and
SYNTAX-BRILLIAN SPE, INC.,
as Borrowers
as Guarantors,
as Administrative Agent, Collateral Agent, and Lead Arranger
SECTION 1. | DEFINITIONS AND INTERPRETATION | 2 | ||||
1.1 | Definitions | 2 | ||||
1.2 | Accounting Terms | 45 | ||||
1.3 | Interpretation, etc | 45 | ||||
SECTION 2. | LOANS AND LETTERS OF CREDIT | 45 | ||||
2.1 | Term Loans | 45 | ||||
2.2 | Revolving Loans | 46 | ||||
2.3 | Issuance of Letters of Credit and Purchase of Participations Therein | 47 | ||||
2.4 | Pro Rata Shares; Availability of Funds | 51 | ||||
2.5 | Use of Proceeds | 52 | ||||
2.6 | Evidence of Debt; Register; Lenders’ Books and Records; Notes | 52 | ||||
2.7 | Interest on Loans | 53 | ||||
2.8 | Conversion/Continuation | 55 | ||||
2.9 | Default Interest | 55 | ||||
2.10 | Fees | 55 | ||||
2.11 | Scheduled Payments/Commitment Reductions | 56 | ||||
2.12 | Voluntary Prepayments/Commitment Reductions | 57 | ||||
2.13 | Mandatory Prepayments/Commitment Reductions | 58 | ||||
2.14 | Application of Prepayments/Reductions | 60 | ||||
2.15 | General Provisions Regarding Payments | 62 | ||||
2.16 | Ratable Sharing | 66 | ||||
2.17 | Making or Maintaining LIBOR Rate Loans | 66 | ||||
2.18 | Increased Costs; Capital Adequacy; Reserves on LIBOR Rate Loans | 68 | ||||
2.19 | Taxes; Withholding, etc | 70 | ||||
2.20 | Obligation to Mitigate | 73 | ||||
2.21 | Defaulting Lenders | 73 | ||||
2.22 | Removal or Replacement of a Lender | 74 | ||||
SECTION 3. | CONDITIONS PRECEDENT | 75 | ||||
3.1 | Closing Date | 75 | ||||
3.2 | Conditions to Each Credit Extension | 80 | ||||
SECTION 4. | REPRESENTATIONS AND WARRANTIES | 82 | ||||
4.1 | Organization; Requisite Power and Authority; Qualification | 82 | ||||
4.2 | Capital Stock and Ownership | 82 | ||||
4.3 | Due Authorization | 82 | ||||
4.4 | No Conflict | 82 | ||||
4.5 | Governmental Consents | 83 | ||||
4.6 | Binding Obligation | 83 | ||||
4.7 | Historical Financial Statements | 83 | ||||
4.8 | Projections | 83 | ||||
4.9 | No Material Adverse Change | 84 | ||||
4.10 | No Restricted Junior Payments | 84 | ||||
4.11 | Adverse Proceedings, etc | 84 |
4.12 | Payment of Taxes and Other Amounts | 84 | ||||
4.13 | Properties | 84 | ||||
4.14 | Environmental Matters | 85 | ||||
4.15 | No Defaults | 86 | ||||
4.16 | Material Contracts | 86 | ||||
4.17 | Governmental Regulation | 86 | ||||
4.18 | Margin Stock | 86 | ||||
4.19 | Employee Matters | 86 | ||||
4.20 | Employee Benefit Plans | 87 | ||||
4.21 | Certain Fees | 88 | ||||
4.22 | Solvency | 88 | ||||
4.23 | Intentionally Omitted | 88 | ||||
4.24 | Compliance with Statutes, etc | 88 | ||||
4.25 | Disclosure | 88 | ||||
4.26 | Terrorism Laws | 88 | ||||
4.27 | Insurance | 88 | ||||
4.28 | Common Enterprise | 89 | ||||
4.29 | Security Interest in Collateral | 89 | ||||
4.30 | Affiliate Transactions | 89 | ||||
4.31 | Intellectual Property | 89 | ||||
4.32 | Permits, Etc | 90 | ||||
4.33 | Customers and Suppliers | 90 | ||||
4.34 | Flood Zone | 90 | ||||
SECTION 5. | AFFIRMATIVE COVENANTS | 91 | ||||
5.1 | Financial Statements and Other Reports | 91 | ||||
5.2 | Existence | 97 | ||||
5.3 | Payment of Taxes and Claims | 97 | ||||
5.4 | Maintenance of Properties | 97 | ||||
5.5 | Insurance | 97 | ||||
5.6 | Books and Records; Inspections | 98 | ||||
5.7 | Lenders Meetings | 98 | ||||
5.8 | Compliance with Laws | 99 | ||||
5.9 | Environmental | 99 | ||||
5.10 | Subsidiaries | 101 | ||||
5.11 | Additional Material Real Estate Assets | 102 | ||||
5.12 | Intentionally Omitted | 103 | ||||
5.13 | Intentionally Omitted | 103 | ||||
