowances and other reasonable
adjustments with reference thereto;
5.4.7 to sign the Debtor's name on any Document, on invoices
relating to any Account, on drafts against customers, on
schedules of assignments of Accounts, on notices of
assignment, financing statements under
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the UCC and other public records, on verifications of
Accounts, and on notices to customers;
5.4.8 to file or record in any public office notices of
assignment or any other public notice required to effect this
Security Agreement;
5.4.9 to notify the post office authorities to change the
address for delivery of the Debtor's mail to an address
designated by the Administrative Agent;
5.4.10 to receive, open and dispose of all mail
addressed to the Debtor;
5.4.11 to discharge Taxes, liens or other encumbrances at any
time levied against or placed thereon;
5.4.12 to send requests for verification of Accounts, Chattel
Paper and Instruments to those liable thereon;
5.4.13 to vote and make any elections with respect to any
Investment Property and to exercise control over such
Investment Property as if the Administrative Agent were the
sole owner thereof; and
5.4.14 to do all other things the Administrative Agent deems
reasonably necessary or desirable to carry out the purposes of
this Agreement.
The Debtor hereby ratifies and approves all acts of the attorney pursuant
to this Section 5.4, and neither the Administrative Agent nor the attorney will
be liable for any acts of commission or omission, nor for any error of judgment
or mistake of fact or law, other than acts, errors or mistakes due to fraud,
willful malfeasance or gross negligence by the Administrative Agent or the
attorney; provided further, however, that Debtor does not waive any rights under
the UCC against any Secured Party for any action taken hereunder which is other
than commercially reasonable. This power, being coupled with an interest, is
irrevocable so long as any of the Secured Obligations remain outstanding.
5.5 After deducting all expenses incurred by the Administrative Agent in
protecting or enforcing the rights of the Secured Parties in the Collateral, the
remainder of any proceeds of collection or sale of the Collateral shall be
applied to the payment of principal, interest, fees, expenses or other charges
comprising the Secured Obligations in such order as the Administrative Agent may
determine, and all surplus shall be returned to the Debtor and the Debtor shall
remain liable for any deficiency. The Administrative Agent shall apply the
proceeds of collection or sale of the Collateral, if any, at least once during
each calendar month, and until so applied, shall retain
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such proceeds in a separate Collateral account, as Collateral for the Secured
Obligations. The Administrative Agent alone shall have the power of withdrawal
from such Collateral Account.
5.6 The Administrative Agent may exercise its rights with respect to
Collateral without resorting to or regard to any Guarantee or other collateral
or source of reimbursement for the Secured Obligations.
5.7 The exercise by the Administrative Agent of or failure to so exercise
any authority granted under this Security Agreement shall in no manner affect
the liability of Debtor to any Secured Party, provided that the Administrative
Agent shall be under no obligation or duty to exercise any of the powers hereby
conferred upon it and it shall be without liability for any act or failure to
act in connection with the collection of, or the preservation of any rights
under any of the Collateral.
6. Waivers.
6.1 The Debtor waives all demands, notices and protests of every
kind which are not expressly required under this Security Agreement or the Loan
Documents and which are permitted by law to be waived, and which would, if not
waived, impair the Administrative Agent's enforcement of this Security Agreement
or release any Collateral from the security interest of the Administrative Agent
under this Security Agreement. By way of example, but not in limitation of the
Administrative Agent's rights under this Security Agreement, the Administrative
Agent does not have to give the Debtor notice of any of the following:
6.1.1 notice of acceptance of this Security Agreement;
6.1.2 notice of advances made, credit extended, or
Collateral received or delivered;
6.1.3 any action which the Administrative Agent does or does
not take regarding the Debtor, any Guarantor or any other
Person, or any other collateral securing the Secured
Obligations;
6.1.4 enforcement of this Security Agreement against
the Collateral; or
6.1.5 any other action taken in reliance on this Security
Agreement.
6.2 With respect both to Secured Obligations and Collateral, the
Debtor assents to any extension or postponement of the time of payment or any
other indulgence, to any substitution, exchange or release of Collateral, to the
addition or release of any party or Person primarily or secondarily liable, to
the acceptance of partial payments thereon and the settlement,
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compromising or adjusting of any thereof, all in such time or times as the
Administrative Agent may deem advisable.
6.3 The Administrative Agent shall have no duty as to the collection
or protection of Collateral not in the Administrative Agent's possession or
control, and the Administrative Agent's duty with reference to Collateral in its
possession or control shall be to use reasonable care in the custody and
preservation of such Collateral, but such duty shall not require the
Administrative Agent to do any of the following (although during the existence
of a Default, the Administrative Agent is authorized to reasonably undertake any
such action if the Administrative Agent deems such action appropriate):
6.3.1 protect any of the Collateral against the claims of
others;
6.3.2 collect any sums due on the Collateral;
6.3.3 exercise any rights under the Collateral;
6.3.4 notify the Debtor of any maturities or other similar
matters concerning the Collateral;
6.3.5 act upon any request the Debtor may make; or
6.3.6 preserve or protect the Debtor's rights in the
Collateral.
7. Qualifying Obligations.
All debts, liabilities and obligations of the Debtor to any Lender for
reimbursement obligations related to one or more letters of credit issued by
such Lender at the request of the Debtor, other than Letters of Credit issued
pursuant to the Credit Agreement, qualify as Secured Obligations, and therefore
constitute Qualifying Obligations, provided that the following conditions are
met in connection with each such letter of credit issued by any such Lender:
7.1 The issuing Lender and the Debtor shall provide written notice
to the Administrative Agent, not less than ten (10) days prior to the issuance,
extension or modification of any such letter of credit, setting forth the face
amount, the beneficiary and the term of such letter of credit, the terms of any
extension or modification to any such letter of credit and the approximate date
on which the Lender expects to issue, extend or modify such letter of credit.
7.2 The issuance of such letter of credit shall not cause the Debtor
to violate Section 5.20 (c) of the Credit Agreement and the issuing Lender and
the Debtor shall not have received from the Administrative Agent any notice that
the issuance of such letter of credit will or may cause the Debtor to be in
violation of such Section.
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7.3 The Administrative Agent shall have received, under a cover
letter executed by the issuing Lender and the Debtor, a copy of such letter of
credit, of all reimbursement agreements between such Lender and the Debtor
executed in connection therewith, and of any documents evidencing any extension
or modification thereof, not later than five (5) days after the actual issuance,
extension or modification of such letter of credit.
7.4 The Administrative Agent shall have received a notice, executed
by such Lender and the Debtor, notifying the Administrative Agent of the date
and amount of any drawing under such letter of credit, or of the expiration or
termination of such letter of credit.
7.5 Each Qualifying Obligation shall be secured by the security
interest granted pursuant to this Security Agreement on the following terms and
conditions:
7.5.1 The Administrative Agent shall hold the Lien created by
this Security Agreement as the agent of each Lender holding a
Qualifying Obligation, on the terms and conditions set forth
in Section 12 of this Security Agreement, but subject to the
modifications hereinafter set forth.
7.5.2 The Lien granted by this Security Agreement and securing
each Qualifying Obligation may not be foreclosed separately
from any foreclosure of the Lien of this Security Agreement
securing the other Secured Obligations described in Clause (a)
of the definition of Secured Obligations contained in Section
1.2 of this Security Agreement. No Lender shall have any vote
based upon any Qualifying Obligations held by such Lender,
with respect to any instructions to or actions taken or not
taken by the Administrative Agent under this Security
Agreement, or otherwise; and all decisions and actions of the
Administrative Agent shall be made and taken in accordance
with the provisions and procedures established under the
Credit Agreement, without regard for the existence or amount
of any Qualifying Obligations.
7.5.3 In the event of a foreclosure of the Lien securing the
Facility Obligations, the proceeds of such foreclosure, after
payment of any expenses of the Administrative Agent as
provided for herein, shall be disbursed to the Lenders pro
rata in accordance with the unpaid principal amount of their
respective Facility Obligations plus the unpaid principal
amount of any Qualifying Obligations then held by the Lenders.
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7.5.4 If any Lender shall, by exercising any right of setoff
or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on, or other amount owing in
connection with, any Qualifying Obligation, such payment shall
be deemed to have been received in respect of principal of or
interest on any of such Lender's Loans or its participation in
LC Disbursements and shall be subject to the provisions of
Section 2.18 (c) of the Credit Agreement, prior to such Lender
making any application of any such payment to or with respect
to any Qualifying Obligations.
7.5.5 The foregoing provisions to the contrary
notwithstanding, at such time as the Credit Agreement shall be
terminated and of no further force or effect, and all Facility
Obligations shall have been paid thereunder, so that the
Administrative Agent shall have ceased to act as the Lenders'
agent under the Credit Agreement, the Administrative Agent
shall also cease to constitute either a Secured Party or the
agent of any of the Lenders with respect to any Qualifying
Obligations; and this Security Agreement shall continue in
effect solely to secure the Qualifying Obligations, and the
Lenders who hold any such Qualifying Obligations shall
constitute the only Secured Parties and shall thereafter be
responsible for the discharge of all further obligations of
the Secured Party hereunder and for the exercise of any rights
of the Secured Party hereunder, with the Administrative Agent
and all other Secured Parties being discharged of any further
responsibilities related thereto.
8. Actions and Proceedings.
IN THE EVENT OF ANY ACTION OR PROCEEDING WITH RESPECT TO ANY MATTER
PERTAINING TO THIS SECURITY AGREEMENT, THE DEBTOR HEREBY WAIVES THE RIGHT TO A
TRIAL BY JURY AND RIGHTS OF SETOFF (BUT DOES NOT WAIVE ANY DEFENSES OR
COUNTERCLAIMS). THE DEBTOR HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION AND VENUE OF THE SUPREME COURT OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK SITTING IN
MONROE COUNTY, IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT.
9. Address for Notices and Service of Process.
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All notices, requests and demands to or upon the Administrative Agent, any
other Secured Party or Debtor shall be effective if made in writing and shall be
deemed to be delivered (A) upon receipt (i) if delivered by hand or by Federal
Express or other national overnight courier, or (ii) if sent by telegraph, or
(B) when sent, answer back received, in the case of notice by telex or
telecopier (fax), or (C) five (5) days after being deposited in the mail,
postage prepaid, to the following address or to such other address of the
Administrative Agent, on behalf of the other Secured Parties, or Debtor as may
be hereafter notified by the Administrative Agent or a Debtor to the other:
if to the Debtor:
IEC Electronics Corp.
105 Norton Street
Newark, New York 14513
Attn: Diana R. Kurty
Vice President of Finance
and Chief Financial Officer
Telecopier #: (315) 332-8186
with a copy to:
Boylan, Brown, Code,
Fowler, Vigdor & Wilson LLP
2400 Chase Square
Rochester, New York 14604
Attn: Justin L. Vigdor, Esq.
Telecopier #: (716) 232-3528
if to any of the Lenders or the Administrative Agent:
The Chase Manhattan Bank, as Administrative Agent
One Chase Square, Floor 9
Rochester, New York 14643
Attn: Gail G. Fiorini
Vice President
Telecopier # (716) 258-7604
10. Costs of Collection and Legal Fees.
The Debtor shall be liable to the Administrative Agent and each other
Secured Party and shall pay to the Administrative Agent immediately on demand as
part of its liability under this Security Agreement all reasonable costs and
expenses of the Administrative Agent or any other Secured Party, including all
reasonable fees and disbursements of the Administrative Agent's or any other
Secured Party's legal counsel incurred in the collection or enforcement or
attempted
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collection or attempted enforcement of the Secured Party's rights under this
Security Agreement, whether within or apart from any legal action or proceeding.
11. No Waiver of Remedies.
No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any other Secured Party, any right, remedy, power or
privilege under this Security Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
under this Security Agreement preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges provided under this Security Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
12. Administrative Agent.
The appointment of the Administrative Agent as agent to act on behalf of
the Lenders as contemplated in this Security Agreement, and the authority and
responsibilities of the Administrative Agent related thereto, are set forth in
and controlled by the Credit Agreement.
13. New York Law.
Pursuant to Section 5-1401 of the New York General Obligations Law, the
whole of this Security Agreement and the rights and obligations of the Debtor
and the Secured Party hereunder shall be governed, construed and interpreted in
accordance with, the laws of the State of New York without regard to any
conflicts-of-laws rules which would require the application of the laws of any
other jurisdiction.
14. Entire Agreement; Modifications.
This Security Agreement contains the entire agreement between each Secured
Party and the Debtor with respect to all subject matters contained herein. This
Security Agreement cannot be amended, modified or changed in any way except by a
written instrument executed by each Secured Party and Debtor.
15. Successors and Assigns.
The covenants, representations, warranties and agreements herein set forth
shall be binding upon the Debtor, its legal representatives, successors and
assigns and shall inure to the benefit of each Secured Party, its successors and
assigns. Any successor or assign of any Secured Party shall forthwith become
vested with and entitled to exercise all the powers and rights given by this
Security Agreement to any Secured Party, as if such successor or assign were
originally named as a Secured Party herein.
16. Counterparts.
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This Security Agreement may be executed in counterparts each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract.
17. Severability.
The unenforceability or invalidity of any provision or provisions of this
Security Agreement or any of the other Loan Documents shall not render any other
provision or provisions herein or therein contained unenforceable or invalid.
IN WITNESS WHEREOF, the Debtor has caused this Security Agreement to be
executed by its duly authorized officer or representative as of the date and
year first above written.
IEC Electronics Corp.
(SEAL) By: _________________________
Name Diana R. Kurty
Title Vice President of Finance and
Chief Financial Officer
Attest: ________________
Assistant Secretary
Accepted this ______ day
of ___________________
The Chase Manhattan Bank,
as Administrative Agent
By: __________________________
Its: Vice President
The Chase Manhattan Bank,
as Lender
By: ___________________
Its: Vice President
Marine Midland Bank
By: __________________________
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Its: Vice President
KeyBank National Association
By: __________________________
Its: Vice President
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STATE OF NEW YORK )
) SS.
COUNTY OF MONROE )
On the _____ day of ________ in the year 1998 before me personally came
Diana Kurty, to me known, who, being by me duly sworn did depose and say that
she resides at __________________; that she is the Chief Financial Officer of
IEC Electronics Corp., the corporation described in and which executed the above
instrument; that she knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by order of
the board of directors of said corporation, and that she signed her name thereto
by like order.
Notary Public
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SCHEDULE A (Page 1 of 4)
to
Security Agreement and UCC-1 Financing Statements
granted by
IEC Electronics Corp. (the "Debtor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and
all lenders that are now or may hereafter become "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent and the
Lenders dated as of _____________ (collectively as the "Secured Party")
1. Equipment. All equipment (as defined in Section 9-109(2) of the
UCC), whether now owned or hereafter acquired, wherever located, and
including fixtures, together with any and all substitutions, parts,
fittings, additions, attachments, accessories, special tools,
accessions or replacements, and together with all computer
programming and licenses necessary or desirable to operate the same,
and all proceeds and general intangibles arising from any of the
foregoing (the "Equipment").
