9.“Insolvency” of Borrower or any other person or entity shall mean that there shall have occurred with respect to Borrower or such other person or entity one or more of the following events: dissolution, termination of existence, liquidation, insolvency, business failure, appointment of a receiver of any part of the property of, assignment for the benefit of creditors by or against Borrower or such other person or entity, or institution of any action or proceeding with respect to Borrower or such other person or entity under or pursuant to any insolvency laws relating to the relief of debtors by or against Borrower or such other person or entity, institution of proceedings in bankruptcy or with respect to the readjustment of indebtedness, reorganization, composition or extension by or against Borrower or such other person or entity (including, without limitation, under or pursuant to the United States Bankruptcy Code, as amended, or under any similar law at any time enacted), or if any action shall be taken for the purpose of effecting any of the foregoing.
10.“Inventory” shall mean all of Borrower’s (or any other entity’s, as applicable) inventory (as defined in the Uniform Commercial Code as enacted in the State of Texas, or in any other jurisdiction) and all finished goods, other goods, merchandise and other personal property now owned or hereafter acquired by Borrower which are held for sale, lease, or rental or are furnished or to be furnished under a contract of service and all raw materials, work in process, component parts, materials or supplies used or to be used, or consumed or to be consumed, in Borrower’s business, and related products and all goods represented thereby, wherever located, and all such goods that may be reclaimed or repossessed from or returned by Borrower’s customers, and all shipping and packaging materials relating to any of the foregoing.
11.“Liabilities” shall mean any and all obligations, indebtedness and liabilities of Borrower to Bank or any affiliate of Bank of every kind and description, whether direct or indirect, absolute or contingent, joint or several, due or to become due, liquidated or unliquidated, now existing or hereafter arising, and all extensions, modifications, renewals, and refinancings thereof, regardless of how such Liabilities arise or by what agreement or instrument (if any) they may be evidenced and include obligations to perform acts and refrain from taking actions as well as obligations to pay money. Without limiting the foregoing, Liabilities shall specifically include all liabilities and obligations of Borrower hereunder and the obligation to repay the indebtedness evidenced by the Note. Without limiting the foregoing, Liabilities also shall include all obligations heretofore, now or hereafter incurred by Borrower under any agreement between Borrower and Bank or any affiliate of Bank, whether now existing or hereafter entered into, including, without limitation, any agreement which provides for an interest rate, currency, equity, credit or commodity swap, cap, floor or collar, spot or foreign currency exchange transaction, cross currency rate swap, currency option, any combination of, or option with respect to, any of the foregoing or similar transactions, for the purpose of hedging Borrower’s exposure to fluctuations in interest rates, exchange rates, currency, stock, portfolio or loan valuations or commodity prices. Without limiting the foregoing, Liabilities shall specifically include all liabilities and obligations of Borrower evidenced by or arising under or in connection with (a) this Credit Agreement; (b) the Note; and (c) any letters of credit heretofore, now or hereafter issued by Bank at Borrower’s request (the “letters of credit”) and any related promissory notes, documents, instruments and agreements.
12.“Loan Documents” shall mean and include the Note, the Credit Agreement,any letter of credit documents, and any subordination agreements, intercreditor agreements and other
5
agreements, documents and instruments now or hereafter evidencing, securing, guaranteeing or relating to the Revolving Line or any of the other Liabilities, obligations or indebtedness of Borrower to Bank, as the same may be amended.
13.“Loan Party” shall mean the Borrower and any subsidiary or other Person executing a guaranty or a security agreement with respect to the Liabilities.
