CREDIT AGREEMENT
dated as of August 31, 2000
among
ONKYO ACQUISITION CORPORATION,
VARIOUS FINANCIAL INSTITUTIONS
and
GMAC BUSINESS CREDIT, LLC,
as Agent
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TABLE OF CONTENTS
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SECTION 1 DEFINITIONS.....................................................................................1
1.1 Definitions.....................................................................................1
1.2 Other Interpretive Provisions..................................................................18
SECTION 2 COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES..............19
2.1 Commitments....................................................................................19
2.1.1 Revolving Loan Commitment.............................................................19
2.1.2 Term Loan Commitment..................................................................19
2.1.3 L/C Commitment........................................................................19
2.2 Loan Procedures................................................................................19
2.2.1 Various Types of Loans................................................................19
2.2.2 Borrowing Procedures..................................................................20
2.2.3 Conversion and Continuation Procedures................................................20
2.3 Letter of Credit Procedures...........................................................21
2.3.1 L/C Applications......................................................................21
2.3.2 Participations in Letters of Credit...................................................21
2.3.3 Reimbursement Obligations.............................................................22
2.3.4 Limitation on Obligations of Issuing Lender...........................................22
2.3.5 Funding by Lenders to Issuing Lender..................................................22
2.4 Commitments Several...................................................................23
2.5 Certain Conditions....................................................................23
SECTION 3 NOTES EVIDENCING LOANS.........................................................................23
3.1 Notes.................................................................................23
3.2 Recordkeeping.........................................................................23
SECTION 4 INTEREST.......................................................................................24
4.1 Interest Rates........................................................................24
4.2 Interest Payment Dates................................................................24
4.3 Setting and Notice of LIBOR...........................................................24
4.4 Computation of Interest...............................................................24
SECTION 5 FEES...........................................................................................24
5.1 Non-Use Fee...........................................................................24
5.2 Letter of Credit Fees.................................................................25
5.3 Upfront Fees..........................................................................25
SECTION 6 REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT; PREPAYMENTS.......................26
6.1 Reduction or Termination of the Revolving Commitment Amount...........................26
6.1.1 Voluntary Reduction or Termination of the Revolving Commitment Amount.................26
6.1.2 Mandatory Reductions of Revolving Commitment Amount...................................26
6.1.3 All Reductions of the Revolving Commitment Amount.....................................26
6.2 Prepayments...........................................................................26
6.2.1 Voluntary Prepayments.................................................................26
6.2.2 Mandatory Prepayments.................................................................26
6.3 All Prepayments.......................................................................27
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES................................................28
7.1 Making of Payments....................................................................28
7.2 Application of Certain Payments.......................................................28
7.3 Due Date Extension....................................................................28
7.4 Setoff................................................................................28
7.5 Proration of Payments.................................................................28
7.6 Taxes.................................................................................28
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS............................................30
8.1 Increased Costs.......................................................................30
8.2 Basis for Determining Interest Rate Inadequate or Unfair..............................31
8.3 Changes in Law Rendering LIBOR Loans Unlawful.........................................31
8.4 Funding Losses........................................................................32
8.5 Right of Lenders to Fund through Other Offices........................................32
8.6 Discretion of Lenders as to Manner of Funding.........................................32
8.7 Mitigation of Circumstances; Replacement of Lenders...................................32
8.8 Conclusiveness of Statements; Survival of Provisions..................................33
SECTION 9 WARRANTIES.....................................................................................33
9.1 Organization..........................................................................33
9.2 Authorization; No Conflict............................................................33
9.3 Validity and Binding Nature...........................................................34
9.4 Financial Condition...................................................................34
9.5 No Material Adverse Change............................................................34
9.6 Litigation and Contingent Liabilities.................................................34
9.7 Ownership of Properties; Liens........................................................34
9.8 Subsidiaries..........................................................................34
9.9 Pension Plans.........................................................................34
9.10 Investment Company Act................................................................35
9.11 Public Utility Holding Company Act....................................................35
9.12 Regulation U..........................................................................35
9.13 Taxes.................................................................................35
9.14 Solvency, etc.........................................................................35
9.15 Environmental Matters.................................................................36
9.16 Onkyo Merger..........................................................................37
9.17 Insurance.............................................................................38
9.18 Real Property.........................................................................38
9.19 Information...........................................................................38
9.20 Intellectual Property.................................................................38
9.21 Burdensome Obligations................................................................38
9.22 Labor Matters.........................................................................38
9.23 No Default............................................................................39
9.24 Purchase Agreement, etc...............................................................39
SECTION 10 COVENANTS......................................................................................40
10.1 Reports, Certificates and Other Information....................................................40
10.1.1 Annual Report........................................................................40
10.1.2 Interim Reports......................................................................40
10.1.3 Compliance Certificates..............................................................41
10.1.4 Reports to the SEC and to Shareholders...............................................41
10.1.5 Notice of Default, Litigation and ERISA Matters......................................41
10.1.6 Borrowing Base Certificates..........................................................42
10.1.7 Management Reports...................................................................42
10.1.8 Projections..........................................................................42
10.1.9 Subordinated Debt Notices............................................................42
10.1.10 Reserved.............................................................................42
10.1.11 Other Information....................................................................42
10.2 Books, Records and Inspections.......................................................42
10.3 Maintenance of Property; Insurance...................................................43
10.4 Compliance with Laws; Payment of Taxes and Liabilities...............................44
10.5 Maintenance of Existence, etc........................................................44
10.6 Financial Covenants..................................................................44
10.6.1 Fixed Charge Coverage Ratio..........................................................44
10.6.2 Senior Debt to EBITDA Ratio..........................................................45
10.6.3 Total Debt to EBITDA Ratio...........................................................45
10.6.4 Capital Expenditures.................................................................45
10.7 Limitations on Debt..................................................................45
10.8 Liens................................................................................46
10.9 Operating Leases.....................................................................47
10.10 Restricted Payments..................................................................47
10.11 Mergers, Consolidations, Sales.......................................................48
10.12 Modification of Organizational Documents.............................................49
10.13 Use of Proceeds......................................................................49
10.14 Further Assurances...................................................................49
10.15 Transactions with Affiliates.........................................................49
10.16 Employee Benefit Plans...............................................................50
10.17 Environmental Matters................................................................50
10.18 Unconditional Purchase Obligations...................................................50
10.19 Inconsistent Agreements..............................................................50
10.20 Business Activities..................................................................50
10.21 Investments..........................................................................50
10.22 Restriction of Amendments to Certain Documents.......................................51
10.23 Interest Rate Protection.............................................................51
10.24 Fiscal Year..........................................................................51
10.25 Cancellation of Debt.................................................................51
SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC......................................................52
11.1 Initial Credit Extension..............................................................52
11.1.1 Notes................................................................................53
11.1.2 Resolutions..........................................................................53
11.1.3 Consents, etc........................................................................53
11.1.4 Incumbency and Signature Certificates................................................53
11.1.5 Guaranty.............................................................................53
11.1.6 Security Agreement...................................................................53
11.1.7 Pledge Agreements....................................................................53
11.1.8 Real Estate Documents................................................................53
11.1.9 Purchase Agreement Assignment........................................................54
11.1.10 Subordination/Intercreditor Agreement................................................54
11.1.11 Opinions of Counsel..................................................................54
11.1.12 Insurance............................................................................54
11.1.13 Copies of Documents..................................................................54
11.1.14 Payment of Fees......................................................................54
11.1.15 Solvency Opinion.....................................................................55
11.1.16 Pro Forma............................................................................55
11.1.17 Search Results; Lien Terminations....................................................55
11.1.18 Filings, Registrations and Recordings................................................55
11.1.19 Closing Certificate..................................................................55
11.1.20 Borrowing Base Certificate...........................................................55
11.1.21 Purchase Certificate, Consents and Permits...........................................55
11.1.22 Merger Certificate, Consents and Permits.............................................56
11.1.23 Merger Related Documents of Assignment and Assumption................................56
11.1.24 Collateral Assignment................................................................56
11.1.25 Other................................................................................56
11.2 Conditions...........................................................................56
11.2.1 Compliance with Warranties, No Default, etc..........................................56
11.2.2 Confirmatory Certificate.............................................................57
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.............................................................57
12.1 Events of Default....................................................................57
12.1.1 Non-Payment of the Loans, etc........................................................57
12.1.2 Non-Payment of Other Debt............................................................57
12.1.3 Other Material Obligations...........................................................57
12.1.4 Bankruptcy, Insolvency, etc..........................................................57
12.1.5 Non-Compliance with Loan Documents...................................................58
12.1.6 Warranties...........................................................................58
12.1.7 Pension Plans........................................................................58
12.1.8 Judgments............................................................................58
12.1.9 Invalidity of Guaranty, etc..........................................................58
12.1.10 Invalidity of Collateral Documents, etc..............................................59
12.1.11 Invalidity of Subordination Provisions, etc..........................................59
12.1.12 Change of Control....................................................................59
12.1.13 Material Adverse Effect..............................................................59
12.2 Effect of Event of Default...........................................................59
SECTION 13 THE AGENT......................................................................................60
13.1 Appointment and Authorization.........................................................60
13.2 Delegation of Duties..................................................................60
13.3 Liability of Agent....................................................................60
13.4 Reliance by Agent.....................................................................61
13.5 Notice of Default.....................................................................61
13.6 Credit Decision.......................................................................61
13.7 Indemnification.......................................................................62
13.8 Agent in Individual Capacity..........................................................62
13.9 Successor Agent.......................................................................62
13.10 Collateral Matters....................................................................63
SECTION 14 GENERAL........................................................................................63
14.1 Waiver; Amendments....................................................................63
14.2 Confirmations.........................................................................63
14.3 Notices...............................................................................64
14.4 Computations..........................................................................64
14.5 Regulation U..........................................................................64
14.6 Costs, Expenses and Taxes.............................................................64
14.7 Subsidiary References.................................................................65
14.8 Captions..............................................................................65
14.9 Assignments; Participations...........................................................65
14.9.1 Assignments...........................................................................65
14.9.2 Participations........................................................................66
14.10 Governing Law.........................................................................67
14.11 Counterparts..........................................................................67
14.12 Successors and Assigns................................................................67
14.13 Indemnification by the Company........................................................67
14.14 Nonliability of Lenders...............................................................68
14.15 Forum Selection and Consent to Jurisdiction...........................................68
14.16 WAIVER OF JURY TRIAL..................................................................69
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SCHEDULES
Pricing Schedule
SCHEDULE 2.1 Lenders and Pro Rata Shares
SCHEDULE 3.1 Term Loan Installments
SCHEDULE 9.6 Litigation and Contingent Liabilities
SCHEDULE 9.8 Subsidiaries
SCHEDULE 9.15 Environmental Matters
SCHEDULE 9.17 Insurance
SCHEDULE 9.18 Real Property
SCHEDULE 9.22 Labor Matters
SCHEDULE 10.7 Existing Debt
SCHEDULE 10.8 Existing Liens
SCHEDULE 11.1 Debt to be Repaid
SCHEDULE 14.3 Addresses for Notices
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EXHIBITS
EXHIBIT A-1 Form of Revolving Note (Section 3.1)
EXHIBIT A-2 Form of Term Loan A Note (Section 3.1)
EXHIBIT A-3 Form of Term Loan B Note (Section 3.1)
EXHIBIT B Form of Compliance Certificate (Section 10.1.3)
EXHIBIT C Form of Borrowing Base Certificate (Section 1.1)
EXHIBIT D Form of Assignment Agreement (Section 14.9.1)
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of August 31, 2000 (this "Agreement") is
entered into among ONKYO ACQUISITION CORPORATION, an Indiana corporation (the
"Company"), the financial institutions that are or may from time to time become
parties hereto (together with their respective successors and assigns, the
"Lenders") and GMAC BUSINESS CREDIT, LLC, a Delaware limited liability company
(in its individual capacity, "GMACBC"), as agent for the Lenders.
WHEREAS, the Lenders have agreed to make available to the Company term
loans and a revolving credit facility (which includes letters of credit) upon
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
1.1 Definitions. When used herein the following terms shall have the following
meanings:
Account Debtor means any Person who is obligated to the Company or any
Subsidiary under an Account Receivable.
Account Receivable means, with respect to any Person, any right of such
person to payment for goods sold or leased or for services rendered, whether or
not evidenced by an instrument or chattel paper and whether or not yet earned by
performance.
Acquisition means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of all or substantially
all of any business or division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests, membership interests or equity
of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a
merger or consolidation or any other combination with another Person (other than
a Person that is a Subsidiary).
Affected Loan - see Section 8.3.
Affiliate of any Person means (i) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person and (ii) any officer or director of such Person. A Person shall be deemed
to be "controlled by" any other Person if such Person possesses, directly or
indirectly, power to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managers or
power to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.
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Agent means GMACBC, in its capacity as agent for the Lenders hereunder
and any successor thereto in such capacity.
Agreement - see the Preamble.
Asset Sale means the sale, lease, assignment or other transfer for
value (each a "Disposition") by the Company or any Subsidiary to any Person
(other than the Company or any Subsidiary) of any asset or right of the company
or such Subsidiary other than (a) the Disposition of any asset which is to be
replaced, and is in fact replaced, within 30 days with another asset performing
the same or a similar function, and (b) the sale or lease of inventory in the
ordinary course of business.
Assignment Agreement - see Section 14.9.1.
Assignment of Rents and Leases means that certain Assignment of Rents
and Leases of even date herewith between the Company and Agent for the Mortgaged
Property, as the same may be amended, restated and modified from time to time.
Attorney Costs means, with respect to any Person, all reasonable fees
and charges of any counsel to such Person, the reasonable allocable cost of
internal legal services of such Person, all reasonable disbursements of such
internal counsel and all court costs and similar legal expenses.
Availability shall mean at any time the amount by which: (a) the lesser
of (i) the Revolving Credit Commitment and (ii) the Borrowing Base, exceeds (b)
the aggregate amount of all Loans and Letters of Credit outstanding at any time.
Base Rate means at any time the greater of (a) the Federal Funds Rate
plus 0.5% and (b) the Prime Rate.
Base Rate Loan means any Loan which bears interest at or by reference
to the Base Rate.
Base Rate Margin - see the Pricing Schedule.
Borrowing Base means an amount equal to the total of (a) 85% of the
unpaid amount, net of such reserves and allowances as the Agent deems necessary
in its reasonable discretion, of all Eligible Accounts Receivable plus (b) the
lesser of (i) 60% of all Eligible Inventory and (ii) $7,500,000, in any case net
of such reserves and allowances as the Agent deems necessary in its reasonable
discretion.
Borrowing Base Certificate means a certificate substantially in the
form of Exhibit C.
Business Day means, (i) except as expressly provided in clause (ii),
any day which is not a Saturday, Sunday or a day on which banks in the State of
Illinois are authorized or obligated by law, executive order or governmental
decree to be closed, and (ii) with respect to the selection, funding, interest
rate, payment, and interest period of any LIBOR Loan, any day which is a
Business Day, as described above, and on which the relevant international
financial markets are open for the transaction of business contemplated by this
Agreement in London, England.
Capital Expenditures means all expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated balance
sheet of the Company, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed (i)
from insurance proceeds (or other similar recoveries) paid on account of the
loss of or damage to the assets being replaced or restored or (ii) with awards
of compensation arising from the taking by eminent domain or condemnation of the
assets being replaced.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.
Cash Collateralize means to deliver cash collateral to the Agent, to be
held as cash collateral for outstanding Letters of Credit, pursuant to
documentation satisfactory to the Agent. Derivatives of such term have
corresponding meanings.
Cash Equivalent Investment means, at any time, (a) any evidence of
Debt, maturing not more than one year after such time, issued or guaranteed by
the United States Government or any agency thereof, (b) commercial paper,
maturing not more than one year from the date of issue, or corporate demand
notes, in each case (unless issued by a Lender or its holding company) rated at
least A-l by Standard & Poor's Ratings Group or P-l by Moody's Investors
Service, Inc., (c) any certificate of deposit (or time deposits represented by
such certificates of deposit) or bankers acceptance, maturing not more than one
year after such time, or overnight Federal Funds transactions that are issued or
sold by any Lender or its holding company or by a commercial banking institution
that is a member of the Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than $500,000,000 and (d) any
repurchase agreement entered into with any Lender (or other commercial banking
institution of the stature referred to in clause (c)) which (i) is secured by a
fully perfected security interest in any obligation of the type described in any
of clauses (a) through (c) and (ii) has a market value at the time such
repurchase agreement is entered into of not less than 100% of the repurchase
obligation of such Lender (or other commercial banking institution) thereunder.
CERCLA - see Section 9.15.
Closing Date - see Section 11.1.
Code means the Internal Revenue Code of 1986.
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Collateral Access Agreement means an agreement in form and substance
reasonably satisfactory to the Agent pursuant to which a mortgagee or lessor of
real property on which collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory, acknowledges the Liens of
the Agent and waives any Liens held by such Person on such property, and, in the
case of any such agreement with a mortgagee or lessor, permits the Agent access
to and use of such real property for a reasonable amount of time following the
occurrence and during the continuance of an Event of Default to assemble,
complete and sell any collateral stored or otherwise located thereon.
Collateral Assignment means that certain Collateral Assignment of Note
of even date herewith made by the Company in favor of Agent, for the benefit of
the Lenders, with respect to the Promissory Note dated of even date herewith
made by GTI in favor of the Company in the original principal amount of
$13,000,000.
Collateral Documents means the Notes, each Security Agreement, the
Purchase Agreement Assignment, the Mortgage, the Assignment of Rents and Leases,
the Environmental Agreement, each Intellectual Property Security Agreement, each
Pledge Agreement, the Collateral Assignment and any other agreement or
instrument pursuant to which the Company, any Subsidiary or any other Person
grants collateral to the Agent for the benefit of the Lenders.
Commitment means, as to any Lender, such Lender's commitment to make
Loans, and to issue or participate in Letters of Credit, under this Agreement.
The initial amount of each Lender's Pro Rata Share of the Revolving Commitment
Amount and of the aggregate amount of the Term Loans is set forth on Schedule
2.1.
Company - see the Preamble. It is understood and agreed that upon
consummation of the merger transaction contemplated by the Onkyo Merger
Agreement, Onkyo America, Inc., an Indiana corporation, as the surviving entity
of the merger of Onkyo America, Inc. and the Company, shall be a Loan Party
hereunder as successor to the Company, and all references to the Company shall
thereafter be deemed to refer to and include Onkyo America, Inc.
Computation Period means each period of twelve (12) calendar months
ending on the last day of a calendar month. For the purpose of making such
computations required in Section 10.6 hereof, all payments of principal and
interest due Agent hereunder on the first day of any calendar month shall be
deemed made on the last day of the preceding calendar month.
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period, excluding any gains from Asset Sales, any
extraordinary gains and any gains from discontinued operations.
Coverage Ratio Computation Period means each of the following periods:
(i) the period of one calendar month ending September 30, 2000; (ii) the period
of two consecutive calendar months ending October 31, 2000; (iii) the period of
three consecutive calendar months ending November 30, 2000; (iv) the period of
four consecutive calendar months ending December 31, 2000; (v) the period of
five consecutive calendar months ending January 31, 2001; (vi) the period of six
consecutive calendar months ending February 28, 2001; (vii) the period of seven
consecutive calendar months ending March 31, 2001; (viii) the period of eight
consecutive calendar months ending April 30, 2001; (ix) the period of nine
consecutive calendar months ending May 31, 2001; (x) the period of ten
consecutive calendar months ending June 30, 2001; (xi) the period of eleven
consecutive calendar months ending July 31, 2001; (xii) the period of twelve
consecutive calendar months ending August 31, 2001; and (xiii) each period of
twelve consecutive calendar months ending on the last day of a calendar month
thereafter. For the purpose of making such computations required in Section 10.6
hereof, all payments of principal and interest due Agent hereunder on the first
day of any calendar month shall be deemed made on the last day of the preceding
calendar month.
Controlled Group means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Company, are treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.
Debt of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been or should be recorded as liabilities on a balance
sheet of such Person in accordance with GAAP, (c) all obligations of such Person
to pay the deferred purchase price of property or services (excluding trade
accounts payable in the ordinary course of business), (d) all indebtedness
secured by a Lien on the property of such Person, whether or not such
indebtedness shall have been assumed by such Person, (e) all obligations,
contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn) and Lender's acceptances issued for the account of
such Person (including the Letters of Credit), (f) all Hedging Obligations of
such Person, (g) all Suretyship Liabilities of such Person and (h) all Debt of
any partnership of which such Person is a general partner.
Debt to be Repaid means Debt listed on Schedule 11.1.
Designated Proceeds - see Section 6.2.2(a).
Disposal - see the definition of "Release".
Dollar and the sign "$" mean lawful money of the United States of
America.
EBITDA means, for any period, Consolidated Net Income for such period
plus, to the extent deducted in determining such Consolidated Net Income,
Interest Expense, income tax expense, depreciation, amortization, and any
management fees or dividends on common stock paid by the Company to GTI for such
period.
Eligible Account Receivable means an Account Receivable owing to the
Company which meets each of the following requirements:
it arises from the sale of goods or the rendering of services by the Company;
and if it arises from the sale of goods, (i) such goods comply with such Account
Debtor's specifications (if any) and have been delivered to such Account Debtor
and (ii) the Company has possession of, or if requested by the Agent has
delivered to the Agent, delivery receipts evidencing such delivery;
it (a) is subject to a perfected Lien in favor of the Agent and (b) is not
subject to any other assignment, claim or Lien except Permitted Liens;
it is a valid, legally enforceable and unconditional obligation of the Account
Debtor with respect thereto, and is not subject to any counterclaim, credit,
allowance, discount, rebate or adjustment by the Account Debtor with respect
thereto, or to any claim by such Account Debtor denying liability thereunder in
whole or in part;
there is no Bankruptcy, insolvency or liquidation proceeding by or against the
Account Debtor with respect thereto;
the Account Debtor with respect thereto is a resident or citizen of, and is
located within, the United States, unless the sale of goods or services giving
rise to such Account Receivable is on letter of credit, Lender's acceptance or
other credit support terms reasonably satisfactory to the Agent;
it is not an Account Receivable arising from a "sale on approval," "sale or
return," "consignment" or "bill and hold" or subject to any other repurchase or
return agreement;
it is not an Account Receivable with respect to which possession and/or control
of the goods sold giving rise thereto is held, maintained or retained by the
Company (or by any agent or custodian of the Company) for the account of or
subject to further and/or future direction from the Account Debtor with respect
thereto;
it arises in the ordinary course of business of the Company;
if the Account Debtor is the United States or any department, agency or
instrumentality thereof, the Company has assigned its right to payment of such
Account Receivable to the Agent pursuant to the Assignment of Claims Act of
1940;
if the Company maintains a credit limit for an Account Debtor, the aggregate
dollar amount of Accounts Receivable due from such Account Debtor, including
such Account Receivable, does not exceed such credit limit;
if the Account Receivable is evidenced by chattel paper or an instrument, the
originals of such chattel paper or instrument shall have been endorsed and/or
assigned and delivered to the Agent in a manner satisfactory to the Agent;
such Account Receivable is not more than (a) 60 days past the due date thereof
or (b) 90 days past the original invoice date thereof, in each case according to
the original terms of sale;
it is not an Account Receivable with respect to an Account Debtor that is
located in any jurisdiction which has adopted a statute or other requirement
with respect to which any Person that obtains business from within such
jurisdiction must file a notice of business activities report or make any other
required filings in a timely manner in order to enforce its claims in such
jurisdiction's courts ("Enforcement Restriction") unless such notice of business
activities report has been duly and timely filed or the Company is exempt from
filing such report and has provided the Agent with satisfactory evidence of such
exemption; provided, however, for the purpose of clarification, the excluded
Accounts Receivable with respect to an Account Debtor referenced in this
subparagraph (xiii) shall only include the applicable Accounts Receivable of
such Account Debtor which are subject to the Enforcement Restriction;
the Account Debtor with respect thereto is not an Affiliate of the Company;
it is not owed by an Account Debtor with respect to which 25% or more of the
aggregate amount of outstanding Accounts Receivable owed at such time by such
Account Debtor is classified as ineligible under clause (xii) of this
definition; and
if the aggregate amount of all Accounts Receivable owed by the Account Debtor
thereon exceeds 25% of the aggregate amount of all Accounts Receivable at such
time, then all Accounts Receivable owed by such Account Debtor in excess of such
amount shall be deemed ineligible; provided, however, such "25%" shall not apply
with respect to Accounts Receivable owed by Delphi Delco Electronics
Corporation.
An Account Receivable which is at any time an Eligible Account Receivable, but
which subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Account Receivable. Further, with respect to
any Account Receivable, if the Agent or the Required Lenders at any time
hereafter determine in their discretion that the prospect of payment or
performance by the Account Debtor with respect thereto is materially impaired
for any reason whatsoever, such Account Receivable shall cease to be an Eligible
Account Receivable after notice of such determination is given to the Company.
Eligible Inventory means Inventory of the Company which meets each of
the following requirements:
it (a) is subject to a perfected Lien in favor of the Agent and (b) is not
subject to any other assignment, claim or Lien (except Permitted Liens);
it is salable (including raw materials that are salable);
it is in the possession and control of the Company and it is stored and held in
facilities owned by the Company or, if such facilities are not so owned, the
Agent is in possession of a Collateral Access Agreement with respect thereto;
it is not Inventory produced in violation of the Fair Labor Standards Act and
subject to the "hot goods" provisions contained in Title 29 U.S.C.ss.215;
it is not subject to any agreement which would restrict the Agent's ability to
sell or otherwise dispose of such Inventory;
it is located in the United States or in any territory or possession of the
United States that has adopted Article 9 of the Uniform Commercial Code;
it is not (i) "in transit" to the Company or if it is "in transit" to the
Company then only to the extent it is insured to the satisfaction of the Agent,
or (ii) held on consignment on behalf of the Company except to the extent Agent
has received a bailee/warehouse waiver letter (or substantially similar
document), in form and substance acceptable to Agent, with respect to such
Inventory; and
the Agent shall not have determined in its reasonable discretion that it is
unacceptable due to age, type, category, quality, and quantity.