2. Inventory. All inventory (as defined in Section 9-109(4) of the
UCC), now owned or hereafter acquired, wherever located, and any
product or mass into which any inventory shall be manufactured,
processed or assembled (but only to the extent the same belongs to
Debtor) or commingled, and all proceeds and General Intangibles
arising from any of the foregoing (the "Inventory").
3. Accounts. All accounts (as defined in Section 9-106 of the UCC), now
existing or hereafter acquired, and all proceeds and General
Intangibles arising therefrom (the "Accounts").
4. Chattel Paper. All chattel paper (as defined in Section 9-105(1)(b)
of the UCC) in which Debtor is the obligee, now owned or hereafter
acquired, and all proceeds and General Intangibles arising therefrom
(the "Chattel Paper").
5. Instruments. All instruments (as defined in Section 9-105(1)(i) of
the UCC), now owned or hereafter acquired, and all proceeds and
General Intangibles arising therefrom (the "Instruments").
6. General Intangibles. All general intangibles (as defined in Section
9-106 of the UCC) now owned or hereafter acquired, and the proceeds
thereof (the "General Intangibles").
7. Documents. All documents of title (as defined in Section 1-201(15)
of the UCC) covering any Inventory wherever located, now owned or
hereafter acquired, and all proceeds and General Intangibles arising
therefrom (the "Documents").
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8. Investment Property. All investment property (as defined in Section
9-115 of the UCC), now owned or hereafter acquired, and all proceeds
and General Intangibles arising therefrom (the "Investment
Property").
9. Fixtures. All fixtures (as defined in Section 9-313 of the UCC),
now owned or hereafter acquired, and all proceeds thereof
(the "Fixtures").
IN FURTHERANCE OF THE FOREGOING TYPES OF PROPERTY, AND WITHOUT LIMITATION
THEREOF:
a. Insurance. All insurance covering the Equipment, Inventory and all
of Debtor's other tangible personal property against risks of fire,
flood, theft, loss or any other physical damage, and against any
risk of any damage or loss whatsoever, now owned or hereafter
acquired, and all proceeds and general intangibles arising therefrom
(the "Insurance").
b. Records. All of Debtor's right, title and interest in all of its
books, records, ledger sheets, files and other data and documents,
including records in any form (digital or other) and recorded in or
through any medium (magnetic, lasergraphic or other) and all
machinery and processes (including computer programming
instructions) required to read and print such records, now or
hereafter existing relating to all types of personal property
described in this Schedule A (the "Records").
c. Rights as Seller of Goods. All of Debtor's rights as a seller of
goods under Article 2 of the UCC or otherwise with respect to
Inventory, and all goods represented by or securing any of the
Accounts, all of Debtor's rights therein, including without
limitation, rights as an unpaid vendor or lienor and including
rights of stoppage in transit, replevin and reclamation, and all
proceeds and General Intangibles arising from any of the foregoing .
d. Debtor's Security. All guarantees, mortgages or security interests
on real or personal property, leases or other agreements or property
now or hereafter securing or relating to any of the Accounts,
Chattel Paper, Instruments, General Intangibles, Documents or
Investment Property and in favor of Debtor, or now or hereafter
acquired for the purpose of securing and enforcing any of such items
in favor of Debtor, and all proceeds and General Intangibles arising
from any of the foregoing (the "Debtor's Security").
e. Deposits. All sums at any time standing to Debtor's credit on the
books of any Secured Party and all moneys, securities, and other
property of Debtor at any time in any Secured Party's possession,
and all proceeds and General Intangibles arising therefrom,
including without limitation all deposit accounts maintained at any
Lender of every nature, including all controlled disbursement
accounts, payroll accounts or other special purpose accounts.
f. Patent Rights. All patent rights throughout the world, including all
letters patents, patent applications, patent licenses, patentable
inventions, modifications and improvements thereof, all rights to
any and all letters patent and applications for letters patent, all
divisions, renewals, reissues, continuations, continuations-in-part,
extensions and
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reexaminations of any of the foregoing, all shop rights, all
proceeds of, and rights associated with any of the foregoing
(including license royalties and proceeds of infringement suits),
the right to sue third parties for past, present or future
infringements of any of the foregoing and for breach or enforcement
of any of the foregoing, and all rights corresponding to each of the
foregoing throughout the world, whether now owned or existing or
hereafter acquired, and all proceeds and General Intangibles arising
from any of the foregoing (the "Patent Rights").
g. Technical Information. All information concerning the subject
matter of the Patent Rights,
---------------------
and all other confidential or proprietary or useful information and
all know-how and common law or statutory trade secrets obtained by
or used in or contemplated at any time for use in the business of
Debtor, and all other research and development work by Debtor
whether or not the same is a patentable invention, including without
limitation all design and engineering data, shop rights,
instructions, procedures, standards, specifications, plans, drawings
and designs, whether now owned or existing or hereafter acquired or
arising, and all proceeds and General Intangibles arising from any
of the foregoing (the "Technical Information").
----------------------
h. Trademarks. All trademarks, trade names, corporate names, company
names, business
----------
names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of
business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and General Intangibles
of a like nature (each of the foregoing items being called a
"Trademark"), now existing anywhere in the world or
---------
hereafter adopted or acquired, whether currently in use or not, all
registrations and recordings thereof and all applications in
connection therewith, whether pending or in preparation for filing,
including registrations, recordings and applications in the United
States Patent and Trademark Office or in any office or agency of the
United States of America or any State thereof or any foreign
country; all Trademark licenses; all reissues, extensions or
renewals of any of the foregoing items; all of the goodwill of the
business connected with the use of, and symbolized by the foregoing
items; all proceeds of, and rights associated with, the foregoing,
including any claim by Debtor against third parties for past,
present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license, including any
Trademark, Trademark registration or Trademark license, or for any
injury to the goodwill associated with the use of any such Trademark
or for breach or enforcement of any Trademark license; and all
proceeds and General Intangibles arising from any of the foregoing
(the "Trademark Rights").
----------------
i. Copyrights. All copyrights and all semiconductor chip product mask
works of Debtor,
----------
whether statutory or common law, registered or unregistered, now or
hereafter in force throughout the world, including, without
limitation, all of Debtor's right, title and interest in and to all
copyrights and mask works registered in the United States Copyright
Office or anywhere else in the world and all applications for
registration thereof, whether pending or in preparation, all
copyright and mask work licenses, the right to sue for past, present
and future infringements of any thereof, all rights corresponding
thereto throughout the world, all extensions and renewals of any
thereof and all proceeds of the foregoing, including,
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without limitation, licenses, royalties, income, payments, claims,
damages and proceeds of suit, and all proceeds and General
Intangibles arising from any of the foregoing (the "Copyrights").
j. Computer Hardware and Software. (A) all computer and other
electronic data processing
------------------------------
hardware, integrated computer systems, central processing units,
memory units, display terminals, printers, features, computer
elements, card readers, tape drives, hard and soft disk drives,
cables, electrical supply hardware, generators, power equalizers,
accessories and all peripheral devices and other related computer
hardware, whether now owned, licensed or leased or hereafter
acquired by Debtor; (B) all software programs including source code
and object code and all related applications and data files, whether
now owned, licensed or leased or hereafter acquired by Debtor,
designed for use on the computers and electronic data processing
hardware described in Clause (A) above; (C) all
------ ---
firmware associated therewith, whether now owned, licensed or leased
or hereafter acquired by Debtor; (D) all documentation (including
flow charts, logic diagrams, manuals, guides and specifications) for
such hardware, software and firmware described in the preceding
Clauses (A), (B) and (C), whether now owned, licensed or leased or
hereafter
------- --- --- ---
acquired by Debtor; and (E) all rights with respect to all of the
foregoing, including, without limitation, any and all copyrights,
licenses, options, warranties, service contracts, program services,
test rights, maintenance rights, support rights, improvement rights,
renewal rights and indemnifications and any substitutions,
replacements, additions or model conversions of any of the
foregoing, and all proceeds and General Intangibles arising from any
of the foregoing (the "Computer Hardware and Software").
------------------------------
As used in this Schedule A, "UCC" means the Uniform Commercial Code of the State
of New York, as amended and in effect from time to time.
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SCHEDULE 3.1
to
Security Agreement
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<PAGE>
SCHEDULE 3.2
to
Security Agreement
granted by
IEC Electronics Corp. (the "Debtor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and the "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent and the
Lenders dated as of ______________ (collectively as the "Secured Party")
The Debtor's exact legal name: ________________________________
All names, if any, other than the name set forth above, under which the Debtor
conducts business (if none, insert "None"): None
Principal place of business of the Debtor:
==========================
Chief executive office of the Debtor:
==========================
All other places of business, if any, of the Debtor (if none, insert "None"):
None
All locations of inventory of the Debtor:
All prior names of the Debtor, if any (if none, insert "None"):
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SCHEDULE 3.5
to
Security Agreement
granted by
IEC Electronics Corp. (the "Debtor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and the "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent and the
Lenders dated as of _____________________ (collectively the "Secured Party")
List of all of the following types of Collateral owned by the Debtor:
1. Patent Rights, Trademark Rights and Copyrights with all pertinent
registration information.
2. Chattel Paper and Instruments
3. Documents
4. Investment Property
5. Insurance
6. Debtor's Security
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SCHEDULE 3.6
to
Security Agreement
granted by
IEC Electronics Corp. (the "Debtor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and the "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent and the
Lenders dated as of _____________________ (collectively the "Secured Party")
List of all of the following types of Collateral owned by the Debtor and subject
to any certificate of title or title registration law, rule or regulation:
1. Motor vehicles
2. Aircraft
3. Ships and boats
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SCHEDULE 4.3.1
to
Security Agreement
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<PAGE>
SCHEDULE 4.15
to
Security Agreement
NOTICE TO ACCOUNT DEBTOR TO MAKE PAYMENT
TO THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
(Letterhead of The Chase Manhattan Bank)
(Date)
Registered Mail; Return Receipt Requested
or by Overnight Courier, Signature Required
Name and Address
of Account Debtor
Re: Payment of All Moneys Due to ________________ (the "Debtor")
Greetings:
Please take notice that all accounts receivable of the above-captioned
Debtor have been assigned to The Chase Manhattan Bank, as Administrative Agent
("Chase") and that pursuant to the terms of agreements between the Debtor and
Administrative Agent all monies now or hereafter becoming due and owing by you
to the Debtor must be paid to Administrative Agent at the following address:
==============================
==============================
Please take notice that payment to the Debtor of any such monies after the
date of receipt of this notice may result in liability to Administrative Agent
for the amount of such payment.
Enclosed is a certified true copy of an authorization executed by the
Debtor.
If you have any questions about this matter, please call _______________
at
- ---------------.
Thank you for your cooperation in this matter.
Very truly yours,
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<PAGE>
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<PAGE>
SCHEDULE 5(k)
to
Security Agreement
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<PAGE>
SCHEDULE 4.01(i)
Form of General Security Agreement for
Texas Sub and Alabama Sub
This General Security Agreement, dated as of _______________, is granted
by IEC ___________________, Inc. (the "Guarantor") to The Chase Manhattan Bank,
as Administrative Agent (the "Administrative Agent") for all financial
institutions who are and may become either lenders or the Issuing Bank pursuant
to and under the Credit Agreement as defined below (collectively, the "Lenders")
and to the Lenders.
Statement of the Premises.
IEC Electronics Corp. (the "Debtor") is concurrently herewith entering
into a Credit Agreement of even date (as it may be amended or otherwise modified
from time to time, the "Credit Agreement") with the Administrative Agent and the
Lenders thereunder.
The Guarantor is also concurrently herewith entering into a Guarantee
[Primary Guarantee Agreement in the amount of $_____] with respect to the
Facility Obligations of even date (as it may be amended or otherwise modified
from time to time, the "Guarantee") with the Administrative Agent and the
Lenders thereunder. The obligations of the Lenders to make loans and to issue
letters of credit under the Credit Agreement are conditional on Guarantor's
execution of this General Security Agreement (hereinafter, this "Security
Agreement") in favor of the Lenders and the Administrative Agent (collectively,
the "Secured Party").
Statement of Consideration.
To induce the Lenders to enter into the Credit Agreement and to make loans
thereunder, the Guarantor hereby grants this Security Agreement to the Lenders
and to the Administrative Agent, as the "Secured Party".
Agreement
This Security Agreement shall be continuing and subsisting until canceled
by the Administrative Agent on behalf of and with the written consent of the
Lenders, in the Lenders' sole discretion.
1. Definitions.
1.1 Incorporation by Reference. All terms defined in Schedule A
annexed hereto are hereby incorporated by reference and all such terms and words
so defined are used herein with the same meanings as are therein set forth.
Except as otherwise defined in this Security Agreement, terms defined in the
Guarantee are used herein as so defined.
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1.2 Additional Definitions. The following terms shall have the
following meanings for purposes of this Security Agreement (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"Administrative Agent" means the Administrative Agent appointed as such
pursuant to the Credit Agreement, and each successor thereto or replacement
therefore under the terms of the Credit Agreement.
"Collateral" means, collectively, all of the personal property of the
Guarantor described on Schedule A annexed hereto.
"Corresponding", when used in conjunction with any defined term (the
"referred term"), "Corresponding" refers to such specific Persons, items or
documents to which such referred term pertains which are related or connected to
another defined term in the context.
"Event of Default" means: (i) any event, condition or act (including
notice and lapse of time, if specified) which is defined or described as an
Event of Default in the Credit Agreement; and (ii) the failure by Guarantor to
perform its obligations under the Guarantee; and (iii) the occurrence of any
event, condition or act (including notice and lapse of time, if specified) which
pursuant to the terms of the Guarantee gives the Administrative Agent or any
Lender the right to accelerate the payment of any Secured Obligation, regardless
of whether such Person exercises such right.
"Financing Statements" mean all UCC-1 Financing Statements to be filed in
any public office to perfect the security interest granted under this Security
Agreement.
"Secured Obligations" means all debts, liabilities and obligations of the
Guarantor to any Secured Party pursuant to the Guarantee, of every nature,
whether now existing or hereafter incurred at any time or times, absolute or
contingent, secured or unsecured, and any and all renewals or extensions thereof
or of any portion thereof, including without limitation all principal, all
interest, all prepayment premiums and breakage fees (if any), all fees, all late
charges and all penalties and all expenses of collection or enforcement or
attempted collection or enforcement thereof, including all reasonable fees and
disbursements of any Secured Party's counsel in connection therewith, whether
within or apart from any legal action or proceeding.
"Secured Party" means the Lenders and the Administrative Agent,
collectively, and means each of the Lenders and the Administrative Agent,
severally.
"UCC" means the Uniform Commercial Code of the State of ________, as
amended and in effect as of the date hereof.
2. Security Interest.
2.1 The Guarantor hereby grants to the Secured Party, a security
interest in all of the Collateral as security for the payment of all Secured
Obligations.
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2.2 The Guarantor irrevocably appoints the Administrative Agent as
its lawful attorney and agent to execute any Financing Statements as
contemplated by this Security Agreement in the Guarantor's name and on the
Guarantor's behalf, and to file such Financing Statements against the Guarantor
signed by the Administrative Agent alone in any appropriate public office.