14.“Permitted Liens” shall mean any of the following (but only to the extent the same do not or could not, in Bank’s reasonable opinion, jeopardize Bank’s rights or priority in or to any Collateral):
| |
| (a) liens of carriers, warehousemen, landlords, mechanics, laborers and materialmen arising by law for sums which are (i) not yet due or (ii) being diligently contested in good faith and with respect to which Borrower has set aside sufficient reserves with Bank; |
| |
| (b) liens for taxes which are (i) not yet due or (ii) being diligently contested in good faith by appropriate proceedings and with respect to which Borrower has set aside sufficient reserves with Bank; |
| |
| (c) security interests in Borrower’s equipment provided that they are limited to those securing a portion of the purchase price of said equipment. |
15.“Proceeds” shall mean all cash proceeds, non-cash proceeds and all forms of payment and other property received or due from the sale, lease, rental, transfer, disposition, licensing, collection, use or exchange of property constituting Collateral hereunder and any and all claims against any third party for loss of or damage to any Collateral, including insurance, contract and tort claims, and further, without limiting the generality of the foregoing, Proceeds shall include all Accounts, checks, cash, money orders, drafts, chattel paper, general intangibles, instruments, notes and other documents evidencing payment and payment obligations to Borrower for the sale, lease, rental, transfer, disposition, licensing, collection, use or exchange of Collateral.
16.“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of any Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of each such Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
17.“Subordinated Debt” shall mean all such debts, obligations or indebtedness owing from Borrower to others which have been and remain subordinated to all Liabilities owing from Borrower to Bank pursuant to an Amended and Restated Creditor’s Subordination Agreement(s) in form and substance acceptable to Bank.
18.Any terms used to describe Bank’s security interest under the Credit Agreement not specifically defined in the Credit Agreement shall have the meanings and definitions given those terms under the Uniform Commercial Code of Texas as may be amended.
6
EXHIBIT A
ACCOUNTS RECEIVABLE AND INVENTORY RECONCILIATION
Number:_____________
Borrower:___________________ Date:________________
ACCOUNTS RECEIVABLE AND INVENTORY REPORT
| | | | | | | | | | | |
1. | Accounts Receivable | | | | | | | | | |
| a. | Balance Last Report | | | | | | | | $ | |
| | | | | | | | | |
|
|
| b. | Add: New Accounts Receivable | | $ | | | | | | | |
| | | |
|
| | | | | | |
| c. | Less: Sales Returns | | $ | | | | | | | |
| | | |
|
| | | | | | |
| d. | Other Adjustments | | $ | | | | | | | |
| | | |
|
| | | | | | |
| | | | | | | | | | | |
| e. | Net New Receivables | | | | | | | | $ | |
| | | | | | | | | |
|
|
| | | | | | | | | | | |
| f. | Less: Customer Remittances (No(s). _______) | | | | | | | | $ | |
| | | | | | | | | |
|
|
| g. | Total Value of Accounts Receivable | | | | | | | | $ | |
| | | | | | | | | |
|
|
| h. | Less: Ineligible Receivables | | | | | | | | $ | |
| | | | | | | | | |
|
|
| | | | | | | | | | | |
| i. | Net Eligible Accounts Receivable for this Period (not to exceed $__________) | | | | | | | | $ | |
| | | | | | | | | |
|
|
| | | | | | | | | | | |
2. | Inventory | | | | | | | | | |
| a. | Inventory Last Report (Line 2d) | | $ | | | | | | | |
| | | |
|
| | | | | | |
| b. | Add: Purchases | | $ | | | | | | | |
| | | |
|
| | | | | | |
| c. | Less: Outgoing Inventory | | $ | | | | | | | |
| | | |
|
| | | | | | |
| d. | Total Inventory | | $ | | | | | | | |
| | | |
|
| | | | | | |
| e. | Less: Ineligible Inventory | | | | | $ | | | | |
| | | | | | |
|
| | | |
| | | | | | | | | | | |
| f. | Total Eligible Inventory for this Period | | | | | | | | $ | |
| | | | | | | | | |
|
|
| | | | | | | | | | | |
LOAN REQUEST |
| | | | | | | | | | | |
3. | Loan Value of Above Collateral | | | | | | | | | |
| a. | Receivables % of Line 1(i) above | | $ | | | | | | | |
| | | |
|
| | | | | | |
| b. | Inventory % of Line 2(f) above | | $ | | | | | | | |
| | | |
|
| | | | | | |
| c. | Total Collateral Loan Value this Period (not to exceed $________) | | | | | | | | $ | |
| | | | | | | | | |
|
|
| | | | | | | | | | | |
4. | Loan Balance | | | | | | | | | |
| a. | Loan Balance Last Report (line 4d) | | $ | | | | | | | |
| | | |
|
| | | | | | |
| b. | Add: Draws | | $ | | | | | | | |
| | | |
|
| | | | | | |
| c. | Less: Payments | | $ | | | | | | | |
| | | |
|
| | | | | | |
| d. | Loan Balance for this Period | | | | | | | | $ | |
| | | | | | | | | |
|
|
| | | | | | | | | | | |
5. | Excess (Deficit) | | | | | | | | $ | |
| | | | | | | | | |
|
|
| | | | | | | | | | | |
6. | A Listing of Ineligible Accounts Receivable and Ineligible Inventory is attached hereto | | | | | | | | | |
- BORROWER CERTIFICATION -
The undersigned hereby warrants that (i) the foregoing is a correct statement regarding new accounts receivable, collection of accounts receivable and/or certification of inventory and that the reconciliation figures are fully and correctly set forth and (ii) there has been no change in Borrower’s state of organization, chief executive office or organizational identification number.