Inventory which is at any time Eligible Inventory but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be Eligible
Inventory.
Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
Environmental Indemnity Agreement means that certain Environmental
Indemnity Agreement between the Company and Agent of even date herewith, as the
same may be amended, restated and modified from time to time.
Environmental Laws means all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental authority,
in each case relating to Environmental Matters.
Environmental Matters means any matter arising out of or relating to
health and safety, or pollution or protection of the environment or workplace,
including any of the foregoing relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
discharge, release, control or cleanup of any Hazardous Substance.
ERISA means the Employee Retirement Income Security Act of 1974.
Eurocurrency Reserve Percentage means, with respect to any LIBOR Loan
for any Interest Period, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentage in effect on each
day of such Interest Period, as prescribed by the FRB, for determining the
aggregate maximum reserve requirements applicable to "Eurocurrency Liabilities"
pursuant to Regulation D or any other then applicable regulation of the FRB
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as presently defined in Regulation D.
Event of Default means any of the events described in Section 12.1.
Excess Cash Flow means, for any period, the remainder of EBITDA for
such period,
less
the sum, without duplication, of scheduled repayments of principal of Term Loans
made during such period,
plus
voluntary prepayments of the Term Loans pursuant to Section 6.2.1 during such
period,
plus
cash payments made in such period with respect to Capital Expenditures,
plus
all federal, state, local and foreign income taxes paid in cash by the Company
and its Subsidiaries during such period,
plus
cash Interest Expense of the Company and its Subsidiaries during such period,
plus
any management fees paid by the Company,
plus
any dividends or distributions paid by the Company.
Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
publication, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 A.M. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on Company's Fiscal Year End of
each year. References to a Fiscal Year with a number corresponding to any
calendar year (e.g., "Fiscal Year 1998") refer to the Fiscal Year ending on
Company's Fiscal Year End of such calendar year.
Fixed Charge Coverage Ratio means, for any Computation Period, the
ratio of (a) the total for such period of EBITDA minus all Capital Expenditures
to (b) the sum for such period of (i) cash Interest Expense, plus (ii) required
payments of principal of Funded Debt (including the Term Loans but excluding the
Revolving Loans), plus (iii) all income taxes paid by the Company and its
Subsidiaries, plus (iv) any management fees paid by the Company, plus (v) any
dividends or distributions paid by the Company.
FRB means the Board of Governors of the Federal Reserve System or any
successor thereto.
Funded Debt means, as to any Person, all Debt of such Person that
matures more than one year from the date of its creation (or is renewable or
extendible, at the option of such Person, to a date more than one year from such
date).
GAAP means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
GMACBC - see the Preamble.
Group - see Section 2.2.1.
GTI means Global Technovations, Inc., a Delaware corporation and the
parent corporation of the Company.
Guarantors means, collectively, GTI and Specialty.
Guaranty means a guaranty in form and substance acceptable to Agent.
Hazardous Substances - see Section 9.15.
Hedging Agreement means any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.
Hedging Obligation means, with respect to any Person, any liability of
such Person under any Hedging Agreement.
Intellectual Property Security Agreements means the Trademark and
License Security Agreement and the Patent and License Security Agreement, each
of even date herewith between the Company and Agent and the Company and
Specialty, respectively, in each case in form and substance satisfactory to the
Agent.
Interest Coverage Ratio means, for any Computation Period, the ratio of
(a) EBITDA for such Computation Period to (b) cash Interest Expense for such
Computation Period.
Interest Expense means for any period the consolidated interest expense
of the Company and its Subsidiaries for such period (including all imputed
interest on Capital Leases).
Interest Period means, as to any LIBOR Loan, the period commencing on
the date such Loan is borrowed or continued as, or converted into, a LIBOR Loan
and ending on the date one, two, three or six months thereafter as selected by
the Company pursuant to Section 2.2.2 or 2.2.3, as the case may be; provided
that:
if any Interest Period would otherwise end on a day that is not a Business Day,
such Interest Period shall be extended to the following Business Day unless the
result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the preceding
Business Day;
any Interest Period that begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period shall
end on the last Business Day of the calendar month at the end of such Interest
Period;
the Company may not select any Interest Period for a Revolving Loan which
would extend beyond the scheduled Termination Date; and
the Company may not select any Interest Period for a Term Loan if, after giving
effect to such selection, the aggregate principal amount of all Term Loans
having Interest Periods ending after any date on which an installment of the
Term Loans is scheduled to be repaid would exceed the aggregate principal amount
of the Term Loans scheduled to be outstanding after giving effect to such
repayment.
Inventory has the meaning assigned to such term in the Uniform
Commercial Code as in effect in the State of Illinois on the date hereof.
Investment means, relative to any Person, any investment in another
Person, whether by acquisition of any debt or equity security, by making any
loan or advance or by becoming obligated with respect to a Suretyship Liability
in respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business).
Issuing Lender means a banking institution which may be appointed in
connection with the issuance of Letters of Credit hereunder, in its capacity as
the issuer of such Letters of Credit and its successors and assigns in such
capacity.
L/C Application means, with respect to any request for the issuance of
a Letter of Credit, a letter of credit application in the form being used by the
Issuing Lender at the time of such request for the type of letter of credit
requested.
LC Fee Rate - see the Pricing Schedule.
Lender - see the Preamble.
Letter of Credit - see Section 2.1.3.
LIBOR means, with respect to any LIBOR Loan for any Interest Period, a
rate per annum equal to the offered rate for deposits in Dollars for a period
equal or comparable to such Interest Period which appears on Telerate page 3750
as of 11:00 A.M. (London time) two Business Days prior to the first day of such
Interest Period. "Telerate Page 3750 " means the display designated as "Page
3750" on the Telerate Service (or such other page as may replace page 3750 on
that service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for Dollar deposits).
LIBOR Loan means any Loan which bears interest at a rate determined by
reference to LIBOR (Reserve Adjusted).
LIBOR Margin - see the Pricing Schedule.
LIBOR Office means with respect to any Lender the office or offices of
such Lender which shall be making or maintaining the LIBOR Loans of such Lender
hereunder. A LIBOR Office of any Lender may be, at the option of such Lender,
either a domestic or foreign office.
LIBOR (Reserve Adjusted) means, with respect to any LIBOR Loan for any
Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest
1/16th of 1%) determined pursuant to the following formula:
LIBOR = LIBOR
(Reserve Adjusted) 1-Eurocurrency
Reserve Percentage.
Lien means, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.
Loan Documents means this Agreement, the Notes, the Guaranty, the L/C
Applications and the Collateral Documents.
Loan Party means the Company and each Subsidiary of the Company, if
any.
Loans means Revolving Loans and Term Loans.
Loan Year means each consecutive one (1) year period commencing on the
Closing Date and each anniversary of the Closing Date.
Mandatory Prepayment Event - see Section 6.2.2(a).
Margin Stock means any "margin stock" as defined in Regulation U.
Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole, (b) a material impairment of the ability of the Company or any Subsidiary
to perform any of its obligations under any Loan Document or (c) a material
adverse effect upon any substantial portion of the collateral under the
Collateral Documents or upon the legality, validity, binding effect or
enforceability against the Company or any Subsidiary of any Loan Document.
Mennen means The George S. Mennen Trust FBO John Henry Mennen or its
Assigns u/a dated November 25, 1970.
Mortgage means a mortgage, deed of trust, leasehold mortgage or similar
instrument granting the Agent a Lien on real property of the Company or any
Subsidiary.
Mortgaged Property means that parcel of real estate located at 3030
Barker Drive, Columbus, Indiana 47101, in which the Company has granted a first
priority interest to Agent pursuant to the Mortgage.
Multiemployer Pension Plan means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any member of the
Controlled Group may have any liability.
Net Cash Proceeds means:
with respect to any Asset Sale the aggregate cash proceeds (including cash
proceeds received by way of deferred payment of principal pursuant to a note,
installment receivable or otherwise, but only as and when received) received by
the Company or any Subsidiary pursuant to such Asset Sale net of (i) the direct
costs relating to such sale, transfer or other disposition (including sales
commissions and legal, accounting and investment banking fees), (ii) taxes paid
or reasonably estimated by the Company to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements) and (iii) amounts required to be applied to the repayment of any
Debt secured by a Lien on the asset subject to such Asset Sale (other than the
Loans); and
with respect to any issuance of equity securities, the aggregate cash proceeds
received by the Company or any Subsidiary pursuant to such issuance, net of the
direct costs relating to such issuance (including sales and underwriter's
commission; and
with respect to any issuance of Debt, the aggregate cash proceeds received by
the Company or any subsidiary pursuant to such issuance, net of the direct costs
of such issuance (including up-front fees and placement fees).
Non-Use Fee Rate - see the Pricing Schedule.
Note or Notes - see Section 3.1.
Onkyo America means Onkyo America, Inc., an Indiana corporation,
prior to giving effect to the merger contemplated by the Onyko Merger Agreement.
Onkyo Corporation Debt shall mean (i) principal and interest payments
due from time to time from Onkyo America to Onkyo Corporation, a Japanese
corporation ("Onkyo Corporation"), pursuant to Section 17.01 of the Purchase
Agreement in the principal amount of One Million Dollars ($1,000,000), plus
interest, representing repayment of a loan from Onkyo Corporation, and (ii)
certain other payments pursuant to Section 17.01 of the Purchase Agreement due
from time to time from Onkyo America to Onkyo Corporation on account of
outstanding inter-company accounts payable without interest including, but not
limited to, royalties until the Closing Date (as defined in the Purchase
Agreement) in the aggregate amount not to exceed $3,600,000, payable on May 31,
2001.
Onkyo Merger - See Section 9.16.
Onkyo Merger Agreement means that certain Agreement and Plan of Merger
of even date herewith by and between the Company and Onkyo America, providing
for the merger of the Company with and into Onkyo America with Onkyo America,
Inc. emerging as the surviving corporation as contemplated therein.
Operating Lease means any lease of (or other agreement conveying the
right to use) any real or personal property by the Company or any Subsidiary, as
lessee, other than any Capital Lease.
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which the Company or any member of the Controlled Group
may have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.
Permitted Liens. See Section 10.8.
Person means any natural person, corporation, partnership, trust,
limited liability company, association, governmental authority or unit, or any
other entity, whether acting in an individual, fiduciary or other capacity.
Pledge Agreement means a pledge agreement in form and substance
acceptable to Agent.
Preferred Stock means the preferred stock, $1.00 par value per share,
of the Company having a liquidation value of $10,000 per share. All 100 shares
of Preferred Stock are held by GTI, and no other shares of Preferred Stock are
issued and outstanding.
Pro Rata Share means, with respect to any Lender, the percentage
specified opposite such Lender's name on Schedule 2.1 hereto, as adjusted from
time to time in accordance with the terms hereof.
Prime Rate means the variable rate of interest per annum equal to the
highest of the "prime rate", "reference rate", "base rate", or other similar
rate published from time to time by The Wall Street Journal, Central Edition, or
its successors, with the understanding that any such rate may merely be a
reference rate and may not necessarily represent the lowest or best rate
actually charged to any customer by any financial institution. Any change in
such published Prime Rate shall take effect at the opening of business on the
day such change was first published as set forth in the preceding sentence.
Purchase means the purchase of 100% of the outstanding shares of common
stock of the Company by GTI pursuant to the Purchase Agreement.
Purchase Agreement means that certain Share Purchase Agreement dated as
of June 29, 2000 by and among Sellers, GTI and Onkyo America, as amended by that
certain letter agreement dated August 3, 2000.
Purchase Agreement Assignment means that certain Purchase Agreement
Assignment of even date herewith with respect to the Purchase Agreement.
RCRA - see Section 9.15.
Regulation D means Regulation D of the FRB.
Regulation U means Regulation U of the FRB.
Release has the meaning specified in CERCLA and the term "Disposal" (or
"Disposed") has the meaning specified in RCRA; provided that in the event either
CERCLA or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply as of the effective date of such
amendment; and provided, further, that to the extent that the laws of a state
wherein any affected property lies establish a meaning for "Release" or
"Disposal" which is broader than is specified in either CERCLA or RCRA, such
broader meaning shall apply.
Required Lenders means Lenders having Pro Rata Shares aggregating 51 %
or more.
Residential Real Estate means that certain parcel of residential real
estate commonly known as 554 Kinney Lane, Columbus, Indiana 47201.
Revolving Commitment Amount means $20,000,000, as reduced from time to
time pursuant to Section 6.1.
Revolving Loan - see Section 2.1.1.
Revolving Outstandings means, at any time, the sum of (a) the aggregate
principal amount of all outstanding Revolving Loans, plus (b) the Stated Amount
of all Letters of Credit.
SEC means the Securities and Exchange Commission or any other
governmental authority succeeding to any of the principal functions thereof.
Security Agreement means a security agreement in form and substance
acceptable to Agent.
Sellers means, collectively, Onkyo Europe Electronics GMBH, a German
corporation, Onkyo Malaysia SDN.BHD, a Malaysian corporation, and Onkyo
Corporation, a Japanese corporation.
Senior Debt means all Debt of the Company and its Subsidiaries other
than Subordinated Debt.
Senior Debt to EBITDA Ratio means, as of the last day of any calendar
month, the ratio of (i) Senior Debt as of such day to (ii) EBITDA for the
Computation Period ending on such day.
Specialty means Onkyo America Specialty Products, Inc., a Michigan
corporation and Wholly-Owned Subsidiary of the Company.
Stated Amount means, with respect to any Letter of Credit at any date
of determination, (a) the maximum aggregate amount available for drawing
thereunder under any and all circumstances plus (b) the aggregate amount of all
unreimbursed payments and disbursements under such Letter of Credit.
Subordinated Debt means (i) indebtedness of the Company in favor of
Mennen subject to a Subordination Agreement of even date herewith in favor of
Agent ("Mennen Subordination Agreement"), and (ii) any other unsecured Debt of
the Company which has subordination terms, covenants, pricing and other terms
which have been approved in writing by the Required Lenders.
Subsidiary means, with respect to any Person, a corporation,
partnership, limited liability company or other entity of which such Person
and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares or other ownership interests as have more than 50% of the
ordinary voting power for the election of directors or other managers of such
corporation, partnership, limited liability company or other entity. Unless the
context otherwise requires, each reference to Subsidiaries herein shall be a
reference to Subsidiaries, if any, of the Company.
Suretyship Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation in respect of any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby.
Term Loan(s) - see Section 2.1.2.
Termination Date means the earlier to occur of (a) August 30, 2003 or
(b) such other date on which the Commitments terminate pursuant to Section 6 or
12.
Total Debt means all Debt of the Company and its Subsidiaries,
determined on a consolidated basis, excluding (i) contingent obligations in
respect of Suretyship Liabilities (except to the extent constituting Suretyship
Liabilities in respect of Debt of a Person other than the Company or any
Subsidiary), (ii) Hedging Obligations, and (iii) Debt of the Company to
Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries
and (iv) contingent obligations in respect of undrawn letters of credit.
Total Debt to EBITDA Ratio means, as of the last day of any calendar
month, the ratio of (i) Total Debt as of such day to (ii) EBITDA for the
Computation Period ending on such day.
Type of Loan or Borrowing - see Section 2.2.1. The types of Loans or
borrowings under this Agreement are as follows: Base Rate Loans or borrowings
and LIBOR Loans or borrowings.
Unmatured Event of Default means any event that, if it continues
uncured, will, with lapse of time or notice or both, constitute an Event of
Default.
Wholly-Owned Subsidiary means, as to any Person, another Person all of
the shares of capital stock or other ownership interests of which (except
directors' qualifying shares) are at the time directly or indirectly owned by
such Person and/or another Wholly-Owned Subsidiary of such Person.
1.2
Other Interpretive Provisions. (a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.
Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.
The term "including" is not limiting and means "including without limitation."
In the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including"; the words "to" and "until"
each mean "to but excluding", and the word "through" means "to and including."
Unless otherwise expressly provided herein, (i) references to agreements
(including this Agreement) and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document, and (ii) references to any statute or regulation
shall be construed as including all statutory and regulatory provisions
amending, replacing, supplementing or interpreting such statute or regulation.
This Agreement and the other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and each shall be
performed in accordance with its terms.
This Agreement and the other Loan Documents are the result of negotiations among
and have been reviewed by counsel to the Agent, the Company, the Lenders and the
other parties thereto and are the products of all parties. Accordingly, they
shall not be construed against the Agent or the Lenders merely because of the
Agent's or Lenders' involvement in their preparation.
Effect of Onkyo Merger. It is hereby acknowledged and agreed that, effective
upon the consummation of the transactions contemplated by the Onkyo Merger
Agreement in accordance with the laws of the State of Indiana each reference
herein and in the Loan Documents to "Onkyo Acquisition Corporation, an Indiana
corporation," or "Onkyo America, Inc., an Indiana corporation," shall be deemed
to refer, as the context may require, herein and in all of the Loan Documents to
"Onkyo America, Inc., an Indiana corporation," as the surviving entity of such
merger transaction. Following consummation of such merger, said Onkyo America,
Inc. shall have assumed all obligations and liabilities of the Company hereunder
and under the Loan Documents.
SECTION 2. COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF
CREDIT PROCEDURES.
2.1
Commitments. On and subject to the terms and conditions of this Agreement,
each of the Lenders, severally and for itself alone, agrees to make loans to,
and to issue or participate in letters of credit for the account of, the Company
as follows:
2.1.1
Revolving Loan Commitment. Each Lender will make loans on a revolving basis
("Revolving Loans") from time to time until the Termination Date in such
Lender's Pro Rata Share of such aggregate amounts as the Company may request
from all Lenders; provided that the Revolving Outstandings will not at any time
exceed the lesser of (x) the Revolving Commitment Amount and (y) the Borrowing
Base.
2.1.2
Term Loan Commitment. Each Lender agrees to make loans to the Company
(respectively, "Term Loan A" and "Term Loan B"; and each such loan, a "Term
Loan" and collectively, the "Term Loans") on the Closing Date in such Lender's
Pro Rata Share of $ 5,230,000 with respect to Term Loan A, and $6,000,000 with
respect to Term Loan B. The commitments of the Lenders to make such Term Loans
shall expire concurrently with the making of the Term Loans on the Closing Date.
2.1.3
L/C Commitment. (a) The Issuing Lender will issue standby letters of credit, in
each case containing such terms and conditions as are permitted by this
Agreement and are reasonably satisfactory to the Issuing Lender (each a "Letter
of Credit"), at the request of and for the account of the Company from time to
time before the date which is 30 days prior to the Termination Date and (b) as
more fully set forth in Section 2.3.2, each Lender agrees to purchase a
participation in each such Letter of Credit; provided that (i) the aggregate
Stated Amount of all Letters of Credit shall not at any time exceed $5,000,000
and (ii) the Revolving Outstandings will not at any time exceed the lesser of
(x) the Revolving Commitment Amount and (y) the Borrowing Base.
2.2 Loan Procedures.
2.2.1
Various Types of Loans. Each Revolving Loan shall be, and each Term Loan may be
divided into tranches which are, either a Base Rate Loan or a LIBOR Loan (each a
"type" of Loan), as the Company shall specify in the related notice of borrowing
or conversion pursuant to Section 2.2.2 or 2.2.3. LIBOR Loans having the same
Interest Period are sometimes called a "Group" or collectively "Groups". Base
Rate Loans and LIBOR Loans may be outstanding at the same time, provided that
not more than six different Groups of LIBOR Loans shall be outstanding at any
one time. All borrowings, conversions and repayments of Revolving Loans shall be
effected so that each Lender will have a pro rata share (according to its Pro
Rata Share) of all types and Groups of Loans. Notwithstanding the foregoing or
any other provision of this Agreement, the Company may not select any Interest
Period for a LIBOR Loan which is longer than one month prior to the earlier of
(x) 90 days after the Closing Date and (y) the date that the Agent notifies the
Company that it has completed its primary syndication of the Loans and the
Commitments.
2.2.2
Borrowing Procedures. The Company shall give written notice or telephonic notice
(followed immediately by written confirmation thereof) to the Agent of each
proposed borrowing not later than (a) in the case of a Base Rate borrowing,
10:00 A.M., Chicago time, on the proposed date of such borrowing, and (b) in the
case of a LIBOR borrowing, 10:00 A.M., Chicago time, at least three Business
Days prior to the proposed date of such borrowing. Each such notice shall be
effective upon receipt by the Agent, shall be irrevocable, and shall specify the
date, amount and type of borrowing and, in the case of a LIBOR borrowing, the
initial Interest Period therefor. Promptly upon receipt of such notice, the
Agent shall advise each Lender thereof. Not later than 12:00 P.M., Chicago time,
on the date of a proposed borrowing, each Lender shall provide the Agent at the
office specified by the Agent with immediately available funds covering such
Lender's Pro Rata Share of such borrowing and, so long as the Agent has not
received written notice that the conditions precedent set forth in Section 11
with respect to such borrowing have not been satisfied, the Agent shall pay over
the funds received by the Agent to the Company on the requested borrowing date.
Each borrowing shall be on a Business Day. Each Base Rate borrowing shall be in
an aggregate amount of at least $1,000,000 and an integral multiple of $100,000,
and each LIBOR borrowing shall be in an aggregate amount of at least $1,000,000
and an integral multiple of at least $100,000.
2.2.3
Conversion and Continuation Procedures. (a) Subject to Section 2.2.1, the
Company may, upon irrevocable written notice to the Agent in accordance with
clause (b) below:
elect, as of any Business Day, to convert any Loans (or any part thereof in an
aggregate amount not less than $1,000,000 a higher integral multiple of
$100,000) into Loans of the other type; or
elect, as of the last day of the applicable Interest Period, to continue any
LIBOR Loans having Interest Periods expiring on such day (or any part thereof in
an aggregate amount not less than $1,000,000 or a higher integral multiple of
$100,000) for a new Interest Period;
provided that after giving effect to any prepayment, conversion or continuation,
the aggregate principal amount of each Group of LIBOR Loans shall be at least
$1,000,000 and an integral multiple of $100,000.
The Company shall give written or telephonic (followed immediately by written
confirmation thereof) notice to the Agent of each proposed conversion or
continuation not later than (i) in the case of conversion into Base Rate Loans,
10:00 A.M., Chicago time, on the proposed date of such conversion and (ii) in
the case of conversion into or continuation of LIBOR Loans, 10:00 A.M., Chicago
time, at least three Business Days prior to the proposed date of such conversion
or continuation, specifying in each case:
the proposed date of conversion or continuation;
the aggregate amount of Loans to be converted or continued;
the type of Loans resulting from the proposed conversion or continuation; and
in the case of conversion into, or continuation of, LIBOR Loans, the duration of
the requested Interest Period therefor.
If upon the expiration of any Interest Period applicable to LIBOR Loans, the
Company has failed to select timely a new Interest Period to be applicable to
such LIBOR Loans, the Company shall be deemed to have elected to convert such
LIBOR Loans into Base Rate Loans effective on the last day of such Interest
Period.
The Agent will promptly notify each Lender of its receipt of a notice of
conversion or continuation pursuant to this Section 2.2.3 or, if no timely
notice is provided by the Company, of the details of any automatic conversion.
Any conversion of a LIBOR Loan on a day other than the last day of an Interest
Period therefor shall be subject to Section 8.4.
2.3 Letter of Credit Procedures.
2.3.1
L/C Applications. The Company shall give notice to the Agent and the Issuing
Lender of the proposed issuance of each Letter of Credit on a Business Day which
is at least three Business Days (or such lesser number of days as the Agent and
the Issuing Lender shall agree in any particular instance in their sole
discretion) prior to the proposed date of issuance of such Letter of Credit.
Each such notice shall be accompanied by an L/C Application, duly executed by
the Company and in all respects satisfactory to the Agent and the Issuing
Lender, together with such other documentation as the Agent or the Issuing
Lender may reasonably request in support thereof, it being understood that each
L/C Application shall specify, among other things, the date on which the
proposed Letter of Credit is to be issued, the expiration date of such Letter of
Credit (which shall not be later than the earlier to occur of (x) one year after
the date of issuance thereof and (y) thirty days prior to the scheduled
Termination Date) and whether such Letter of Credit is to be transferable in
whole or in part. So long as the Issuing Lender has not received written notice
that the conditions precedent set forth in Section 11 with respect to the
issuance of such Letter of Credit have not been satisfied, the Issuing Lender
shall issue such Letter of Credit on the requested issuance date. The Issuing
Lender shall promptly advise the Agent of the issuance of each Letter of Credit
and of any amendment thereto, extension thereof or event or circumstance
changing the amount available for drawing thereunder. In the event of any
inconsistency between the terms of any L/C Application and the terms of this
Agreement, the terms of this Agreement shall control.
2.3.2
Participations in Letters of Credit. Concurrently with the issuance of each
Letter of Credit, the Issuing Lender shall be deemed to have sold and
transferred to each other Lender, and each other Lender shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Lender, without recourse or warranty, an undivided interest and participation,
to the extent of such other Lender's Pro Rata Share, in such Letter of Credit
and the Company's reimbursement obligations with respect thereto. For the
purposes of this Agreement, the unparticipated portion of each Letter of Credit
shall be deemed to be the Issuing Lender's "participation" therein. The Issuing
Lender hereby agrees, upon request of the Agent or any Lender, to deliver to the
Agent or such Lender a list of all outstanding Letters of Credit issued by the
Issuing Lender, together with such information related thereto as the Agent or
such Lender may reasonably request.
2.3.3
Reimbursement Obligations. The Company hereby unconditionally and irrevocably
agrees to reimburse the Issuing Lender for each payment or disbursement made by
the Issuing Lender under any Letter of Credit honoring any demand for payment
made by the beneficiary thereunder, in each case on the date that such payment
or disbursement is made. Any amount not reimbursed on the date of such payment
or disbursement shall bear interest from the date of such payment or
disbursement to the date that the Issuing Lender is reimbursed by the Company
therefor, payable on demand, at a rate per annum equal to the Base Rate from
time to time in effect plus the Base Rate Margin from time to time in effect
plus, beginning on the third Business Day after receipt of notice from the
Issuing Lender of such payment or disbursement, 2%. The Issuing Lender shall
notify the Company and the Agent whenever any demand for payment is made under
any Letter of Credit by the beneficiary thereunder; provided that the failure of
the Issuing Lender to so notify the Company shall not affect the rights of the
Issuing Lender or the Lenders in any manner whatsoever.