2.3 This Security Agreement is in addition to and without limitation
of any right of any Secured Party under the Guarantee or any other security
agreement, mortgage or guarantee granted by the Debtor, Guarantor or any other
Person to or for the benefit of any Secured Party.
3. Representation and Warranties.
The Guarantor represents and warrants to each Secured Party that:
3.1 Except (i) as listed on Schedule 3.1 [hereto and (ii) pursuant
to the Security Agreement, Including Fixtures, in the form of Schedule 4.01(j)
to the Credit Agreement, executed by the Guarantor pursuant to Section 4.01(j)
of the Credit Agreement (the "Secondary Security Agreement") to secure the
Secondary Guarantee], the Guarantor has granted no currently effective security
interest in the Collateral to any Person other than to the Administrative Agent,
and no financing statement in favor of any such other Person as a secured party
covering any of the Collateral or any proceeds thereof is on file in any public
office, and the Collateral is free and clear of any "Lien" (as such quoted term
is defined in the Credit Agreement), charge or encumbrance, except pursuant to
and under this Security Agreement and as permitted under Section 5.21 of the
Credit Agreement.
3.2 The office location(s) of the Guarantor set forth on Schedule
3.20 to the Credit Agreement, a copy of which is attached hereto as Schedule
3.2, are the true and correct locations of the Guarantor's principal place of
business and chief executive office and all other places of business as of the
date hereof.
3.3 The locations of all Equipment, Inventory and Fixtures of the
Guarantor set forth on Schedule 3.2 hereto is a true and complete listing of all
of the locations of the Guarantor's Equipment, Inventory and Fixtures as of the
date hereof.
3.4 Except as noted on Schedule 3.2 hereto, as of the date hereof,
the Guarantor conducts no business, whether directly or indirectly or through
any Subsidiary or division, under any name or trade name other than its name
first recited above.
3.5 Schedule 3.5 hereto is a true and complete list of all of the
Guarantor's Patent Rights, Trademark Rights, Copyrights, Chattel Paper (where
Debtor is obligee), Instruments, Documents, Investment Property, Insurance and
Guarantor's Security as of the date hereof.
3.6 Schedule 3.6 hereto is a true and complete list of all motor
vehicles, aircraft, ships and boats which are owned or leased by Guarantor and
are subject to any certificate of title or title registration law, rule or
regulation as of the date hereof.
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4. Covenants and Agreements of Guarantor.
The Guarantor severally covenants and agrees that:
4.1 Any Secured Party shall have the right, by its employees,
accountants, attorneys and other agents (i) to examine and inspect the
Collateral at any reasonable time and wherever located, and (ii) to call at the
Guarantor's place or places of business at reasonable intervals and upon
reasonable notice to inspect, audit, make test verifications and otherwise
examine and make extracts from the books, records, journals, orders, receipts,
correspondence and other data relating to any of the Collateral.
4.2 To enable the Primary Borrower to comply with Section 5.02(h),
clause (v) of the Credit Agreement, the Guarantor will provide to the Primary
Borrower, prior to the date on which such compliance is required, reports
describing any addition, deletion or modification as of the date of each such
report to the representations and warranties made in Section 3.5 above that
involves (i) Patent Rights, Trademark Rights, Copyrights or Investment Property
that, in the opinion of Guarantor's management, have or has a fair saleable
value greater than $100,000 for any individual item, or $250,000 for all items
in the aggregate, (ii) Chattel Paper (where Debtor is obligee), Instruments,
Investment Property or Debtor's Security that represent or secure an obligation
of $100,000 or more, for any individual item, or obligations greater than
$250,000 for all such items and (iii) any individual Document relating to
personal property that, in the opinion of Guarantor's management, have or has a
fair saleable value greater than $100,000 or all Documents relating to personal
property that, in the opinion of Guarantor's management, have or has a fair
saleable value greater than $250,000 in the aggregate. Each report described in
the preceding sentence will also describe any addition, deletion or modification
as of the date of such report to the representations and warranties made in
Section 3.6 above that involves Collateral that, in the opinion of Guarantor's
management, have or has a fair saleable value greater than $100,000 for any
individual item, or greater than $250,000 for all items in the aggregate and, at
the request of the Administrative Agent, the Debtor shall (a) provide
appropriate proof that each item of Equipment reflected on such report has been
properly titled and registered to the extent required by any applicable statute,
rule or regulation, (b) cause the interest of the Secured Party to be properly
noted on each certificate of title or registration to any such Equipment, and
(c) deliver each such certificate of title or registration received by the
Debtor to the Administrative Agent. The $100,000 and $250,000 limitations set
forth in this Section with respect to any type or category of Collateral shall
not apply, and shall not limit the items required to be included in any such
report, if the Collateral that would be excluded by virtue of such limitations
would, in the opinion of Guarantor's management, have a fair saleable value, or
represent or secure obligations or have a face amount, as the case may be, of
greater than $300,000 in the aggregate, when all of excluded items of all such
types and categories are added together.
4.3 Subject to the limitations of this Security Agreement, the
Guarantor will from time to time upon demand furnish to the Administrative Agent
such further information and will execute, acknowledge and deliver to the
Administrative Agent such financing statements and assignments and other papers,
pay any costs of searches and filing fees, and do all such other acts and things
as the Administrative Agent may reasonably request as being necessary or
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appropriate to establish, perfect and maintain a valid security interest in the
Collateral as security for the Secured Obligations. Without limitation of the
foregoing,
4.3.1 At the time this Security Agreement is executed and
delivered to the Administrative Agent, the Guarantor (a) shall
execute and deliver to the Administrative Agent each financing
statement, notice of Lien, instrument of assignment and other
writing, and take such other action, as the Administrative
Agent may deem necessary or desirable to evidence or perfect
the security interest of the Administrative Agent in the
Collateral; (b) shall deliver all original items of Chattel
Paper, Instruments and Documents, with each such endorsement,
instrument of assignment and other writing as the
Administrative Agent may request; (c) shall execute such
documents as the Administrative Agent may request in order to
provide the Administrative Agent with "control" over all
Investment Property owned by the Guarantor, within the meaning
of Section 9-115 of the UCC; (d) will execute and deliver to
the Administrative Agent any document required to acknowledge,
register or perfect the security interest hereby granted in
any of the Patent Rights, Technical Information, Trademark
Rights or Copyrights and in any of the Collateral under the
Federal Assignment of Claims Act; (e) will take all such
action and execute all such documentation as the
Administrative Agent may request in order to perfect the
Secured Party's Lien in all Debtor's Security; and (f) will
deliver to the Administrative Agent an Acknowledgment in the
form of Schedule 4.3.1, executed by each warehouse identified
in Schedule 3.20 of the Credit Agreement as a warehouse from
which Debtor is required to obtain such a document.
4.3.2 At the time of receipt or creation of any item or items
of Collateral, that involves Collateral with respect to which
a report will be required pursuant to Section 4.2, the
Guarantor will immediately notify the Administrative Agent of
such receipt or creation and (a) will execute and deliver to
the Administrative Agent any document required to acknowledge,
register or perfect the security interest hereby granted in
any of the Patent Rights, Technical Information, Trademark
Rights or Copyrights and in any of the Collateral under the
Federal Assignment of Claims Act; (b) will immediately deliver
to
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the Administrative Agent all original Chattel Paper,
Instruments and Documents, with each such endorsement,
instrument of assignment and other writing as the
Administrative Agent may request; (c) will take such action as
the Administrative Agent may request in order to provide the
Administrative Agent with "control" over each item of
Investment Property owned by the Guarantor, within the meaning
of Section 9-115 of the UCC; and (d) will take all such action
and execute all such documentation as the Administrative Agent
may request in order to perfect the Secured Party's Lien in
all Guarantor's Security.
4.4 The Guarantor will defend the Collateral against all claims and
demands of all other Persons at any time claiming the same or an interest
therein. Except to the extent permitted in the Credit Agreement, Guarantor shall
not grant any Lien with respect to any Collateral to any Person other than the
Secured Party, or sell, assign or transfer the Collateral or any right, title or
interest therein.
4.5 If any action or proceeding shall be commenced, other than any
action to collect the Secured Obligations, to which action or proceeding any
Secured Party is made a party and in which it becomes necessary to defend or
uphold such Secured Party's security interests hereunder, all costs incurred by
such Secured Party for the expenses of such litigation (including reasonable
fees and expenses of such Secured Party's external legal counsel and costs
allocated by and expenses of its internal legal department) shall be deemed part
of the Secured Obligations secured hereby, which the Guarantor agrees to pay or
cause to be paid.
4.6 All Records of the Collateral will be located at the Guarantor's
principal place of business or at the headquarters of the Primary Borrower.
Except for transactions that comply with Section 5.24 or 5.29, as applicable, of
the Credit Agreement, the Guarantor shall not change any location of any
Equipment, Inventory, Records or any other Collateral unless the Guarantor gives
the Administrative Agent not less than 30 days prior written notice (which the
Administrative Agent shall promptly forward to the Lenders) and the Guarantor
executes such documents and takes such other actions related thereto as the
Administrative Agent may request.
4.7 The Guarantor will have and maintain Insurance at its expense at
all times in such amounts, in such form, containing such terms and written by
such companies as may be reasonably satisfactory to Administrative Agent (and as
more particularly set forth in the Credit Agreement). All policies of Insurance
shall be payable to the Administrative Agent and the Guarantor, as their
interests may appear, and shall provide for thirty (30) days' written notice of
cancellation or modification to the Administrative Agent (which the
Administrative Agent shall promptly forward to the Lenders). So long as any
Event of Default exists, (a) the Administrative Agent is authorized by the
Guarantor to act as its attorney in collecting, adjusting, settling or canceling
such Insurance and endorsing any drafts drawn by insurers and (b) the
Administrative Agent may apply any proceeds of Insurance received by it to the
Secured Obligations, whether
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due or not. The Guarantor will immediately notify the Administrative Agent of
any damage to or loss of the Collateral in excess of $250,000. Not later than
thirty (30) days prior to the expiration date of each policy of Insurance then
in effect, the Guarantor shall deliver to the Administrative Agent a certificate
of Insurance certifying as to (i) the extension of such policy or the issuance
of a renewal policy therefor, describing the same in reasonable detail
satisfactory to the Administrative Agent and (ii) the payment in full of the
portion of the premium therefor then due and payable (or accompanied by other
proof of such payment satisfactory to the Administrative Agent). The Guarantor
shall be required forthwith to notify the Administrative Agent (by telephone,
confirmed in writing) if the Guarantor shall determine at any time not to, or at
any time be unable to, extend or renew any such policy then in effect.
4.8 The Guarantor will use the Collateral for business purposes and
not in violation of any law, regulation, order, writ, injunction or decree.
4.9 The Guarantor will pay promptly when due all taxes and
assessments upon the Collateral or upon its use or sale ("Taxes"), to the extent
required pursuant to the Credit Agreement.
4.10 The Guarantor will at all times keep accurate and complete
records of the Accounts, Instruments, Chattel Paper, Documents, Investment
Property, General Intangibles and other Collateral and will deliver such
reconciliation reports and other financial information to the Administrative
Agent as the Administrative Agent or any other Secured Party may at any time
reasonably request.
4.11 Upon the occurrence of an Event of Default, the Guarantor
agrees to stamp all books and records pertaining to Accounts, Instruments,
Chattel Paper, Documents, Investment Property and General Intangibles to
evidence the Secured Party's security interest therein in form satisfactory to
the Administrative Agent immediately upon the Administrative Agent's written
demand.
4.12 At its option, during the existence of any Event of Default,
the Administrative Agent may discharge Taxes, liens or other encumbrances at any
time levied against or placed on the Collateral which have not been stayed as to
execution and contested with due diligence in appropriate legal proceedings, and
the Administrative Agent may pay for Insurance on the Collateral and may pay for
maintenance and preservation of the Collateral and in connection therewith, the
Guarantor will, upon demand, remit to the Administrative Agent forthwith:
4.12.1 The amount of any such Taxes, assessments, Insurance or
other expenses which the Administrative Agent shall have been
required or shall have elected to pay; and
4.12.2 The amount of any and all out-of-pocket
expenses which the Administrative Agent may incur in
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connection with the exercise by the Administrative Agent
of any of the powers conferred upon it hereunder; and
4.12.3 Interest on any amounts described
under Subsections 4.12.1 and 4.12.2 of this
Section 4.12 from the date of such
expenditure to the date of repayment in full
to the Administrative Agent at a rate per
annum which shall automatically increase and
decrease so that at all times such rate
shall be the lesser of 2% higher than the
Prime Rate or the maximum rate permitted by
law.
4.13 The Guarantor will notify the Administrative Agent in writing
at least thirty (30) days prior to changing its name or conducting business
under any name or trade name other than as warranted under Section 3.4 hereof,
in each case specifying the names involved.
4.14 The Guarantor will use its best efforts to obtain the consent
of any Person or Governmental Authority to the assignment hereunder of any
Account or General Intangible, or of any Instrument, Document or Chattel Paper
required to be delivered pursuant to Section 4.3, if such consent may be
required by the terms of any contract or statute or if the such consent is
reasonably necessary to support the security interest hereunder or if the
Administrative Agent so requests in its discretion reasonably exercised.
4.15 During the existence of any Event of Default (as defined in the
Credit Agreement), the Administrative Agent shall have the right to notify the
account debtors obligated on any or all of a Guarantor's Accounts, Chattel
Paper, Instruments, Documents, Investment Property, Guarantor's Security or
General Intangibles to make payment thereof directly to the Administrative
Agent, and the Administrative Agent may take control of all proceeds of any
thereof. The form of such notice to the account debtors shall be in the form of
Schedule 4.15 annexed hereto.
4.16 At the time of execution and delivery of this Security
Agreement by the Guarantor, and at any future time as of which any Collateral
may be affixed to or located on any real property other than that described in
Schedule 3.2 hereto, the Guarantor shall provide the Administrative Agent a
document, in form and substance satisfactory to the Administrative Agent,
executed by each Person having an interest in such real property, either as
lessor, lessee, owner or mortgagee thereof, to which any Collateral is affixed
or in which any Collateral is located (a) disclaiming any interest by such
owner, lessor, lessee or mortgagee in any such Collateral and (b) containing the
agreement of such owner, lessor, lessee or mortgagee permitting the
Administrative Agent to enter such real property and take possession of and
remove from such real property any Collateral affixed thereto or located therein
and retaining possession of such real property for the purpose of selling,
leasing or otherwise disposing of such Collateral without by doing so incurring
any liability to such owner, lessor, lessee or mortgagee other than liability
that would be incurred by the Guarantor pursuant to any lease or mortgage
between the Guarantor and such owner, lessor, lessee or mortgagee.
4.17 The Debtor will not amend any agreements with third parties
relating to Warehoused Inventory without prior written notice the Administrative
Agent, which shall promptly
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forward same to the Lenders, and without the written consent of the
Administrative Agent provided at the direction of the Required Lenders.