5.14 | Further Assurances | 103 | ||||
5.15 | Miscellaneous Business Covenants | 103 | ||||
5.16 | Use of Proceeds | 103 | ||||
5.17 | Post Closing Matters | 104 | ||||
5.18 | Key Man Insurance | 104 | ||||
5.19 | Foreign Credit Insurance | 104 | ||||
5.20 | Projections | 104 | ||||
5.21 | Independent Director | 104 |
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SECTION 6. | NEGATIVE COVENANTS | 104 | ||||
6.1 | Indebtedness | 105 | ||||
6.2 | Liens | 107 | ||||
6.3 | No Further Negative Pledges | 108 | ||||
6.4 | Restricted Junior Payments | 108 | ||||
6.5 | Restrictions on Subsidiary Distributions | 109 | ||||
6.6 | Investments | 109 | ||||
6.7 | Financial Covenants | 110 | ||||
6.8 | Fundamental Changes; Disposition of Assets; Acquisitions | 112 | ||||
6.9 | Disposal of Subsidiary Interests | 114 | ||||
6.10 | Sales and Lease Backs | 114 | ||||
6.11 | Transactions with Shareholders and Affiliates | 114 | ||||
6.12 | Conduct of Business | 114 | ||||
6.13 | Permitted Activities of SPV | 114 | ||||
6.14 | Amendments or Waivers of Certain Contractual Obligations | 115 | ||||
6.15 | Customers and Suppliers | 115 | ||||
6.16 | Fiscal Year | 115 | ||||
6.17 | Deposit Accounts | 115 | ||||
6.18 | Amendments to Organizational Agreements and Material Contracts | 115 | ||||
6.19 | Prepayments of Certain Indebtedness | 115 | ||||
6.20 | Issuance of Capital Stock | 116 | ||||
6.21 | Affiliate Payments | 116 | ||||
6.22 | Accounts | 116 | ||||
6.23 | Judgments and Litigations | 116 | ||||
6.24 | Panel Inventory | 116 | ||||
SECTION 7. | GUARANTY | 116 | ||||
7.1 | Guaranty of the Obligations | 116 | ||||
7.2 | Contribution by Guarantors | 117 | ||||
7.3 | Payment by Guarantors | 117 | ||||
7.4 | Liability of Guarantors Absolute | 118 | ||||
7.5 | Waivers by Guarantors | 120 | ||||
7.6 | Guarantors’ Rights of Subrogation, Contribution, etc | 120 | ||||
7.7 | Subordination of Other Obligations | 121 | ||||
7.8 | Continuing Guaranty | 121 | ||||
7.9 | Authority of Guarantors or Borrowers | 121 | ||||
7.10 | Financial Condition of Borrowers | 121 | ||||
7.11 | Bankruptcy, etc. | 122 | ||||
7.12 | Discharge of Guaranty Upon Sale of Guarantor | 122 | ||||
7.13 | Taxes | 123 | ||||
SECTION 8. | EVENTS OF DEFAULT | 123 | ||||
8.1 | Events of Default | 123 | ||||
SECTION 9. | AGENTS | 126 | ||||
9.1 | Appointment of Agents | 126 | ||||
9.2 | Powers and Duties | 127 | ||||
9.3 | General Immunity | 127 |
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9.4 | Agents Entitled to Act as Lender | 128 | ||||
9.5 | Lenders’ Representations, Warranties and Acknowledgment | 129 | ||||
9.6 | Right to Indemnity | 129 | ||||
9.7 | Successor Administrative Agent | 130 | ||||
9.8 | Collateral Matters, Collateral, Documents and Guaranty | 132 | ||||
9.9 | Posting of Approved Electronic Communications | 133 | ||||
9.10 | Proofs of Claim | 134 | ||||
9.11 | Agents and Arrangers | 135 | ||||
SECTION 10. | MISCELLANEOUS | 135 | ||||
10.1 | Notices | 135 | ||||
10.2 | Expenses | 135 | ||||
10.3 | Indemnity | 136 | ||||
10.4 | Set Off | 137 | ||||
10.5 | Amendments and Waivers | 137 | ||||
10.6 | Successors and Assigns; Participations | 139 | ||||
10.7 | Special Purpose Funding Vehicles | 142 | ||||
10.8 | Independence of Covenants | 143 | ||||
10.9 | Survival of Representations, Warranties and Agreements | 143 | ||||
10.10 | No Waiver; Remedies Cumulative | 143 | ||||
10.11 | Marshalling; Payments Set Aside | 144 | ||||
10.12 | Severability | 144 | ||||
10.13 | Obligations Several; Independent Nature of Lenders’ Rights | 144 | ||||