Authorized
Signature ______________________________________ Title ________________________________________________
EXHIBIT B
COMPLIANCE CERTIFICATE
Reference is made to that certain Revolving Credit and Security Agreement (the “Credit Agreement”) executed byUNIVERSAL POWER GROUP, INC., a Texas corporation (“Borrower”) in favor ofCOMPASS BANK (“Bank”), dated as June 19, 2007 and executed as of July __, 2007. Capitalized terms used but not defined herein shall have the meaning attributed to the same in the Credit Agreement. Borrower hereby represents, warrants and covenants to and in favor of Bank as follows:
| |
| (1) no default or event of default (or any event that would constitute an event of default but for the requirement that notice be given or time elapse or both) has occurred or is continuing under the Credit Agreement or any of the other Loan Documents or under any other loans, notes, debentures, bonds, leases or other obligations of Borrower now outstanding; |
| |
| (2) all representations, warranties and covenants contained in the Credit Agreement and the other Loan Documents are expressly reaffirmed and restated as of the date hereof; |
| |
| (3) neither Borrower nor, to the best of Borrower’s knowledge, any other party has any matured or unmatured claim, offset or cause of action against Bank or its officers, agents or affiliates arising under or in connection with the Loan Documents or the Liabilities; |
| |
| (4) all financial statements, reports and other documents delivered to Bank on or before the date hereof under or in connection with the Loan Documents are, as of the relevant date, complete and accurate and may be relied upon by Bank; and |
| |
| (5) the Borrower is in compliance with the financial covenants contained in Section 6 of the Credit Agreement as set forth onAnnex A attached hereto. |
| | |
| UNIVERSAL POWER GROUP, INC., |
| a Texas corporation |
| |
| By: | |
| |
|
| Name: | |
| |
|
| Title: | |
| |
|
| Date: | |
| |
|
1
ACKNOWLEDGEMENT
STATE OF______________
COUNTY OF____________
I, the undersigned, Notary Public in and for said County in said State, hereby certify that _____________________, whose name as __________________ ofUNIVERSAL POWER GROUP, INC., a Texas corporation, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he, as such __________________ and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand this the _____ day of _______________, ______.