5. Events of Default.
5.1 Upon the occurrence of an Event of Default, the Administrative
Agent shall have, and shall exercise at the direction of the Required Lenders,
all of the rights, powers and remedies set forth in the Loan Documents, together
with the rights and remedies of a secured party under the UCC, including without
limitation, the right to sell, lease or otherwise dispose of any or all of the
Collateral, and to take possession of the Collateral, and for that purpose (a)
the Administrative Agent may enter peaceably any premises on which the
Collateral or any part thereof may be situated and remove the same therefrom and
the Guarantor will not resist or interfere with such action, and (b) the
Administrative Agent may require the Guarantor to assemble the Collateral and
make the same available to the Administrative Agent at a place to be designated
by the Administrative Agent which is reasonably convenient to both parties. The
Guarantor hereby agrees that the place or places of location of the Collateral
are places reasonably convenient to it to assemble the Collateral. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Administrative Agent will send
the Guarantor reasonable notice of the time and place of any public sale or
reasonable notice of the time after which any private sale or any other
disposition thereof is to be made. The requirement of sending reasonable notice
shall be met if such notice is mailed, postage prepaid, to the Guarantor at
least five days before the time of the sale or disposition.
5.2 Upon demand by the Administrative Agent after an Event of
Default, given at the direction of the Required Lenders, the Guarantor will
immediately deliver to the Administrative Agent all proceeds of Collateral, and
all original evidences of Accounts, Chattel Paper, Instruments, Documents,
Guarantor's Security, Investment Property or General Intangibles, including,
without limitation, all checks, drafts, cash and other remittances, notes, trade
acceptances or other instruments or contracts for the payment of money,
appropriately endorsed to the Administrative Agent's order and, regardless of
the form of such endorsement, the Guarantor hereby waives presentment, demand,
notice of dishonor, protest and notice of protest and all other notices with
respect thereto; and the Guarantor hereby appoints the Administrative Agent as
the Guarantor's agent and attorney-in-fact to make such endorsement on behalf of
and in the name of the Guarantor. Pending such deposit, the Guarantor agrees
that it will not commingle any such checks, drafts, cash and other remittances
with any of the Guarantor's funds or property, but will hold them separate and
apart therefrom and upon an express trust for the Administrative Agent until
delivery thereof is made to the Administrative Agent.
5.3 The costs of collection and enforcement of Accounts, Chattel
Paper, Instruments, Documents, Guarantor's Security, Investment Property or
General Intangibles including attorneys' fees and out-of-pocket expenses, shall
be borne solely by the Guarantor, whether the same are incurred by the
Administrative Agent or the Guarantor. The Guarantor will not, after the
occurrence of an Event of Default, except with the Administrative Agent's
express written consent, extend, compromise, compound or settle any Accounts,
Chattel Paper, Instruments, Documents, Guarantor's Security, Investment Property
or General Intangibles, or
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release, wholly or partly, any Person liable for payment thereof, or allow any
credit or discount thereon which is not customarily allowed by the Guarantor in
the ordinary conduct of its business.
5.4 Effective immediately upon the occurrence of an Event of
Default, the Guarantor hereby appoints the Administrative Agent to be the
Guarantor's true and lawful attorney, with full power of substitution, in the
Administrative Agent's name or the Guarantor's name or otherwise, for the
Administrative Agent's sole use and benefit, but at the Guarantor's cost and
expense, to exercise at any time, at the direction of the Required Lenders, all
or any of the following powers with respect to all or any of the Accounts,
Chattel Paper, Instruments, Documents, Guarantor's Security, Investment Property
or General Intangibles:
5.4.1 to demand, sue for, enforce, collect, settle,
compromise, receive and give acquittance for any and all
moneys due or to become due upon or by virtue thereof and any
Liens securing any such Collateral;
5.4.2 to receive, take, endorse, assign and deliver any and
all checks, notes, drafts and other negotiable and
non-negotiable instruments taken or received by the
Administrative Agent in connection therewith, and the
Guarantor waives notice of presentment, protest and
non-payment of any instrument so endorsed or assigned;
5.4.3 to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto;
5.4.4 to extend the time of payment of any or all thereof, to
make any allowances and other adjustments with reference
thereto;
5.4.5 to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof or the relevant
goods, as fully and effectually as if the Administrative Agent
were the absolute owner thereof;
5.4.6 to make any reasonable allowances and other reasonable
adjustments with reference thereto;
5.4.7 to sign the Guarantor's name on any Document, on
invoices relating to any Account, on drafts against customers,
on schedules of assignments of Accounts, on notices of
assignment, financing statements under the UCC and other
public records, on verifications of Accounts, and on notices
to customers;
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5.4.8 to file or record in any public office notices of
assignment or any other public notice required to effect this
Security Agreement;
5.4.9 to notify the post office authorities to change the
address for delivery of the Guarantor's mail to an address
designated by the Administrative Agent;
5.4.10 to receive, open and dispose of all mail
addressed to the Guarantor;
5.4.11 to discharge Taxes, liens or other encumbrances at any
time levied against or placed thereon;
5.4.12 to send requests for verification of Accounts, Chattel
Paper and Instruments to those liable thereon;
5.4.13 to vote and make any elections with respect to any
Investment Property and to exercise control over such
Investment Property as if the Administrative Agent were the
sole owner thereof; and
5.4.14 to do all other things the Administrative Agent deems
reasonably necessary or desirable to carry out the purposes of
this Agreement.
The Guarantor hereby ratifies and approves all acts of the attorney
pursuant to this Section 5.4, and neither the Administrative Agent nor the
attorney will be liable for any acts of commission or omission, nor for any
error of judgment or mistake of fact or law, other than acts, errors or mistakes
due to fraud, willful malfeasance or gross negligence by the Administrative
Agent or the attorney; provided further, however, that Guarantor does not waive
any rights under the UCC against any Secured Party for any action taken
hereunder which is other than commercially reasonable. This power, being coupled
with an interest, is irrevocable so long as any of the Secured Obligations
remain outstanding.
5.5 [Subject to the rights of the Secured Party under the Secondary
Security Agreement,] (a) after deducting all expenses incurred by the
Administrative Agent in protecting or enforcing the rights of the Secured
Parties in the Collateral, the remainder of any proceeds of collection or sale
of the Collateral shall be applied to the payment of principal, interest, fees,
expenses or other charges comprising the Secured Obligations in such order as
the Administrative Agent may determine, and all surplus shall be returned to the
Guarantor and the Guarantor shall remain liable for any deficiency; (b) the
Administrative Agent shall apply the proceeds of collection or sale of the
Collateral, if any, at least once during each calendar month, and until so
applied, shall retain such proceeds in a separate Collateral account, as
Collateral for the Secured
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Obligations; and (c) the Administrative Agent alone shall have the power of
withdrawal from such Collateral Account.
5.6 The Administrative Agent may exercise its rights with respect to
Collateral without resorting to or regard to any Guarantee or other collateral
or source of reimbursement for the Secured Obligations.
5.7 The exercise by the Administrative Agent of or failure to so exercise
any authority granted under this Security Agreement shall in no manner affect
the liability of Guarantor to any Secured Party, provided that the
Administrative Agent shall be under no obligation or duty to exercise any of the
powers hereby conferred upon it and it shall be without liability for any act or
failure to act in connection with the collection of, or the preservation of any
rights under any of the Collateral.
6. Waivers.
6.1 The Guarantor waives all demands, notices and protests of every
kind which are not expressly required under this Security Agreement or the other
Loan Documents and which are permitted by law to be waived, and which would, if
not waived, impair the Administrative Agent's enforcement of this Security
Agreement or release any Collateral from the security interest of the
Administrative Agent under this Security Agreement. By way of example, but not
in limitation of the Administrative Agent's rights under this Security
Agreement, the Administrative Agent does not have to give the Guarantor notice
of any of the following:
6.1.1 notice of acceptance of this Security Agreement;
6.1.2 notice of advances made, credit extended, or
Collateral received or delivered;
6.1.3 any action which the Administrative Agent does or does
not take regarding the Debtor, the Guarantor, or any other
Person, or any other collateral securing the Secured
Obligations;
6.1.4 enforcement of any rights under this Security Agreement
[or the Secondary Security Agreement]t; or
6.1.5 any other action taken in reliance on this Security
Agreement.
6.2 With respect to [the Secondary Security Agreement,] the Secured
Obligations and the Collateral, the Guarantor assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of Collateral, to the addition or release of
any party or Person primarily or secondarily liable, to the acceptance of
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partial payments thereon and the settlement, compromising or adjusting of any
thereof, all in such time or times as the Administrative Agent may deem
advisable.
6.3 The Administrative Agent shall have no duty as to the collection
or protection of Collateral not in the Administrative Agent's possession or
control, and the Administrative Agent's duty with reference to Collateral in its
possession or control shall be to use reasonable care in the custody and
preservation of such Collateral, but such duty shall not require the
Administrative Agent to do any of the following (although during the existence
of a Default, the Administrative Agent is authorized to reasonably undertake any
such action if the Administrative Agent deems such action appropriate):
6.3.1 protect any of the Collateral against the claims of
others;
6.3.2 collect any sums due on the Collateral;
6.3.3 exercise any rights under [the Secondary
Security Agreement] or the Collateral;
6.3.4 notify the Guarantor of any maturities or other
similar matters concerning the Collateral;
6.3.5 act upon any request the Guarantor may make; or
6.3.6 preserve or protect the Guarantor's rights in the
Collateral [or under the Secondary Security
Agreement.]
7. Actions and Proceedings.
IN THE EVENT OF ANY ACTION OR PROCEEDING WITH RESPECT TO ANY MATTER
PERTAINING TO THIS SECURITY AGREEMENT, THE GUARANTOR HEREBY WAIVES THE RIGHT TO
A TRIAL BY JURY AND RIGHTS OF SETOFF (BUT DOES NOT WAIVE ANY DEFENSES OR
COUNTERCLAIMS). THE GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION AND VENUE OF THE SUPREME COURT OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK SITTING IN
MONROE COUNTY, IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT.
8. Address for Notices and Service of Process.
All notices, requests and demands to or upon the Administrative Agent, any
other Secured Party or Guarantor shall be effective if made in writing and shall
be deemed to be delivered (A) upon receipt (i) if delivered by hand or by
Federal Express or other national overnight courier, or
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(ii) if sent by telegraph, or (B) when sent, answer back received, in the case
of notice by telex or telecopier (fax), or (C) five (5) days after being
deposited in the mail, postage prepaid, to the following address or to such
other address of the Administrative Agent, on behalf of the other Secured
Parties, or Guarantor as may be hereafter notified by the Administrative Agent
or a Guarantor to the other:
if to the Guarantor:
IEC ___________________________, Inc.
Telecopier #:
with a copy to:
Boylan, Brown, Code,
Fowler, Vigdor & Wilson LLP
2400 Chase Square
Rochester, New York 14604
Attn: Justin L. Vigdor, Esq.
Telecopier #: (716) 232-3528
if to any of the Lenders or the Administrative Agent:
The Chase Manhattan Bank, as Administrative Agent
One Chase Square, Floor 9
Rochester, New York 14643
Attn: Gail G. Fiorini, Vice President
Telecopier # (716) 258-7604
9. Costs of Collection and Legal Fees.
The Guarantor shall be liable to the Administrative Agent and each other
Secured Party and shall pay to the Administrative Agent immediately on demand as
part of its liability under this Security Agreement all reasonable costs and
expenses of the Administrative Agent or any other Secured Party, including all
reasonable fees and disbursements of the Administrative Agent's or any other
Secured Party's legal counsel incurred in the collection or enforcement or
attempted collection or attempted enforcement of the Secured Party's rights
under this Security Agreement, whether within or apart from any legal action or
proceeding.
10. No Waiver of Remedies.
No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any other Secured Party, any right, remedy, power or
privilege under this Security Agreement shall
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operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege under this Security Agreement preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges provided under
this Security Agreement are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
11. Administrative Agent.
The appointment of the Administrative Agent as agent to act on behalf of
the Lenders as contemplated in this Security Agreement, and the authority and
responsibilities of the Administrative Agent related thereto, are set forth in
and controlled by the Credit Agreement.
12. _____ Law.
Pursuant to _________________, the whole of this Security Agreement and
the rights and obligations of the Guarantor and the Secured Party hereunder
shall be governed, construed and interpreted in accordance with, the laws of the
State of __________ without regard to any conflicts-of-laws rules which would
require the application of the laws of any other jurisdiction.
13. Entire Agreement; Modifications.
This Security Agreement contains the entire agreement between each Secured
Party and the Guarantor with respect to all subject matters contained herein.
This Security Agreement cannot be amended, modified or changed in any way except
by a written instrument executed by each Secured Party and Guarantor.
14. Successors and Assigns.
The covenants, representations, warranties and agreements herein set forth
shall be binding upon the Guarantor, its legal representatives, successors and
assigns and shall inure to the benefit of each Secured Party, its successors and
assigns. Any successor or assign of any Secured Party shall forthwith become
vested with and entitled to exercise all the powers and rights given by this
Security Agreement to any Secured Party, as if such successor or assign were
originally named as a Secured Party herein.
15. Counterparts.
This Security Agreement may be executed in counterparts each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract.
17. Severability.
The unenforceability or invalidity of any provision or provisions of this
Security Agreement or any of the other Loan Documents shall not render any other
provision or provisions herein or therein contained unenforceable or invalid.
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[18. Relationship Between General and Secondary Security Agreements.
The rights of the Secured Parties with respect to all Collateral except
Fixtures (Fixtures to include, without limitation, all Equipment that also
constitutes Fixtures), and the proceeds thereof, under this Security Agreement
shall have priority over the Secured Parties' rights with respect to such
Collateral and proceeds under the Secondary Security Agreement; and the rights
of the Secured Parties with respect to Fixtures (Fixtures to include, without
limitation, all Equipment that also constitutes Fixtures), and the proceeds
thereof, under the Secondary Security Agreement shall have priority over the
Secured Parties' rights with respect to such Collateral and proceeds under this
Security Agreement. ]
IN WITNESS WHEREOF, the Guarantor has caused this Security Agreement to be
executed by its duly authorized officer or representative as of the date and
year first above written.
IEC ____________________________, Inc.
Attest: ________________
Assistant Secretary
By: _________________________
(SEAL) Its: Vice President
Accepted this ______ day
of ___________________
The Chase Manhattan Bank,
as Administrative Agent
By: __________________________
Its: Vice President
The Chase Manhattan Bank,
as Lender
By: _____________________
Its: Vice President
Marine Midland Bank
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By: __________________________
Its: Vice President
KeyBank National Association
By: __________________________
Its: Vice President
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STATE OF________________)
) SS.
COUNTY OF ______________)
On the _____ day of ________ in the year 1998 before me personally came
_____________________, to me known, who, being by me duly sworn did depose and
say that (s)he resides at __________________; that (s)he is the
____________________ of IEC ____________________________, Inc., the corporation
described in and which executed the above instrument; that (s)he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the board of directors of said
corporation, and that (s)he signed his/her name thereto by like order.