2.3.4
Limitation on Obligations of Issuing Lender. In determining whether to pay under
any Letter of Credit, the Issuing Lender shall not have any obligation to the
Company or any Lender other than to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered and appear
to comply on their face with the requirements of such Letter of Credit. Any
action taken or omitted to be taken by the Issuing Lender under or in connection
with any Letter of Credit, if taken or omitted in the absence of gross
negligence and willful misconduct, shall not impose upon the Issuing Lender any
liability to the Company or any Lender and shall not reduce or impair the
Company's reimbursement obligations set forth in Section 2.3.3 or the
obligations of the Lenders pursuant to Section 2.3.5.
2.2.5
Funding by Lenders to Issuing Lender. If the Issuing Lender makes any payment or
disbursement under any Letter of Credit and the Company has not reimbursed the
Issuing Lender in full for such payment or disbursement by 10:00 A.M., Chicago
time, on the date of such payment or disbursement, or if any reimbursement
received by the Issuing Lender from the Company is or must be returned or
rescinded upon or during any Bankruptcy or reorganization of the Company or
otherwise, each other Lender shall be obligated to pay to the Agent for the
account of the Issuing Lender, in full or partial payment of the purchase price
of its participation in such Letter of Credit, its Pro Rata Share of such
payment or disbursement (but no such payment shall diminish the obligations of
the Company under Section 2.3.3), and, upon notice from the Issuing Lender, the
Agent shall promptly notify each other Lender thereof. Each other Lender
irrevocably and unconditionally agrees to so pay to the Agent in immediately
available funds for the Issuing Lender's account the amount of such other
Lender's Percentage of such payment or disbursement. If and to the extent any
Lender shall not have made such amount available to the Agent by 1:00 P.M.,
Chicago time, on the Business Day on which such Lender receives notice from the
Agent of such payment or disbursement (it being understood that any such notice
received after 11:00 a.m., Chicago time, on any Business Day shall be deemed to
have been received on the next following Business Day), such Lender agrees to
pay interest on such amount to the Agent for the Issuing Lender's account
forthwith on demand, for each day from the date such amount was to have been
delivered to the Agent to the date such amount is paid, at a rate per annum
equal to (a) for the first three days after demand, the Federal Funds Rate from
time to time in effect and (b) thereafter, the Base Rate from time to time in
effect. Any Lender's failure to make available to the Agent its Pro Rata Share
of any such payment or disbursement shall not relieve any other Lender of its
obligation hereunder to make available to the Agent such other Lender's Pro Rata
Share of such payment, but no Lender shall be responsible for the failure of any
other Lender to make available to the Agent such other Lender's Pro Rata Share
of any such payment or disbursement.
2.4
Commitments Several. The failure of any Lender to make a requested Loan on any
date shall not relieve any other Lender of its obligation (if any) to make a
Loan on such date, but no Lender shall be responsible for the failure of any
other Lender to make any Loan to be made by such other Lender.
2.5
Certain Conditions. Notwithstanding any other provision of this Agreement, no
Lender shall have an obligation to make any Loan, or to permit the continuation
of or any conversion into any LIBOR Loan, and the Issuing Lender shall not have
any obligation to issue any Letter of Credit, if an Event of Default or
Unmatured Event of Default exists.
SECTION 3. NOTES EVIDENCING LOANS.
3.1
Notes. The Loans of each Lender shall be evidenced by a promissory note (each a
"Note") substantially in the form set forth in Exhibits A-1, A-2 and A-3,
respectively, with appropriate insertions, payable to the order of such Lender
in a face principal amount equal to the sum of such Lender's Pro Rata Share of
the Revolving Commitment Amount plus the principal amount of such Lender's
applicable Loan, as follows:
each Revolving Loan of such Lender shall be paid in full on the Termination
Date; and
the applicable Term Loan of such Lender shall be paid in installments equal to
such Lender's Pro Rata Share of the aggregate principal amount of the
installments of such Term Loans as set forth on Schedule 3.1.
3.2
Recordkeeping. Each Lender shall record in its records, or at its option on the
schedule attached to its Note, the date and amount of each Loan made by such
Lender, each repayment or conversion thereof and, in the case of each LIBOR
Loan, the dates on which each Interest Period for such Loan shall begin and end.
The aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on such Note. The
failure to so record any such amount or any error in so recording any such
amount shall not, however, limit or otherwise affect the obligations of the
Company hereunder or under any Note to repay the principal amount of the Loans
evidenced by such Note together with all interest accruing thereon.
SECTION 4. INTEREST.
4.1
Interest Rates. The Company promises to pay interest on the unpaid principal
amount of each Loan for the period commencing on the date of such Loan until
such Loan is paid in full as follows:
at all times while such Loan is a Base Rate Loan, at a rate per annum equal to
the sum of the Base Rate from time to time in effect plus the applicable Base
Rate Margin from time to time in effect; and
at all times while such Loan is a LIBOR Loan, at a rate per annum equal to the
sum of the LIBOR (Reserve Adjusted) applicable to each Interest Period for such
Loan plus the applicable LIBOR Margin from time to time in effect;
provided that at any time an Event of Default exists, if requested by the
Required Lenders, the interest rate applicable to each Loan shall be increased
by 2%.
4.2
Interest Payment Dates. Accrued interest on each Base Rate Loan shall be payable
in arrears on the first day of each calendar month, and the remaining accrued
and unpaid interest shall be payable at maturity. Accrued interest on each LIBOR
Loan shall be payable on the last day of each Interest Period relating to such
Loan (and, in the case of a LIBOR Loan with an Interest Period of six months or
greater, on each three-month anniversary of the first day of such Interest
Period) and at maturity. After maturity, accrued interest on all Loans shall be
payable on demand.
4.3
Setting and Notice of LIBOR. The applicable LIBOR for each Interest Period shall
be determined by the Agent, and notice thereof shall be given by the Agent
promptly to the Company and each Lender. Each determination of the applicable
LIBOR by the Agent shall be conclusive and binding upon the parties hereto, in
the absence of demonstrable error. The Agent shall, upon written request of the
Company or any Lender, deliver to the Company or such Lender a statement showing
the computations used by the Agent in determining any applicable LIBOR
hereunder.
4.4
Computation of Interest. Interest shall be computed for the actual number of
days elapsed on the basis of a year of 360 days. The applicable interest rate
for each Base Rate Loan shall change simultaneously with each change in the Base
Rate.
SECTION 5. FEES.
5.1 Non-Use Fee. The Company agrees to pay to the Agent for the account of each
Lender a non-use fee, for the period from the Closing Date to the Termination
Date, at the Non-Use Fee Rate in effect from time to time of such Lender's Pro
Rata Share (as adjusted from time to time) of the unused amount of the Revolving
Commitment Amount. For purposes of calculating usage under this Section, the
Revolving Commitment Amount shall be deemed used to the extent of the aggregate
principal amount of all outstanding Revolving Loans plus the Stated Amount of
all Letters of Credit. Such non-use fee shall be payable in arrears on the first
day of each calendar month and on the Termination Date for any period then
ending for which such non-use fee shall not have previously been paid. The
non-use fee shall be computed for the actual number of days elapsed on the basis
of a year of 360 days.
5.2 Letter of Credit Fees. (a) The Company agrees to pay to the Agent for the
account of each Lender a letter of credit fee for each Letter of Credit equal to
the LC Fee Rate in effect from time to time of such Lender's Pro Rata Share (as
adjusted from time to time) of the undrawn amount of such Letter of Credit
(computed for the actual number of days elapsed on the basis of a year of 360
days); provided that, if requested by the Required Lenders, the rate applicable
to each Letter of Credit shall be increased by 2% at any time that an Event of
Default exists. Such letter of credit fee shall be payable in arrears on the
first day of each calendar month and on the Termination Date (or such later date
on which such Letter of Credit expires or is terminated) for the period from the
date of the issuance of each Letter of Credit (or the last day on which the
letter of credit fee was paid with respect thereto) to the date such payment is
due or, if earlier, the date on which such Letter of Credit expired or was
terminated.
In addition, with respect to each Letter of Credit, the Company agrees to pay to
the Issuing Lender, for its own account, (i) such fees and expenses as the
Issuing Lender customarily requires in connection with the issuance,
negotiation, processing and/or administration of letters of credit in similar
situations and (ii) a letter of credit fronting fee in the amount and at the
times agreed to by the Company and the Issuing Lender.
5.3 Upfront Fees. The Company agrees to pay to the Agent for the account of each
Lender on the Closing Date an upfront fee in the amount previously agreed to
between the Company and the Agent (and the Agent agrees to promptly forward to
each Lender a portion of such upfront closing fee in the amount previously
agreed to between the Agent and such Lender).
SECTION 6. REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT;
PREPAYMENTS.
6.1 Reduction or Termination of the Revolving Commitment Amount.
6,1.1 Voluntary Reduction or Termination of the Revolving Commitment Amount The
Company may from time to time on at least five Business Days' prior written
notice received by the Agent (which shall promptly advise each Lender thereof)
permanently reduce the Revolving Commitment Amount to an amount not less than
the Revolving Outstandings. Any such reduction shall be in an amount not less
than $1,000,000 or a higher integral multiple of $100,000. Concurrently with any
reduction of the Revolving Commitment Amount to zero, the Company shall pay all
interest on the Revolving Loans, all non-use fees and all letter of credit fees
and shall Cash Collateralize in full all obligations arising with respect to the
Letters of Credit.
SECTION 6. REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT;
PREPAYMENTS.
6.1 Reduction or Termination of the Revolving Commitment Amount.
6.1.1 Voluntary Reduction or Termination of the Revolving Commitment Amount. The
Company may from time to time on at least five Business Days' prior written
notice received by the Agent (which shall promptly advise each Lender thereof)
permanently reduce the Revolving Commitment Amount to an amount not less than
the Revolving Outstandings. Any such reduction shall be in an amount not less
than $1,000,000 or a higher integral multiple of $100,000. Concurrently with any
reduction of the Revolving Commitment Amount to zero, the Company shall pay all
interest on the Revolving Loans, all non-use fees and all letter of credit fees
and shall Cash Collateralize in full all obligations arising with respect to the
Letters of Credit.
6.1.2 Mandatory Reductions of Revolving Commitment Amount. On the date of any
Mandatory Prepayment Event, the Revolving Commitment Amount shall be permanently
reduced by an amount (if any) equal to the Designated Proceeds of such Mandatory
Prepayment Event over the amount (if any) applied to prepay Term Loans pursuant
to Section 6.2.2.
6.1.3 All Reductions of the Revolving Commitment Amount. All reductions of the
Revolving Commitment Amount shall reduce the Commitments pro rata among the
Lenders according to their respective Pro Rata Shares.
6.2 Prepayments.
6.2.1 Voluntary Prepayments. The Company may from time to time prepay the Loans
in whole or in part; provided that the Company shall give the Agent (which shall
promptly advise each Lender) notice thereof not later than 10:00 A.M., Chicago
time, on the day of such prepayment (which shall be a Business Day), specifying
the Loans to be prepaid and the date and amount of prepayment. Any such partial
prepayment shall be in an amount equal to $1,000,000 or a higher integral
multiple of $100,000.
6.2.2 Mandatory Prepayments. (a) The Company shall make a prepayment of the
Loans upon the occurrence of any of the following (each a "Mandatory Prepayment
Event") at the following times and in the following amounts (such applicable
amounts being referred to as "Designated Proceeds"):
Concurrently with the receipt by the Company or any Subsidiary of any Net Cash
Proceeds from any Asset Sale, in an amount equal to 100% of such Net Cash
Proceeds.
Concurrently with the receipt by the Company or any Subsidiary of any Net Cash
Proceeds from any issuance of equity securities of the Company or any Subsidiary
(excluding (x) any issuance of shares of capital stock pursuant to any employee
or director stock option program, benefit plan or compensation program and (y)
any issuance by a Subsidiary to the Company or another Subsidiary), in an amount
equal to 100% of such Net Cash Proceeds.
Concurrently with the receipt by the Company or any Subsidiary of any Net Cash
Proceeds from any issuance of any Debt of the Company or any Subsidiary
(excluding Debt permitted by clauses (a) through (i) of Section 10.7).
Within ten (10) days after the delivery to Agent of the annual audit report of
the Company (such report subject to Agent's approval and satisfaction) as
required by Section 10.1.1 and commencing with Fiscal Year 2000, in an amount
equal to 75% of Excess Cash Flow for such Fiscal Year; provided, for Fiscal Year
2000 only, the amount due shall be based on Excess Cash Flow for the period
beginning September 1, 2000 and ending December 31, 2000, such amount for each
Fiscal Year to be confirmed by the auditors of the Company and be acceptable to
Agent; provided, however, that the failure of such amount to be so confirmed
shall not relieve the Company of the prepayment obligation set forth in this
clause.
If on any day the Revolving Outstandings exceed the Borrowing Base, the Company
shall immediately prepay Revolving Loans and/or Cash Collateralize the
outstanding Letters of Credit, or do a combination of the foregoing, in an
amount sufficient to eliminate such excess.
If on any day on which the Revolving Commitment Amount is reduced pursuant to
Section 6.1.2 the Revolving Outstandings exceed the Revolving Commitment Amount,
the Company shall immediately prepay Revolving Loans or Cash Collateralize the
outstanding Letters of Credit, or do a combination of the foregoing, in an
amount sufficient to eliminate such excess.
6.3 All Prepayments. Each voluntary partial prepayment shall be in a principal
amount of $1,000,000 or a higher integral multiple of $100,000. Any partial
prepayment of a Group of LIBOR Loans shall be subject to the proviso to Section
2.2.3(a). Any prepayment of a LIBOR Loan on a day other than the last day of an
Interest Period therefor shall include interest on the principal amount being
repaid and shall be subject to Section 8.4. All prepayments made in connection
with a Mandatory Prepayment Event shall be applied, in inverse order of
maturity, first, to the remaining installments due under Term Loan A; second, to
the remaining installments due under Term Loan B; third, to any outstanding
principal due under the Revolving Loan and fourth, to any outstanding interest
due under the Loans (as determined by Agent). All prepayments of a Term Loan
other than those required due to a Mandatory Prepayment Event shall be applied
pro rata in the inverse order of maturity to the remaining installments thereof.
<PAGE>
SECTION 7. MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on the Notes,
and of all fees, shall be made by the Company to the Agent in immediately
available funds at the office specified by the Agent not later than 11:00 a.m.
Chicago time, on the date due; and funds received after that hour shall be
deemed to have been received by the Agent on the following Business Day. The
Agent shall promptly remit to each Lender its share of all such payments
received in collected funds by the Agent for the account of such Lender. All
payments under Section 8.1 shall be made by the Company directly to the Lender
entitled thereto.
7.2 Application of Certain Payments. Each payment of principal shall be applied
to such Loans as the Company shall direct by notice to be received by the Agent
on or before the date of such payment or, in the absence of such notice, as the
Agent shall determine in its discretion. Concurrently with each remittance to
any Lender of its share of any such payment, the Agent shall advise such Lender
as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with respect to
any of the Loans, or of any fees, falls due on a day which is not a Business
Day, then such due date shall be extended to the immediately following Business
Day (unless, in the case of a LIBOR Loan, such immediately following Business
Day is the first Business Day of a calendar month, in which case such due date
shall be the immediately preceding Business Day) and, in the case of principal,
additional interest shall accrue and be payable for the period of any such
extension.
7.4 Setoff. The Company agrees that the Agent and each Lender have all rights of
set-off and Lenders' lien provided by applicable law, and in addition thereto,
the Company agrees that at any time any Event of Default exists, the Agent and
each Lender may apply to the payment of any obligations of the Company
hereunder, whether or not then due, any and all balances, credits, deposits,
accounts or moneys of the Company then or thereafter with the Agent or such
Lender.
7.5 Proration of Payments. If any Lender shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise,
but excluding any payment pursuant to Section 8.7 or 14.9 and payments of
interest on any Affected Loan) on account of principal of or interest on any
Loan (or on account of its participation in any Letter of Credit) in excess of
its pro rata share of payments and other recoveries obtained by all Lenders on
account of principal of and interest on the Loans (or such participation) then
held by them, such Lender shall purchase from the other Lenders such
participations in the Loans (or sub-participations in Letters of Credit) held by
them as shall be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; provided that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery.
7.6 Taxes. All payments of principal of, and interest on, the Loans and all
other amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, excluding franchise taxes and taxes
imposed on or measured by any Lender's net income or receipts (all non-excluded
items being called "Taxes"). If any withholding or deduction from any payment to
be made by the Company hereunder is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Company will:
pay directly to the relevant authority the full amount required to be so
withheld or deducted;
promptly forward to the Agent an official receipt or other documentation
satisfactory to the Agent evidencing such payment to such authority; and
pay to the Agent for the account of the Lenders such additional amount or
amounts as is necessary to ensure that the net amount actually received by each
Lender will equal the full amount such Lender would have received had no such
withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Company will promptly pay such
additional amounts (including any penalty, interest or expense) as is necessary
in order that the net amount received by such Person after the payment of such
Taxes (including any Taxes on such additional amount) shall equal the amount
such Person would have received had such Taxes not been asserted.
If the Company fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lenders, the required receipts or other required documentary
evidence, the Company shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section 7.6, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Company.
Each Lender that (a) is organized under the laws of a jurisdiction other than
the United States of America and (b)(i) is a party hereto on the Closing Date or
(ii) becomes an assignee of an interest under this Agreement under Section
14.9.1 after the Closing Date (unless such Lender was already a Lender hereunder
immediately prior to such assignment) shall execute and deliver to the Company
and the Agent one or more (as the Company or the Agent may reasonably request)
United States Internal Revenue Service Forms 4224 or Forms 1001 or such other
forms or documents, appropriately completed, as may be applicable to establish
that such Lender is exempt from withholding or deduction of Taxes. The Company
shall not be required to pay additional amounts to any Lender pursuant to this
Section 7.6 to the extent that the obligation to pay such additional amounts
would not have arisen but for the failure of such Lender to comply with this
paragraph.
SECTION 8. INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the adoption of, or any
change in, any applicable law, rule or regulation, or any change in the
interpretation or administration of any applicable law, rule or regulation by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
LIBOR Office of such Lender) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency.
shall subject any Lender (or any LIBOR Office of such Lender) to any tax, duty
or other charge with respect to its LIBOR Loans, its Note or its obligation to
make LIBOR Loans, or shall change the basis of taxation of payments to any
Lender of the principal of or interest on its LIBOR Loans or any other amounts
due under this Agreement in respect of its LIBOR Loans or its obligation to make
LIBOR Loans (except for changes in the rate of tax on the overall net income of
such Lender or its LIBOR Office imposed by the jurisdiction in which such
Lender's principal executive office or LIBOR Office is located);
shall impose, modify or deem applicable any reserve (including any reserve
imposed by the FRB, but excluding any reserve included in the determination of
interest rates pursuant to Section 4), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by
any Lender (or any LIBOR Office of such Lender); or
shall impose on any Lender (or its LIBOR Office) any other condition affecting
its LIBOR Loans, its Note or its obligation to make LIBOR Loans;
and the result of any of the foregoing is to increase the cost to (or to impose
a cost on) such Lender (or any LIBOR Office of such Lender) of making or
maintaining any LIBOR Loan, or to reduce the amount of any sum received or
receivable by such Lender (or its LIBOR Office) under this Agreement or under
its Note with respect thereto, then upon demand by such Lender (which demand
shall be accompanied by a statement setting forth the basis for such demand and
a calculation of the amount thereof in reasonable detail, a copy of which shall
be furnished to the Agent), the Company shall pay directly to such Lender such
additional amount as will compensate such Lender for such increased cost or such
reduction.
If any Lender shall reasonably determine that any change in, the adoption or
phase-in of, any applicable law, rule or regulation regarding capital adequacy,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or any
Person controlling such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's or such controlling Person's capital as a consequence of
such Lender's obligations hereunder or under any Letter of Credit to a level
below that which such Lender or such controlling Person could have achieved but
for such change, adoption, phase-in or compliance (taking into consideration
such Lender's or such controlling Person's policies with respect to capital
adequacy) by an amount deemed by such Lender or such controlling Person to be
material, then from time to time, upon demand by such Lender (which demand shall
be accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail, a copy of which shall be
furnished to the Agent), the Company shall pay to such Lender such additional
amount as will compensate such Lender or such controlling Person for such
reduction.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If with respect
to any Interest Period:
deposits in Dollars (in the applicable amounts) are not being offered to the
Agent in the interbank LIBOR market for such Interest Period, or the Agent
otherwise reasonably determines (which determination shall be binding and
conclusive on the Company) that by reason of circumstances affecting the
interbank LIBOR market adequate and reasonable means do not exist for
ascertaining the applicable LIBOR; or
Lenders having aggregate Pro Rata Shares of 40% or more advise the Agent that
the LIBOR (Reserve Adjusted) as determined by the Agent will not adequately and
fairly reflect the cost to such Lenders of maintaining or funding LIBOR Loans
for such Interest Period (taking into account any amount to which such Lenders
may be entitled under Section 8.1) or that the making or funding of LIBOR Loans
has become impracticable as a result of an event occurring after the date of
this Agreement which in the opinion of such Lenders materially affects such
Loans;
then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Lender shall be under any obligation
to make or convert into LIBOR Loans and (ii) on the last day of the current
Interest Period for each LIBOR Loan, such Loan shall, unless then repaid in
full, automatically convert to a Base Rate Loan.
8.3 Changes in Law Rendering LIBOR Loans Unlawful. If any change in, or the
adoption of any new, law or regulation, or any change in the interpretation of
any applicable law or regulation by any governmental or other regulatory body
charged with the administration thereof, should make it (or in the good faith
judgment of any Lender cause a substantial question as to whether it is)
unlawful for any Lender to make, maintain or fund LIBOR Loans, then such Lender
shall promptly notify each of the other parties hereto and, so long as such
circumstances shall continue, (a) such Lender shall have no obligation to make
or convert into LIBOR Loans (but shall make Base Rate Loans concurrently with
the making of or conversion into LIBOR Loans by the Lenders which are not so
affected, in each case in an amount equal to the amount of LIBOR Loans which
would be made or converted into by such Lender at such time in the absence of
such circumstances) and (b) on the last day of the current Interest Period for
each LIBOR Loan of such Lender (or, in any event, on such earlier date as may be
required by the relevant law, regulation or interpretation), such LIBOR Loan
shall, unless then repaid in full, automatically convert to a Base Rate Loan.
Each Base Rate Loan made by a Lender which, but for the circumstances described
in the foregoing sentence, would be a LIBOR Loan (an "Affected Loan") shall
remain outstanding for the same period as the Group of LIBOR Loans of which such
Affected Loan would be a part absent such circumstances.
8.4 Funding Losses. The Company hereby agrees that upon demand by any Lender
(which demand shall be accompanied by a statement setting forth the basis for
the amount being claimed, a copy of which shall be furnished to the Agent), the
Company will indemnify such Lender against any net loss or expense which such
Lender may sustain or incur (including any net loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund or maintain any LIBOR Loan), as reasonably determined by
such Lender, as a result of (a) any payment, prepayment or conversion of any
LIBOR Loan of such Lender on a date other than the last day of an Interest
Period for such Loan (including any conversion pursuant to Section 8.3) or (b)
any failure of the Company to borrow, convert or continue any Loan on a date
specified therefor in a notice of borrowing, conversion or continuation pursuant
to this Agreement. For this purpose, all notices to the Agent pursuant to this
Agreement shall be deemed to be irrevocable.
8.5
Right of Lenders to Fund through Other Offices. Each Lender may, if it so
elects, fulfill its commitment as to any LIBOR Loan by causing a foreign branch
or Affiliate of such Lender to make such Loan; provided that in such event for
the purposes of this Agreement such Loan shall be deemed to have been made by
such Lender and the obligation of the Company to repay such Loan shall
nevertheless be to such Lender and shall be deemed held by it, to the extent of
such Loan, for the account of such branch or Affiliate.
8.6
Discretion of Lenders as to Manner of Funding. Notwithstanding any provision of
this Agreement to the contrary, each Lender shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Lender had actually funded and
maintained each LIBOR Loan during each Interest Period for such Loan through the
purchase of deposits having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the LIBOR for such Interest Period.
8.7
Mitigation of Circumstances; Replacement of Lenders. (a) Each Lender shall
promptly notify the Company and the Agent of any event of which it has knowledge
which will result in, and will use reasonable commercial efforts available to it
(and not, in such Lender's sole judgment, otherwise disadvantageous to such
Lender) to mitigate or avoid, (i) any obligation by the Company to pay any
amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence of any
circumstances described in Section 8.2 or 8.3 (and, if any Lender has given
notice of any such event described in clause (i) or (ii) above and thereafter
such event ceases to exist, such Lender shall promptly so notify the Company and
the Agent). Without limiting the foregoing, each Lender will designate a
different funding office if such designation will avoid (or reduce the cost to
the Company of) any event described in clause (i) or (ii) of the preceding
sentence and such designation will not, in such Lender's sole judgment, be
otherwise disadvantageous to such Lender.
If the Company becomes obligated to pay additional amounts to any Lender
pursuant to Section 7.6 or 8.1, or any Lender gives notice of the occurrence of
any circumstances described in Section 8.2 or 8.3, the Company may designate
another Lender which is acceptable to the Agent and the Issuing Lender in their
reasonable discretion (such other Lender being called a "Replacement Lender") to
purchase the Loans of such Lender and such Lender's rights hereunder, without
recourse to or warranty by, or expense to, such Lender, for a purchase price
equal to the outstanding principal amount of the Loans payable to such Lender
plus any accrued but unpaid interest on such Loans and all accrued but unpaid
fees owed to such Lender and any other amounts payable to such Lender under this
Agreement, and to assume all the obligations of such Lender hereunder, and, upon
such purchase and assumption (pursuant to an Assignment Agreement), such Lender
shall no longer be a party hereto or have any rights hereunder (other than
rights with respect to indemnities and similar rights applicable to such Lender
prior to the date of such purchase and assumption) and shall be relieved from
all obligations to the Company hereunder, and the Replacement Lender shall
succeed to the rights and obligations of such Lender hereunder.