10.14 | Headings | 144 | ||||
10.15 | APPLICABLE LAW | 144 | ||||
10.16 | CONSENT TO JURISDICTION | 145 | ||||
10.17 | WAIVER OF JURY TRIAL | 145 | ||||
10.18 | Confidentiality | 146 | ||||
10.19 | Usury Savings Clause | 147 | ||||
10.20 | Counterparts | 147 | ||||
10.21 | Effectiveness | 147 | ||||
10.22 | Patriot Act | 147 | ||||
10.23 | Disclosure | 148 | ||||
10.24 | Appointment for Perfection | 148 | ||||
10.25 | Advertising and Publicity | 148 | ||||
10.26 | Foreign Currency | 148 | ||||
10.27 | Immunity | 149 |
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APPENDICES: | A-1 | Tranche A Term Loan Commitments | ||||
A-2 | Tranche A-1 Term Loan Commitments | |||||
A-3 | Revolving Commitments | |||||
B | Notice Addresses | |||||
SCHEDULES: | 1.1(a) | Certain Material Real Estate Assets | ||||
1.1(b) | Contractor Agreements | |||||
1.1(c) | Panel Deposit Agreements | |||||
1.1(d) | Contractor Documents | |||||
4.1 | Jurisdictions of Organization and Qualification | |||||
4.2 | Capital Stock and Ownership | |||||
4.13 | Real Estate Assets | |||||
4.16 | Material Contracts | |||||
4.27 | Insurance | |||||
5.17 | Certain Post Closing Matters | |||||
6.1 | Certain Indebtedness | |||||
6.2 | Certain Liens | |||||
6.6 | Certain Investments | |||||
6.8(c) | Foreign Subsidiaries to be Dissolved | |||||
6.11 | Certain Affiliate Transactions | |||||
EXHIBITS: | A-1 | Funding Notice | ||||
A-2 | Conversion/Continuation Notice | |||||
A-3 | Issuance Notice | |||||
B-1 | Tranche A Term Loan Note | |||||
B-2 | Tranche A-1 Term Loan Note | |||||
B-3 | Revolving Loan Note | |||||
C | Compliance Certificate | |||||
D | Opinions of Counsel | |||||
E | Assignment Agreement | |||||
F | Certificate Regarding Non-bank Status | |||||
G-1 | Closing Date Certificate | |||||
G-2 | Solvency Certificate | |||||
H | Counterpart Agreement | |||||
I-1 | Pledge and Security Agreement | |||||
I-2 | Hong Kong Fixed and Floating Security Document | |||||
I-3 | Hong Kong Share Charge | |||||
J | [Reserved] | |||||
K | Landlord Consent and Subordination Agreement | |||||
L | Borrowing Base Certificate | |||||
M | Bailee’s Letter |
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(i) | the sum, without duplication, of the amounts for such period of: |
(a) | Consolidated Net Income,plus | ||
(b) | Consolidated Interest Expense,plus | ||
(c) | provisions for taxes based on income,plus | ||
(d) | total depreciation expense,plus | ||
(e) | total amortization expense,plus | ||
(f) | other non-Cash items reducing Consolidated Net Income (excluding any such non-Cash item to the extent that it represents an accrual or reserve for potential Cash items in any future period |
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or amortization of a prepaid Cash item that was paid in a prior period),minus |
(ii) | the sum, without duplication of the amounts for such period of: |
(a) | other non-Cash items increasing Consolidated Net Income for such period (excluding any such non-Cash item to the extent it represents the reversal of an accrual or reserve for potential Cash item in any prior period),plus | ||
(b) | interest income,plus | ||
(c) | extraordinary gains and other income; |
(i) | the sum, without duplication, of the amounts for such period of: |
(a) | Consolidated Adjusted EBITDA,plus | ||
(b) | interest income,plus | ||
(c) | other non-ordinary course income, plus | ||
(d) | the Consolidated Working Capital Adjustment,minus |
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(ii) | the sum, without duplication, of the amounts for such period of: |