| | |
| ___________________________________________________ |
| Notary Public |
[NOTARIAL SEAL] | |
| My Commission Expires: _____________________________ |
2
Schedule 2.1
Subsidiaries
None
Schedule 2.9
Places of Business
|
Corporate Office |
1720 Hayden Drive |
Carrollton, TX 75006 |
|
Oklahoma Branch |
11605-B N Santa Fe |
Oklahoma City, OK 73114 |
|
Nevada Branch |
5480 S Valley View Blvd |
Las Vegas, NV 89118 |
|
Georgia Branch |
5224 Miller Road, Ste 3B |
Columbus, GA 31909 |
Schedule 2.17
Patents, Copyrights, Trademarks, and Licenses
|
Patents |
|
None |
|
Copyrights |
|
None |
|
Trademarks |
|
Adventure Power |
Charge ‘n Start (3,146,881) |
UB Scootin’ |
UNILOK (3,192,234) |
|
Licenses |
|
None |
Schedule 2.18
Judgments and Actions
| | |
No Judgments |
| | |
Lawsuits |
| | |
| 1. | Energizer Holdings, Inc. and Eveready Battery Company, Inc. (collectively “Eveready”) see comments in Universal Power Group, Inc. 2006 10K and 2007 1st Qtr 10Q filings |
|
| 2. | A.J. Gilson see comments in Universal Power Group, Inc. 2006 10K and 2007 1st Qtr 10Q filings |
AMENDED AND RESTATED MASTER REVOLVING PROMISSORY
NOTE
| | |
$30,000,000.00 | Dallas, Texas | June 19, 2007 |
FOR VALUE RECEIVED, the undersigned,UNIVERSAL POWER GROUP, INC., a Texas corporation (“Maker”), promises to pay to the order ofCOMPASS BANK (“Payee”), on July 5, 2012 (the “Maturity Date”), the principal sum ofTHIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00), or, if less than such amount, the aggregate unpaid principal amount of all Advances (as defined below) made by Payee to Maker hereunder, on the terms herein stated, with interest thereon from this date on the unpaid principal amount hereof from time to time outstanding at the rate of interest provided below, both principal and interest payable as provided below in lawful money of the United States of America at the address of Payee set forth below or at such other place within Dallas County, Texas, as from time to time may be designated by the holder of this Amended and Restated Master Revolving Promissory Note (this “Note”).
SECTION 19. terms.
The unpaid principal of this Note from time to time outstanding shall bear interest prior to maturity at the rate of interest per annum equal to the lesser of (a) the Maximum Rate and (b) the LIBOR Index Rate (as hereinafter defined) for such Interest Periodplus the Applicable Margin (the sum being, the “LIBOR Floating Rate”). The rate of interest on the unpaid balance of principal of this Note prior to maturity shall be increased or decreased as the case may be, from time to time as of the effective date of each change in the LIBOR Index Rate, but at no time greater than the Maximum Rate. If applicable law provides for a ceiling, that ceiling shall be the indicated rate ceiling. All interest accruing under this Note shall be calculated on the basis of a 360-day year applied to the actual number of days elapsed.
Payee may disburse the principal of this Note to Maker in one or more Advances (herein so called) from time to time, pursuant to the terms of this Note and the Credit Agreement (defined below). Maker shall be entitled to receive disbursements of Advances hereunder when Payee is delivered requests for advances by Maker in accordance with and pursuant to, and otherwise in compliance with, the terms and conditions of, that certain Amended and Restated Revolving Credit and Security Agreement (the “Credit Agreement”), executed by and among Maker and Payee, dated of even date herewith; provided, however, that at no time shall the total principal amount outstanding hereunder exceed the face value of this Note. Each guarantor and any other liable party with respect to the indebtedness and obligations evidenced hereby are hereinafter referred to collectively as, the “Guarantors.”
If Payee determines in good faith (which determination shall be conclusive and binding upon Maker) that by reason of circumstances affecting the relevant market or for any other reason, adequate and reasonable means do not exist for ascertaining the LIBOR Floating Rate for such Interest Period, such Advances shall be made at the Compass Bank Prime Index Rate (as hereinafter defined)..
Maker shall be entitled, and in certain instances may be required, to prepay the principal of the Note from time to time. Maker may borrow, repay, and reborrow up to the
principal face amount of this Note. It is contemplated that by reason of prepayments hereon there may be times when no indebtedness is owing hereunder; but notwithstanding such occurrences, this Note shall remain valid and shall be in full force and effect subsequent to each such occurrence until the Maturity Date. Notwithstanding the foregoing, Maker acknowledges and agrees that, with respect to letters of credit issued by Payee for the benefit of Maker, at no time hereunder shall Payee be obligated to issue letters of credit or make advances thereunder in excess of $1,000,000.00 in the aggregate at any given time hereunder.