8.8
Conclusiveness of Statements; Survival of Provisions. Determinations and
statements of any Lender pursuant to Section 8.1, 8.2, 8.3 or 8.4 shall be
conclusive absent demonstrable error. Lenders may use reasonable averaging and
attribution methods in determining compensation under Sections 8.1 and 8.4, and
the provisions of such Sections shall survive repayment of the Loans,
cancellation of the Notes, expiration or termination of the Letters of Credit
and termination of this Agreement.
SECTION 9. WARRANTIES.
To induce the Agent and the Lenders to enter into this Agreement and to induce
the Lenders to make Loans and issue and participate in Letters of Credit
hereunder, the Company warrants to the Agent and the Lenders (after giving
effect to the Purchase and the merger contemplated by the Onkyo Merger
Agreement) that:
9.1
Organization. The Company is a corporation validly existing and in good standing
under the laws of the State of Indiana; each Subsidiary is validly existing and
in good standing under the laws of the jurisdiction of its organization; and
each of the Company and each Subsidiary is duly qualified to do business in each
jurisdiction where, because of the nature of its activities or properties, such
qualification is required, except for such jurisdictions where the failure to so
qualify would not have a Material Adverse Effect.
9.2
Authorization; No Conflict. Each of the Company and each other Loan Party is
duly authorized to execute and deliver each Loan Document to which it is a
party, the Company is duly authorized to borrow monies hereunder and each of the
Company and each other Loan Party is duly authorized to perform its obligations
under each Loan Document to which it is a party. The execution, delivery and
performance by the Company of this Agreement and by each of the Company and each
other Loan Party of each Loan Document to which it is a party, and the
borrowings by the Company hereunder, do not and will not (a) require any consent
or approval of any governmental agency or authority (other than any consent or
approval which has been obtained and is in full force and effect), (b) conflict
with (i) any provision of law, (ii) the charter, by-laws or other organizational
documents of the Company or any other Loan Party or (iii) any agreement,
indenture, instrument or other document, or any judgment, order or decree, which
is binding upon the Company or any other Loan Party or any of their respective
properties or (c) require, or result in, the creation or imposition of any Lien
on any asset of the Company or any other Loan Party (other than Liens in favor
of the Agent created pursuant to the Collateral Documents).
9.3
Validity and Binding Nature. Each of this Agreement and each other Loan Document
to which the Company or any other Loan Party is a party is the legal, valid and
binding obligation of such Person, enforceable against such Person in accordance
with its terms, subject to Bankruptcy, insolvency and similar laws affecting the
enforceability of creditors' rights generally and to general principles of
equity.
9.4
Financial Condition. The audited consolidated financial statements of the
Company and its Subsidiaries as at Company's Fiscal Year End, 1999 and the
unaudited consolidated financial statements of the Company and the Subsidiaries
as of July 31, 2000, copies of each of which have been delivered to each Lender,
were prepared in accordance with GAAP (subject, in the case of such unaudited
statements, to the absence of footnotes and to normal year-end adjustments) and
present fairly the consolidated financial condition of the Company and its
Subsidiaries as at such dates and the results of their operations for the
periods then ended.
9.5
No Material Adverse Change. Since Company's Fiscal Year End, 1999 there has been
no material adverse change in the financial condition, operations, assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole.
9.6
Litigation and Contingent Liabilities. No litigation (including derivative
actions), arbitration proceeding or governmental investigation or proceeding is
pending or, to the Company's knowledge, threatened against the Company,
Guarantors or any Subsidiary which might reasonably be expected to have a
Material Adverse Effect, except as set forth in Schedule 9.6. Other than any
liability incident to such litigation or proceedings, neither the Company nor
any Subsidiary has any material contingent liabilities not listed on Schedule
9.6 or permitted by Section 10.7.
9.7
Ownership of Properties; Liens. Each of the Company and each Subsidiary owns
good and, in the case of real property, marketable title to all of its
properties and assets, real and personal, tangible and intangible, of any nature
whatsoever (including patents, trademarks, trade names, service marks and
copyrights), free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, service marks,
copyrights and the like) except as permitted by Section 10.8.
9.8
Subsidiaries. As of the Closing Date, the Company has no Subsidiaries other
than those listed on Schedule 9.8.
9.9
Pension Plans. (a) During the twelve-consecutive-month period prior to the date
of the execution and delivery of this Agreement or the making of any Loan or the
issuance of any Letter of Credit, (i) no steps have been taken to terminate any
Pension Plan and (ii) no contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to any
Pension Plan which could result in the incurrence by the Company of any material
liability, fine or penalty.
All contributions (if any) have been made to any Multiemployer Pension Plan that
are required to be made by the Company or any other member of the Controlled
Group under the terms of the plan or of any collective bargaining agreement or
by applicable law; neither the Company nor any member of the Controlled Group
has withdrawn or partially withdrawn from any Multiemployer Pension Plan,
incurred any withdrawal liability with respect to any such plan or received
notice of any claim or demand for withdrawal liability or partial withdrawal
liability from any such plan, and no condition has occurred which, if continued,
might result in a withdrawal or partial withdrawal from any such plan; and
neither the Company nor any member of the Controlled Group has received any
notice that any Multiemployer Pension Plan is in reorganization, that increased
contributions may be required to avoid a reduction in plan benefits or the
imposition of any excise tax, that any such plan is or has been funded at a rate
less than that required under Section 412 of the Code, that any such plan is or
may be terminated, or that any such plan is or may become insolvent.
9.10
Investment Company Act. Neither the Company nor any Subsidiary is an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940.
9.11
Public Utility Holding Company Act. Neither the Company nor any Subsidiary is a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935.
9.12
Regulation U. The Company is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
9.13
Taxes. Each of the Company and each Subsidiary has filed all tax returns and
reports required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such taxes or charges
which are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.
9.14
Solvency, etc. On the Closing Date, and immediately prior to and after giving
effect to the issuance of each Letter of Credit and each borrowing hereunder and
the use of the proceeds thereof, (a) each of the Company's and each other Loan
Party's assets will exceed its liabilities and (b) each of the Company and each
other Loan Party will be solvent, will be able to pay its debts as they mature,
will own property with fair saleable value greater than the amount required to
pay its debts and will have capital sufficient to carry on its business as then
constituted.
9.15
Environmental Matters.
No Violations. Except as set forth on Schedule 9.15, neither the Company nor any
Subsidiary, nor any operator of the Company's or any Subsidiary's properties, is
in violation, or alleged violation, of any judgment, decree, order, law, permit,
license, rule or regulation pertaining to environmental matters, including those
arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986 or any
other Environmental Law which (i) in any single case, requires expenditures in
any three-year period of $100,000 or more by the Company and its Subsidiaries in
penalties and/or for investigative, removal or remedial actions or (ii)
individually or in the aggregate otherwise might reasonably be expected to have
a Material Adverse Effect.
Notices. Except as set forth on Schedule 9.15 and for matters arising after the
Closing Date, in each case none of which could singly or in the aggregate be
expected to have a Material Adverse Effect, neither the Company nor any
Subsidiary has received notice from any third party, including any Federal,
state or local governmental authority: (a) that any one of them has been
identified by the U.S. Environmental Protection Agency as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B; (b) that any hazardous waste, as
defined by 42 U.S.C. ss.6903(5), any hazardous substance as defined by 42 U.S.C.
ss.9601(14), any pollutant or contaminant as defined by 42 U.S.C. ss.9601(33) or
any toxic substance, oil or hazardous material or other chemical or substance
regulated by any Environmental Law (all of the foregoing, "Hazardous
Substances") which any one of them has generated, transported or disposed of has
been found at any site at which a Federal, state or local agency or other third
party has conducted a remedial investigation, removal or other response action
pursuant to any Environmental Law; (c) that the Company or any Subsidiary must
conduct a remedial investigation, removal, response action or other activity
pursuant to any Environmental Law; or (d) of any Environmental Claim.
Handling of Hazardous Substances. Except as set forth on Schedule 9.15, (i) no
portion of the real property or other assets of the Company or any Subsidiary
has been used for the handling, processing, storage or disposal of Hazardous
Substances except in accordance in all material respects with applicable
Environmental Laws; and no underground tank or other underground storage
receptacle for Hazardous Substances is located on such properties; (ii) in the
course of any activities conducted by the Company, any Subsidiary or the
operators of any real property of the Company or any Subsidiary, to the best of
the Company's knowledge, no Hazardous Substances have been generated or are
being used on such properties except in accordance in all material respects with
applicable Environmental Laws; (iii) there have been no Releases or threatened
Releases of Hazardous Substances on, upon, into or from any real property or
other assets of the Company or any Subsidiary, which Releases singly or in the
aggregate might reasonably be expected to have a material adverse effect on the
value of such real property or assets; (iv) to the best of the Company's
knowledge, there have been no Releases on, upon, from or into any real property
in the vicinity of the real property or other assets of the Company or any
Subsidiary which, through soil or groundwater contamination, may have come to be
located on, and which might reasonably be expected to have a material adverse
effect on the value of, the real property or other assets of the Company or any
Subsidiary; and (v) any Hazardous Substances generated by the Company and its
Subsidiaries have been transported offsite only by properly licensed carriers
and delivered only to treatment or disposal facilities maintaining valid permits
as required under applicable Environmental Laws, which transporters and
facilities, to the best of the Company's knowledge, have been and are operating
in compliance in all material respects with such permits and applicable
Environmental Laws.
9.16
Onkyo Merger. (a) The merger of the Company with and into Onkyo America, Inc.
pursuant to the Onkyo Merger Agreement, whereas Onkyo America, Inc. will be the
surviving corporation ("Onkyo Merger"), will be consummated on the Closing Date.
Neither entity party to the Onkyo Merger will have any adverse tax consequences
as a result of such merger.
Each of the Company and, to the Company's knowledge, each other party to the
Onkyo Merger Agreement, has duly taken all necessary corporate, partnership or
other organizational action to authorize the execution, delivery and performance
of the Onkyo Merger Agreement and the consummation of transactions contemplated
thereby.
The Onkyo Merger will comply with all applicable legal requirements, and all
necessary governmental, regulatory, creditor, shareholder, partner and other
material consents, approvals and exemptions required to be obtained by the
Company and, to the Company's knowledge, each other party to the Onkyo Merger
Agreement in connection with the Onkyo Merger will be, prior to consummation of
the Onkyo Merger, duly obtained and will be in full force and effect. As of the
date of the Onkyo Merger Agreement, all applicable waiting periods with respect
to the Onkyo Merger will have expired without any action being taken by any
competent governmental authority which restrains, prevents or imposes material
adverse conditions upon the consummation of the Onkyo Merger.
The execution and delivery of the Onkyo Merger Agreement did not, and the
consummation of the Onkyo Merger will not, violate any statute or regulation of
the United States (including any securities law) or of any state or other
applicable jurisdiction, or any order, judgment or decree of any court or
governmental body binding on the Company or, to the Company's knowledge, any
other party to the Onkyo Merger Agreement, or result in a breach of, or
constitute a default under, any material agreement, indenture, instrument or
other document, or any judgment, order or decree, to which the Company is a
party or by which the Company is bound or, to the Company's knowledge, to which
any other party to the Onkyo Merger Agreement is a party or by which any such
party is bound.
No statement or representation made in the Onkyo Merger Agreement by the Company
or, to the Company's knowledge, any other Person, contains any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they are made, not misleading.
<PAGE>
9.17
Insurance. Set forth on Schedule 9.17 is a complete and accurate summary of the
property and casualty insurance program of the Company and its Subsidiaries as
of the Closing Date (including the names of all insurers, policy numbers,
expiration dates, amounts and types of coverage, annual premiums, exclusions,
deductibles, self-insured retention, and a description in reasonable detail of
any self-insurance program, retrospective rating plan, fronting arrangement or
other risk assumption arrangement involving the Company or any Subsidiary).
9.18
Real Property. Set forth on Schedule 9.18 is a complete and accurate list, as of
the Closing Date, of the address of all real property owned or leased by the
Company or any Subsidiary, together with, in the case of leased property, the
name and mailing address of the lessor of such property.
9.19
Information. All information heretofore or contemporaneously herewith furnished
in writing by the Company or any other Loan Party to the Agent or any Lender for
purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by or on
behalf of the Company, the Guarantors or any Subsidiary of the Company or
Guarantors to the Agent or any Lender pursuant hereto or in connection herewith
will be, true and accurate in every material respect on the date as of which
such information is dated or certified, and none of such information is or will
be incomplete by omitting to state any material fact necessary to make such
information not misleading in light of the circumstances under which made (it
being recognized by the Agent and the Lenders that any projections and forecasts
provided by the Company are based on good faith estimates and assumptions
believed by the Company to be reasonable as of the date of the applicable
projections or assumptions and that actual results during the period or periods
covered by any such projections and forecasts may differ from projected or
forecasted results).
9.19
Intellectual Property. The Company and each Subsidiary owns and possesses or has
a license or other right to use all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service mark
rights and copyrights as are necessary for the conduct of the business of the
Company and its Subsidiaries (the "Intellectual Property Rights"), and to the
best knowledge of the Company and each Subsidiary, the Intellectual Property
Rights do not infringe upon rights of others which could reasonably be expected
to have a Material Adverse Effect.
9.20
Burdensome Obligations. Neither the Company nor any Subsidiary is a party to any
agreement or contract or subject to any corporate or partnership restriction
which might reasonably be expected to have a Material Adverse Effect.
9.21
1.1 Labor Matters. Except as set forth on Schedule 9.22, neither the Company nor
any Subsidiary is subject to any labor or collective bargaining agreement. There
are no existing or threatened strikes, lockouts or other labor disputes
involving the Company or any Subsidiary that singly or in the aggregate could
reasonably be expected to have a Material Adverse Effect. To the best knowledge
of the Company and its Subsidiaries, hours worked by and payment made to
employees of the Company and its Subsidiaries are not in violation of the Fair
Labor Standards Act or any other applicable law, rule or regulation dealing with
such matters which would cause a Material Adverse Effect.
9.23 No Default. No Event of Default or Unmatured Event of Default exists
or would result from the incurring by the Company of any Debt hereunder or under
any other Loan Document.
9.24
Purchase Agreement, etc. (a) The Company has heretofore furnished the
Agent a true and correct copy of the Purchase Agreement.
(1) Each of the Company and, to the Company's knowledge, each other party
to the Purchase Agreement, has duly taken all necessary corporate,
partnership or other organizational action to authorize the execution,
delivery and performance of the Purchase Agreement and the consummation
of transactions contemplated thereby.
(2) The Purchase will comply with all applicable legal requirements, and
all necessary governmental, regulatory, creditor, shareholder, partner
and other material consents, approvals and exemptions required to be
obtained by the Company and, to the Company's knowledge, each other
party to the Purchase Agreement in connection with the Purchase will
be, prior to consummation of the Purchase, duly obtained and will be in
full force and effect. As of the date of the Purchase Agreement, all
applicable waiting periods with respect to the Purchase will have
expired without any action being taken by any competent governmental
authority which restrains, prevents or imposes material adverse
conditions upon the consummation of the Purchase.
(3) The execution and delivery of the Purchase Agreement did not, and the
consummation of the Purchase will not, violate any statute or
regulation of the United States (including any securities law) or of
any state or other applicable jurisdiction in any material respect, or
any order, judgment or decree of any court or governmental body binding
on the Company or, to the Company's knowledge, any other party to the
Purchase Agreement, or result in a breach of, or constitute a default
under, any material agreement, indenture, instrument or other document,
or any judgment, order or decree, to which the Company is a party or by
which the Company is bound or, to the Company's knowledge, to which any
other party to the Purchase Agreement is a party or by which any such
party is bound.
(4) No statement or representation made in the Purchase Agreement by the
Company or, to the Company's knowledge, any other Person, contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they
are made, not misleading.
SECTION 10. COVENANTS.
Until the expiration or termination of the Commitments and thereafter until all
obligations of the Company hereunder and under the other Loan Documents are paid
in full and all Letters of Credit have been terminated, the Company agrees that,
unless at any time the Required Lenders shall otherwise expressly consent in
writing, it will:
10.1
Reports, Certificates and Other Information. Furnish to the Agent and each
Lender:
10.1 Annual Report. Promptly when available and in any event within 105 days
after the close of each Fiscal Year: (a) a copy of the annual audit report of
the Company and its Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets and statements of earnings and cash flows of the
Company and its Subsidiaries as at the end of such Fiscal Year, certified
without qualification by Deloitte & Touche or other independent auditors of
recognized standing selected by the Company and reasonably acceptable to the
Agent, together with (i) a written statement from such accountants to the effect
that in making the examination necessary for the signing of such annual audit
report by such accountants, nothing came to their attention that caused them to
believe that the Company was not in compliance with any provision of Section
10.6, 10.7, 10.9 or 10.10 of this Agreement insofar as such provision relates to
accounting matters or, if something has come to their attention that caused them
to believe that the Company was not in compliance with any such provision,
describing such non-compliance in reasonable detail and (ii) a comparison with
the budget for such Fiscal Year and a comparison with the previous Fiscal Year;
and (b) consolidating balance sheets of the Company and its Subsidiaries as of
the end of such Fiscal Year and a consolidating statement of earnings for the
Company and its Subsidiaries for such Fiscal Year, certified by the Chief
Financial Officer of the Company.
10.2 Interim Reports. (a) Promptly when available and in any event within 50
days after the end of each Fiscal Quarter (except the last Fiscal Quarter of
each Fiscal Year), consolidated balance sheets of the Company and its
Subsidiaries as of the end of such Fiscal Quarter, together with consolidated
statements of earnings and cash flows for such Fiscal Quarter and for the period
beginning with the first day of such Fiscal Year and ending on the last day of
such Fiscal Quarter, together with a comparison with the corresponding period of
the previous Fiscal Year and a comparison with the budget for such period of the
current Fiscal Year, certified by the Chief Financial Officer of the Company;
and (b) promptly when available and in any event within 30 days after the end of
each month (except the last month of each Fiscal Quarter), consolidated balance
sheets of the Company and its Subsidiaries as of the end of such month, together
with consolidated statements of earnings and a consolidated statement of cash
flows for such month and for the period beginning with the first day of such
Fiscal Year and ending on the last day of such month, together with a comparison
with the corresponding period of the previous Fiscal Year and a comparison with
the budget for such period of the current Fiscal Year, certified by the Chief
Financial Officer of the Company. Upon thirty (30) days written notice by Agent
to the Company, the Company shall also deliver to Agent consolidating statements
of each of the foregoing, in form and substance acceptable to Agent.
10.3 Compliance Certificates. Contemporaneously with the furnishing of a copy
of each annual audit report pursuant to Section 10.1.1 and each set of monthly
statements pursuant to Section 10.1.2, a duly completed compliance certificate
in the form of Exhibit B, with appropriate insertions, dated the date of such
annual report or such monthly statements and signed by the Chief Financial
Officer of the Company, containing (i) a computation of each of the financial
ratios and restrictions set forth in Section 10.6 and to the effect that such
officer has not become aware of any Event of Default or Unmatured Event of
Default that has occurred and is continuing or, if there is any such event,
describing it and the steps, if any, being taken to cure it and (ii) a written
statement of the Company's management setting forth a discussion of the
Company's financial condition, changes in financial condition and results of
operations.
10.1.4
Reports to the SEC and to Shareholders. Promptly upon the filing or
sending thereof, copies of all regular, periodic or special reports of the
Company or any Subsidiary filed with the SEC; copies of all registration
statements of the Company or any Subsidiary filed with the SEC (other than on
Form S-8); and copies of all proxy statements or other communications made to
security holders generally.
10.1.5
Notice of Default, Litigation and ERISA Matters. Promptly upon becoming
aware of any of the following, written notice describing the same and the steps
being taken by the Company or the Subsidiary affected thereby with respect
thereto:
(1) the occurrence of an Event of Default or an Unmatured Event of Default;
(2) any litigation, arbitration or governmental investigation or proceeding
not previously disclosed by the Company to the Lenders which has been
instituted or, to the knowledge of the Company, is threatened against
the Company or any Subsidiary or to which any of the properties of any
thereof is subject which might reasonably be expected to have a
Material Adverse Effect;
(3) the institution of any steps by any member of the Controlled Group or
any other Person to terminate any Pension Plan, or the failure of any
member of the Controlled Group to make a required contribution to any
Pension Plan (if such failure is sufficient to give rise to a Lien
under Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or
the taking of any action with respect to a Pension Plan which could
result in the requirement that the Company furnish a bond or other
security to the PBGC or such Pension Plan, or the occurrence of any
event with respect to any Pension Plan or Multiemployer Pension Plan
which could result in the incurrence by any member of the Controlled
Group of any material liability, fine or penalty (including any claim
or demand for withdrawal liability or partial withdrawal from any
Multiemployer Pension Plan), or any material increase in the contingent
liability of the Company with respect to any post-retirement welfare
plan benefit, or any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of an excise tax, that any
such plan is or has been funded at a rate less than that required under
Section 412 of the Code, that any such plan is or may be terminated, or
that any such plan is or may become insolvent;
(4) any cancellation or material change in any insurance maintained by the
Company or any Subsidiary; or
(5) any other event (including (i) any violation of any Environmental Law
or the assertion of any Environmental Claim or (ii) the enactment or
effectiveness of any law, rule or regulation) which might reasonably be
expected to have a Material Adverse Effect.
10.1.6 Borrowing Base Certificates. Within 15 days of the end of each month, a
Borrowing Base Certificate dated as of the end of such month and executed by the
Chief Financial Officer of the Company on behalf of the Company (provided that
(i) the Company may deliver a Borrowing Base Certificate more frequently if it
chooses and (ii) at any time an Event of Default exists, the Agent may require
the Company to deliver Borrowing Base Certificates more frequently), together
with monthly accounts payable reports, Accounts Receivable reports and inventory
listings, in form and substance acceptable to Agent.
10.1.7
Management Reports. Promptly upon the request of the Agent or any Lender,
copies of all detailed financial and management reports submitted to the Company
by independent auditors in connection with each annual or interim audit made by
such auditors of the books of the Company.
10.1.8
Projections. As soon as practicable, and in any event within 30 days prior
to the commencement of each Fiscal Year, financial projections for the Company
and its Subsidiaries for such Fiscal Year (including an operating budget and a
cash flow budget) prepared in a manner consistent with the projections delivered
by the Company to the Lenders prior to the Closing Date or otherwise in a manner
reasonably satisfactory to the Agent, accompanied by a certificate of the Chief
Financial Officer of the Company on behalf of the Company to the effect that (i)
such projections were prepared by the Company in good faith, (ii) the Company
has a reasonable basis for the assumptions contained in such projections and
(iii) such projections have been prepared in accordance with such assumptions.
10.1.9 Subordinated Debt Notices. Promptly from time to time,
copies of any notices (including notices of default or acceleration) received
from any holder or trustee of, under or with respect to any Subordinated Debt.
10.1.10 Reserved.
10.1.11 Other Information. Promptly from time to time, such other
information concerning the Company and its Subsidiaries as any Lender or the
Agent may reasonably request.
10.2
Books, Records and Inspections. Keep, and cause each Subsidiary to keep, its
books and records in accordance with sound business practices sufficient to
allow the preparation of financial statements in accordance with GAAP; permit,
and cause each Subsidiary to permit, any Lender or the Agent or any
representative thereof to inspect the properties and operations of the Company
or such Subsidiary; and permit, and cause each Subsidiary to permit, at any
reasonable time during normal business hours, and with reasonable notice (or at
any time without notice if an Event of Default exists), any Lender or the Agent
or any representative thereof to visit any or all of its offices, to discuss its
financial matters with its officers and its independent auditors (and the
Company hereby authorizes such independent auditors to discuss such financial
matters with any Lender or the Agent or any representative thereof), and to
examine (and, at the expense of the Company or the applicable Subsidiary,
photocopy extracts from) any of its books or other records; and permit, and
cause each Subsidiary to permit, the Agent and its representatives to inspect
the Inventory and other tangible assets of the Company or such Subsidiary, to
perform appraisals of the equipment of the Company or such Subsidiary, and to
inspect, audit, check and make copies of and extracts from the books, records,
computer data, computer programs, journals, orders, receipts, correspondence and
other data relating to Inventory, Accounts Receivable and any other collateral
including, without limitation, quarterly collateral audits. All such inspections
or audits by the Agent shall be at the Company's expense, provided that so long
as no Event of Default or Unmatured Event of Default exists, the Company shall
not be required to reimburse the Agent for audits more frequently than
quarterly.
10.3
Maintenance of Property; Insurance. (a) Keep, and cause each Subsidiary to
keep, all property useful and necessary in the business of the Company or such
Subsidiary in good working order and condition, ordinary wear and tear excepted.
(1) Maintain, and cause each Subsidiary to maintain, with responsible
insurance companies, such insurance as may be required by any law or
governmental regulation or court decree or order applicable to it and
such other insurance, to such extent and against such hazards and
liabilities, as is customarily maintained by companies similarly
situated[, but which shall insure against all risks and liabilities of
the type identified on Schedule 9.17 and shall have insured amounts no
less than, and deductibles no higher than, those set forth on such
schedule; and, upon request of the Agent or any Lender, furnish to the
Agent or such Lender a certificate setting forth in reasonable detail
the nature and extent of all insurance maintained by the Company and
its Subsidiaries. The Company shall cause each issuer of an insurance
policy to provide the Agent with an endorsement (i) showing loss
payable to the Agent with respect to each policy of property or
casualty insurance and naming the Agent, for itself and the benefit of
Lenders, as an additional insured with respect to each policy of
insurance for liability for personal injury or property damage, (ii)
providing that 30 days' notice will be given to the Agent prior to any
cancellation of, material reduction or change in coverage provided by
or other material modification to such policy and (iii) reasonably
acceptable in all other respects to the Agent. The Company shall
execute and deliver to the Agent a collateral assignment, in form and
substance satisfactory to the Agent, of each business interruption
insurance policy maintained by the Company.