Notary Public
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SCHEDULE A (Page 1 of 4)
to
Security Agreement and UCC-1 Financing Statements
granted by
IEC ____________________________, Inc. (the "Guarantor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and
all lenders that are now or may hereafter become "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent and the
Lenders dated as of _____________ (collectively as the "Secured Party")
1. Equipment. All equipment (as defined in Section 9-109(2) of the
UCC), whether now owned or hereafter acquired, wherever located, and
including fixtures, together with any and all substitutions, parts,
fittings, additions, attachments, accessories, special tools,
accessions or replacements, and together with all computer
programming and licenses necessary or desirable to operate the same,
and all proceeds and general intangibles arising from any of the
foregoing (the "Equipment").
2. Inventory. All inventory (as defined in Section 9-109(4) of the
UCC), now owned or hereafter acquired, wherever located, and any
product or mass into which any inventory shall be manufactured,
processed or assembled (but only to the extent the same belongs to
Guarantor) or commingled, and all proceeds and General Intangibles
arising from any of the foregoing (the "Inventory").
3. Accounts. All accounts (as defined in Section 9-106 of the UCC), now
existing or hereafter acquired, and all proceeds and General
Intangibles arising therefrom (the "Accounts").
4. Chattel Paper. All chattel paper (as defined in Section 9-105(1)(b)
of the UCC) in which Debtor is the obligee, now owned or hereafter
acquired, and all proceeds and General Intangibles arising therefrom
(the "Chattel Paper").
5. Instruments. All instruments (as defined in Section 9-105(1)(i) of
the UCC), now owned or hereafter acquired, and all proceeds and
General Intangibles arising therefrom (the "Instruments").
6. General Intangibles. All general intangibles (as defined in Section
9-106 of the UCC) now owned or hereafter acquired, and the proceeds
thereof (the "General Intangibles").
7. Documents. All documents of title (as defined in Section 1-201(15)
of the UCC) covering any Inventory wherever located, now owned or
hereafter acquired, and all proceeds and General Intangibles arising
therefrom (the "Documents").
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8. Investment Property. All investment property (as defined in Section
9-115 of the UCC), now owned or hereafter acquired, and all proceeds
and General Intangibles arising therefrom (the "Investment
Property").
9. Fixtures. All fixtures (as defined in Section 9-313 of the UCC),
now owned or hereafter acquired, and all proceeds thereof
(the "Fixtures").
IN FURTHERANCE OF THE FOREGOING TYPES OF PROPERTY, AND WITHOUT LIMITATION
THEREOF:
k. Insurance. All insurance covering the Equipment, Inventory and all
of Guarantor's other tangible personal property against risks of
fire, flood, theft, loss or any other physical damage, and against
any risk of any damage or loss whatsoever, now owned or hereafter
acquired, and all proceeds and general intangibles arising therefrom
(the "Insurance").
l. Records. All of Guarantor's right, title and interest in all of its
books, records, ledger sheets, files and other data and documents,
including records in any form (digital or other) and recorded in or
through any medium (magnetic, lasergraphic or other) and all
machinery and processes (including computer programming
instructions) required to read and print such records, now or
hereafter existing relating to all types of personal property
described in this Schedule A (the "Records").
m. Rights as Seller of Goods. All of Guarantor's rights as a seller of
goods under Article 2 of the UCC or otherwise with respect to
Inventory, and all goods represented by or securing any of the
Accounts, all of Guarantor's rights therein, including without
limitation, rights as an unpaid vendor or lienor and including
rights of stoppage in transit, replevin and reclamation, and all
proceeds and General Intangibles arising from any of the foregoing .
n. Guarantor's Security. All guarantees, mortgages or security
interests on real or personal property, leases or other agreements
or property now or hereafter securing or relating to any of the
Accounts, Chattel Paper, Instruments, General Intangibles, Documents
or Investment Property and in favor of Guarantor, or now or
hereafter acquired for the purpose of securing and enforcing any of
such items in favor of Guarantor, and all proceeds and General
Intangibles arising from any of the foregoing (the "Guarantor's
Security").
o. Deposits. All sums at any time standing to Guarantor's credit on the
books of any Secured Party and all moneys, securities, and other
property of Guarantor at any time in any Secured Party's possession,
and all proceeds and General Intangibles arising therefrom,
including without limitation all deposit accounts maintained at any
Lender of every nature, including all controlled disbursement
accounts, payroll accounts or other special purpose accounts.
p. Patent Rights. All patent rights throughout the world, including all
letters patents, patent applications, patent licenses, patentable
inventions, modifications and improvements thereof, all rights to
any and all letters patent and applications for letters patent, all
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divisions, renewals, reissues, continuations, continuations-in-part,
extensions and reexaminations of any of the foregoing, all shop
rights, all proceeds of, and rights associated with any of the
foregoing (including license royalties and proceeds of infringement
suits), the right to sue third parties for past, present or future
infringements of any of the foregoing and for breach or enforcement
of any of the foregoing, and all rights corresponding to each of the
foregoing throughout the world, whether now owned or existing or
hereafter acquired, and all proceeds and General Intangibles arising
from any of the foregoing (the "Patent Rights").
q. Technical Information. All information concerning the subject
matter of the Patent Rights,
---------------------
and all other confidential or proprietary or useful information and
all know-how and common law or statutory trade secrets obtained by
or used in or contemplated at any time for use in the business of
Guarantor, and all other research and development work by Guarantor
whether or not the same is a patentable invention, including without
limitation all design and engineering data, shop rights,
instructions, procedures, standards, specifications, plans, drawings
and designs, whether now owned or existing or hereafter acquired or
arising, and all proceeds and General Intangibles arising from any
of the foregoing (the "Technical
Information").
-----------
r. Trademarks. All trademarks, trade names, corporate names,
company names, business
----------
names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of
business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and General Intangibles
of a like nature (each of the foregoing items being called a
"Trademark"), now existing anywhere in the world or
---------
hereafter adopted or acquired, whether currently in use or not, all
registrations and recordings thereof and all applications in
connection therewith, whether pending or in preparation for filing,
including registrations, recordings and applications in the United
States Patent and Trademark Office or in any office or agency of the
United States of America or any State thereof or any foreign
country; all Trademark licenses; all reissues, extensions or
renewals of any of the foregoing items; all of the goodwill of the
business connected with the use of, and symbolized by the foregoing
items; all proceeds of, and rights associated with, the foregoing,
including any claim by Guarantor against third parties for past,
present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license, including any
Trademark, Trademark registration or Trademark license, or for any
injury to the goodwill associated with the use of any such Trademark
or for breach or enforcement of any Trademark license; and all
proceeds and General Intangibles arising from any of the foregoing
(the "Trademark Rights").
----------------
s. Copyrights. All copyrights and all semiconductor chip product mask
works of Guarantor, whether statutory or common law, registered or
unregistered, now or hereafter in force throughout the world,
including, without limitation, all of Guarantor's right, title and
interest in and to all copyrights and mask works registered in the
United States Copyright Office or anywhere else in the world and all
applications for registration thereof, whether pending or in
preparation, all copyright and mask work licenses, the right to sue
for past, present and future infringements of any thereof, all
rights corresponding thereto throughout the world,
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all extensions and renewals of any thereof and all proceeds of the
foregoing, including, without limitation, licenses, royalties,
income, payments, claims, damages and proceeds of suit, and all
proceeds and General Intangibles arising from any of the foregoing
(the "Copyrights").
t. Computer Hardware and Software. (A) all computer and other
electronic data processing
------------------------------
hardware, integrated computer systems, central processing units,
memory units, display terminals, printers, features, computer
elements, card readers, tape drives, hard and soft disk drives,
cables, electrical supply hardware, generators, power equalizers,
accessories and all peripheral devices and other related computer
hardware, whether now owned, licensed or leased or hereafter
acquired by Guarantor; (B) all software programs including source
code and object code and all related applications and data files,
whether now owned, licensed or leased or hereafter acquired by
Guarantor, designed for use on the computers and electronic data
processing hardware described in Clause (A) above; (C) all
------ ---
firmware associated therewith, whether now owned, licensed or leased
or hereafter acquired by Guarantor; (D) all documentation (including
flow charts, logic diagrams, manuals, guides and specifications) for
such hardware, software and firmware described in the preceding
Clauses (A), (B) and (C), whether now owned, licensed or leased or
------- --- --- ---
hereafter acquired by Guarantor; and (E) all rights with respect to
all of the foregoing, including, without limitation, any and all
copyrights, licenses, options, warranties, service contracts,
program services, test rights, maintenance rights, support rights,
improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any
of the foregoing, and all proceeds and General Intangibles arising
from any of the foregoing (the "Computer Hardware and Software").
------------------------------
As used in this Schedule A, "UCC" means the Uniform Commercial Code of the State
of ______________, as amended and in effect from time to time.
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SCHEDULE 3.1
to
Security Agreement
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SCHEDULE 3.2
to
Security Agreement
granted by
IEC ___________________________, Inc. (the "Guarantor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and the "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent and the
Lenders dated as of ______________ (collectively as the "Secured Party")
The Guarantor's exact legal name: ________________________________
All names, if any, other than the name set forth above, under which the
Guarantor conducts business (if none, insert "None"): None
Principal place of business of the Guarantor:
==========================
Chief executive office of the Guarantor:
==========================
All other places of business, if any, of the Guarantor (if none, insert "None"):
None
All locations of inventory of the Guarantor:
All prior names of the Guarantor, if any (if none, insert "None"):
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SCHEDULE 3.5
to
Security Agreement
granted by
IEC ___________________________, Inc.. (the "Guarantor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and the "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent and the
Lenders dated as of _____________________ (collectively the "Secured Party")
List of all of the following types of Collateral owned by the Guarantor:
1. Patent Rights, Trademark Rights and Copyrights with all pertinent
registration information.
2. Chattel Paper and Instruments
3. Documents
4. Investment Property
5. Insurance
6. Guarantor's Security
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SCHEDULE 3.6
to
Security Agreement
granted by
_______________________________ (the "Debtor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and the "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent and the
Lenders dated as of _____________________ (collectively the "Secured Party")
List of all of the following types of Collateral owned by the Debtor and subject
to any certificate of title or title registration law, rule or regulation:
1. Motor vehicles
2. Aircraft
3. Ships and boats
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SCHEDULE 4.3.1
to
Security Agreement
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SCHEDULE 4.15
to
Security Agreement
NOTICE TO ACCOUNT GUARANTOR TO MAKE PAYMENT
TO THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
(Letterhead of The Chase Manhattan Bank)
(Date)
Registered Mail; Return Receipt Requested
or by Overnight Courier, Signature Required
Name and Address
of Account Guarantor
Re: Payment of All Moneys Due to ________________ (the "Guarantor")
Greetings:
Please take notice that all accounts receivable of the above-captioned
Guarantor have been assigned to The Chase Manhattan Bank, as Administrative
Agent ("Chase") and that pursuant to the terms of agreements between the
Guarantor and Administrative Agent all monies now or hereafter becoming due and
owing by you to the Guarantor must be paid to Administrative Agent at the
following address:
==============================
==============================
Please take notice that payment to the Guarantor of any such monies after
the date of receipt of this notice may result in liability to Administrative
Agent for the amount of such payment.
Enclosed is a certified true copy of an authorization executed by the
Guarantor.
If you have any questions about this matter, please call _______________
at ---------------.
Thank you for your cooperation in this matter.
Very truly yours,
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SCHEDULE 4.01 (j)
Form of Security Agreement, Including Fixtures, for Alabama Sub
This Security Agreement, Including Fixtures, dated as of _______________,
is granted by IEC Arab, Alabama, Inc. (the "Guarantor") to The Chase Manhattan
Bank, as Administrative Agent (the "Administrative Agent") for all financial
institutions who are and may become either lenders or the Issuing Bank pursuant
to and under the Credit Agreement as defined below (collectively, the "Lenders")
and to the Lenders.
Statement of the Premises.
IEC Electronics Corp. (the "Debtor") is concurrently herewith entering
into a Credit Agreement of even date (as it may be amended or otherwise modified
from time to time, the "Credit Agreement") with the Administrative Agent and the
Lenders thereunder.
The Guarantor is also concurrently herewith entering into a Secondary
Guarantee Agreement in the amount of $2,300,000 with respect to the Facility
Obligations of even date (as it may be amended or otherwise modified from time
to time, the "Guarantee") with the Administrative Agent and the Lenders
thereunder. The obligations of the Lenders to make loans and to issue letters of
credit under the Credit Agreement are conditional on Guarantor's execution of
this Security Agreement, Including Fixtures, (hereinafter, this "Security
Agreement") in favor of the Lenders and the Administrative Agent (collectively,
the "Secured Party").
Statement of Consideration.
To induce the Lenders to enter into the Credit Agreement and to make loans
thereunder, the Guarantor hereby grants this Security Agreement to the Lenders
and to the Administrative Agent, as the "Secured Party".
Agreement
This Security Agreement shall be continuing and subsisting until canceled
by the Administrative Agent on behalf of and with the written consent of the
Lenders, in the Lenders' sole discretion.
1. Definitions.
1.1 Incorporation by Reference. All terms defined in Schedule A
annexed hereto are hereby incorporated by reference and all such terms and words
so defined are used herein with the same meanings as are therein set forth.
Except as otherwise defined in this Security Agreement, terms defined in the
Guarantee are used herein as so defined.
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1.2 Additional Definitions. The following terms shall have the
following meanings for purposes of this Security Agreement (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"Administrative Agent" means the Administrative Agent appointed as such
pursuant to the Credit Agreement, and each successor thereto or replacement
therefore under the terms of the Credit Agreement.
"Collateral" means, collectively, all of the personal property of the
Guarantor described on Schedule A annexed hereto.
"Corresponding", when used in conjunction with any defined term (the
"referred term"), "Corresponding" refers to such specific Persons, items or
documents to which such referred term pertains which are related or connected to
another defined term in the context.
"Event of Default" means: (i) any event, condition or act (including
notice and lapse of time, if specified) which is defined or described as an
Event of Default in the Credit Agreement; and (ii) the failure by Guarantor to
perform its obligations under the Guarantee; and (iii) the occurrence of any
event, condition or act (including notice and lapse of time, if specified) which
pursuant to the terms of the Guarantee gives the Administrative Agent or any
Lender the right to accelerate the payment of any Secured Obligation, regardless
of whether such Person exercises such right.
"Financing Statements" mean all UCC-1 Financing Statements to be filed in
any public office to perfect the security interest granted under this Security
Agreement.
"Secured Obligations" means all debts, liabilities and obligations of the
Guarantor to any Secured Party pursuant to the Guarantee, of every nature,
whether now existing or hereafter incurred at any time or times, absolute or
contingent, secured or unsecured, and any and all renewals or extensions thereof
or of any portion thereof, including without limitation all principal, all
interest, all prepayment premiums and breakage fees (if any), all fees, all late
charges and all penalties and all expenses of collection or enforcement or
attempted collection or enforcement thereof, including all reasonable fees and
disbursements of any Secured Party's counsel in connection therewith, whether
within or apart from any legal action or proceeding.
"Secured Party" means the Lenders and the Administrative Agent,
collectively, and means each of the Lenders and the Administrative Agent,
severally.
"UCC" means the Uniform Commercial Code of the State of Alabama, as
amended and in effect as of the date hereof.