Accrued interest on the outstanding principal balance that exists from time to time shall be due and payable monthly in arrears commencing on the 1st day of August, 2007and continue to be payable on the same day of each successive calendar month thereafter until Maturity Date, when all accrued but unpaid interest and all principal amounts outstanding shall be due and payable in full. Any payment received later than ten (10) days from the due date thereof must be accompanied by a late fee payment in the amount of five percent (5%) of the amount of such monthly payment. Maker shall be entitled to notice of, as well as any applicable grace period with respect to, any default hereunder as provided in the Credit Agreement.
SECTION 20. definitions.
“Applicable Margin” shall mean, on any day, the applicable per annum percentage set forth at the appropriate intersection in the table shown below, based on the Funded Debt to EBITDA ratio on the most recent Determination Date:
| | |
Funded Debt to EBITDA ratio | Applicable Margin | |
|
| |
Less than 1.25 to 1.00 | 1.25% | |
Greater than or equal to 1.25 to 1.00 but less than 1.75 to 1.00 | 1.50% | |
Greater than or equal to 1.75 to 1.00 but less than 2.25 to 1.00 | 1.75% | |
Greater than or equal to 2.25 to 1.00 but less than 2.75 to 1.00 | 2.00% | |
Greater than or equal to 2.75 to 1.00 but less than 3.25 to 1.00 | 2.25% | |
Greater than or equal to 3.25 to 1.00 | 2.50% | |
The Applicable Margin shall be established as of the last day of each fiscal quarter (each, a “Determination Date”), beginning on September 30, 2007 (the “Initial Determination Date”). Any change in the Applicable Margin following each Determination Date shall be determined based upon the information and computations set forth in the financial statements and compliance certificate furnished to Payee pursuant to the Credit Agreement, subject to review and approval of such computations by the Payee. Each change in the Applicable Margin shall be effective as of the first day of the fiscal quarter following each Determination Date, and shall remain in effect until the date that is the first day of the fiscal quarter following the next Determination Date for which a change in the Applicable Margin occurs. Notwithstanding the foregoing, during the period beginning on the date hereof and ending on the Initial Determination Date, the Applicable Margin shall be 2.0%.
“Compass Bank Prime Index Rate” shall equal the Compass Bank Index rate announced from time to time and automatically fluctuating upward and downward with each announcement without notice to Maker or any other person, which shall be a rate of
interest per annum equal to the highest prime rate (or base rate) reported in the Money Rates column or section ofThe Wall Street Journal (or another similar publication selected by Payee, in the event the Wall Street Journal is no longer published) as announced from time to time by Payee, automatically fluctuating upward and downward with each announcement without notice to Maker or any other person, provided that notwithstanding anything contained herein to the contrary, in no event shall any rate of interest which this Note bears ever exceed the Maximum Rate.
“LIBOR Index Rate” shall mean the rate determined by Payee (rounded upward, if necessary, to the nearest 1/16th of 1%) to be equal to the offered rate (and not the bid rate) in the London interbank market for deposits in U.S. dollars of amounts comparable to the principal amount hereof for a period of one (1) month, as reported on the Telerate Information System on the applicable determination date (or in the event no such quotation is available on such date on the day most immediately preceding the determination date on which such a quotation was available). In the event the Telerate Information Service ceases to be available to Payee or ceases to provide information sufficient to determine the London interbank offered rate for periods of one (1) month, the“LIBOR Index Rate” shall mean the London Interbank Offered Rate for a period of one (1) month as published in the “Money Rates” table ofThe Wall Street Journal on the applicable determination date (or in the event no such quotation is available on such date, as quoted on the day most immediately preceding the determination date on which such a quotation was available). In the event the London Interbank Offered Rate for a period of one (1) month is no longer published in the “Money Rates” table, then Payee will choose a substitute rate as the LIBOR Index Rate based on comparable information, which may include quotations from such services as Reuters Monitor Money Rates Service or Knight Ridder News Service. Each change in the rate charged hereunder shall become effective without notice to Maker as of the first (1st) day of each calendar month during the term hereof, but in no event shall the rate charged hereunder exceed the Maximum Rate (as hereinafter defined). Maker understands and acknowledges that Payee may from time to time make various loans at rates of interest having no relationship to the LIBOR Index Rate, and that the LIBOR Index Rate may not be the lowest interest rate charged for loans by Payee.