(2) UNLESS THE COMPANY PROVIDES THE AGENT WITH EVIDENCE OF THE INSURANCE
COVERAGE REQUIRED BY THIS AGREEMENT, THE AGENT MAY PURCHASE INSURANCE
AT THE COMPANY'S EXPENSE TO PROTECT THE AGENT'S AND THE LENDERS'
INTERESTS IN THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT
THE COMPANY'S INTERESTS. THE COVERAGE THAT THE AGENT PURCHASES MAY NOT
PAY ANY CLAIM THAT IS MADE AGAINST THE COMPANY IN CONNECTION WITH THE
COLLATERAL. THE COMPANY MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE
AGENT, BUT ONLY AFTER PROVIDING THE AGENT WITH EVIDENCE THAT THE
COMPANY HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE
AGENT PURCHASES INSURANCE FOR THE COLLATERAL, THE COMPANY WILL BE
RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST AND ANY
OTHER CHARGES THAT MAY BE IMPOSED WITH THE PLACEMENT OF THE INSURANCE,
UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE
INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE PRINCIPAL
AMOUNT OF THE LOANS OWING HEREUNDER. THE COSTS OF THE INSURANCE MAY BE
MORE THAN THE COST OF THE INSURANCE THE COMPANY MAY BE ABLE TO OBTAIN
ON ITS OWN.
10.4
Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, rules, regulations, decrees, orders, judgments, licenses and permits,
except where failure to comply could not reasonably be expected to have a
Material Adverse Effect; and (b) pay, and cause each Subsidiary to pay, prior to
delinquency, all taxes and other governmental charges against it or any of its
property, as well as claims of any kind which, if unpaid, might become a Lien on
any of its property; provided that the foregoing shall not require the Company
or any Subsidiary to pay any such tax or charge so long as it shall contest the
validity thereof in good faith by appropriate proceedings and shall set aside on
its books adequate reserves with respect thereto in accordance with GAAP.
10.5
Maintenance of Existence, etc. Maintain and preserve, and (subject to
Section 10.11) cause each Subsidiary to maintain and preserve, (a) its existence
and good standing in the jurisdiction of its organization and (b) its
qualification to do business and good standing in each jurisdiction where the
nature of its business makes such qualification necessary (except in those
instances in which the failure to be qualified or in good standing does not have
a Material Adverse Effect).
10.6 Financial Covenants.
10.6.1
Fixed Charge Coverage Ratio. Not permit the Fixed Charge Coverage Ratio
for any Coverage Ratio Computation Period (measured at each month end) to be
less than the applicable ratio set forth below for such Coverage Ratio
Computation Period:
<TABLE>
<S> <C> <C>
------------------------------------------------------------------------- ------------------------------------------
Coverage Ratio Fixed Charge
Computation Period Coverage Ratio
------------------------------------------------------------------------- ------------------------------------------
------------------------------------------------------------------------- ------------------------------------------
September, 2000 through November, 2000 (each month end) 1.15:1
------------------------------------------------------------------------- ------------------------------------------
------------------------------------------------------------------------- ------------------------------------------
December, 2000 through February, 2001 (each month end) 1.20:1
------------------------------------------------------------------------- ------------------------------------------
------------------------------------------------------------------------- ------------------------------------------
March, 2001 through May, 2001 (each month end) 1.25:1
------------------------------------------------------------------------- ------------------------------------------
------------------------------------------------------------------------- ------------------------------------------
June, 2001 through November, 2001 (each month end) 1:35:1
------------------------------------------------------------------------- ------------------------------------------
------------------------------------------------------------------------- ------------------------------------------
December, 2001 and each month end thereafter 1.50:1
------------------------------------------------------------------------- ------------------------------------------
10.6.2
Senior Debt to EBITDA Ratio. Not permit the Senior Debt to EBITDA Ratio as
of the last day of any Computation Period (measured at each month end) to exceed
the applicable ratio set forth below for such Computation Period:
----------------------------------------------------------------------------- --------------------------------------
Senior Debt to
Computation Period EBITDA Ratio
----------------------------------------------------------------------------- --------------------------------------
----------------------------------------------------------------------------- --------------------------------------
September, 2000 through November, 2000 (each month end) 4.00:1
----------------------------------------------------------------------------- --------------------------------------
----------------------------------------------------------------------------- --------------------------------------
December, 2000 through February, 2001 (each month end) 3.25:1
----------------------------------------------------------------------------- --------------------------------------
----------------------------------------------------------------------------- --------------------------------------
March, 2001 through May, 2001 (each month end) 2.75:1
----------------------------------------------------------------------------- --------------------------------------
----------------------------------------------------------------------------- --------------------------------------
June, 2001 through August, 2001 (each month end) 2.50:1
----------------------------------------------------------------------------- --------------------------------------
----------------------------------------------------------------------------- --------------------------------------
September, 2001 through November, 2001 (each month end) 2.00:1
----------------------------------------------------------------------------- --------------------------------------
----------------------------------------------------------------------------- --------------------------------------
December, 2001 through November, 2002 (each month end) 1.75:1
----------------------------------------------------------------------------- --------------------------------------
----------------------------------------------------------------------------- --------------------------------------
December, 2002 and each month end thereafter 1.50:1
----------------------------------------------------------------------------- --------------------------------------
10.6.3
Total Debt to EBITDA Ratio. Not permit the Total Debt to EBITDA Ratio as
of the last day of any Computation Period (measured at each month end) to exceed
the applicable ratio set forth below for such Computation Period:
---------------------------------------------------------------------------- ---------------------------------------
Computation Period Total Debt to
EBITDA Ratio
---------------------------------------------------------------------------- ---------------------------------------
---------------------------------------------------------------------------- ---------------------------------------
September, 2000 through November, 2000 (each month end) 5.00:1
---------------------------------------------------------------------------- ---------------------------------------
---------------------------------------------------------------------------- ---------------------------------------
December, 2000 through February, 2001 (each month end) 4.00:1
---------------------------------------------------------------------------- ---------------------------------------
---------------------------------------------------------------------------- ---------------------------------------
March, 2001 through May, 2001 (each month end) 3.50:1
---------------------------------------------------------------------------- ---------------------------------------
---------------------------------------------------------------------------- ---------------------------------------
June, 2001 through August, 2001 (each month end) 3.25:1
---------------------------------------------------------------------------- ---------------------------------------
---------------------------------------------------------------------------- ---------------------------------------
September, 2001 through November, 2001 (each month end) 2.75:1
---------------------------------------------------------------------------- ---------------------------------------
---------------------------------------------------------------------------- ---------------------------------------
December, 2001 through November, 2002 (each month end) 2.25:1
---------------------------------------------------------------------------- ---------------------------------------
---------------------------------------------------------------------------- ---------------------------------------
December, 2002 and each month end thereafter 2.00:1
---------------------------------------------------------------------------- ---------------------------------------
</TABLE>
10.6.4
Capital Expenditures. Not permit the aggregate amount of all Capital
Expenditures made by the Company and its Subsidiaries in any Fiscal Year to
exceed $1,000,000.
Excess Availability. Not permit Availability to be less than $1,500,000 at
any time a Borrowing Base Certificate is due under this Agreement or at any time
a payment otherwise restricted under the first sentence of Section 10.10 of this
Agreement is permitted to be made pursuant to the remaining provisions of
Section 10.10 (both before and after giving effect to such payment).
10.7
Limitations on Debt. Not, and not permit any Subsidiary to, create, incur,
assume or suffer to exist any Debt, except:
obligations under this Agreement and the other Loan Documents;
Debt secured by Liens permitted by Section 10.8(d), and extensions, renewals and
refinancings thereof; provided that the aggregate amount of all such Debt at any
time outstanding shall not exceed $300,000;
Debt of Subsidiaries to the Company;
unsecured Debt of the Company to Subsidiaries;
Subordinated Debt, which Subordinated Debt may be refinanced by the Company, so
long as the terms and conditions of such refinancing including, but not limited
to, principal amount, interest rate and maturity date, are in form and substance
acceptable to Agent and such refinancing is subject to a subordination agreement
executed by the refinancing lenders in form and substance acceptable to Agent;
Hedging Obligations incurred for bona fide hedging purposes and not for
speculation;
Debt described on Schedule 10.7 and any extension, renewal or refinancing
thereof so long as the principal amount thereof is not increased;
the Debt to be Repaid (so long as such Debt is repaid on the Closing Date with
the proceeds of the initial Loans hereunder); and
other Debt, in addition to the Debt listed above, in an aggregate amount not at
any time exceeding $100,000.
Liens. Not, and not permit any Subsidiary to, create or permit to exist any Lien
on any of its real or personal properties, assets or rights of whatsoever nature
(whether now owned or hereafter acquired), except (collectively, the following
shall herein be referred to as the "Permitted Liens"):
Liens for taxes or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith by
appropriate proceedings and, in each case, for which it maintains adequate
reserves;
Liens arising in the ordinary course of business (such as (i) Liens of carriers,
warehousemen, mechanics and materialmen and other similar Liens imposed by law
and (ii) Liens incurred in connection with worker's compensation, unemployment
compensation and other types of social security (excluding Liens arising under
ERISA) or in connection with surety bonds, bids, performance bonds and similar
obligations) for sums not overdue or being contested in good faith by
appropriate proceedings and not involving any deposits or advances or borrowed
money or the deferred purchase price of property or services and, in each case,
for which it maintains adequate reserves;
Liens described on Schedule 10.8;
subject to the limitation set forth in Section 10.7(b), (i) Liens arising in
connection with Capital Leases (and attaching only to the property being
leased), (ii) Liens existing on property at the time of the acquisition thereof
by the Company or any Subsidiary (and not created in contemplation of such
acquisition) and (iii) Liens that constitute purchase money security interests
on any property securing debt incurred for the purpose of financing all or any
part of the cost of acquiring such property, provided that any such Lien
attaches to such property within 60 days of the acquisition thereof and attaches
solely to the property so acquired;
attachments, appeal bonds, judgments and other similar Liens, for sums not
exceeding $100,000 arising in connection with court proceedings, provided the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
easements, rights of way, restrictions, minor defects or irregularities in title
and other similar Liens not interfering in any material respect with the
ordinary conduct of the business of the Company or any Subsidiary;
Liens arising under the Loan Documents; and
the replacement, extension or renewal of any Lien permitted by clauses (c) or
(g) above upon or in the same property theretofore subject thereto arising out
of the extension, renewal or replacement of the Debt secured thereby (without
increase in the amount thereof).
Operating Leases. Not permit the aggregate amount of all rental payments under
Operating Leases made (or scheduled to be made) by the Company and its
Subsidiaries (on a consolidated basis) to exceed $350,000 in any Fiscal Year.
Restricted Payments. Not, and not permit any Subsidiary to, (a) make any
distribution to any of its shareholders, (b) purchase or redeem any of its
capital stock or other equity interests or any warrants, options or other rights
in respect thereof, (c) pay any management fees or similar fees to any of its
shareholders or any Affiliate thereof, (d) make any redemption, prepayment,
defeasance or repurchase of any Subordinated Debt, (e) make any Earn-Out Payment
(as defined in the Purchase Agreement) whether in the form of cash, stock or a
promissory note, or (f) set aside funds for any of the foregoing.
Notwithstanding the foregoing, (i) any Subsidiary may pay dividends or make
other distributions to the Company or to a Wholly-Owned Subsidiary; (ii) the
Company may redeem any or all of the shares of Preferred Stock from GTI if, and
only if, the following conditions are satisfied: (w) each share of Preferred
Stock shall be redeemed for no more than $1,000,000 in the aggregate, plus a
$50,000 dividend thereon; (x) the Agent shall have received in a timely manner
the Borrowing Base Certificate for the month of August 2000; (y) the
above-referenced Borrowing Base Certificate shall reflect Availability as of the
Closing Date in excess of $3,000,000 (assuming such redemption payment was made
on the Closing Date); and (z) no Event of Default or Unmatured Event of Default
exists at the time of any such redemption payment(s) or would result therefrom;
and (iii) so long as no Event of Default or Unmatured Event of Default exists or
would result therefrom, and, at the time of making the payment, the Company is
in compliance with each financial covenant set forth in Section 10.6, (before
and after giving effect to the applicable payment), the Company may (x) make
payments on the Onkyo Corporation Debt on the scheduled payment dates (but may
not make any prepayments thereof), (y) pay dividends to GTI for the exclusive
purpose of allowing GTI to make interest payments to Mennen in connection with a
$3,000,000 portion of Mennen's loan to GTI ("Dividend Payments"); provided,
however, such Dividend Payments may not, in the aggregate, (A) exceed $375,000
in any Fiscal Year, or (B) exceed $31,250 in any calendar month; and (z) pay
management fees to GTI in an aggregate amount not exceeding $400,000 in the
first Loan Year, $500,000 in the second Loan Year and $600,000 in the third Loan
Year (collectively, the "Management Fee Payments"); provided, however, the
amount of such Management Fee Payments shall not exceed 1/12 of the applicable
Management Fee Payment in any calendar month ("Maximum Monthly Payment"), except
that if the Company is restricted from making the Maximum Monthly Payment due to
the other limitations set forth herein, the Company may make payment on account
of such Management Fee Payment in excess of the Maximum Monthly Payment during
subsequent calendar months within the same Loan Year (and no such excess
payments may be extended past the then current Loan Year) so long as such
payments are otherwise in compliance with the limitations set forth in this
subsection (iii). To the extent the Company is restricted from making any
payment referenced in clauses (x), (y) or (z) of subsection (iii) above because
(i) such payment would either cause an Event of Default or Unmatured Event of
Default to occur or (ii) such payment would cause the Company to not be in
compliance with each financial covenant set forth in Section 10.6, the Company
may make a partial payment thereof to the extent any of the events listed in
either (i) or (ii) of this sentence is not triggered thereby. If at any time
within twelve (12) months of the Company's making of any Management Fee Payment
or Dividend Payment, either an Event of Default or Unmatured Event of Default
occurs or the Company fails to be in compliance with each financial covenant set
forth in Section 10.6, the Company shall cause GTI to immediately upon demand
repay such amount of the Management Fee Payment or Dividend Payment, as
applicable, to the extent necessary to cure such Event of Default or Unmatured
Event of Default.
10.11
Mergers, Consolidations, Sales. Not, and not permit any Subsidiary to, be a
party to any merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of, or any partnership
or joint venture interest in, any other Person, or, except in the ordinary
course of its business, sell, transfer, convey or lease all or any substantial
part of its assets, or sell or assign with or without recourse any receivables,
except for (a) any such merger, consolidation, sale, transfer, conveyance, lease
or assignment of or by any Wholly-Owned Subsidiary into the Company or into,
with or to any other Wholly-Owned Subsidiary; (b) any such purchase or other
acquisition by the Company or any Wholly-Owned Subsidiary of the assets or stock
of any Wholly-Owned Subsidiary; and (c) sales and dispositions of assets
(including the stock of Subsidiaries) for at least fair market value (as
determined by the Board of Directors of the Company) so long as the net book
value of all assets sold or otherwise disposed of in any Fiscal Year does not
exceed 10% of the net book value of the consolidated assets of the Company and
its Subsidiaries as of the last day of the preceding Fiscal Year.
10.12
Modification of Organizational Documents. Not permit the Certificate or Articles
of Incorporation, By-Laws or other organizational documents of the Company or
any Subsidiary to be amended or modified in any way which might reasonably be
expected to materially adversely affect the interests of the Lenders.
10.13
Use of Proceeds. Use the proceeds of the Loans, and the Letters of Credit,
solely to finance the Purchase, for working capital, for Capital Expenditures
and for other general corporate purposes; and not use or permit any proceeds of
any Loan to be used, either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of "purchasing or carrying" any Margin Stock.
10.14
Further Assurances. Take, and cause each Subsidiary to take, such actions as are
necessary or as the Agent or the Required Lenders may reasonably request from
time to time (including the execution and delivery of guaranties, security
agreements, pledge agreements, mortgages, deeds of trust, financing statements
and other documents, the filing or recording of any of the foregoing, and the
delivery of stock certificates and other collateral with respect to which
perfection is obtained by possession) to ensure that (a) the obligations of the
Company hereunder and under the other Loan Documents (i) are secured by
substantially all of the assets of the Company and (ii) guaranteed by all of its
Subsidiaries (including, promptly upon the acquisition or creation thereof, any
Subsidiary acquired or created after the date hereof) by execution of a
counterpart of the Guaranty and (b) the obligations of each Subsidiary under the
Guaranty are secured by substantially all of the assets of such Subsidiary.
Cause each financial institution (other than the Agent) at which the Company or
any Subsidiary maintains any lockbox, deposit account or other similar account
to deliver to the Agent a writing, in form and substance satisfactory to the
Agent, (x) acknowledging and consenting to the security interest of the Agent in
such lockbox or account and all cash, checks, drafts and other instruments or
writings for the payment of money from time to time therein, (y) confirming such
financial institution's agreement to follow the instructions of the Agent with
respect to all such cash, checks, drafts and other instruments or writings for
the payment of money and (z) waiving all rights of setoff and Lender's lien on
all items held in any such lockbox or account (other than with respect to
payment of fees and expenses for account services).
10.15
Transactions with Affiliates. Except as otherwise permitted by this Agreement,
not, and not permit any Subsidiary to, enter into, or cause, suffer or permit to
exist any transaction, arrangement or contract with any of its other Affiliates
(other than the Company and its Subsidiaries) which is on terms which are less
favorable than are obtainable from any Person which is not one of its
Affiliates.
10.16
Employee Benefit Plans. Maintain, and cause each Subsidiary to maintain, each
Pension Plan in substantial compliance with all applicable requirements of law
and regulations.
10.17
Environmental Matters. (a) If any Release or Disposal of Hazardous Substances
shall occur or shall have occurred on any real property or any other assets of
the Company or any Subsidiary, the Company shall, or shall cause the applicable
Subsidiary to, cause the prompt containment and removal of such Hazardous
Substances and the remediation of such real property or other assets as
necessary to comply with all Environmental Laws and to preserve the value of
such real property or other assets. Without limiting the generality of the
foregoing, the Company shall, and shall cause each Subsidiary to, comply with
any valid Federal or state judicial or administrative order requiring the
performance at any real property of the Company or any Subsidiary of activities
in response to the Release or threatened Release of a Hazardous Substance.
To the extent that the transportation of "hazardous waste" as defined by RCRA is
permitted by this Agreement, the Company shall, and shall cause its Subsidiaries
to, dispose of such hazardous waste only at licensed disposal facilities
operating in compliance with Environmental Laws.
10.18
Unconditional Purchase Obligations. Not, and not permit any Subsidiary to, enter
into or be a party to any contract for the purchase of materials, supplies or
other property or services if such contract requires that payment be made by it
regardless of whether delivery is ever made of such materials, supplies or other
property or services.
10.19
Inconsistent Agreements. Not, and not permit any Subsidiary to, enter into any
agreement containing any provision which would (a) be violated or breached by
any borrowing by the Company hereunder or by the performance by the Company or
any Subsidiary of any of its obligations hereunder or under any other Loan
Document, (b) prohibit the Company or any Subsidiary from granting to the Agent,
for the benefit of the Lenders, a Lien on any of its assets or (c) create or
permit to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i) pay dividends or make other distributions to
the Company or any other applicable Subsidiary, or pay any Debt owed to the
Company or any other Subsidiary, (ii) make loans or advances to the Company or
(iii) transfer any of its assets or properties to the Company.
10.20
Business Activities. Not, and not permit any Subsidiary to, engage in any line
of business other than the businesses engaged in on the date hereof and
businesses reasonably related thereto.
10.21
Investments. Not, and not permit any Subsidiary to, make or permit to exist any
Investment in any other Person, except (without duplication) the following:
in the ordinary course of business, Investments by the Company in any Subsidiary
or by any Subsidiary in the Company, by way of intercompany loans, advances or
guaranties, all to the extent permitted by Section 10.7;
Suretyship Liabilities permitted by Section 10.7;
Cash Equivalent Investments;
Lender deposits in the ordinary course of business (subject to the requirements
of Section 10.14(b); and
Investments in securities of account debtors received pursuant to any plan of
reorganization or similar arrangement upon the Bankruptcy or insolvency of such
account debtors.
provided that (x) any Investment which when made complies with the requirements
of the definition of the term "Cash Equivalent Investment" may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; (y) no Investment otherwise permitted by clause (a) or
(b) shall be permitted to be made if, immediately before or after giving effect
thereto, any Event of Default or Unmatured Event of Default exists.
Restriction of Amendments to Certain Documents. Not amend or otherwise modify,
or waive any rights under, the Onkyo Merger Agreement, the Purchase Agreement or
any documents related to the Subordinated Debt.
10.23
Interest Rate Protection. At the request of Agent, enter into an interest rate
protection mechanism on an ISDA standard form with one or more Lenders or
Affiliates thereof or with counterparties reasonably acceptable to the Agent to
hedge the interest rate with respect to not less than 50% of the principal
amount of the Term Loans in form and substance reasonably satisfactory to the
Agent.
10.24
Fiscal Year. Not change its Fiscal Year.
10.25
Cancellation of Debt. Not, and not permit any Subsidiary to, cancel any claim or
debt owing to it, except for reasonable consideration or in the ordinary course
of business, and except for the cancellation of debts or claims not to exceed
$10,000 in any Fiscal Year.
Collection of Accounts and Payments. Establish lockboxes and blocked accounts
(collectively, "Blocked Accounts") in Company's name with such banks
("Collecting Banks") as are acceptable to the Agent (subject to irrevocable
instructions acceptable to the Agent as hereinafter set forth) to which all
Account Debtors shall directly remit all payments on Accounts Receivable and in
which Company will immediately deposit all payments made for Inventory or other
payments constituting proceeds of Collateral (as defined in the Security
Agreement delivered by the Company to Agent on the Closing Date) in the
identical form in which such payment was made, whether by cash or check. The
Collecting Banks shall acknowledge and agree, in a manner satisfactory to the
Agent, that all payments made to the Blocked Accounts are the sole and exclusive
property of the Agent, for the benefit of the Lenders, and that the Collecting
Banks have no right of setoff against the Blocked Accounts (except as
specifically provided in any blocked account agreement between Agent and such
Collecting Bank) and that all such payments received will be promptly
transferred to the Agent's account for application against the Revolving
Outstandings or any other obligations due from the Company to Agent or the
Lenders. The Company hereby agrees that all payments received by the Agent,
whether by cash, check, wire transfer or any other instrument, made to such
Blocked Accounts or otherwise received by the Agent and whether on any Account
Receivable or as proceeds of other Collateral or otherwise will be the sole and
exclusive property of the Agent, for the benefit of Lenders. Company shall
irrevocably instruct each Collecting Bank to promptly transfer all payments or
deposits to the Blocked Accounts into the Agent's account on a daily basis or as
otherwise instructed by Agent. Company, and any of its Affiliates, employees,
agents or other Persons acting for or in concert with Company, shall, acting as
trustee for the Agent, receive, as the sole and exclusive property of the Agent,
any monies, checks, notes, drafts or any other payments relating to and/or
proceeds of Accounts Receivable or other Collateral which come into the
possession or under the control of Company or any of its Affiliates, employees,
agents or other Persons acting for or in concert with Company, and immediately
upon receipt thereof, Company or such Persons shall remit the same or cause the
same to be remitted, in kind, to the Agent's account.
Not permit any material amount of inventory, equipment or other personal
property not owned by the Company to be kept upon any of Company's owned or
leased premises unless the Company provides the Agent, on a quarterly basis,
with a schedule listing such items in reasonable detail and the owner(s)
thereof.
SECTION 11. EFFECTIVENESS; CONDITIONS OF LENDING, ETC.
The obligation of each Lender to make its Loans and of the Issuing Lender to
issue Letters of Credit is subject to the following conditions precedent:
11.1
Initial Credit Extension. The obligation of the Lenders to make the initial
Loans and the obligation of the Issuing Lender to issue its initial Letter of
Credit (whichever first occurs) is, in addition to the conditions precedent
specified in Section 11.2, subject to the conditions precedent that (1) all Debt
to be Repaid has been (or concurrently with the initial borrowing will be) paid
in full, and that all agreements and instruments governing the Debt to be Repaid
and that all Liens securing such Debt to be Repaid have been (or concurrently
with the initial borrowing will be) terminated and (2) the Agent shall have
received (a) evidence, reasonably satisfactory to the Agent, that the Company
has received equity and subordinated debt contributions ("Junior Investment") in
form and substance acceptable to Agent. The Junior Investment shall consist of
(i) a minimum $3,000,000 capital contribution in exchange for common shares of
the Company, and (ii) a minimum $7,000,000 loan, as evidenced by a promissory
note from the Company in favor of Mennen, (b) evidence, reasonably satisfactory
to the Agent, that the Company has completed, or concurrently with the initial
credit extension hereunder will complete, the Purchase in accordance with the
terms of the Purchase Agreement (without any amendment thereto or waiver
thereunder unless consented to by the Required Lenders); and (c) all of the
following, each duly executed and dated the Closing Date (or such earlier date
as shall be satisfactory to the Agent), in form and substance satisfactory to
the Agent (and the date on which all such conditions precedent have been
satisfied or waived in writing by the Agent and the Required Lenders is called
the "Closing Date"):
11.1.1
Notes. The Notes.
11.1.2
Resolutions. Certified copies of resolutions of the Board of Directors of the
Company authorizing the execution, delivery and performance by the Company of
this Agreement, the Notes and the other Loan Documents to which the Company is a
party; and certified copies of resolutions of the Board of Directors of each
other Loan Party and each Guarantor authorizing the execution, delivery and
performance by such Loan Party or Guarantor of each Loan Document to which such
entity is a party.
11.1.3
Consents, etc. Certified copies of all documents evidencing any necessary
corporate or partnership action, consents and governmental approvals (if any)
required for the execution, delivery and performance by the Company and each
other Loan Party or Guarantor of the documents referred to in this Section 11.
11.1.4
Incumbency and Signature Certificates. A certificate of the Secretary or an
Assistant Secretary (or other appropriate representative) of each Loan Party and
Guarantor certifying the names of the officer or officers of such entity
authorized to sign the Loan Documents to which such entity is a party, together
with a sample of the true signature of each such officer (it being understood
that the Agent and each Lender may conclusively rely on each such certificate
until formally advised by a like certificate of any changes therein).