(a) | voluntary and scheduled repayments of Consolidated Total Debt (excluding repayments of any revolving credit indebtedness except to the extent the obligation of the relevant lenders to make such revolving credit available is permanently reduced or terminated in connection with such repayments, to the extent of such reduction or termination),plus | ||
(b) | Consolidated Capital Expenditures,plus | ||
(c) | Consolidated Cash Interest Expense,plus | ||
(d) | provisions for current taxes based on income of Company and its Subsidiaries and payable in cash with respect to such period. |
(i) | Consolidated Cash Interest Expense,plus | ||
(ii) | scheduled payments of principal on Consolidated Total Debt,plus | ||
(iii) | Consolidated Capital Expenditures,plus | ||
(iv) | dividends or distributions paid in cash,plus | ||
(v) | the portion of taxes based on income actually paid in cash and provisions for cash income taxes, as each of the foregoing is made during such period in conformity with GAAP. |
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(i) | the net income (or loss) of Company and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP,minus | ||
(ii) | the sum of: |
(a) | the income (or loss) of any Person (other than a Subsidiary of Company) in which any other Person (other than Company or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to Company or any of its Subsidiaries by such Person during such period, plus | ||
(b) | the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of Company or is merged into or consolidated with Company or any of its Subsidiaries or that Person’s assets are acquired by Company or any of its Subsidiaries, plus | ||
(c) | the income of any Subsidiary of Company to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, plus | ||
(d) | any after-tax gains or losses attributable to Asset Sales or returned surplus assets of any Pension Plan, plus | ||
(e) | (to the extent not included in clauses (a) through (d) above) any net extraordinary gains or net extraordinary losses. |
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(A) | returned units under repair; | ||
(B) | parts for repairs; | ||
(C) | marketing and testing units; | ||
(D) | damaged goods under dispute; | ||
(E) | lower of cost or market reserve; and | ||
(F) | Kolin rebate Inventory adjustments. |
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(i) | the greater of (A) Consolidated Total Debt as of such day and (B) the average daily Consolidated Total Debt for the four-quarter Fiscal Quarter ending on such date, to | ||
(ii) | Consolidated Adjusted EBITDA for the four-Fiscal Quarter period ending on such date. |
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Fiscal Quarter | Leverage Ratio | |||
December 31, 2007 | 2.75:1.00 | |||
March 31, 2008 | 3.25:1.00 | |||
June 30, 2008 and each Fiscal Quarter thereafter | 2.50:1.00 |
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Fiscal Quarter | Consolidated Adjusted EBITDA | |||
December 31, 2007 | $ | 62,000,000 | ||
March 31, 2008 | $ | 70,000,000 | ||
June 30, 2008 | $ | 80,000,000 | ||
September 30, 2008 | $ | 85,000,000 | ||
December 31, 2008 | $ | 88,000,000 | ||
March 31, 2009 | $ | 91,000,000 | ||
June 30, 2009 | $ | 95,000,000 | ||
September 30, 2009 | $ | 98,000,000 | ||
December 31, 2009 and each Fiscal Quarter ending thereafter | $ | 100,000,000 | ||
Fiscal Quarter | Revenues | |||
December 31, 2007 | $ | 770,000,000 | ||
March 31, 2008 | $ | 950,000,000 | ||
June 30, 2008 | $ | 1,130,000,000 | ||