“Maximum Rate,” as used herein, shall mean, with respect to each holder hereof (any holder of this Note shall be referred to herein as a “holder”), the maximum nonusurious interest rate, if any, that at any time, or from time to time, may under applicable law be contracted for, taken, reserved, charged or received on the indebtedness evidenced by this Note under the laws which are presently in effect of the United States and the State of Texas applicable to such holder and such indebtedness or, to the extent allowed by law under such applicable laws of the United States of America and State of Texas which may hereafter be in effect, which allow a higher maximum non-usurious interest rate than applicable laws now allow; provided, that in determining the Maximum Rate, due regard shall be given, to the extent required by applicable law, to any and all relevant payments, fees, charges, deposits, balances, agreements and calculations which may constitute or be deemed to constitute interest, or be deducted from principal to calculate the interest rate or otherwise affect interest rate determinations, so that in no event shall the Payee contract for, charge, receive, take, collect, reserve or apply, on the Note, any amount in excess of the maximum non-usurious rate of interest permitted by applicable law. To the
extent that Texas law determines the Maximum Rate, the Maximum Rate shall be determined by utilizing the “indicated rate ceiling” from time to time in effect pursuant to the Texas Finance Code (V.T.C.A. Finance Code Section 303.001 et seq.) (the “Texas Finance Code”) or such successor statute, as then in effect, governing usury. The Maximum Rate shall not be limited to the applicable rate ceiling in the Texas Finance Code or such successor statute if Federal laws or other state laws now or hereafter in effect and applicable to this Note (and the interest contracted for, charged and collected hereunder) shall permit a higher rate of interest.
SECTION 21. miscellaneous.
All principal and interest under this Note which remains in arrears five (5) or more consecutive days after their respective due dates shall bear interest at the rate of interest per annum equal to Eighteen Percent (18%) (the “Default Rate”); provided, however, that in no event shall such Default Rate exceed the Maximum Rate. Further, in the event Maker shall be in default hereunder or under the Credit Agreement beyond any applicable notice, grace, and/or cure periods, Payee may, at its election, accelerate the indebtedness evidenced hereby, and it shall at once become due and payable, as the holder may elect. It is further agreed that if this Note is placed in the hands of an attorney for collection or if collected by suit or through probate or bankruptcy proceedings, Maker agrees to pay reasonable attorneys’ fees in addition to the principal and interest then due hereon, together with all costs of collection.
This Note is secured by the Credit Agreement, to which Credit Agreement reference is made for a description of the properties covered thereby and the nature and extent of the rights and powers of the holder of this Note in respect of such properties. This Note, the Credit Agreement and any other documents or instruments securing or evidencing this Note are sometimes referred to herein collectively as, the “Loan Documents.”
Maker and any other party who is or becomes liable to pay all or any part of this Note, or who grants any lien or security interest to secure all or any part of this Note (each called an “other liable party” below), including but not limited to the Guarantors, and any drawer, acceptor, endorser, guarantor, surety or accommodation party, severally waive presentment for payment, demand, notice of demand and of dishonor and nonpayment of this Note, notice of intention to accelerate the maturity of this Note, notice of acceleration, protest and notice of protest, diligence in collecting, and the bringing of suit against any other party.