2. Security Interest.
2.1 The Guarantor hereby grants to the Secured Party, a security
interest in all of the Collateral as security for the payment of all Secured
Obligations.
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2.2 The Guarantor irrevocably appoints the Administrative Agent as
its lawful attorney and agent to execute any Financing Statements as
contemplated by this Security Agreement in the Guarantor's name and on the
Guarantor's behalf, and to file such Financing Statements against the Guarantor
signed by the Administrative Agent alone in any appropriate public office.
2.3 This Security Agreement is in addition to and without limitation
of any right of any Secured Party under the Guarantee or any other security
agreement, mortgage or guarantee granted by the Debtor, Guarantor or any other
Person to or for the benefit of any Secured Party.
3. Representation and Warranties.
The Guarantor represents and warrants to each Secured Party that:
3.1 Except (i) as listed on Schedule 3.1 hereto and (ii) pursuant to
the General Security Agreement in the form of Schedule 4.01(i) to the Credit
Agreement, executed by the Guarantor pursuant to Section 4.01(j) of the Credit
Agreement, (the "General Security Agreement") to secure the Primary Guarantee,
the Guarantor has granted no currently effective security interest in the
Collateral to any Person other than to the Administrative Agent, and no
financing statement in favor of any such other Person as a secured party
covering any of the Collateral or any proceeds thereof is on file in any public
office, and the Collateral is free and clear of any "Lien" (as such quoted term
is defined in the Credit Agreement), charge or encumbrance, except pursuant to
and under this Security Agreement and as permitted under Section 5.21 of the
Credit Agreement.
3.2 The office location(s) of the Guarantor set forth on Schedule
3.20 to the Credit Agreement, a copy of which is attached hereto as Schedule
3.2, are the true and correct locations of the Guarantor's principal place of
business and chief executive office and all other places of business as of the
date hereof.
3.3 The locations of all Equipment, Inventory and Fixtures of the
Guarantor set forth on Schedule 3.2 hereto is a true and complete listing of all
of the locations of the Guarantor's Equipment, Inventory and Fixtures as of the
date hereof.
3.4 Except as noted on Schedule 3.2 hereto, as of the date hereof,
the Guarantor conducts no business, whether directly or indirectly or through
any Subsidiary or division, under any name or trade name other than its name
first recited above.
3.5 Schedule 3.5 hereto is a true and complete list of all of the
Guarantor's Patent Rights, Trademark Rights, Copyrights, Chattel Paper (where
Debtor is obligee), Instruments, Documents, Investment Property, Insurance and
Guarantor's Security as of the date hereof.
3.6 Schedule 3.6 hereto is a true and complete list of all motor
vehicles, aircraft, ships and boats which are owned or leased by Guarantor and
are subject to any certificate of title or title registration law, rule or
regulation as of the date hereof.
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3.7 The value of Guarantor's Fixtures does not exceed $2,300,000.
4. Covenants and Agreements of Guarantor.
The Guarantor severally covenants and agrees that:
4.1 Any Secured Party shall have the right, by its employees,
accountants, attorneys and other agents (i) to examine and inspect the
Collateral at any reasonable time and wherever located, and (ii) to call at the
Guarantor's place or places of business at reasonable intervals and upon
reasonable notice to inspect, audit, make test verifications and otherwise
examine and make extracts from the books, records, journals, orders, receipts,
correspondence and other data relating to any of the Collateral.
4.2 To enable the Primary Borrower to comply with Section 5.02(h),
clause (v) of the Credit Agreement, the Guarantor will provide to the Primary
Borrower, prior to the date on which such compliance is required, reports
describing any addition, deletion or modification as of the date of each such
report to the representations and warranties made in Section 3.5 above that
involves (i) Patent Rights, Trademark Rights, Copyrights or Investment Property
that, in the opinion of Guarantor's management, have or has a fair saleable
value greater than $100,000 for any individual item, or $250,000 for all items
in the aggregate, (ii) Chattel Paper (where Debtor is obligee), Instruments,
Investment Property or Debtor's Security that represent or secure an obligation
of $100,000 or more, for any individual item, or obligations greater than
$250,000 for all such items and (iii) any individual Document relating to
personal property that, in the opinion of Guarantor's management, have or has a
fair saleable value greater than $100,000 or all Documents relating to personal
property that, in the opinion of Guarantor's management, have or has a fair
saleable value greater than $250,000 in the aggregate. Each report described in
the preceding sentence will also describe any addition, deletion or modification
as of the date of such report to the representations and warranties made in
Section 3.6 above that involves Collateral that, in the opinion of Guarantor's
management, have or has a fair saleable value greater than $100,000 for any
individual item, or greater than $250,000 for all items in the aggregate and, at
the request of the Administrative Agent, the Debtor shall (a) provide
appropriate proof that each item of Equipment reflected on such report has been
properly titled and registered to the extent required by any applicable statute,
rule or regulation, (b) cause the interest of the Secured Party to be properly
noted on each certificate of title or registration to any such Equipment, and
(c) deliver each such certificate of title or registration received by the
Debtor to the Administrative Agent. The $100,000 and $250,000 limitations set
forth in this Section with respect to any type or category of Collateral shall
not apply, and shall not limit the items required to be included in any such
report, if the Collateral that would be excluded by virtue of such limitations
would, in the opinion of Guarantor's management, have a fair saleable value, or
represent or secure obligations or have a face amount, as the case may be, of
greater than $300,000 in the aggregate, when all of excluded items of all such
types and categories are added together. Each report described in the first
sentence of this Section shall confirm Guarantor's compliance with Section 4.18
as of the date of such report.
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4.3 Subject to the limitations of this Security Agreement, the
Guarantor will from time to time upon demand furnish to the Administrative Agent
such further information and will execute, acknowledge and deliver to the
Administrative Agent such financing statements and assignments and other papers,
pay any costs of searches and filing fees, and do all such other acts and things
as the Administrative Agent may reasonably request as being necessary or
appropriate to establish, perfect and maintain a valid security interest in the
Collateral as security for the Secured Obligations. Without limitation of the
foregoing,
4.3.1 At the time this Security Agreement is executed and
delivered to the Administrative Agent, the Guarantor (a) shall
execute and deliver to the Administrative Agent each financing
statement, notice of Lien, instrument of assignment and other
writing, and take such other action, as the Administrative
Agent may deem necessary or desirable to evidence or perfect
the security interest of the Administrative Agent in the
Collateral; (b) shall deliver all original items of Chattel
Paper, Instruments and Documents, with each such endorsement,
instrument of assignment and other writing as the
Administrative Agent may request; (c) shall execute such
documents as the Administrative Agent may request in order to
provide the Administrative Agent with "control" over all
Investment Property owned by the Guarantor, within the meaning
of Section 9-115 of the UCC; (d) will execute and deliver to
the Administrative Agent any document required to acknowledge,
register or perfect the security interest hereby granted in
any of the Patent Rights, Technical Information, Trademark
Rights or Copyrights and in any of the Collateral under the
Federal Assignment of Claims Act; (e) will take all such
action and execute all such documentation as the
Administrative Agent may request in order to perfect the
Secured Party's Lien in all Debtor's Security; and (f) will
deliver to the Administrative Agent an Acknowledgment in the
form of Schedule 4.3.1, executed by each warehouse identified
in Schedule 3.20 of the Credit Agreement as a warehouse from
which Debtor is required to obtain such a document.
4.3.2 At the time of receipt or creation of any item or items
of Collateral, that involves Collateral with respect to which
a report will be required pursuant to Section 4.2, the
Guarantor will immediately notify the Administrative Agent of
such receipt or creation and (a) will execute and deliver to
the Administrative Agent any document
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required to acknowledge, register or perfect the security
interest hereby granted in any of the Patent Rights, Technical
Information, Trademark Rights or Copyrights and in any of the
Collateral under the Federal Assignment of Claims Act; (b)
will immediately deliver to the Administrative Agent all
original Chattel Paper, Instruments and Documents, with each
such endorsement, instrument of assignment and other writing
as the Administrative Agent may request; (c) will take such
action as the Administrative Agent may request in order to
provide the Administrative Agent with "control" over each item
of Investment Property owned by the Guarantor, within the
meaning of Section 9-115 of the UCC; and (d) will take all
such action and execute all such documentation as the
Administrative Agent may request in order to perfect the
Secured Party's Lien in all Guarantor's Security.
4.4 The Guarantor will defend the Collateral against all claims and
demands of all other Persons at any time claiming the same or an interest
therein. Except to the extent permitted in the Credit Agreement, Guarantor shall
not grant any Lien with respect to any Collateral to any Person other than the
Secured Party, or sell, assign or transfer the Collateral or any right, title or
interest therein.
4.5 If any action or proceeding shall be commenced, other than any
action to collect the Secured Obligations, to which action or proceeding any
Secured Party is made a party and in which it becomes necessary to defend or
uphold such Secured Party's security interests hereunder, all costs incurred by
such Secured Party for the expenses of such litigation (including reasonable
fees and expenses of such Secured Party's external legal counsel and costs
allocated by and expenses of its internal legal department) shall be deemed part
of the Secured Obligations secured hereby, which the Guarantor agrees to pay or
cause to be paid.
4.6 All Records of the Collateral will be located at the Guarantor's
principal place of business or at the headquarters of the Primary Borrower.
Except for transactions that comply with Section 5.24 or 5.29, as applicable, of
the Credit Agreement, the Guarantor shall not change any location of any
Equipment, Inventory, Records or any other Collateral unless the Guarantor gives
the Administrative Agent not less than 30 days prior written notice (which the
Administrative Agent shall promptly forward to the Lenders) and the Guarantor
executes such documents and takes such other actions related thereto as the
Administrative Agent may request.
4.7 The Guarantor will have and maintain Insurance at its expense at
all times in such amounts, in such form, containing such terms and written by
such companies as may be reasonably satisfactory to Administrative Agent (and as
more particularly set forth in the Credit Agreement). All policies of Insurance
shall be payable to the Administrative Agent and the Guarantor, as their
interests may appear, and shall provide for thirty (30) days' written notice of
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<PAGE>
cancellation or modification to the Administrative Agent (which the
Administrative Agent shall promptly forward to the Lenders). So long as any
Event of Default exists, (a) the Administrative Agent is authorized by the
Guarantor to act as its attorney in collecting, adjusting, settling or canceling
such Insurance and endorsing any drafts drawn by insurers and (b) the
Administrative Agent may apply any proceeds of Insurance received by it to the
Secured Obligations, whether due or not. The Guarantor will immediately notify
the Administrative Agent of any damage to or loss of the Collateral in excess of
$250,000. Not later than thirty (30) days prior to the expiration date of each
policy of Insurance then in effect, the Guarantor shall deliver to the
Administrative Agent a certificate of Insurance certifying as to (i) the
extension of such policy or the issuance of a renewal policy therefor,
describing the same in reasonable detail satisfactory to the Administrative
Agent and (ii) the payment in full of the portion of the premium therefor then
due and payable (or accompanied by other proof of such payment satisfactory to
the Administrative Agent). The Guarantor shall be required forthwith to notify
the Administrative Agent (by telephone, confirmed in writing) if the Guarantor
shall determine at any time not to, or at any time be unable to, extend or renew
any such policy then in effect.
4.8 The Guarantor will use the Collateral for business purposes and
not in violation of any law, regulation, order, writ, injunction or decree.
4.9 The Guarantor will pay promptly when due all taxes and
assessments upon the Collateral or upon its use or sale ("Taxes"), to the extent
required pursuant to the Credit Agreement.
4.10 The Guarantor will at all times keep accurate and complete
records of the Accounts, Instruments, Chattel Paper, Documents, Investment
Property, General Intangibles and other Collateral and will deliver such
reconciliation reports and other financial information to the Administrative
Agent as the Administrative Agent or any other Secured Party may at any time
reasonably request.
4.11 Upon the occurrence of an Event of Default, the Guarantor
agrees to stamp all books and records pertaining to Accounts, Instruments,
Chattel Paper, Documents, Investment Property and General Intangibles to
evidence the Secured Party's security interest therein in form satisfactory to
the Administrative Agent immediately upon the Administrative Agent's written
demand.
4.12 At its option, during the existence of any Event of Default,
the Administrative Agent may discharge Taxes, liens or other encumbrances at any
time levied against or placed on the Collateral which have not been stayed as to
execution and contested with due diligence in appropriate legal proceedings, and
the Administrative Agent may pay for Insurance on the Collateral and may pay for
maintenance and preservation of the Collateral and in connection therewith, the
Guarantor will, upon demand, remit to the Administrative Agent forthwith:
4.12.1 The amount of any such Taxes, assessments, Insurance or
other expenses which the Administrative
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Agent shall have been required or shall have elected to
pay; and
4.12.2 The amount of any and all out-of-pocket expenses which
the Administrative Agent may incur in connection with the
exercise by the Administrative Agent of any of the powers
conferred upon it hereunder; and
4.12.3 Interest on any amounts described
under Subsections 4.12.1 and 4.12.2 of this Section 4.12 from
the date of such expenditure to the date of repayment in full
to the Administrative Agent at a rate per annum which shall
automatically increase and decrease so that at all times such
rate shall remain 2% higher than the Prime Rate.
4.13 The Guarantor will notify the Administrative Agent in writing
at least thirty (30) days prior to changing its name or conducting business
under any name or trade name other than as warranted under Section 3.4 hereof,
in each case specifying the names involved.
4.14 The Guarantor will use its best efforts to obtain the consent
of any Person or Governmental Authority to the assignment hereunder of any
Account or General Intangible, or of any Instrument, Document or Chattel Paper
required to be delivered pursuant to Section 4.3, if such consent may be
required by the terms of any contract or statute or if the such consent is
reasonably necessary to support the security interest hereunder or if the
Administrative Agent so requests in its discretion reasonably exercised.
4.15 During the existence of any Event of Default (as defined in the
Credit Agreement), the Administrative Agent shall have the right to notify the
account debtors obligated on any or all of a Guarantor's Accounts, Chattel
Paper, Instruments, Documents, Investment Property, Guarantor's Security or
General Intangibles to make payment thereof directly to the Administrative
Agent, and the Administrative Agent may take control of all proceeds of any
thereof. The form of such notice to the account debtors shall be in the form of
Schedule 4.15 annexed hereto.
4.16 At the time of execution and delivery of this Security
Agreement by the Guarantor, and at any future time as of which any Collateral
may be affixed to or located on any real property other than that described in
Schedule 3.2 hereto, the Guarantor shall provide the Administrative Agent a
document, in form and substance satisfactory to the Administrative Agent,
executed by each Person having an interest in such real property, either as
lessor, lessee, owner or mortgagee thereof, to which any Collateral is affixed
or in which any Collateral is located (a) disclaiming any interest by such
owner, lessor, lessee or mortgagee in any such Collateral and (b) containing the
agreement of such owner, lessor, lessee or mortgagee permitting the
Administrative Agent to enter such real property and take possession of and
remove from such real property any Collateral affixed thereto or located therein
and retaining possession of such real property for the purpose of selling,
leasing or otherwise disposing of such Collateral without by doing so incurring
any liability to such owner, lessor, lessee or mortgagee other than liability
that would be incurred
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by the Guarantor pursuant to any lease or mortgage between the Guarantor and
such owner, lessor, lessee or mortgagee.