September 30, 2008 | $ | 1,350,000,000 | ||
December 31, 2008 | $ | 1,400,000,000 | ||
March 31, 2009 | $ | 1,450,000,000 | ||
June 30, 2009 | $ | 1,500,000,000 | ||
September 30, 2009 | $ | 1,550,000,000 | ||
December 31, 2009 and each Fiscal Quarter ending thereafter | $ | 1,600,000,000 |
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Minimum Consolidated | ||||
Date | Liquidity | |||
Closing Date through November 30, 2007 | $ | 2,500,000 | ||
December 1, 2007 and thereafter | $ | 5,000,000 |
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SYNTAX-BRILLIAN CORPORATION | ||||
By: | /s/ John S. Hodgson | |||
Name: | John S. Hodgson | |||
Title: | Executive Vice President, Chief Financial Officer and Treasurer | |||
SYNTAX-BRILLIAN SPE, INC. | ||||
By: | /s/ John S. Hodgson | |||
Name: | John S. Hodgson | |||
Title: | Chief Financial Officer | |||
SYNTAX GROUPS CORPORATION | ||||
By: | /s/ John S. Hodgson | |||
Name: | John S. Hodgson | |||
Title: | Chief Financial Officer | |||
SYNTAX CORPORATION | ||||
By: | /s/ John S. Hodgson | |||
Name: | John S. Hodgson | |||
Title: | Chief Financial Officer | |||
VIVITAR CORPORATION | ||||
By: | /s/ John S. Hodgson | |||
Name: | John S. Hodgson | |||
Title: | Chief Financial Officer |
SILVER POINT FINANCE, LLC, as Administrative Agent, Lead Arranger and Collateral Agent and a Lender | ||||
By: | /s/ Frederick H. Fogel | |||
Name: | Frederick H. Fogel | |||
Title: | Authorized Signatory |
SP SYNTAX LLC, as a Lender | ||||
By: | /s/ Frederick H. Fogel | |||
Name: | Frederick H. Fogel | |||
Title: | Authorized Signatory | |||
SP3 SYNTAX LLC, as a Lender | ||||
By: | /s/ Frederick H. Fogel | |||
Name: | Frederick H. Fogel | |||
Title: | Authorized Signatory |
CITICORP USA, INC., as a Lender | ||||
By: | /s/ James R. Williams | |||
Name: | James R. Williams | |||
Title: | Director and Vice President |
WELLS FARGO FOOTHILL, LLC, as a Lender | ||||
By: | /s/ Todd R. Nakamoto | |||
Name: | Todd R. Nakamoto | |||
Title: | Vice President |
THE CIT GROUP/COMMERCIAL SERVICES, INC., as a Lender | ||||
By: | /s/ Nathan L. Hugg | |||
Name: | Nathan L. Hugg | |||
Title: | Senior Vice President |
WACHOVIA CAPITAL FINANCE CORPORATION (NEW ENGLAND) as a Lender | ||||
By: | /s/ Robert A. Kinne | |||
Name: | Robert A. Kinne | |||
Title: | Director |
Tranche A | Pro | |||||||
Lender | Term Loan Commitment | Rata Share | ||||||
SP Syntax LLC | $ | 85,066,666.66 | 77.333333 | % | ||||
SP3 Syntax LLC | $ | 10,266,666.67 | 9.333333 | % | ||||
Citicorp USA, Inc. | $ | 14,666,666.67 | 13.333333 | % | ||||
Total | $ | 110,000,000.00 | 100 | % | ||||
Tranche A-1 | Pro | |||||||
Lender | Term Loan Commitment | Rata Share | ||||||
SP Syntax LLC | $ | 30,933,333.34 | 77.333333 | % | ||||
SP3 Syntax LLC | $ | 3,733,333.33 | 9.333333 | % | ||||
Citicorp USA, Inc. | $ | 5,333,333.33 | 13.333333 | % | ||||
Total | $ | 40,000,000.00 | 100 | % | ||||
Lender | Revolving Commitment | Pro Rata Share | ||||||
Wells Fargo Foothill, LLC | $ | 33,333,333.34 | 33.33 | % | ||||
The CIT Group/Commercial Services, Inc. | $ | 33,333,333.33 | 33.33 | % | ||||
Wachovia Capital Finance Corporation (New England) | $ | 33,333,333.33 | 33.33 | % | ||||
Total | $ | 100,000,000.00 | 33.33 | % | ||||
Tempe, Arizona 85281
Attention: General Counsel, Chief Financial Officer and Treasurer
Telecopier: 602-389-8869
2375 E. Camelback Road, Suite 700
Phoenix, AZ 85016
Attention: Robert S. Kant, Esq.
Telecopier: 602-445-8100
Two Greenwich Plaza
Greenwich, Connecticut 06830
Telecopier: (203) 542-4550
Attention: Tim Skoufis, Account Manager