Further, Maker and any other liable party severally waive any notice of or defense based upon any agreement or consent of the holder of this Note made or given from time to time, before or after maturity, to any of the following: the acceleration, renewal or extension of this Note; a change in the time or manner of payments required by this Note; a change in the rates of interest specified in this Note; acceptance or surrender of security; a substitution of security or subordination, amendment or release of security; an addition or release of any other liable party; changes of any sort whatever in the terms of payment of this Note or in the manner of doing business with Maker; and any settlement or compromise with Maker or any other liable party on such terms as the holder of this Note may deem appropriate in its sole and absolute discretion; provided, however, that the terms of this paragraph shall not apply to any written agreement or consent of the holder of this Note that is in writing and signed by the holder of this Note and Maker and/or the Guarantors, including, but not limited to, the Loan Documents, any documents
on file as public records, and compromise settlement agreements between the holder of this Note and Maker and/or the Guarantors.
The holder of this Note may apply all moneys received from Maker or others, or from any security (whether held under a security instrument or not), in such manner upon the indebtedness evidenced or secured by any Loan Documents (whether then due or not) as such holder may determine to be in its best interest, without in any way being required to marshal assets or to apply all or any part of such moneys upon any particular part of such indebtedness. The holder of this Note is not required to retain, hold, protect, exercise due care with respect to, perfect security interests in or otherwise assure or safeguard any security for this Note, and no failure by the holder of this Note to do any of the foregoing and no exercise or failure to exercise by such holder of any other right or remedy shall in any way affect any of Maker’s or any other liable party’s obligations hereunder or under other Loan Documents or affect any security or give Maker or any other liable party any recourse against the holder of this Note.
It is the intent of Maker and Payee in the execution of this Note and all other Loan Documents to contract in strict compliance with applicable usury law. In furtherance thereof, Maker and Payee stipulate and agree that none of the terms and provisions contained in this Note, or in any other instrument executed in connection herewith, shall ever be construed to create a contract to pay for the use, forbearance or detention of money, interest at a rate in excess of the Maximum Rate. Neither Maker nor any guarantors, endorsers or other parties now or hereafter becoming liable for payment of this Note shall ever be obligated or required to pay interest on this Note at a rate in excess of the Maximum Rate, and the provisions of this paragraph shall control over all other provisions of this Note and any other Loan Documents now or hereafter executed which may be in apparent conflict herewith. Payee expressly disavows any intention to charge or collect excessive unearned interest or finance charges in the event the maturity of this Note is accelerated. If the maturity of this Note shall be accelerated for any reason or if the principal of this Note is paid prior to the end of the term of this Note, and as a result thereof the interest received for the actual period of existence of the loan evidenced by this Note exceeds the applicable maximum lawful rate, the holder of this Note shall credit the amount of such excess against the principal balance of this Note then outstanding and thereby shall render inapplicable any and all penalties of any kind provided by applicable law as a result of such excess interest; provided, however, that if the principal hereof has been paid in full, such excess shall be refunded to Maker. If the holder of this Note shall receive money (or anything else) which is determined to constitute interest and which would increase the effective interest rate on this Note or the other indebtedness secured by the Loan Documents to a rate in excess of that permitted by applicable law, the amount determined to constitute interest in excess of the lawful rate shall be credited against the principal balance of this Note then outstanding or, if the principal balance has been paid in full, refunded to Maker, in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be inapplicable. If the holder of this Note shall not actually receive, but shall contract for, request or demand, a payment of money (or anything else) which is determined to constitute interest and which would increase the effective interest rate contracted for or charged on this Note or the other indebtedness evidenced or secured by the Loan Documents to a rate in excess of that permitted by applicable law, the holder of this Note shall be entitled, following such
determination, to waive or rescind the contractual claim, request or demand for the amount determined to constitute interest in excess of the lawful rate, in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be inapplicable. By execution of this Note Maker acknowledges that Maker believes the loan evidenced by this Note to be non-usurious and agrees that if, at any time, Maker should have reason to believe that such loan is in fact usurious, Maker will give the holder of this Note notice of such condition and Maker agrees that the holder shall have sixty (60) days after receipt of such notice in which to make appropriate refund or other adjustment in order to correct such condition if in fact such exists. Additionally, if, from any circumstance whatsoever, fulfillment of any provision hereof or of the Credit Agreement or any other Loan Documents shall, at the time fulfillment of such provision be due, involve transcending the Maximum Rate then,ipso facto, the obligation to be fulfilled shall be reduced to the Maximum Rate. The term “applicable law” as used in this Note shall mean the laws of the State of Texas or the laws of the United States, whichever laws allow the greater rate of interest, as such laws now exist or may be changed or amended or come into effect in the future.