4.17 The Guarantor will not amend any agreements with third parties
relating to Warehoused Inventory without prior written notice the Administrative
Agent, which shall promptly forward same to the Lenders, and without the written
consent of the Administrative Agent provided at the direction of the Required
Lenders.
4.18 The Guarantor will not permit the value of Guarantor's Fixtures
at the locations set forth in Schedule 3.2 to exceed $2,300,000 unless the
Guarantor gives the Administrative Agent not less than 30 days prior written
notice (which the Administrative Agent shall promptly forward to the Lenders)
and the Guarantor executes such documents and takes such other actions related
thereto as the Administrative Agent may request.
5. Events of Default.
5.1 Upon the occurrence of an Event of Default, the Administrative
Agent shall have, and shall exercise at the direction of the Required Lenders,
all of the rights, powers and remedies set forth in the Loan Documents, together
with the rights and remedies of a secured party under the UCC, including without
limitation, the right to sell, lease or otherwise dispose of any or all of the
Collateral, and to take possession of the Collateral, and for that purpose (a)
the Administrative Agent may enter peaceably any premises on which the
Collateral or any part thereof may be situated and remove the same therefrom and
the Guarantor will not resist or interfere with such action, and (b) the
Administrative Agent may require the Guarantor to assemble the Collateral and
make the same available to the Administrative Agent at a place to be designated
by the Administrative Agent which is reasonably convenient to both parties. The
Guarantor hereby agrees that the place or places of location of the Collateral
are places reasonably convenient to it to assemble the Collateral. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Administrative Agent will send
the Guarantor reasonable notice of the time and place of any public sale or
reasonable notice of the time after which any private sale or any other
disposition thereof is to be made. The requirement of sending reasonable notice
shall be met if such notice is mailed, postage prepaid, to the Guarantor at
least five days before the time of the sale or disposition.
5.2 Upon demand by the Administrative Agent after an Event of
Default, given at the direction of the Required Lenders, the Guarantor will
immediately deliver to the Administrative Agent all proceeds of Collateral, and
all original evidences of Accounts, Chattel Paper, Instruments, Documents,
Guarantor's Security, Investment Property or General Intangibles, including,
without limitation, all checks, drafts, cash and other remittances, notes, trade
acceptances or other instruments or contracts for the payment of money,
appropriately endorsed to the Administrative Agent's order and, regardless of
the form of such endorsement, the Guarantor hereby waives presentment, demand,
notice of dishonor, protest and notice of protest and all other notices with
respect thereto; and the Guarantor hereby appoints the Administrative Agent as
the Guarantor's agent and attorney-in-fact to make such endorsement on behalf of
and in the name of the Guarantor. Pending such deposit, the Guarantor agrees
that it will not
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commingle any such checks, drafts, cash and other remittances with any of the
Guarantor's funds or property, but will hold them separate and apart therefrom
and upon an express trust for the Administrative Agent until delivery thereof is
made to the Administrative Agent.
5.3 The costs of collection and enforcement of Accounts, Chattel
Paper, Instruments, Documents, Guarantor's Security, Investment Property or
General Intangibles including attorneys' fees and out-of-pocket expenses, shall
be borne solely by the Guarantor, whether the same are incurred by the
Administrative Agent or the Guarantor. The Guarantor will not, after the
occurrence of an Event of Default, except with the Administrative Agent's
express written consent, extend, compromise, compound or settle any Accounts,
Chattel Paper, Instruments, Documents, Guarantor's Security, Investment Property
or General Intangibles, or release, wholly or partly, any Person liable for
payment thereof, or allow any credit or discount thereon which is not
customarily allowed by the Guarantor in the ordinary conduct of its business.
5.4 Effective immediately upon the occurrence of an Event of
Default, the Guarantor hereby appoints the Administrative Agent to be the
Guarantor's true and lawful attorney, with full power of substitution, in the
Administrative Agent's name or the Guarantor's name or otherwise, for the
Administrative Agent's sole use and benefit, but at the Guarantor's cost and
expense, to exercise at any time, at the direction of the Required Lenders, all
or any of the following powers with respect to all or any of the Accounts,
Chattel Paper, Instruments, Documents, Guarantor's Security, Investment Property
or General Intangibles:
5.4.1 to demand, sue for, enforce, collect, settle,
compromise, receive and give acquittance for any and all
moneys due or to become due upon or by virtue thereof and any
Liens securing any such Collateral;
5.4.2 to receive, take, endorse, assign and deliver any and
all checks, notes, drafts and other negotiable and
non-negotiable instruments taken or received by the
Administrative Agent in connection therewith, and the
Guarantor waives notice of presentment, protest and
non-payment of any instrument so endorsed or assigned;
5.4.3 to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto;
5.4.4 to extend the time of payment of any or all thereof, to
make any allowances and other adjustments with reference
thereto;
5.4.5 to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof or the relevant
goods, as fully and effectually as if the Administrative Agent
were the absolute owner thereof;
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5.4.6 to make any reasonable allowances and other reasonable
adjustments with reference thereto;
5.4.7 to sign the Guarantor's name on any Document, on
invoices relating to any Account, on drafts against customers,
on schedules of assignments of Accounts, on notices of
assignment, financing statements under the UCC and other
public records, on verifications of Accounts, and on notices
to customers;
5.4.8 to file or record in any public office notices of
assignment or any other public notice required to effect this
Security Agreement;
5.4.9 to notify the post office authorities to change the
address for delivery of the Guarantor's mail to an address
designated by the Administrative Agent;
5.4.10 to receive, open and dispose of all mail
addressed to the Guarantor;
5.4.11 to discharge Taxes, liens or other encumbrances at any
time levied against or placed thereon;
5.4.12 to send requests for verification of Accounts, Chattel
Paper and Instruments to those liable thereon;
5.4.13 to vote and make any elections with respect to any
Investment Property and to exercise control over such
Investment Property as if the Administrative Agent were the
sole owner thereof; and
5.4.14 to do all other things the Administrative Agent deems
reasonably necessary or desirable to carry out the purposes of
this Agreement.
The Guarantor hereby ratifies and approves all acts of the attorney
pursuant to this Section 5.4, and neither the Administrative Agent nor the
attorney will be liable for any acts of commission or omission, nor for any
error of judgment or mistake of fact or law, other than acts, errors or mistakes
due to fraud, willful malfeasance or gross negligence by the Administrative
Agent or the attorney; provided further, however, that Guarantor does not waive
any rights under the UCC against any Secured Party for any action taken
hereunder which is other than commercially reasonable. This power, being coupled
with an interest, is irrevocable so long as any of the Secured Obligations
remain outstanding.
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5.5 Subject to the rights of the Secured Parties under the General
Security Agreement, (a) after deducting all expenses incurred by the
Administrative Agent in protecting or enforcing the rights of the Secured
Parties in the Collateral, the remainder of any proceeds of collection or sale
of the Collateral shall be applied to the payment of principal, interest, fees,
expenses or other charges comprising the Secured Obligations in such order as
the Administrative Agent may determine, and all surplus shall be returned to the
Guarantor and the Guarantor shall remain liable for any deficiency; (b) the
Administrative Agent shall apply the proceeds of collection or sale of the
Collateral, if any, at least once during each calendar month, and until so
applied, shall retain such proceeds in a separate Collateral account, as
Collateral for the Secured Obligations; and (c) the Administrative Agent alone
shall have the power of withdrawal from such Collateral Account.
5.6 The Administrative Agent may exercise its rights with respect to
Collateral without resorting to or regard to any Guarantee or other collateral
or source of reimbursement for the Secured Obligations.
5.7 The exercise by the Administrative Agent of or failure to so exercise
any authority granted under this Security Agreement shall in no manner affect
the liability of Guarantor to any Secured Party, provided that the
Administrative Agent shall be under no obligation or duty to exercise any of the
powers hereby conferred upon it and it shall be without liability for any act or
failure to act in connection with the collection of, or the preservation of any
rights under any of the Collateral.
6. Waivers.
6.1 The Guarantor waives all demands, notices and protests of every
kind which are not expressly required under this Security Agreement or the other
Loan Documents and which are permitted by law to be waived, and which would, if
not waived, impair the Administrative Agent's enforcement of this Security
Agreement or release any Collateral from the security interest of the
Administrative Agent under this Security Agreement. By way of example, but not
in limitation of the Administrative Agent's rights under this Security
Agreement, the Administrative Agent does not have to give the Guarantor notice
of any of the following:
6.1.1 notice of acceptance of this Security Agreement;
6.1.2 notice of advances made, credit extended, or
Collateral received or delivered;
6.1.3 any action which the Administrative Agent does or does
not take regarding the Debtor, the Guarantor, or any other
Person, or any other collateral securing the Secured
Obligations;
6.1.4 enforcement of any rights under this Security Agreement
or the General Security Agreement; or
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6.1.5 any other action taken in reliance on this Security
Agreement.
6.2 With respect to the General Security Agreement, the Secured
Obligations and the Collateral, the Guarantor assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of Collateral, to the addition or release of
any party or Person primarily or secondarily liable, to the acceptance of
partial payments thereon and the settlement, compromising or adjusting of any
thereof, all in such time or times as the Administrative Agent may deem
advisable.
6.3 The Administrative Agent shall have no duty as to the collection
or protection of Collateral not in the Administrative Agent's possession or
control, and the Administrative Agent's duty with reference to Collateral in its
possession or control shall be to use reasonable care in the custody and
preservation of such Collateral, but such duty shall not require the
Administrative Agent to do any of the following (although during the existence
of a Default, the Administrative Agent is authorized to reasonably undertake any
such action if the Administrative Agent deems such action appropriate):
6.3.1 protect any of the Collateral against the claims of
others;
6.3.2 collect any sums due on the Collateral;
6.3.3 exercise any rights under the General Security
Agreement or the Collateral;
6.3.4 notify the Guarantor of any maturities or other
similar matters concerning the Collateral;
6.3.5 act upon any request the Guarantor may make; or
6.3.6 preserve or protect the Guarantor's rights in the
Collateral or under the General Security Agreement.
7. Actions and Proceedings.
IN THE EVENT OF ANY ACTION OR PROCEEDING WITH RESPECT TO ANY MATTER
PERTAINING TO THIS SECURITY AGREEMENT, THE GUARANTOR HEREBY WAIVES THE RIGHT TO
A TRIAL BY JURY AND RIGHTS OF SETOFF (BUT DOES NOT WAIVE ANY DEFENSES OR
COUNTERCLAIMS). THE GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION AND VENUE OF THE SUPREME COURT OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK SITTING IN
MONROE COUNTY, IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT.
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8. Address for Notices and Service of Process.
All notices, requests and demands to or upon the Administrative Agent, any
other Secured Party or Guarantor shall be effective if made in writing and shall
be deemed to be delivered (A) upon receipt (i) if delivered by hand or by
Federal Express or other national overnight courier, or (ii) if sent by
telegraph, or (B) when sent, answer back received, in the case of notice by
telex or telecopier (fax), or (C) five (5) days after being deposited in the
mail, postage prepaid, to the following address or to such other address of the
Administrative Agent, on behalf of the other Secured Parties, or Guarantor as
may be hereafter notified by the Administrative Agent or a Guarantor to the
other:
if to the Guarantor:
IEC Arab, Alabama, Inc.
Telecopier #:
with a copy to:
Boylan, Brown, Code,
Fowler, Vigdor & Wilson LLP
2400 Chase Square
Rochester, New York 14604
Attn: Justin L. Vigdor, Esq.
Telecopier #: (716) 232-3528
if to any of the Lenders or the Administrative Agent:
The Chase Manhattan Bank, as Administrative Agent
One Chase Square, Floor 9
Rochester, New York 14643
Attn: Gail G. Fiorini, Vice President
Telecopier # (716) 258-7604
9. Costs of Collection and Legal Fees.
The Guarantor shall be liable to the Administrative Agent and each other
Secured Party and shall pay to the Administrative Agent immediately on demand as
part of its liability under this Security Agreement all reasonable costs and
expenses of the Administrative Agent or any other Secured Party, including all
reasonable fees and disbursements of the Administrative Agent's or any other
Secured Party's legal counsel incurred in the collection or enforcement or
attempted collection or attempted enforcement of the Secured Party's rights
under this Security Agreement, whether within or apart from any legal action or
proceeding.
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10. No Waiver of Remedies.
No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any other Secured Party, any right, remedy, power or
privilege under this Security Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
under this Security Agreement preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges provided under this Security Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
11. Administrative Agent.
The appointment of the Administrative Agent as agent to act on behalf of
the Lenders as contemplated in this Security Agreement, and the authority and
responsibilities of the Administrative Agent related thereto, are set forth in
and controlled by the Credit Agreement.
12. Alabama Law.
The whole of this Security Agreement and the rights and obligations of the
Guarantor and the Secured Party hereunder shall be governed, construed and
interpreted in accordance with, the laws of the State of Alabama without regard
to any conflicts-of-laws rules which would require the application of the laws
of any other jurisdiction.
13. Entire Agreement; Modifications.
This Security Agreement contains the entire agreement between each Secured
Party and the Guarantor with respect to all subject matters contained herein.
This Security Agreement cannot be amended, modified or changed in any way except
by a written instrument executed by each Secured Party and Guarantor.
14. Successors and Assigns.
The covenants, representations, warranties and agreements herein set forth
shall be binding upon the Guarantor, its legal representatives, successors and
assigns and shall inure to the benefit of each Secured Party, its successors and
assigns. Any successor or assign of any Secured Party shall forthwith become
vested with and entitled to exercise all the powers and rights given by this
Security Agreement to any Secured Party, as if such successor or assign were
originally named as a Secured Party herein.
15. Counterparts.
This Security Agreement may be executed in counterparts each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract.
17. Severability.
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The unenforceability or invalidity of any provision or provisions of this
Security Agreement or any of the other Loan Documents shall not render any other
provision or provisions herein or therein contained unenforceable or invalid.
18. Relationship Between General and Secondary Security Agreements.
The rights of the Secured Parties with respect to all Collateral except
Fixtures (Fixtures to include, without limitation, all Equipment that also
constitutes Fixtures), and the proceeds thereof, under the General Security
Agreement shall have priority over the Secured Parties' rights with respect to
such Collateral and proceeds under this Security Agreement; and the rights of
the Secured Parties with respect to Fixtures (Fixtures to include, without
limitation, all Equipment that also constitutes Fixtures), and the proceeds
thereof, under this Security Agreement shall have priority over the Secured
Parties' rights with respect to such Collateral and proceeds under the General
Security Agreement.
IN WITNESS WHEREOF, the Guarantor has caused this Security Agreement to be
executed by its duly authorized officer or representative as of the date and
year first above written.
IEC Arab, Alabama, Inc.
Attest: ________________
Assistant Secretary
By: _________________________
(SEAL) Its: Vice President
Accepted this ______ day
of ___________________
The Chase Manhattan Bank,
as Administrative Agent
By: __________________________
Its: Vice President
The Chase Manhattan Bank,
as Lender
By: _____________________
Its: Vice President
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Marine Midland Bank
By: __________________________
Its: Vice President
KeyBank National Association
By: __________________________
Its: Vice President
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STATE OF________________)
) SS.