11.1.5
Guaranty. A Guaranty executed by each Guarantor.
11.1.6
Security Agreement. A counterpart of the Security Agreement executed by the
Company and each Subsidiary.
11.1.7
Pledge Agreements. Pledge Agreements executed by GTI and the Company together
with all items required to be delivered in connection therewith.
11.1.8
Real Estate Documents. With respect to each parcel of real property owned by the
Company or any Subsidiary, other than the Residential Real Estate, a duly
executed Mortgage providing for a fully perfected Lien, in favor of the Agent,
in all right, title and interest of the Company or such Subsidiary in such real
property, together with:
an ALTA Loan Title Insurance Policy, issued by an insurer acceptable to the
Agent, insuring the Agent's Lien on such real property and containing such
endorsements as the Agent may reasonably require (it being understood that the
amount of coverage, exceptions to coverage and status of title set forth in such
policy shall be acceptable to the Agent);
copies of all documents of record concerning such real property as shown on the
commitment for the ALTA Loan Title Insurance Policy referred to above;
original or certified copies of all insurance policies required to be maintained
with respect to such real property by this Agreement, the applicable Mortgage or
any other Loan Document;
a survey certified to the Agent meeting such standards as the Agent may
reasonably establish and otherwise reasonably satisfactory to the Agent;
a flood insurance policy concerning such real property, reasonably satisfactory
to the Agent, if required by the Flood Disaster Protection Act of 1973; and
an appraisal, satisfactory to the Agent, prepared by an independent appraiser
engaged directly by the Agent, of such parcel of real property or interest in
real property, which appraisal shall satisfy the requirements of the Financial
Institutions Reform, Recovery and Enforcement Act, if applicable, and shall
evidence compliance with the supervisory loan-to-value limits set forth in the
Federal Deposit Insurance Corporation Improvement Act of 1991, if applicable.
Additionally, in the case of any leased real property, a consent, in
form and substance satisfactory to the Agent, from the owner waiving any
landlord's Lien in respect of personal property kept at the premises subject to
such lease.
11.1.9
Purchase Agreement Assignment. A purchase agreement assignment in form and
substance acceptable to Agent (the "Purchase Agreement Assignment") executed by
the Company and Sellers.
11.1.10
Subordination/Intercreditor Agreement. The Mennen Subordination Agreement.
11.1.11
Opinions of Counsel. The opinions of (a) Michael Harris, P.A.; (b) Ice Miller,
special counsel to Onkyo America and Subsidiary; (c) legal counsel to Mennen;
(d) special tax counsel with respect to the tax free nature of the Onkyo Merger;
and (e) all opinions delivered in connection with the closing of the Purchase
Agreement (which opinions in Agent's sole descrition shall state (or be
accompanied by letters which state) that the Agent and the Lenders may rely
thereon).
11.1.12
Insurance. Evidence satisfactory to the Agent of the existence of insurance
required to be maintained pursuant to Section 10.3(b), together with evidence
that the Agent has been named as a lender's loss payee and an additional insured
on all related insurance policies.
11.1.13
Copies of Documents. True, correct and complete copies, certified by the
Secretary of the Company, of (i) the Purchase Agreement and all documents and
agreements (ii) all documents and agreements related to the Subordinated Debt.
11.1.14
Payment of Fees. Evidence of payment by the Company of all accrued and unpaid
fees, costs and expenses to the extent then due and payable on the Closing Date,
together with all Attorney Costs of the Agent to the extent invoiced prior to
the Closing Date, plus such additional amounts of Attorney Costs as shall
constitute the Agent's reasonable estimate of Attorney Costs incurred or to be
incurred by the Agent through the closing proceedings (provided that such
estimate shall not thereafter preclude final settling of accounts between the
Company and the Agent).
11.1.15
Solvency Opinion. A Solvency Opinion, in form and substance acceptable to Agent,
from Duff & Phelps, LLC.
11.1.16
Pro Forma. A consolidated pro forma balance sheet of the Company as at the
Closing Date, adjusted to give effect to the consummation of the Purchase and
the financings contemplated hereby as if such transactions had occurred on such
date, consistent in all material respects with the sources and uses of cash as
previously described to the Lenders and the forecasts previously provided to the
Lenders.
11.1.17
Search Results; Lien Terminations. Certified copies of Uniform Commercial Code
Requests for Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Agent, dated a date reasonably near to
the Closing Date, listing all effective financing statements which name the
Company, GTI and each Subsidiary (under their present names and any previous
names) as debtors and which are filed in the jurisdictions in which filings are
to be made pursuant to the Collateral Documents, together with (i) copies of
such financing statements, (ii) executed copies of proper Uniform Commercial
Code Form UCC-3 termination statements, if any, necessary to release all Liens
and other rights of any Person in any collateral described in the Collateral
Documents previously granted by any Person (other than Liens permitted by
Section 10.8) and (iii) such other Uniform Commercial Code Form UCC-3
termination statements as the Agent may reasonably request.
11.1.18
Filings, Registrations and Recordings. The Agent shall have received each
document (including Uniform Commercial Code financing statements) required by
the Collateral Documents or under law or reasonably requested by the Agent to be
filed, registered or recorded in order to create in favor of the Agent, for the
benefit of the Lenders, a perfected Lien on the collateral described therein,
prior and superior to any other Person, in proper form for filing, registration
or recording.
11.1.19
Closing Certificate. A certificate signed by a Vice President or other
Authorized Officer of the Company dated as of the Closing Date, affirming the
matters set forth in Section 11.2.1 as of the Closing Date.
11.1.20
Borrowing Base Certificate. A Borrowing Base Certificate dated as of the Closing
Date and reflecting a minimum of $3,000,000 in Availability.
11.1.21
Purchase Certificate, Consents and Permits. A certificate executed by a Vice
President or other authorized officer of the Company on behalf of the Company
certifying the occurrence of the closing of the Purchase and that such closing
has been consummated in accordance with the terms of the Purchase Agreement
without waiver of any material condition thereof; together with evidence
satisfactory to the Agent that (i) all necessary governmental, regulatory,
creditor, shareholder, partner and other material consents, approvals and
exemptions required to be obtained by the Company in connection with the
Purchase have been duly obtained and are in full force and effect and (ii) all
material permits necessary for the operation of the Company have been obtained.
11.1.22
Merger Certificate, Consents and Permits. A certificate executed by a Vice
President or other authorized officer of the Company on behalf of the Company
certifying the occurrence of the closing of the Onkyo Merger and that such
transaction has been consummated in accordance with the terms of the Onkyo
Merger Agreement without waiver of any material condition thereof; together with
evidence satisfactory to the Agent that (i) all necessary governmental,
regulatory, creditor, shareholder, partner and other material consents,
approvals and exemptions required to be obtained by the Company in connection
with the Onkyo Merger have been duly obtained and are in full force and effect
and (ii) all material documents and filings necessary for the effectiveness of
the Onkyo Merger have been obtained.
11.1.23
Merger Related Documents of Assignment and Assumption. The following documents,
each duly executed by Onkyo America, Inc., an Indiana corporation, as the
surviving corporation of the Onkyo Merger, and any other Person party thereto:
(i) Omnibus Amendment Agreement; (ii) Security Agreement; (iii) Acknowledgment
of Security Agreement; (iv) Amendment to Pledge Agreement, together with the
delivery of the stock certificate of Onkyo America, Inc. issued to GTI and a
stock power executed in blank; (v) Substitute Revolving Note in favor of GMACBC
in the maximum principal amount available of $20,000,000; (vi) Substitute Term
Loan A Note in favor of GMACBC in the original principal amount of $5,230,000;
(vii) Substitute Term Loan B Note in favor of GMACBC in the original principal
amount of $6,000,000; (viii) UCC-1 Financing Statement; (ix) Secretary's
Certificate attaching and certifying to (a) resolutions approving the financing
transaction, the Onkyo Merger and the related assumption by Onkyo America, Inc.
of all obligations of the Company, (b) Bylaws of Onkyo America, Inc., and (c)
incumbency of Onkyo America, Inc.; (x) Certified Articles or Certificate of
Incorporation, as applicable, of Onkyo America, Inc. from the Indiana Secretary
of State; (xi) Good Standing Certificate or equivalent of Onkyo America, Inc.
from the Indiana Secretary of State; and (xii) such other documents as required
by Agent.
11.1.24
Collateral Assignment. Collateral Assignment executed by the Company and GTI,
along with the original promissory note referenced therein affixed thereto.
11.1.25
Other. Such other documents as the Agent or any Lender may reasonably
request.
11.2
Conditions. The obligation (a) of each Lender to make each Loan and (b) of
the Issuing Lender to issue each Letter of Credit is subject to the following
further conditions precedent that:
11.2.1
Compliance with Warranties, No Default, etc. Both before and after giving
effect to any borrowing and the issuance of any Letter of Credit, the following
statements shall be true and correct:
(1) the representations and warranties of the Company and each Subsidiary
set forth in this Agreement and the other Loan Documents shall be true
and correct in all material respects with the same effect as if then
made (except to the extent stated to relate to a specific earlier date,
in which case such representations and warranties shall be true and
correct as of such earlier date); and
(2) no Event of Default or Unmatured Event of Default shall have then
occurred and be continuing.
11.2.2
Confirmatory Certificate. If requested by the Agent or any Lender, the
Agent shall have received (in sufficient counterparts to provide one to each
Lender) a certificate dated the date of such requested Loan or Letter of Credit
and signed by a duly authorized representative of the Company as to the matters
set out in Section 11.2.1 (it being understood that each request by the Company
for the making of a Loan or the issuance of a Letter of Credit shall be deemed
to constitute a warranty by the Company that the conditions precedent set forth
in Section 11.2.1 will be satisfied at the time of the making of such Loan or
the issuance of such Letter of Credit), together with such other documents as
the Agent or any Lender may reasonably request in support thereof.
SECTION 12. EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
12.1.1
Non-Payment of the Loans, etc. Default in the payment when due of the
principal of any Loan; or default, and continuance thereof for five days, in the
payment when due of any interest, fee, reimbursement obligation with respect to
any Letter of Credit or other amount payable by the Company hereunder or under
any other Loan Document.
12.1.2
Non-Payment of Other Debt. Any default shall occur under the terms
applicable to any Debt of the Company or any Subsidiary in an aggregate amount
(for all such Debt so affected) exceeding $250,000 and such default shall (a)
consist of the failure to pay such Debt when due, whether by acceleration or
otherwise, or (b) accelerate the maturity of such Debt or permit the holder or
holders thereof, or any trustee or agent for such holder or holders, to cause
such Debt to become due and payable (or require the Company or any Subsidiary to
purchase or redeem such Debt) prior to its expressed maturity.
12.1.3
Other Material Obligations. Default in the payment when due, or in the
performance or observance of, any material obligation of, or condition agreed to
by, the Company or any Subsidiary with respect to any material purchase or lease
of goods or services where such default, singly or in the aggregate with all
other such defaults, might reasonably be expected to have a Material Adverse
Effect.
12.1.4
Bankruptcy, Insolvency, etc. The Company or any Subsidiary becomes
insolvent or generally fails to pay, or admits in writing its inability or
refusal to pay, debts as they become due; or the Company or any Subsidiary
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for the Company or such Subsidiary or any property
thereof, or makes a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Subsidiary or for a
substantial part of the property of any thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of the Company or any
Subsidiary, and if such case or proceeding is not commenced by the Company or
such Subsidiary, it is consented to or acquiesced in by the Company or such
Subsidiary, or remains for 60 days undismissed; or the Company or any Subsidiary
takes any action to authorize, or in furtherance of, any of the foregoing.
12.1.5
Non-Compliance with Loan Documents. (a) Failure by the Company to comply
with or to perform any covenant set forth in Sections 10.1.5(a), 10.5 through
10.15, 10.20 through 10.22, and 10.26; or (b) failure by the Company to comply
with or to perform any other provision of this Agreement or any other Loan
Document (and not constituting an Event of Default under any other provision of
this Section 12) and continuance of such failure described in this clause (b)
for 30 days after the Company has been notified by the Agent of such failure.
12.1.6
Warranties. Any warranty made by the Company or any Subsidiary herein or
any other Loan Document is breached or is false or misleading in any material
respect, or any schedule, certificate, financial statement, report, notice or
other writing furnished by the Company or any Subsidiary to the Agent or any
Lender in connection herewith is false or misleading in any material respect on
the date as of which the facts therein set forth are stated or certified.
12.1.7
Pension Plans. (i) Institution of any steps by the Company or any other
Person to terminate a Pension Plan if as a result of such termination the
Company could be required to make a contribution to such Pension Plan, or could
incur a liability or obligation to such Pension Plan, in excess of $50,000; (ii)
a contribution failure occurs with respect to any Pension Plan sufficient to
give rise to a Lien under Section 302(f) of ERISA; or (iii) there shall occur
any withdrawal or partial withdrawal from a Multiemployer Pension Plan and the
withdrawal liability (without unaccrued interest) to Multiemployer Pension Plans
as a result of such withdrawal (including any outstanding withdrawal liability
that the Company and the Controlled Group have incurred on the date of such
withdrawal) exceeds $50,000.
12.1.8
Judgments. Final judgments which exceed an aggregate of $250,000 shall be
rendered against the Company or any Subsidiary and shall not have been paid,
discharged or vacated or had execution thereof stayed pending appeal within 30
days after entry or filing of such judgments.
12.1.9
Invalidity of Guaranty, etc. The Guaranty shall cease to be in full force
and effect with respect to either of any Subsidiary; or any Subsidiary (or any
Person by, through or on behalf of such Subsidiary) shall contest in any manner
the validity, binding nature or enforceability of the Guaranty with respect to
such Subsidiary.
12.1.10
Invalidity of Collateral Documents, etc. Any Collateral Document shall
cease to be in full force and effect; or the Company or any Subsidiary (or any
Person by, through or on behalf of the Company or any Subsidiary) shall contest
in any manner the validity, binding nature or enforceability of any Collateral
Document.
12.1.11
Invalidity of Subordination Provisions, etc. Any subordination provision
in any document or instrument governing Subordinated Debt, or any subordination
provision in any guaranty by any Subsidiary of any Subordinated Debt, shall
cease to be in full force and effect, or the Company or any other Person
(including the holder of any applicable Subordinated Debt) shall contest in any
manner the validity, binding nature or enforceability of any such provision.
12.1.12
Change of Control. GTI shall cease to collectively (i) own and control
100% of the outstanding voting stock of the Company or (ii) have the right to
elect a majority of the board of directors of the Company.
12.1.13 Material Adverse Effect. The occurrence of any event having a Material
Adverse Effect.
12.1.13.1
Merger. The Onkyo Merger shall not occur within one (1) Business Day of
the Closing Date.
12.2
Effect of Event of Default. If any Event of Default described in Section
12.1.4 shall occur, the Commitments (if they have not theretofore terminated)
shall immediately terminate and the Loans and all other obligations hereunder
shall become immediately due and payable and the Company shall become
immediately obligated to Cash Collateralize all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, if any other Event of
Default shall occur and be continuing, the Agent (upon written request of the
Required Lenders) shall declare the Commitments (if they have not theretofore
terminated) to be terminated and/or declare all Loans and all other obligations
hereunder to be due and payable and/or demand that the Company immediately Cash
Collateralize all Letters of Credit, whereupon the Commitments (if they have not
theretofore terminated) shall immediately terminate and/or all Loans and all
other obligations hereunder shall become immediately due and payable and/or the
Company shall immediately become obligated to Cash Collateralize all Letters of
Credit, all without presentment, demand, protest or notice of any kind. The
Agent shall promptly advise the Company of any such declaration, but failure to
do so shall not impair the effect of such declaration. Notwithstanding the
foregoing, the effect as an Event of Default of any event described in Section
12.1.1 or Section 12.1.4 may be waived by the written concurrence of all of the
Lenders, and the effect as an Event of Default of any other event described in
this Section 12 may be waived by the written concurrence of the Required
Lenders. Any cash collateral delivered hereunder shall be held by the Agent
(without liability for interest thereon) and applied to obligations arising in
connection with any drawing under a Letter of Credit. After the expiration or
termination of all Letters of Credit, such cash collateral shall be applied by
the Agent to any remaining obligations hereunder and any excess shall be
delivered to the Company or as a court of competent jurisdiction may elect.
SECTION 13. THE AGENT.
13.1
Appointment and Authorization. (a) Each Lender hereby irrevocably (subject
to Section 13.9) appoints, designates and authorizes the Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Agent shall not have any duty or responsibility except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
(1) The Issuing Lender shall act on behalf of the Lenders with respect to
any Letters of Credit issued by it and the documents associated
therewith. The Issuing Lender shall have all of the benefits and
immunities (i) provided to the Agent in this Section 13 with respect to
any acts taken or omissions suffered by the Issuing Lender in
connection with Letters of Credit issued by it or proposed to be issued
by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term "Agent",
as used in this Section 13, included the Issuing Lender with respect to
such acts or omissions and (ii) as additionally provided in this
Agreement with respect to the Issuing Lender.
13.2
Delegation of Duties. The Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
13.3
Liability of Agent. None of the Agent nor any of its directors, officers,
employees or agents shall (i) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to any
of the Lenders for any recital, statement, representation or warranty made by
the Company or any Subsidiary or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of the Company or any other party to any Loan Document to perform its
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of the
Company or any of the Company's Subsidiaries or Affiliates.
13.4
Reliance by Agent. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, confirmation from the Lenders of their obligation to indemnify the
Agent against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
13.5
Notice of Default. The Agent shall not be deemed to have knowledge or notice
of the occurrence of any Event of Default or Unmatured Event of Default except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Agent for the account of the Lenders, unless the Agent shall
have received written notice from a Lender or the Company referring to this
Agreement, describing such Event of Default or Unmatured Event of Default and
stating that such notice is a "notice of default". The Agent will notify the
Lenders of its receipt of any such notice. The Agent shall take such action with
respect to such Event of Default or Unmatured Event of Default as may be
requested by the Required Lenders in accordance with Section 12; provided that
unless and until the Agent has received any such request, the Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Event of Default or Unmatured Event of Default as it shall
deem advisable or in the best interest of the Lenders.
13.6
Credit Decision. Each Lender acknowledges that the Agent has not made any
representation or warranty to it, and that no act by the Agent hereafter taken,
including any review of the affairs of the Company and its Subsidiaries, shall
be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that it has, independently and
without reliance upon the Agent and based on such documents and information as
it has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and made its own decision
to enter into this Agreement and to extend credit to the Company hereunder. Each
Lender also represents that it will, independently and without reliance upon the
Agent and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Company. Except for notices, reports and
other documents expressly herein required to be furnished to the Lenders by the
Agent, the Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, prospects,
operations, property, financial or other condition or creditworthiness of the
Company which may come into the possession of the Agent.
13.7
Indemnification. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent and its
directors, officers, employees and agents (to the extent not reimbursed by or on
behalf of the Company and without limiting the obligation of the Company to do
so), pro rata, from and against any and all Indemnified Liabilities; provided
that no Lender shall be liable for any payment to any such Person of any portion
of the Indemnified Liabilities resulting from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive repayment of the Loans, cancellation of the Notes,
expiration or termination of the Letters of Credit, any foreclosure under, or
modification, release or discharge of, any or all of the Collateral Documents,
termination of this Agreement and the resignation or replacement of the Agent.
13.8
Agent in Individual Capacity. GMACBC and its Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with the Company and its Subsidiaries
and Affiliates as though GMACBC were not the Agent or the Issuing Lender
hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, GMACBC or its Affiliates may
receive information regarding the Company or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Affiliate) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to their Loans (if
any), GMACBC and its Affiliates shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though GMACBC were
not the Agent and the Issuing Lender, and the terms "Lender" and "Lenders"
include GMACBC and its Affiliates, to the extent applicable, in their individual
capacities.
13.9
Successor Agent. The Agent may resign as Agent upon 30 days' notice to the
Lenders. If the Agent resigns under this Agreement, the Required Lenders shall,
with (so long as no Event of Default exists) the consent of the Company (which
shall not be unreasonably withheld or delayed), appoint from among the Lenders a
successor agent for the Lenders. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and the Company, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent, and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 13 and Sections 14.6 and 14.13 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of the Agent hereunder until such
time, if any, as the Required Lenders appoint a successor agent as provided for
above.
13.10
Collateral Matters. The Lenders irrevocably authorize the Agent, at its
option and in its discretion, (a) to release any Lien granted to or held by the
Agent under any Collateral Document (i) upon termination of the Commitments and
payment in full of all Loans and all other obligations of the Company hereunder
and the expiration or termination of all Letters of Credit; (ii) constituting
property sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; or (iii) subject to Section 14.1, if approved,
authorized or ratified in writing by the Required Lenders; or (b) to subordinate
its interest in any collateral to any holder of a Lien on such collateral which
is permitted by clause (d)(i) or (d)(iii) of Section 10.8 (it being understood
that the Agent may conclusively rely on a certificate from the Company in
determining whether the Debt secured by any such Lien is permitted by Section
10.7(b)). Upon request by the Agent at any time, the Lenders will confirm in
writing the Agent's authority to release, or subordinate its interest in,
particular types or items of collateral pursuant to this Section 13.10.
SECTION 14. GENERAL.
14.1
Waiver; Amendments. No delay on the part of the Agent or any Lender in the
exercise of any right, power or remedy shall operate as a waiver thereof, nor
shall any single or partial exercise by any of them of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or the Notes shall in any event be
effective unless the same shall be in writing and signed and delivered by
Lenders having an aggregate Pro Rata Share of not less than the aggregate Pro
Rata Share expressly designated herein with respect thereto or, in the absence
of such designation as to any provision of this Agreement or the Notes, by the
Required Lenders, and then any such amendment, modification, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No amendment, modification, waiver or consent shall change the
Pro Rata Share of any Lender without the consent of such Lender. No amendment,
modification, waiver or consent shall (i) increase the Revolving Commitment
Amount, (ii) extend the date for payment of any principal of or interest on the
Loans or any fees payable hereunder, (iii) reduce the principal amount of any
Loan, the rate of interest thereon or any fees payable hereunder, (iv) release
the Guaranty or all or any substantial part of the collateral granted under the
Collateral Documents or (v) reduce the aggregate Pro Rata Share required to
effect an amendment, modification, waiver or consent without, in each case, the
consent of all Lenders. No provision of Section 13 or other provision of this
Agreement affecting the Agent in its capacity as such shall be amended, modified
or waived without the consent of the Agent. No provision of this Agreement
relating to the rights or duties of the Issuing Lender in its capacity as such
shall be amended, modified or waived without the consent of the Issuing Lender.
14.2 Confirmations. The Company and each holder of a Note agree from time to
time, upon written request received by it from the other, to confirm to the
other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such Note.
14.3
Notices. Except as otherwise provided in Sections 2.2.2 and 2.2.3, all
notices hereunder shall be in writing (including facsimile transmission) and
shall be sent to the applicable party at its address shown on Schedule 14.3 or
at such other address as such party may, by written notice received by the other
parties, have designated as its address for such purpose. Notices sent by
facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received. For purposes of Sections 2.2.2 and 2.2.3, the Agent shall
be entitled to rely on telephonic instructions from any person that the Agent in
good faith believes is an authorized officer or employee of the Company, and the
Company shall hold the Agent and each other Lender harmless from any loss, cost
or expense resulting from any such reliance.
14.4
Computations. Where the character or amount of any asset or liability or
item of income or expense is required to be determined, or any consolidation or
other accounting computation is required to be made, for the purpose of this
Agreement, such determination or calculation shall, to the extent applicable and
except as otherwise specified in this Agreement, be made in accordance with
GAAP, consistently applied; provided that if the Company notifies the Agent that
the Company wishes to amend any covenant in Section 10 to eliminate or to take
into account the effect of any change in GAAP on the operation of such covenant
(or if the Agent notifies the Company that the Required Lenders wish to amend
Section 10 for such purpose), then the Company's compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Company and the
Required Lenders.
14.5
Regulation U. Each Lender represents that it in good faith is not relying,
either directly or indirectly, upon any Margin Stock as collateral security for
the extension or maintenance by it of any credit provided for in this Agreement.
14.6
Costs, Expenses and Taxes. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Agent (including Attorney
Costs) in connection with the preparation, execution, syndication, delivery and
administration of this Agreement, the other Loan Documents and all other
documents provided for herein or delivered or to be delivered hereunder or in
connection herewith (including any amendment, supplement or waiver to any Loan
Document), and all reasonable out-of-pocket costs and expenses (including
Attorney Costs) incurred by the Agent and each Lender after an Event of Default
in connection with the enforcement of this Agreement, the other Loan Documents
or any such other documents. In addition, the Company agrees to pay, and to save
the Agent and the Lenders harmless from all liability for, (a) any stamp or
other taxes (excluding income taxes and franchise taxes based on net income)
which may be payable in connection with the execution and delivery of this
Agreement, the borrowings hereunder, the issuance of the Notes or the execution
and delivery of any other Loan Document or any other document provided for
herein or delivered or to be delivered hereunder or in connection herewith and
(b) any fees of the Company's auditors in connection with any reasonable
exercise by the Agent and the Lenders of their rights pursuant to Section 10.2
including, but not limited to, the cost of $750 per audit day per auditor, plus
all out-of-pocket costs and expenses in connection therewith, including, without
limitation, third party auditor costs and fees. All obligations provided for in
this Section 14.6 shall survive repayment of the Loans, cancellation of the
Notes, expiration or termination of the Letters of Credit and termination of
this Agreement.
14.7 Subsidiary References. The provisions of this Agreement relating to
Subsidiaries shall apply only during such times as the Company has one or more
Subsidiaries.
14.8
Captions. Section captions used in this Agreement are for convenience only
and shall not affect the construction of this Agreement.
14.9 Assignments; Participations.
14.9.1
Assignments. Any Lender may, with the prior written consents of the
Issuing Lender and the Agent and (so long as no Event of Default exists) the
Company (which consents shall not be unreasonably delayed or withheld and, in
any event, shall not be required for an assignment by a Lender to one of its
Affiliates), at any time assign and delegate to one or more commercial Lenders
or other Persons (any Person to whom such an assignment and delegation is to be
made being herein called an "Assignee") all or any fraction of such Lender's
Loans and Commitment (which assignment and delegation shall be of a constant,
and not a varying, percentage of all the assigning Lender's Loans and
Commitment) in a minimum aggregate amount equal to the lesser of (i) the amount
of the assigning Lender's Pro Rata Share of the Revolving Commitment Amount plus
the unpaid amount of such Lender's Term Loan and (ii) $5,000,000; provided that
(a) no assignment and delegation may be made to any Person if, at the time of
such assignment and delegation, the Company would be obligated to pay any
greater amount under Section 7.6 or Section 8 to the Assignee than the Company
is then obligated to pay to the assigning Lender under such Sections (and if any
assignment is made in violation of the foregoing, the Company will not be
required to pay the incremental amounts) and (b) the Company and the Agent shall
be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned and delegated to an Assignee until the
date when all of the following conditions shall have been met:
(x) five Business Days (or such lesser period of time as the
Agent and the assigning Lender shall agree) shall have passed after
written notice of such assignment and delegation, together with payment
instructions, addresses and related information with respect to such
Assignee, shall have been given to the Company and the Agent by such
assigning Lender and the Assignee,
(y) the assigning Lender and the Assignee shall have executed
and delivered to the Company and the Agent an assignment agreement
substantially in the form of Exhibit D (an "Assignment Agreement"),
together with any documents required to be delivered thereunder, which
Assignment Agreement shall have been accepted by the Agent, and
(z) except in the case of an assignment by a Lender to one of
its Affiliates, the assigning Lender or the Assignee shall have paid
the Agent a processing fee of $3,500.
From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Lender hereunder and (y) the assigning Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it pursuant to such Assignment Agreement, shall be released from
its obligations hereunder. Within five Business Days after effectiveness of any
assignment and delegation, the Company shall execute and deliver to the Agent
(for delivery to the Assignee and the Assignor, as applicable) a new Note in the
principal amount of the Assignee's Pro Rata Share of the Revolving Commitment
Amount plus the principal amount of the Assignee's Term Loan and, if the
assigning Lender has retained a Commitment hereunder, a replacement Note in the
principal amount of the Pro Rata Share of the Revolving Commitment Amount
retained by the assigning Lender plus the principal amount of the Term Loan
retained by the assigning Lender (such Note to be in exchange for, but not in
payment of, the predecessor Note held by such assigning Lender). Each such Note
shall be dated the effective date of such assignment. The assigning Lender shall
mark the predecessor Note "exchanged" and deliver it to the Company. Accrued
interest on that part of the predecessor Note being assigned shall be paid as
provided in the Assignment Agreement. Accrued interest and fees on that part of
the predecessor Note not being assigned shall be paid to the assigning Lender.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Note and in this Agreement. Any attempted assignment
and delegation not made in accordance with this Section 14.9.1 shall be null and
void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, any Lender may at any time assign all or any
portion of its Loans and its Note to a Federal Reserve Lender (but no such
assignment shall release any Lender from any of its obligations hereunder).
14.9.2
Participations. Any Lender may at any time sell to one or more commercial
Lenders or other Persons participating interests in any Loan owing to such
Lender, the Note held by such Lender, the Commitment of such Lender, the direct
or participation interest of such Lender in any Letter of Credit or any other
interest of such Lender hereunder (any Person purchasing any such participating
interest being herein called a "Participant"). In the event of a sale by a
Lender of a participating interest to a Participant, (x) such Lender shall
remain the holder of its Note for all purposes of this Agreement, (y) the
Company and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations hereunder and (z)
all amounts payable by the Company shall be determined as if such Lender had not
sold such participation and shall be paid directly to such Lender. No
Participant shall have any direct or indirect voting rights hereunder except
with respect to any of the events described in the fourth sentence of Section
14.1. Each Lender agrees to incorporate the requirements of the preceding
sentence into each participation agreement which such Lender enters into with
any Participant. The Company agrees that if amounts outstanding under this
Agreement and the Notes are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement, any
Note and with respect to any Letter of Credit to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement or such Note; provided that such right of setoff shall be subject
to the obligation of each Participant to share with the Lenders, and the Lenders
agree to share with each Participant, as provided in Section 7.5. The Company
also agrees that each Participant shall be entitled to the benefits of Section
7.6 and Section 8 as if it were a Lender (provided that no Participant shall
receive any greater compensation pursuant to Section 7.6 or Section 8 than would
have been paid to the participating Lender if no participation had been sold).
14.10
Governing Law. This Agreement and each Note shall be a contract made under
and governed by the internal laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State. Whenever possible
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Company and rights of the Agent and the
Lenders expressed herein or in any other Loan Document shall be in addition to
and not in limitation of those provided by applicable law.
14.11
Counterparts. This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Agreement.
14.12
Successors and Assigns. This Agreement shall be binding upon the Company,
the Lenders and the Agent and their respective successors and assigns, and shall
inure to the benefit of the Company, the Lenders and the Agent and the
successors and assigns of the Lenders and the Agent.
14.13
Indemnification by the Company. In consideration of the execution and
delivery of this Agreement by the Agent and the Lenders and the agreement to
extend the Commitments provided hereunder, the Company hereby agrees to
indemnify, exonerate and hold the Agent, each Lender and each of the officers,
directors, employees, Affiliates and agents of the Agent and each Lender (each a
"Lender Party") free and harmless from and against any and all actions, causes
of action, suits, losses, liabilities, damages and expenses, including Attorney
Costs (collectively, the "Indemnified Liabilities"), incurred by the Lender
Parties or any of them as a result of, or arising out of, or relating to (i) any
tender offer, merger, purchase of stock, purchase of assets (including the
Purchase) or other similar transaction financed or proposed to be financed in
whole or in part, directly or indirectly, with the proceeds of any of the Loans,
(ii) the use, handling, release, emission, discharge, transportation, storage,
treatment or disposal of any hazardous substance at any property owned or leased
by the Company or any Subsidiary, (iii) any violation of any Environmental Laws
with respect to conditions at any property owned or leased by the Company or any
Subsidiary or the operations conducted thereon, (iv) the investigation, cleanup
or remediation of offsite locations at which the Company or any Subsidiary or
their respective predecessors are alleged to have directly or indirectly
disposed of hazardous substances or (v) the execution, delivery, performance or
enforcement of this Agreement or any other Loan Document by any of the Lender
Parties, except for any such Indemnified Liabilities arising on account of the
applicable Lender Party's gross negligence or willful misconduct. If and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Company hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. All obligations provided for in this Section 14.13 shall survive
repayment of the Loans, cancellation of the Notes, expiration or termination of
the Letters of Credit, any foreclosure under, or any modification, release or
discharge of, any or all of the Collateral Documents and termination of this
Agreement.
14.14
Nonliability of Lenders. The relationship between the Company on the one
hand and the Lenders and the Agent on the other hand shall be solely that of
borrower and lender. Neither the Agent nor any Lender shall have any fiduciary
responsibility to the Company. Neither the Agent nor any Lender undertakes any
responsibility to the Company to review or inform the Company or any matter in
connection with any phase of the Company's business or operations. The Company
agrees that neither the Agent nor any Lender shall have liability to the Company
(whether sounding in tort, contract or otherwise) for losses suffered by the
Company in connection with, arising out of, or in any way related to the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the Agent
nor any Lender shall have any liability with respect to, and the Company hereby
waives, releases and agrees not to sue for, any special, indirect or
consequential damages suffered by the Company in connection with, arising out
of, or in any way related to the Loan Documents or the transactions contemplated
thereby.
14.15
Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE
OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE COMPANY
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
14.16
WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND EACH LENDER HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
1.9 Revised Article 9. It is the intention of the parties hereto that the
priorities and agreements herein contained continue to apply after the enactment
by the various States of Revised Article 9 --Secured Transactions (with
conforming amendments to Articles 1, 2, 2a, 4, 5, 6, 7 and 8) to the UCC as
approved by The American Law Institute in 1998 and approved and recommended for
enactment in all the States by the National Conference of Commissioners for
Uniform State Laws in 1998 ("Revised Article 9") and the effectiveness of
Revised Article 9 in any State. After the effectiveness of Revised Article 9 in
any State governing perfection and the effect of perfection or non-perfection of
a security interest in any collateral, as to such State and such collateral, (i)
all section references herein to, and all defined terms used herein defined in,
Article 9 of the UCC as currently in effect shall be deemed to be to any
corresponding Section or definition of Revised Article 9, and (ii) if any
definition used herein by reference to Revised Article 9 is broader than the
corresponding definition used in current Article 9 of the UCC, such broader
definition will apply herein.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
Credit Agreement Signature Page
Delivered at Chicago, Illinois, as of the day and year first above written.
ONKYO ACQUISITION CORPORATION
By
Name: David Natan
Title: President
GMAC BUSINESS CREDIT, LLC, as Agent
By
Name: Mary C. Bookman
Title: Vice President
GMAC BUSINESS CREDIT, LLC, as Lender
By
Name: Mary C. Bookman
Title: Vice President
<PAGE>
PRICING SCHEDULE
The LIBOR Margin, the Base Rate Margin, the Non-Use Fee Rate and the LC
Fee Rate shall be as set forth below:
LIBOR Margin (Revolving Loan and Term Loan A) 3% per annum
LIBOR Margin (Term Loan B) 3.5% pr annum
Base Rate Margin (Revolving Loan and Term 1% per annum
Loan A)
Base RAte Margin (Term Loan B) 1.5% per annum
Non-Use Fee Rate 0.5% per annum
LC Fee Rate 2.5% per annum
<PAGE>
<TABLE>
SCHEDULE 2.1
LENDERS AND PRO RATA SHARES
------------------------- ---------------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Pro Rata Share
Lender of Revolving Amount of Amount of Term
Commitment Amount Term Loan A Loan B Pro Rata Share
------------------------- ---------------------------- ------------------- ------------------- -------------------
------------------------- ---------------------------- ------------------- ------------------- -------------------
GMAC BUSINESS CREDIT,
LLC $20,000,000 $5,230,000 $6,000,000 100%
------------------------- ---------------------------- ------------------- ------------------- -------------------
TOTALS $20,000,000 $5,230,000 $6,000,000 100%
------------------------- ---------------------------- ------------------- ------------------- -------------------
SCHEDULE 3.1
TERM LOAN INSTALLMENTS
Term Loan A ($5,230,000)
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
Date Amount Date Amount Date Amount
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
October 1, 2000 $72,638.89 October 1, 2001 $72,638.89 October 1, 2002 $72,638.89
November 1, 2000 $72,638.89 November 1, 2001 $72,638.89 November 1, 2002 $72,638.89
December 1, 2000 $72,638.89 December 1, 2001 $72,638.89 December 1, 2002 $72,638.89
January 1, 2001 $72,638.89 January 1, 2002 $72,638.89 January 1, 2003 $72,638.89
February 1, 2001 $72,638.89 February 1, 2002 $72,638.89 February 1, 2003 $72,638.89
March 1, 2001 $72,638.89 March 1, 2002 $72,638.89 March 1, 2003 $72,638.89
April 1, 2001 $72,638.89 April 1, 2002 $72,638.89 April 1, 2003 $72,638.89
May 1, 2001 $72,638.89 May 1, 2002 $72,638.89 May 1, 2003 $72,638.89
June 1, 2001 $72,638.89 June 1, 2002 $72,638.89 June 1, 2003 $72,638.89
July 1, 2001 $72,638.89 July 1, 2002 $72,638.89 July 1, 2003 $72,638.89
August 1, 2001 $72,638.89 August 1, 2002 $72,638.89 August 1, 2003 $72,638.89
September 1, 2001 $72,638.89 September 1, 2002 $72,638.89 August 30, 2000 $2,614,999.96
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Term Loan B
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
Date Amount Date Amount Date Amount
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
October 1, 2000 $100,000 October 1, 2001 $150,000 October 1, 2002 $250,000
November 1, 2000 $100,000 November 1, 2001 $150,000 November 1, 2002 $250,000
December 1, 2000 $100,000 December 1, 2001 $150,000 December 1, 2002 $250,000
January 1, 2001 $100,000 January 1, 2002 $150,000 January 1, 2003 $250,000
February 1, 2001 $100,000 February 1, 2002 $150,000 February 1, 2003 $250,000
March 1, 2001 $100,000 March 1, 2002 $150,000 March 1, 2003 $250,000
April 1, 2001 $100,000 April 1, 2002 $150,000 April 1, 2003 $250,000
May 1, 2001 $100,000 May 1, 2002 $150,000 May 1, 2003 $250,000
June 1, 2001 $100,000 June 1, 2002 $150,000 June 1, 2003 $250,000
July 1, 2001 $100,000 July 1, 2002 $150,000 July 1, 2003 $250,000
August 1, 2001 $100,000 August 1, 2002 $150,000 August 1, 2003 $250,000
September 1, 2001 $100,000 September 1, 2002 $150,000 August 30, 2003 $250,000
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
</TABLE>
<PAGE>
SCHEDULE 9.6
LITIGATION AND CONTINGENT LIABILITIES
VPCHI01/#654578.3
Litigation and Contingent Liabilities
Litigation & Contingent Matters (Onkyo America, Inc. & Onkyo America Specialty
roducts, Inc.)
<PAGE>
1) Tricia and David Evanko v. Onkyo America, Inc.,
Cause No: 03D02-9812-CT-268, State of Indiana,
Bartholomew County Superior Court No.2. Claim of injury resulting
from exposure to toxic fumes while servicing vending machines.
1) Following the announcement of Onkyo America's proposed acquisition of
Top Source Automotive, Inc.'s ("TSA") assets from Top Source
Technologies, Inc. ("TST"), NCT Group, in August 1999, raised an issue
regarding provisions of a Confidentiality and/or Proprietary
Information Agreement between it and TST/TSA. Since Onkyo America's
acquisition of TSA's assets in October 1999, neither NCT nor its
counsel has communicated further with Onkyo America.
1) Louis Melillo v. Onkyo America, Inc., Cause No: IP00-1165C Y/G, United
States District Court, Southern
District of Indiana, Indianapolis Division. Complaint involves
charges of age discrimination and breach of contract by an employee
that was fired.
1) Blaise Barr v. Onkyo America, Inc., Cause No. 0240990868, EEOC Charge,
filed February 3, 1999. EEOC issued a dismissal of the charge on
October 27, 1999. Blaise had 90 days from his receipt of the
determination to file suit.
1) Debbie Claywell v. Onkyo America Inc., Indiana Civil Rights Commission
Docket No. EMha98040325; EEOC
Charge No. 24F980374, filed April 17, 1998.
1) Onkyo America terminated Michael McDermott for removing
company/customer property from the workplace. Counsel for McDermott
wrote requesting severance pay on January 10, 2000. Onkyo America
responded denying severance pay on January 20, 2000. There has been no
further communication between McDermott and Onkyo America.
1) Workers Compensation Claim No. 985-16696-42 regarding employee,
Starranne M. Eubanks, for CTS right wrist injury.
1) Workers Compensation Claim No. 985-14790-42 regarding employee,
Betty A. Baxter, for bilateral carpal tunnel syndrome.
1) Workers Compensation Claim No. 085-23389-AE regarding employee,
Emma F. Ingram, for wrist left arm tendonitis.
1) Workers Compensation Claim No. 985-01941-AI regarding employee,
Michael W. Sprague, for pain in right shoulder.
1) Workers Compensation Claim No. 085-17654-40 regarding employee,
Alveina P. Roton, for a bruised hand.
1) Workers Compensation Claim No. 085-17560-35 regarding employee,
Tracy L. McCoy, for left wrist pain.
1) Workers Compensation Claim No. 085-17628-24 regarding employee,
Laretha J. Schroer, for right shoulder pain.
1) Workers Compensation Claim No. 016-15237AI regarding employee,
Helde A. Owens, for a fractured right arm.
1) Workers Compensation Claim, Case No. 11744, regarding employee,
Carol S. Adams, for pain in both hands and wrists.
1) Workers Compensation Claim No. 085-23090-37 regarding employee,
Amber L. Quick, for a paraspinal muscle strain.
1) Workers Compensation Claim No. 085-23108-37 regarding employee,
Brenda F. Russell, for right shoulder pain.
1) Workers Compensation Claim No. 085-24807-44 regarding employee,
Donna F. Howard, for right rotator cuff strain.
1) Workers Compensation Claim No. 085-25761-29 regarding employee,
Aaron Marie Ivey, for numbness in right pinky finger.
1) Workers Compensation Claim No. 085-25759-29 regarding employee,
Paula S. Jones, for numbness in both hands and right shoulder pain.
1) Workers Compensation Claim, Case No. 472000, regarding employee,
Monica D. Myers, for a bruise/right third digit contusion.
Workers Compensation Claim, Case No. 482000, regarding employee,
Laura L. Ball, for bruise/right thumb contusion
1) Workers Compensation Claim, Case No. 492000 regarding employee,
Rob M. Bowman, for pain in both hands and wrists.
1) Workers Compensation Claim, Case No. 502000 regarding employee,
Deborah K. Ballard, for bruise/right hand contusion.
1) Workers Compensation Claim, Case No. 512000 regarding employee,
Kimberly D. Baker, for pain in both arms/wrists.
Litigation & Contingent Matters (Global Technovations, Inc.)
<PAGE>
1) NCT Audio Products, Inc. has filed an arbitration proceeding against
Global Technovations, Inc. before the American Arbitration Association in
Wilmington, Delaware.
<PAGE>
SCHEDULE 9.8
SUBSIDIARIES
Onkyo America Specialty Products, Inc.
<PAGE>
SCHEDULE 9.15
ENVIRONMENTAL MATTERS
1. Onkyo America, Inc. was issued a notice of non-compliance related to
its storm water permit from the Indiana Department of Environmental
Management.
1. Onkyo America, Inc. has not prepared a storm water pollution plan for
a potential hydraulic fluid leak into the sump pump area in the
elevator shaft.
<PAGE>
SCHEDULE 9.17
INSURANCE
<TABLE>
<S> <C> <C> <C> <C>
Exp Date Policy Number Type of Coverage Carrier Coverage Amounts
9/15/2000 AIR630202 Commercial Package CGU PROPERTY:
Blanket Limit = $26,045,500
Pers Prop at Unspecified location =$100,000
Pers Prop in Transit = $100,000
Business Income & Extra Expense =$24,559,800
(Limits per location previously provided)
INLAND MARINE INSURANCE:
Limit
=
$1
Million
BOILER
&
MACHINERY
INSURANCE:
Limit = $1 Million
ORDINANCE OR LAW COVERAGE
Limit = $1 Million Earthquake Insurance
Limit per any one premises = $5 Million
Limit any single policy year = $5 Million
FLOOD INSURANCE:
Limit per any one premises = $5 Million
Limit any single policy year + $5 Million
9/15/2000 PLP0434751-01 Commercial General Liability General Accident General Aggregate Limit = $2 Million
9/15/2000 CCR0152363-01 Crime Insurance General Accident Blanket Limit = $100,000
9/15/2000 BA0251587-01 Commercial Auto General Accident Combined Single Limit = $1 Million
9/15/2000 WC0083907-02 Workers' Compensation General Accident Bodily Injury by Accident = $100,000/accident
9/15/2000 CC400674 Ocean Marine Commercial Union Vessel Limit = $400,000
9/15/2000 CVB0112856-00 Commercial Umbrella CGU $5,000,000 Annual Limit of Liability
1/14/2001 90002524 Directors & Officers Liability E-Risk Services Limit = $1,000,000
1/14/2001 ZE 0003880 Employment Practices Liability Pacific Insurance Limit = $1,000,000
3/31/2001 GL-5081 Group Term Life Kansas City Life 1 times pay, maximum $250,000
12/31/2000 126962-0001 Group Short Term Disability UNUM/Provident 75% of pay, weekly maximum $750
12/31/2000 126962-0002 Group Long Term Disability UNUM/Provident 60% of pay, monthly maximum $7,500
3/31/2001 L45000-732016-98 Specific & Aggregate Stop Loss IAO Re $80,000 specific; 125% aggregate
</TABLE>
<PAGE>
SCHEDULE 9.18
REAL PROPERTY
VPCHI01/#654578.3
Onkyo America, Inc. owns the following:
<PAGE>
1) The property located at 3030 Barker Dr. Columbus, IN 47201.
1) The Company House located at 554 Kinney Lane, Columbus, IN 47201.
Onkyo America, Inc. leases the following:
<PAGE>
1) Standard Office Lease, dated March 9, 2000, by and between Onkyo
America and North Island Federal Credit Union, for a lease term of 4
years commencing on April 15, 2000, for Suite Number 204 at 2300
Boswell Road, Chula Vista, California.
Onkyo America Specialty Products, Inc. leases the following:
VPCHI01/#654578.3
1) Standard Office Lease, dated March 9, 2000, by and between Onkyo
America and North Island Federal Credit Union, for a lease term of 4
years commencing on April 15, 2000, for Suite Number 204 at 2300
Boswell Road, Chula Vista, California.
Onkyo America Specialty Products, Inc. leases the following:
<PAGE>
1) Net Lease, dated February 10, 1995, by and between Bostick Real Estate
Partnership, and Top Source Technologies, Inc., for a lease term of 5
years for the premises at 1757 Larchwood, Troy, Michigan 48083. Lease
was extended via letter dated July 20, 1999, by David Natan for a
period of 3 years commencing on March 1, 2000. Consent for Assignment
of lease is dated September 29, 1999, by Dennis Bostick, partner of
Bostick Real Estate Partnership.
<PAGE>
SCHEDULE 9.22
LABOR MATTERS
No exceptions.
<PAGE>
SCHEDULE 10.7
EXISTING DEBT
Existing Debt
1) Second Replacement Credit Note dated February 29, 2000 (Onkyo America, Inc.
and Onkyo America Specialty Products, Inc. as co-borrowers) in favor of
LaSalle Bank which will be paid off at Closing.
1) First Replacement Mortgage Note dated February 29, 2000 (Onkyo America,
Inc. and Onkyo America Specialty Products, Inc. as co-borrowers) in favor
of LaSalle Bank which will be paid off at Closing.
1) First Replacement Term Note dated February 29, 2000 (Onkyo America, Inc.
and Onkyo America Specialty Products, Inc. as co-borrowers) in favor of
LaSalle Bank which will be paid off at Closing.
1) Loan Agreement dated October 26, 1998, by and between Onkyo Corporation and
Onkyo America, Inc. for $1 million.
1) Royalty amounts owed by Onkyo America, Inc. to Onkyo Corporation pursuant
to the Trademark License Agreement dated January 1, 1999, by and between
Onkyo Corporation and Onkyo America, Inc.
<PAGE>
SCHEDULE 10.8
EXISTING LIENS
VPCHI01/#654578.3
Onkyo America, Inc.
<PAGE>
1) Security Agreement dated September 24, 1999, in favor of LaSalle Bank which
will be terminated upon repayment of the debt set forth in Schedule 11.1.
1) UCC-1 Financing Statement covering copier with stapler/sorter dated
November 17, 1995 in favor of First United Leasing.
1) UCC-1 Financing Statement covering crown RR3520-45 Trucks and batteries
dated April 4, 1997 in favor of CFC Investment Company.
1) UCC-1 Financing Statement covering crown RR3520-45 electric lift truck with
battery & charged dated December 2, 1997 in favor of CFC Investment
Company.
1) Real Estate Tax Search for Residential Real Estate in the amount of
$1,221.75.
Onkyo America Specialty Products, Inc.
Security Agreement dated February 29, 2000, in favor of LaSalle Bank.
Onkyo Acquisition Corporation
Subordinated Loan & Security Agreement dated August 31, 2000 by and between
Onkyo Acquisition Corporation & Wilmington Trust Company & George Jeff Mennen
Co-Trustees u/a dated November 25, 1970 with George S. Mennen FBO John Henry
Mennen.
<PAGE>
SCHEDULE 11.1
DEBT TO BE REPAID
Debt to be Repaid
a) Second Replacement Credit Note dated February 29, 2000 (Onkyo America,
Inc. and Onkyo America Specialty Products, Inc. as co-borrowers) in
favor of LaSalle Bank.
a) First Replacement Mortgage Note dated February 29, 2000 (Onkyo
America, Inc. and Onkyo America Specialty Products, Inc. as
co-borrowers) in favor of LaSalle Bank.
a) First Replacement Term Note dated February 29, 2000 (Onkyo America,
Inc. and Onkyo America Specialty Products, Inc. as co-borrowers) in
favor of LaSalle Bank.
<PAGE>
SCHEDULE 14.3
ADDRESSES FOR NOTICES
ONKYO ACQUISITION CORPORATION
c/o Global Technovations, Inc.
7108 Fairway Drive, Suite 200
Palm Beach Gardens, FL 33418
Attention: William C. Willis, Jr.
Telephone: (561) 775-5756
Facsimile: (561) 775-2668
With a copy to:
Michael Harris, P.A.
1645 Palm Beach Lakes Blvd.
Suite 550
West Palm Beach, FL 33401
Telephone: (561) 689-4441
Facsimile: (561) 478-1817
GMAC BUSINESS CREDIT, LLC, as Agent, and a Lender
GMAC Business Credit, LLC
500 W. Madison Street
Suite 3130
Chicago, Illinois 60661
Attention: Michael Molenda
Telephone: (312) 775-7086
Facsimile: (312) 775-6006
With a copy to:
Michael A. Nemeroff, Esq.
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
24th Floor
Chicago, IL 60601
Telephone: (312) 609-5000
Facsimile: (312) 609-5005
<PAGE>
EXHIBIT A-1
August ____, 20000
$20,000,000 FORM OF REVOLVING NOTE Chicago, Illinois
The undersigned, ONKYO ACQUISITION CORPORATION, an Indiana corporation
(the "Obligor"), for value received, promises to pay to the order of GMAC
BUSINESS CREDIT, LLC ("Lender") at the principal office of the Lender in
Chicago, Illinois, in lawful money of the United States of America and in
immediately available funds, the maximum principal amount available of Twenty
Million and 00/100 Dollars ($20,000,000), or such lesser principal amount as may
be outstanding to Obligor pursuant to the Credit Agreement (as hereinafter
defined) with respect to the Revolving Loan, together with interest on the
unpaid principal amount of this Revolving Note outstanding from time to time.