COUNTY OF ______________)
On the _____ day of ________ in the year 1998 before me personally came
_____________________, to me known, who, being by me duly sworn did depose and
say that (s)he resides at __________________; that (s)he is the
____________________ of IEC Arab, Alabama, Inc., the corporation described in
and which executed the above instrument; that (s)he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that (s)he signed his/her name thereto by like order.
Notary Public
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SCHEDULE A (Page 1 of 4)
to
Security Agreement and UCC-1 Financing Statements
granted by
IEC Arab, Alabama, Inc. (the "Guarantor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and
all lenders that are now or may hereafter become "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent
and the Lenders dated as of (collectively as the
-------------
"Secured Party")
1. Equipment. All equipment (as defined in Section 9-109(2) of the
UCC), whether now owned or hereafter acquired, wherever located, and
including fixtures, together with any and all substitutions, parts,
fittings, additions, attachments, accessories, special tools,
accessions or replacements, and together with all computer
programming and licenses necessary or desirable to operate the same,
and all proceeds and general intangibles arising from any of the
foregoing (the "Equipment").
2. Inventory. All inventory (as defined in Section 9-109(4) of the
UCC), now owned or hereafter acquired, wherever located, and any
product or mass into which any inventory shall be manufactured,
processed or assembled (but only to the extent the same belongs to
Guarantor) or commingled, and all proceeds and General Intangibles
arising from any of the foregoing (the "Inventory").
3. Accounts. All accounts (as defined in Section 9-106 of the UCC), now
existing or hereafter acquired, and all proceeds and General
Intangibles arising therefrom (the "Accounts").
4. Chattel Paper. All chattel paper (as defined in Section 9-105(1)(b)
of the UCC) in which Debtor is the obligee, now owned or hereafter
acquired, and all proceeds and General Intangibles arising therefrom
(the "Chattel Paper").
5. Instruments. All instruments (as defined in Section 9-105(1)(i) of
the UCC), now owned or hereafter acquired, and all proceeds and
General Intangibles arising therefrom (the "Instruments").
6. General Intangibles. All general intangibles (as defined in Section
9-106 of the UCC) now owned or hereafter acquired, and the proceeds
thereof (the "General Intangibles").
7. Documents. All documents of title (as defined in Section 1-201(15)
of the UCC) covering any Inventory wherever located, now owned or
hereafter acquired, and all proceeds and General Intangibles arising
therefrom (the "Documents").
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8. Investment Property. All investment property (as defined in Section
9-115 of the UCC), now owned or hereafter acquired, and all proceeds
and General Intangibles arising therefrom (the "Investment
Property").
9. Fixtures. All fixtures (as defined in Section 9-313 of the UCC),
now owned or hereafter acquired, and all proceeds thereof
(the "Fixtures").
IN FURTHERANCE OF THE FOREGOING TYPES OF PROPERTY, AND WITHOUT LIMITATION
THEREOF:
u. Insurance. All insurance covering the Equipment, Inventory and all
of Guarantor's other tangible personal property against risks of
fire, flood, theft, loss or any other physical damage, and against
any risk of any damage or loss whatsoever, now owned or hereafter
acquired, and all proceeds and general intangibles arising therefrom
(the "Insurance").
v. Records. All of Guarantor's right, title and interest in all of its
books, records, ledger sheets, files and other data and documents,
including records in any form (digital or other) and recorded in or
through any medium (magnetic, lasergraphic or other) and all
machinery and processes (including computer programming
instructions) required to read and print such records, now or
hereafter existing relating to all types of personal property
described in this Schedule A (the "Records").
w. Rights as Seller of Goods. All of Guarantor's rights as a seller of
goods under Article 2 of the UCC or otherwise with respect to
Inventory, and all goods represented by or securing any of the
Accounts, all of Guarantor's rights therein, including without
limitation, rights as an unpaid vendor or lienor and including
rights of stoppage in transit, replevin and reclamation, and all
proceeds and General Intangibles arising from any of the foregoing .
x. Guarantor's Security. All guarantees, mortgages or security
interests on real or personal property, leases or other agreements
or property now or hereafter securing or relating to any of the
Accounts, Chattel Paper, Instruments, General Intangibles, Documents
or Investment Property and in favor of Guarantor, or now or
hereafter acquired for the purpose of securing and enforcing any of
such items in favor of Guarantor, and all proceeds and General
Intangibles arising from any of the foregoing (the "Guarantor's
Security").
y. Deposits. All sums at any time standing to Guarantor's credit on the
books of any Secured Party and all moneys, securities, and other
property of Guarantor at any time in any Secured Party's possession,
and all proceeds and General Intangibles arising therefrom,
including without limitation all deposit accounts maintained at any
Lender of every nature, including all controlled disbursement
accounts, payroll accounts or other special purpose accounts.
z. Patent Rights. All patent rights throughout the world, including all
letters patents, patent applications, patent licenses, patentable
inventions, modifications and improvements thereof, all rights to
any and all letters patent and applications for letters patent, all
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divisions, renewals, reissues, continuations, continuations-in-part,
extensions and reexaminations of any of the foregoing, all shop
rights, all proceeds of, and rights associated with any of the
foregoing (including license royalties and proceeds of infringement
suits), the right to sue third parties for past, present or future
infringements of any of the foregoing and for breach or enforcement
of any of the foregoing, and all rights corresponding to each of the
foregoing throughout the world, whether now owned or existing or
hereafter acquired, and all proceeds and General Intangibles arising
from any of the foregoing (the "Patent Rights").
aa. Technical Information. All information concerning the subject
matter of the Patent Rights, and all other confidential or
proprietary or useful information and all know-how and common law or
statutory trade secrets obtained by or used in or contemplated at
any time for use in the business of Guarantor, and all other
research and development work by Guarantor whether or not the same
is a patentable invention, including without limitation all design
and engineering data, shop rights, instructions, procedures,
standards, specifications, plans, drawings and designs, whether now
owned or existing or hereafter acquired or arising, and all proceeds
and General Intangibles arising from any of the foregoing
(the "Technical Information").
bb. Trademarks. All trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade
styles, service marks, certification marks, collective marks, logos,
other source of business identifiers, prints and labels on which any
of the foregoing have appeared or appear, designs and General
Intangibles of a like nature (each of the foregoing items being
called a "Trademark"), now existing anywhere in the world or
hereafter adopted or acquired, whether currently in use or not, all
registrations and recordings thereof and all applications in
connection therewith, whether pending or in preparation for filing,
including registrations, recordings and applications in the United
States Patent and Trademark Office or in any office or agency of the
United States of America or any State thereof or any foreign
country; all Trademark licenses; all reissues, extensions or
renewals of any of the foregoing items; all of the goodwill of the
business connected with the use of, and symbolized by the foregoing
items; all proceeds of, and rights associated with, the foregoing,
including any claim by Guarantor against third parties for past,
present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license, including any
Trademark, Trademark registration or Trademark license, or for any
injury to the goodwill associated with the use of any such Trademark
or for breach or enforcement of any Trademark license; and all
proceeds and General Intangibles arising from any of the foregoing
(the "Trademark Rights").
cc. Copyrights. All copyrights and all semiconductor chip product mask
works of Guarantor, whether statutory or common law, registered or
unregistered, now or hereafter in force throughout the world,
including, without limitation, all of Guarantor's right, title and
interest in and to all copyrights and mask works registered in the
United States Copyright Office or anywhere else in the world and all
applications for registration thereof, whether pending or in
preparation, all copyright and mask work licenses, the right to sue
for past, present and future infringements of any thereof, all
rights corresponding thereto throughout the world,
A:\RCA9.AGR U&K 05/14/98-9
230
<PAGE>
all extensions and renewals of any thereof and all proceeds of the
foregoing, including, without limitation, licenses, royalties,
income, payments, claims, damages and proceeds of suit, and all
proceeds and General Intangibles arising from any of the foregoing
(the "Copyrights").
dd. Computer Hardware and Software. (A) all computer and other
electronic data processing hardware, integrated computer systems,
central processing units, memory units, display terminals, printers,
features, computer elements, card readers, tape drives, hard and
soft disk drives, cables, electrical supply hardware, generators,
power equalizers, accessories and all peripheral devices and other
related computer hardware, whether now owned, licensed or leased or
hereafter acquired by Guarantor; (B) all software programs including
source code and object code and all related applications and data
files, whether now owned, licensed or leased or hereafter acquired
by Guarantor, designed for use on the computers and electronic data
processing hardware described in Clause (A) above; (C) all
firmware associated therewith, whether now owned, licensed or leased
or hereafter acquired by Guarantor; (D) all documentation (including
flow charts, logic diagrams, manuals, guides and specifications) for
such hardware, software and firmware described in the preceding
Clauses (A), (B) and (C), whether now owned, licensed or leased or
hereafter acquired by Guarantor; and (E) all rights with respect to
all of the foregoing, including, without limitation, any and all
copyrights, licenses, options, warranties, service contracts,
program services, test rights, maintenance rights, support rights,
improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any
of the foregoing, and all proceeds and General Intangibles arising
from any of the foregoing (the "Computer Hardware and Software").
As used in this Schedule A, "UCC" means the Uniform Commercial Code of the State
of Alabama, as amended and in effect from time to time.
A:\RCA9.AGR U&K 05/14/98-9
231
<PAGE>
SCHEDULE 3.1
to
Security Agreement
A:\RCA9.AGR U&K 05/14/98-9
232
<PAGE>
SCHEDULE 3.2
to
Security Agreement
granted by
IEC Arab Alabama, Inc. (the "Guarantor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and the "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent and the
Lenders dated as of (collectively as the "Secured Party")
--------------
The Guarantor's exact legal name:
--------------------------------
All names, if any, other than the name set forth above, under which the
Guarantor conducts business (if none, insert "None"): None
Principal place of business of the Guarantor:
==========================
Chief executive office of the Guarantor:
==========================
All other places of business, if any, of the Guarantor (if none, insert "None"):
None
All locations of inventory of the Guarantor:
All prior names of the Guarantor, if any (if none, insert "None"):
A:\RCA9.AGR U&K 05/14/98-9
233
<PAGE>
SCHEDULE 3.5
to
Security Agreement
granted by
IEC Arab Alabama, Inc.. (the "Guarantor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and the "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent and the
Lenders dated as of _____________________ (collectively the "Secured Party")
List of all of the following types of Collateral owned by the Guarantor:
1. Patent Rights, Trademark Rights and Copyrights with all pertinent
registration information.
2. Chattel Paper and Instruments
3. Documents
4. Investment Property
5. Insurance
6. Guarantor's Security
A:\RCA9.AGR U&K 05/14/98-9
234
<PAGE>
SCHEDULE 3.6
to
Security Agreement
granted by
IEC Arab, Alabama, Inc. (the "Debtor")
in favor of
The Chase Manhattan Bank, as "Administrative Agent", and the "Lenders"
under a Credit Agreement among the Debtor, the Administrative Agent and the
Lenders dated as of _____________________ (collectively the "Secured Party")
List of all of the following types of Collateral owned by the Debtor and subject
to any certificate of title or title registration law, rule or regulation:
1. Motor vehicles
2. Aircraft
3. Ships and boats
A:\RCA9.AGR U&K 05/14/98-9
235
<PAGE>
SCHEDULE 4.3.1
to
Security Agreement Including Fixtures
A:\RCA9.AGR U&K 05/14/98-9
236
<PAGE>
SCHEDULE 4.15
to
Security Agreement
NOTICE TO ACCOUNT GUARANTOR TO MAKE PAYMENT
TO THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
(Letterhead of The Chase Manhattan Bank)
(Date)
Registered Mail; Return Receipt Requested
or by Overnight Courier, Signature Required
Name and Address
of Account Guarantor
Re: Payment of All Moneys Due to Arab, Alabama, Inc. (the "Guarantor")
Greetings:
Please take notice that all accounts receivable of the above-captioned
Guarantor have been assigned to The Chase Manhattan Bank, as Administrative
Agent ("Chase") and that pursuant to the terms of agreements between the
Guarantor and Administrative Agent all monies now or hereafter becoming due and
owing by you to the Guarantor must be paid to Administrative Agent at the
following address:
==============================
==============================
Please take notice that payment to the Guarantor of any such monies after
the date of receipt of this notice may result in liability to Administrative
Agent for the amount of such payment.
Enclosed is a certified true copy of an authorization executed by the
Guarantor.
If you have any questions about this matter, please call _______________
at ---------------.
Thank you for your cooperation in this matter.
Very truly yours,
A:\RCA9.AGR U&K 05/14/98-9
237
<PAGE>
A:\RCA9.AGR U&K 05/14/98-9
238
<PAGE>
SCHEDULE 4.01 (l)
Indebtedness to be Repaid
A:\RCA9.AGR U&K 05/14/98-9
239
<PAGE>
SCHEDULE 5.22
Investments
A:\RCA9.AGR U&K 05/14/98-9
240
<PAGE>
SCHEDULE 5.23
Certain Benefits Plans
A:\RCA9.AGR U&K 05/14/98-9
241
<PAGE>
SCHEDULE 5.25
Restrictive Agreements
A:\RCA9.AGR U&K 05/14/98-9
242
<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-26-1998
<CASH> 7,733
<SECURITIES> 0
<RECEIVABLES> 21,362
<ALLOWANCES> 0
<INVENTORY> 24,362
<CURRENT-ASSETS> 57,361
<PP&E> 38,304
<DEPRECIATION> 0
<TOTAL-ASSETS> 107,667
<CURRENT-LIABILITIES> 15,968
<BONDS> 12,172
0
0
<COMMON> 75
<OTHER-SE> 75,608
<TOTAL-LIABILITY-AND-EQUITY> 107,667
<SALES> 208,286
<TOTAL-REVENUES> 208,399
<CGS> 194,033
<TOTAL-COSTS> 12,667
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,538
<INCOME-PRETAX> 161
<INCOME-TAX> 62
<INCOME-CONTINUING> 99
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 99
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The information in this finanical data schedule has been restated to reflect the
effect of Statement of Financal Accounting Standards No.128,
"Earnings per Share."
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-27-1997
<CASH> 2,284
<SECURITIES> 0
<RECEIVABLES> 32,887
<ALLOWANCES> 0
<INVENTORY> 40,426
<CURRENT-ASSETS> 76,224
<PP&E> 36,128
<DEPRECIATION> 0
<TOTAL-ASSETS> 125,219
<CURRENT-LIABILITIES> 44,031
<BONDS> 5,256
0
0
<COMMON> 75
<OTHER-SE> 72,641
<TOTAL-LIABILITY-AND-EQUITY> 125,219
<SALES> 174,423
<TOTAL-REVENUES> 174,829
<CGS> 154,723
<TOTAL-COSTS> 11,489
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,170
<INCOME-PRETAX> 7,446
<INCOME-TAX> 2,838
<INCOME-CONTINUING> 4,608
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,608
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.61
</TABLE>