This Revolving Note is issued pursuant to Section 3.1 of that certain
Credit Agreement of even date herewith among Obligor and the Lender (as the same
may be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), and is entitled to the benefit and security of the Loan
Documents provided for therein, to which reference is hereby made for a
statement of all of the terms and conditions under which the loan evidenced
hereby is made including those pursuant to which this Revolving Note may or must
be paid prior to its due date or the due date if accelerated. All capitalized
terms herein, unless otherwise defined, shall have the meanings ascribed to them
in the Credit Agreement.
It is understood and agreed that upon consummation of the merger
transaction contemplated by the Onkyo Merger Agreement, Onkyo America, Inc., an
Indiana corporation, as the surviving entity of the merger of Obligor and Onkyo
America, Inc. shall be the "Obligor" hereunder as successor to the Obligor, and
all references to Obligor shall thereafter be deemed to refer to and include
said Onkyo America, Inc.
The principal amount of the indebtedness evidenced hereby shall be
payable in the amounts and on the dates specified in the Credit Agreement and,
if not sooner paid in full, all unpaid principal and accrued interest shall be
due and payable on August ___, 2003. Interest thereon shall be paid until such
principal amount is paid in full at such interest rates and at such times as are
specified in the Credit Agreement. Upon and after the occurrence and during the
continuance of an Event of Default, this Revolving Note shall or may, as
provided in the Credit Agreement, and without demand, notice or legal process of
any kind, become or be declared immediately due and payable.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Obligor. This Revolving Note shall be interpreted, governed
by, and construed in accordance with, the laws of the State of Illinois.
ONKYO ACQUISITION CORPORATION
By:
Title:
<PAGE>
Schedule attached to Revolving Note dated August ___, 2000 of ONKYO ACQUISITION
CORPORATION payable to the order of GMAC BUSINESS CREDIT, LLC.
<TABLE>
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------
Date and Date and
Amount of Amount of
Loan or of Repayment or of
Conversion from Conversion into Interest Unpaid Notation
another type of another type of Period Maturity Principal Made by
Loan Loan Date Balance
1. BASE RATE LOANS
2. LIBOR LOANS
</TABLE>
<PAGE>
EXHIBIT A-2
FORM OF TERM LOAN A NOTE
$5,230,000 August ___, 2000
Chicago, Illinois
The undersigned, ONKYO ACQUISITION CORPORATION, an Indiana corporation
(the "Obligor"), for value received, promises to pay to the order of GMAC
BUSINESS CREDIT, LLC ("Lender") at the principal office of the Lender in
Chicago, Illinois, in lawful money of the United States of America and in
immediately available funds, the principal amount of Five Million Two Hundred
Thirty Thousand and 00/100 Dollars ($5,230,000), together with interest from and
after the date hereof on the unpaid principal balance of this Term Note
outstanding from time to time.
This Term Note is issued pursuant to Section 3.1 of that certain Credit
Agreement of even date herewith among Obligor and the Lender (as may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
and is entitled to the benefit and security of the Loan Documents provided for
therein, to which reference is hereby made for a statement of all of the terms
and conditions under which the loan evidenced hereby is made including those
pursuant to which this Term Note may or must be paid prior to its due date or
the due date is accelerated. All capitalized terms herein, unless otherwise
defined, shall have the meanings ascribed to them in the Credit Agreement.
It is understood and agreed that upon consummation of the merger
transaction contemplated by the Onkyo Merger Agreement, Onkyo America, Inc., an
Indiana corporation, as the surviving entity of the merger of Obligor and Onkyo
America, Inc. shall be an "Obligor" hereunder as successor to the Obligor, and
all references to Obligor shall thereafter be deemed to refer to and include
said Onkyo America, Inc.
Unless otherwise required to be paid sooner pursuant to the provisions
of the Credit Agreement, the principal indebtedness evidenced hereby shall be
payable in installments as set forth in the Credit Agreement with a final
installment of all unpaid principal and accrued interest due and payable on
August __, 2003. Interest thereon shall be paid until such principal amount is
paid in full at such interest rates and at such times as are specified in the
Credit Agreement. Upon and after the occurrence and during the continuance of an
Event of Default, this Term Note shall or may, as provided in the Credit
Agreement, and without demand, notice or legal process of any kind, become or be
declared immediately due and payable.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Obligor. This Note shall be interpreted, governed by, and
construed in accordance with, the laws of the State of Illinois.
ONKYO ACQUISITION CORPORATION
By:
Title:
<PAGE>
<TABLE>
Schedule attached to Term Loan A Note dated August ___, 2000 of ONKYO
ACQUISITION CORPORATION payable to the order of GMAC BUSINESS CREDIT, LLC.
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------
Date and Date and
Amount of Amount of
Loan or of Repayment or of Interest
Conversion from Conversion into Period Unpaid Notation
another type of another type of Maturity Principal Made by
Loan Loan Date Balance
</TABLE>
1. BASE RATE LOANS
2. LIBOR LOANS
<PAGE>
EXHIBIT A-3
FORM OF TERM LOAN B NOTE
$6,000,000 August ___, 2000
Chicago, Illinois
The undersigned, ONKYO ACQUISITION CORPORATION, an Indiana corporation
(the "Obligor"), for value received, promises to pay to the order of GMAC
BUSINESS CREDIT, LLC ("Lender") at the principal office of the Lender in
Chicago, Illinois, in lawful money of the United States of America and in
immediately available funds, the principal amount of Six Million and 00/100
Dollars ($6,000,000), together with interest from and after the date hereof on
the unpaid principal balance of this Term Note outstanding from time to time.
This Term Note is issued pursuant to Section 3.1 of that certain Credit
Agreement of even date herewith among Obligor and the Lender (as may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
and is entitled to the benefit and security of the Loan Documents provided for
therein, to which reference is hereby made for a statement of all of the terms
and conditions under which the loan evidenced hereby is made including those
pursuant to which this Term Note may or must be paid prior to its due date or
the due date is accelerated. All capitalized terms herein, unless otherwise
defined, shall have the meanings ascribed to them in the Credit Agreement.
It is understood and agreed that upon consummation of the merger
transaction contemplated by the Onkyo Merger Agreement, Onkyo America, Inc., an
Indiana corporation, as the surviving entity of the merger of Obligor and Onkyo
America, Inc. shall be an "Obligor" hereunder as successor to the Obligor, and
all references to Obligor shall thereafter be deemed to refer to and include
said Onkyo America, Inc.
Unless otherwise required to be paid sooner pursuant to the provisions
of the Credit Agreement, the principal indebtedness evidenced hereby shall be
payable in installments as set forth in the Credit Agreement with a final
installment of all unpaid principal and accrued interest due and payable on
August __, 2003. Interest thereon shall be paid until such principal amount is
paid in full at such interest rates and at such times as are specified in the
Credit Agreement. Upon and after the occurrence and during the continuance of an
Event of Default, this Term Note shall or may, as provided in the Credit
Agreement, and without demand, notice or legal process of any kind, become or be
declared immediately due and payable.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Obligor. This Note shall be interpreted, governed by, and
construed in accordance with, the laws of the State of Illinois.
ONKYO ACQUISITION CORPORATION
By:
Title:
<PAGE>
Schedule attached to Term Loan B Note dated August ___, 2000 of ONKYO
ACQUISITION CORPORATION payable to the order of GMAC BUSINESS CREDIT, LLC.
<TABLE>
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------
Date and Date and
Amount of Amount of
Loan or of Repayment or of Interest
Conversion from Conversion into Period Unpaid Notation
another type of another type of Maturity Principal Made by
Loan Loan Date Balance
</TABLE>
1. BASE RATE LOANS
2. LIBOR LOANS
<PAGE>
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
To: GMAC Business Credit, LLC, as Agent
Please refer to the Credit Agreement dated as of August __, 2000 (as
amended or otherwise modified from time to time, the "Credit Agreement") among
ONKYO ACQUISITION CORPORATION (the "Company"), various financial institutions
and GMAC Business Credit, LLC, as agent. Terms used but not otherwise defined
herein are used herein as defined in the Credit Agreement.
I. Reports. Enclosed herewith is a copy of the [annual
audited/quarterly/monthly] report of the Company as at _____________, ____
(the "Computation Date"), which report fairly presents in all material
respects the financial condition and results of operations [(subject to the
absence of footnotes and to normal year-end adjustments)] of the Company as
of the Computation Date and has been prepared in accordance with GAAP
consistently applied.
II. Financial Tests. The Company hereby certifies and warrants to you that the
following is a true and correct computation as at the Computation Date of
the following ratios and/or financial restrictions contained in the Credit
Agreement:
[REVISE AS APPROPRIATE]
-----------------------------------------------------------------------------
A. Section 10.6.1 - Minimum Fixed Charge Coverage Ratio
Consolidated Net Income $
Plus: Interest Expense
income tax expense $
depreciation $
amortization $
dividends $
management fees $
Total (EBITDA)
Capital Expenditures $
Sum of (4) and (5) $
Remainder of (3) minus (6) $
Cash Interest Expense $
Required payments of principal of Funded Debt (including Term Loans $
Income Taxes Paid $_____
Sum of (8) and (9) $
Ratio of (7) to (10) _____ to 1
Minimum Required _____ to 1
B-3
------------------------------------------------------------------------------
Section 10.6.2 - Minimum Interest Coverage Ratio
EBITDA (from Item A(3) above) $
Cash Interest Expense $
Ratio of (1) to (2) _____ to 1
Minimum required _____ to 1
Section 10.6.3 - Maximum Senior Debt to EBITDA Ratio
Senior Debt $
EBITDA (from Item A(3) above) $
Ratio of (1) to (2) _____ to 1
Maximum allowed _____ to 1
Section 10.6.4 - Maximum Total Debt to EBITDA Ratio
Total Debt $
EBITDA (from Item A(3) above) $
Ratio of (1) to (2) _____ to 1
Maximum allowed _____ to 1
Section 10.6.5 - Minimum EBITDA
EBITDA (from Item A(3) above) $
Minimum required _____ to 1
Section 10.6.6 - Capital Expenditures
Capital Expenditures for the Fiscal Year $
Maximum Permitted Capital Expenditures $
The Company further certifies to you that no Event of Default or
Unmatured Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered by its duly authorized officer on _________, ____.
ONKYO ACQUISITION
CORPORATION
By
Title
<PAGE>
EXHIBIT C
FORM OF BORROWING BASE CERTIFICATE
To: GMAC Business Credit, LLC, as Agent
300 Galleria Officentre
Suite 110
Southfield, MI 48034
Ladies and Gentlemen:
Please refer to the Credit Agreement dated as of August __, 2000 (as
amended or otherwise modified from time to time, the "Credit Agreement") among
ONKYO ACQUISITION CORPORATION (the "Company"), various financial institutions
and GMAC Business Credit, LLC, as agent. This certificate (this "Certificate"),
together with supporting calculations attached hereto, is delivered to you
pursuant to the terms of the Credit Agreement. Capitalized terms used but not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Company hereby certifies and warrants to the Agent and the Lenders
that at the close of business on ______________, ____ (the "Calculation Date"),
the Borrowing Base was $_____________, computed as set forth on the schedule
attached hereto.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered by its officer thereunto duly authorized on ___________,
------.
ONKYO ACQUISITION CORPORATION
By:
Title:
<PAGE>
EXHIBIT D
FORM OF ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
_____________ (the "Assignor") and _______________ (the "Assignee") is dated as
of _____________, _____. The parties hereto agree as follows:
15. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement (which,
as it may be amended, modified, renewed or extended from time to time is herein
called the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto
("Schedule 1"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings attributed to them in the Credit Agreement.
16. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item 3 of
Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loans, if
the applicable Commitment has been terminated) purchased by the Assignee
hereunder is set forth in Item 4 of Schedule 1.
17. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two Business Days (or such shorter period agreed to by the Agent) after a
Notice of Assignment substantially in the form of Appendix I (attached hereto)
has been delivered to the Agent. Such Notice of Assignment must include the
consents, if any, required to be delivered to the Agent and the Company by
Section 14 of the Credit Agreement. In no event will the Effective Date occur if
the payments required to be made by the Assignee to the Assignor on the
Effective Date under Sections 4 and 5 hereof are not made on the proposed
Effective Date. The Assignor will notify the Assignee of the proposed Effective
Date no later than the Business Day prior to the proposed Effective Date. As of
the Effective Date, (i) the Assignee shall have the rights and obligations of a
Lender under the Loan Documents with respect to the rights and obligations
assigned to the Assignee hereunder and (ii) the Assignor shall relinquish its
rights and be released from its corresponding obligations under the Loan
Documents with respect to the rights and obligations assigned to the Assignee
hereunder.
<PAGE>
18. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee shall be
entitled to receive from the Agent all payments of principal, interest and fees
with respect to the interest assigned hereby. The Assignee shall advance funds
directly to the Agent with respect to all Loans and reimbursement payments made
on or after the Effective Date with respect to the interest assigned hereby. [In
consideration for the sale and assignment of Loans hereunder, (i) the Assignee
shall pay the Assignor, on the Effective Date, an amount equal to the principal
amount of the portion of all Base Rate Loans assigned to the Assignee hereunder
and (ii) with respect to each LIBOR Loan made by the Assignor and assigned to
the Assignee hereunder which is outstanding on the Effective Date, (a) on the
last day of the Interest Period, therefor or (b) on such earlier date agreed to
by the Assignor and the Assignee or (c) on the date on which any such LIBOR Loan
either becomes due (by acceleration or otherwise) or is prepaid (the date as
described in the foregoing clauses (a), (b) or (c) being hereinafter referred to
as the "Payment Date"), the Assignee shall pay the Assignor an amount equal to
the principal amount of the portion of such LIBOR Loan assigned to the Assignee
which is outstanding on the Payment Date. If the Assignor and the Assignee agree
that the Payment Date for such LIBOR Loan shall be the Effective Date, they
shall agree to the interest rate applicable to the portion of such Loan assigned
hereunder for the period from the Effective Date to the end of the existing
Interest Period, applicable to such LIBOR Loan (the "Agreed Interest Rate") and
any interest received by the Assignee in excess of the Agreed Interest Rate
shall be remitted to the Assignor. In the event interest for the period from the
Effective Date to but not including the Payment Date is not paid by the Company
with respect to any LIBOR Loan sold by the Assignor to the Assignee hereunder,
the Assignee shall pay to the Assignor interest for such period on the portion
of such LIBOR Loan sold by the Assignor to the Assignee hereunder at the
applicable rate provided by the Credit Agreement. In the event a prepayment of
any LIBOR Loan which is existing on the Payment Date and assigned by the
Assignor to the Assignee hereunder occurs after the Payment Date but before the
end of the Interest Period applicable to such LIBOR Loan, the Assignee shall
remit to the Assignor the excess of the prepayment penalty paid with respect to
the portion of such LIBOR Loan assigned to the Assignee hereunder over the
amount which would have been paid if such prepayment penalty was calculated
based on the Agreed Interest Rate. The Assignee will also promptly remit to the
Assignor (i) any principal payments received from the Agent with respect to
LIBOR Loans prior to the Payment Date and (ii) any amounts of interest on Loans
and fees received from the Agent which relate to the portion of the Loans
assigned to the Assignee hereunder for periods prior to the Effective Date, in
the case of Base Rate Loans or fees, or the Payment Date, in the case of LIBOR
Loans, and not previously paid by the Assignee to the Assignor.]1 In the event
that either party hereto receives any payment to which the other party hereto is
entitled under this Assignment Agreement, then the party receiving such amount
shall promptly remit it to the other party hereto.
-----
Each Assignor may insert its standard payment provisions in lieu of
the payment terms included in this Exhibit.
<PAGE>
15. FEES PAYABLE BY THE ASSIGNEE. The [Assignee shall pay to the Assignor a fee
on each day on which a payment of interest or commitment fees is made under the
Credit Agreement with respect to the amounts assigned to the Assignee hereunder
(other than a payment of interest or commitment fees for the period prior to the
Effective Date or, in the case of LIBOR Loans, the Payment Date, which the
Assignee is obligated to deliver to the Assignor pursuant to Section 4 hereof).
The amount of such fee shall be the difference between (i) the interest or fee,
as applicable, paid with respect to the amounts assigned to the Assignee
hereunder and (ii) the interest or fee, as applicable, which would have been
paid with respect to the amounts assigned to the Assignee hereunder if each
interest rate was ___ of 1% less than the interest rate paid by the Company or
if the commitment fee was ___ of 1% less than the commitment fee paid by the
Company, as applicable. In addition, the] [Assignee] [Assignor] agrees to pay a
$3,500 processing fee required to be paid to the Agent in connection with this
Assignment Agreement.1
16. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S LIABILITY.
The Assignor represents and warrants that it is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim created by the Assignor. It is understood and
agreed that the assignment and assumption hereunder are made without recourse to
the Assignor and that the Assignor makes no other representation or warranty of
any kind to the Assignee. Neither the Assignor, the Agent, nor any of its
officers, directors, employees, agents or attorneys shall be responsible for (i)
the due execution, legality, validity, enforceability, genuineness, sufficiency
or collectability of any Loan Document, including without limitation, documents
granting the Assignor and the Agent a security interest in assets of the
Company, (ii) any representation, warranty or statement made in or in connection
with any of the Loan Documents, (iii) the financial condition or
creditworthiness of the Company, (iv) the performance of or compliance with any
of the terms or provisions of any of the Loan Documents, (v) inspecting any of
the property, books or records of the Company, (vi) the validity,
enforceability, perfection, priority, condition, value or sufficiency of any
collateral securing or purporting to secure the Loans or (vii) any mistake,
error of judgment, or action taken or omitted to be taken in connection with the
Loans or the Loan Documents.
17. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it has
received a copy of the Credit Agreement, together with copies of the financial
statements requested by the Assignee and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment Agreement, and agrees to be bound by the terms thereof
including, but not limited to, the provisions of Section 13.9.1 of the Credit
Agreement, (ii) agrees that it will, independently and without reliance upon the
Agent or the Assignor and based on such documents and information at it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, (iii) appoints and
authorizes the Agent to take such action as Agent on its behalf and to exercise
such powers under the Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto, (iv)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender, (v) agrees that its payment instructions and notice
instructions are as set forth in the attachment to Schedule 1, (vi) confirms
that none of the funds, monies, assets or other consideration being used to make
the purchase and assumption hereunder are "plan assets" as defined under ERISA
and that its rights, benefits and interests in and under the Loan Documents will
not be "plan assets" under ERISA, [and (vii) attaches the forms prescribed by
the Internal Revenue Service of the United States certifying that the Assignee
is entitled to receive payments under the Loan Documents without deduction or
withholding of any United States federal income taxes].2 1.
<PAGE>
18. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor harmless
against any and all losses, costs and expenses (including, without limitation,
reasonable attorneys' fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee's non-performance of
the obligations assumed under this Assignment Agreement.
19. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall have
the right pursuant to Section 13 of the Credit Agreement to assign the rights
which are assigned to the Assignee hereunder to any entity or person, provided
that (i) any such subsequent assignment does not violate any of the terms and
conditions of the Loan Documents or any law, rule, regulation, order, writ,
judgment, injunction or decree and that any consent required under the terms of
the Loan Documents has been obtained and (ii) unless the prior written consent
of the Assignor is obtained, the Assignee is not thereby released from its
obligations to the Assignor hereunder, if any remain unsatisfied, including,
without limitation, its obligations under [Sections 4, 5 and 8] hereof.
20. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the aggregate
Commitment occurs between the date of this Assignment Agreement and the
Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall
remain the same, but the dollar amount purchased shall be recalculated based on
the reduced aggregate Commitment.
21. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice of
Assignment embody the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings between the parties
hereto relating to the subject matter hereof.
22. GOVERNING LAW. This Assignment Agreement shall be governed by and
interpreted and enforced in accordance with the internal laws (without regard to
conflicts of law provisions) of the State of Illinois.
23. NOTICES. Notices shall be given under this Assignment Agreement in the
manner set forth in the Credit Agreement. For the purpose hereof, the addresses
of the parties hereto (until notice of a change is delivered) shall be the
address set forth in the attachment to Schedule 1.
* * * * *
[SIGNATURE PAGES FOLLOW]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By:
Name:
Title:
[NAME OF ASSIGNEE]
By:
Name:
Title:
<PAGE>
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
Credit Agreement dated as of August __, 2000 among ONKYO ACQUISITION
CORPORATION an Indiana corporation, the Lenders party thereto and GMAC
BUSINESS CREDIT, LLC, a Delaware limited liability company, as Agent
and a Lender.
2. Date of Assignment Agreement: ______________, ___
3. Amounts to be Assigned (As of Date of Item 2 above):
Revolving Loan Facility
Total of Commitments (Loans) Under the Credit Agreement $_______
Amount of Assigned Share of Each Facility Under the
Assignment Agreement $_______
4. Assignee's Aggregate (Loan Amount) Commitment
Amount Purchased Hereunder: $_______
5. Proposed Effective Date: _____________ ___, _______
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
Name: Name:
Title: Title:
<PAGE>
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must include notice
address for the Assignor and the Assignee
<PAGE>
APPENDIX I
to Assignment Agreement
NOTICE
OF ASSIGNMENT
____________, 20__
To: GMAC Business Credit, LLC, as Agent
500 W. Madison Street, Suite 3130
Chicago, Illinois 60661
Attention: Michael Molenda
Telephone: (312) 775-7086
Facsimile: (312) 775-6006
Facsimile: (248) 350-2733
Onkyo Acquisition Corporation
c/o Global Technovations, Inc.
7108 Fairway Drive, Suite 200
Palm Beach Gardens, FL 33418
Attention: William C. Willis, Jr.
Telephone: (561) 775-5756
Facsimile: (561) 691-5220
--------
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Credit Agreement (the "Credit Agreement") described in Item
1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein
and not otherwise defined herein shall have the meanings attributed to them in
the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to the Loan
Parties and the Agent pursuant to Section 14 of the Credit Agreement.
<PAGE>
3. The Assignor and the Assignee have entered into an Assignment Agreement,
dated as of ____________, 20___ (the "Assignment"), pursuant to which, among
other things, the Assignor has sold, assigned, delegated and transferred to the
Assignee, and the Assignee has purchased, accepted and assumed from the Assignor
the percentage interest specified in Item 3 of Schedule 1 of all outstandings,
rights and obligations under the Credit Agreement relating to the facilities
listed in Item 3 of Schedule 1. The Effective Date of the Assignment shall be
the later of the date specified in Item 5 of Schedule 1 or two Business Days (or
such shorter period as agreed to by the Agent) after this Notice of Assignment
and any consents and fees required by Section 14 of the Credit Agreement have
been delivered to the Agent, provided that the Effective Date shall not occur if
any condition precedent agreed to by the Assignor and the Assignee has not been
satisfied.
4. The Assignor and the Assignee hereby give to the Loan Parties and the Agent
notice of the assignment and delegation referred to herein. The Assignor will
confer with the Agent before the date specified in Item 5 of Schedule 1 to
determine if the Assignment Agreement will become effective on such date
pursuant to Section 3 hereof, and will confer with the Agent to determine the
Effective Date pursuant to Section 3 hereof if it occurs thereafter. The
Assignor shall notify the Agent if the Assignment Agreement does not become
effective on any proposed Effective Date as a result of the failure to satisfy
the conditions precedent agreed to by the Assignor and the Assignee. At the
request of the Agent, the Assignor will give the Agent written confirmation of
the satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on or before the
Effective Date the processing fee of $3,500 required by Section 14 of the Credit
Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and the Assignee
request and direct that the Agent prepare and cause the applicable Loan Parties
to execute and deliver new Notes or, as appropriate, replacements notes, to the
Assignor and the Assignee. The Assignor and, if applicable, the Assignee each
agree to deliver to the Agent the original Note received by it from such Loan
Parties upon its receipt of a new Note in the appropriate amount.
7. The Assignee advises the Agent that notice and payment instructions are set
forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the funds, monies,
assets or other consideration being used to make the purchase pursuant to the
Assignment are "plan assets" as defined under ERISA and that its rights,
benefits, and interests in and under the Loan Documents will not be "plan
assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent under the Loan
Documents in accordance with the terms thereof. The Assignee acknowledges that
the Agent has no duty to supply information with respect to the Loan Parties or
the Loan Documents to the Assignee until the Assignee becomes a party to the
Credit Agreement.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
Name: Name:
Title: Title:
<PAGE>
ACKNOWLEDGED AND CONSENTED TO:
GMAC BUSINESS CREDIT, LLC,
a Delaware limited liability company
By:
Name:
Title:
----------------------------------
ONKYO ACQUISITION CORPORATION, an Indiana corporation
By:
Title:
[Attach photocopy of Schedule 1 to Assignment]
<PAGE>
SCHEDULE TO BORROWING BASE CERTIFICATE
Dated as of [_________________]
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1. Gross Accounts Receivable $
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2. Less Ineligibles
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- Agent's Lien Not Perfected $
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- Subject to other Lien $
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- Subject to Offset, etc. $
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- Account Debtor not in U.S. $
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- Sale on Approval, Sale or Return, Bill and Hold $
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- Over 60 days past due or over 90 days past $
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- Affiliate Receivables $
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- Foreign Receivables $
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- Receivables with respect to Account Debtors $
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- Receivables of an Account Debtor $
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- Other $
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- Total $
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3. Eligible Accounts Receivable (Item 1 minus Item 2] $
--------------------------------------------------------------------------------
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4. Item 3 times 85% $
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5. Gross Inventory $
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6. Less Ineligibles
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- Agent's Lien Not Perfected $------------------
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- Subject to other Lien $
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- Not Salable $
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- Located off-site and no Collateral Access $
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- Not located in U.S. $
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- Other $
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- Total $
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7. Eligible Inventory [Item 5 minus Item 6] $
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8. Item 7 times 90% $
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9. Borrowing Base [Item 4 plus Item 8] $
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10. Lesser of Item 9 and the Revolving Commitment Amount $
-------------------------------------------------------------------------------
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11. Revolving Outstandings $
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12. Net Availability $
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13. Required Prepayment $
[Excess of Item 11 over Item 10]
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