Should the indebtedness represented by this Note or any part thereof be collected at law or in equity or through any bankruptcy, receivership, probate or other court proceedings or if this Note is placed in the hands of attorneys for collection after default, Maker and all endorsers, guarantors and sureties of this Note jointly and severally agree to pay to the holder of this Note in addition to the principal and interest due and payable hereon all the costs and expenses of the holder in enforcing this Note including, without limitation, reasonable attorneys’ fees and legal expenses.
This Note and the rights, duties and liabilities of the parties hereunder or arising from or relating in any way to the indebtedness evidenced by this Note or the transaction of which such indebtedness is a part shall be governed by and construed in accordance with the law of the State of Texas and the law of the United States applicable to transactions within such State.
No amendment of this Note shall be binding unless expressed in a writing executed by Maker and the holder of this Note.
This Note amends, supersedes and restates the Master Revolving Promissory Note dated as of December 14, 2004, as it has been previously amended, extended and modified.MAKER IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS COUNTY, TEXAS OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, AND MAKER HEREBY AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS COUNTY, TEXAS MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO MAKER AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE FIVE DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Dated effective as of June 19, 2007 but executed as of this the __ day of July, 2007.
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Maker’s Address: | MAKER: |
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1720 Hayden Drive | UNIVERSAL POWER GROUP, INC., a |
Carrollton, Texas 75006 | Texas corporation |
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Payee’s Address: | | |
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COMPASS BANK | | |
8080 N. Central Expressway, Ste. 250 | | |
Dallas, Texas 75206 | | |
Attn: Key Coker | | |
AMENDED AND RESTATED CREDITORS’
SUBORDINATION AGREEMENT
This Amended and Restated Creditors’ Subordination Agreement (the “Agreement”) is made and entered into byZUNICOM, INC., a Texas corporation (the “Creditor”), for the benefit ofCOMPASS BANK and its successors and assigns (“Bank”).
WHEREAS,Universal Power Group, Inc., a Texas corporation (“Borrower”) has applied to Bank for an increased revolving line of credit in the principal amount of $30,000,000.00 (the “Loan”); and
WHEREAS, Creditor has heretofore loaned Borrower sums of money, has agreed to forebear collection of sums owed by Borrower to Creditor, and/or may hereafter grant further loans or forbearances to Borrower; and
WHEREAS, Creditor has previously executed that certain Creditors’ Subordination Agreement dated as of December 14, 2004 in favor of Bank; and
WHEREAS, as a condition to making the Loan, Bank has required that Creditor continue to subordinate any and all loans and indebtedness heretofore, now or hereafter owed or owing by Borrower to Creditor to any loan or indebtedness heretofore, now or hereafter owed or owing from Borrower to Bank, including, without limitation, any amounts now or hereafter owed or owing under or in connection with the Loan, as well as execute, deliver and perform this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned Borrower and Creditor do hereby covenant and agree with Bank as follows:
SECTION 22.Certain Definitions.Unless otherwise defined herein, the following terms have the following meanings:
“Bank Indebtedness” means the principal of all loans from time to time owing from Borrower to Bank, all interest, whether now or hereafter accrued (including, without limitation, interest accrued subsequent to the filing of any petition under any bankruptcy, insolvency or similar law), on such principal amounts of such loans and all other indebtedness, obligations and liabilities (including, without limitation, principal, interest and fees), whether now existing or hereafter incurred, of Borrower to Bank, including without limitation to the generality of the foregoing, under or with respect to the Loan or any documents or instruments executed or delivered in connection therewith.
“Bank Security Documents” means each and all of the mortgages, loan and security agreements, revolving credit and security agreements, pledges, assignments, security agreements and other documents and instruments at any time securing any of the Bank Indebtedness.
“Subordinated Obligations” means all indebtedness, obligations and liabilities , whether now or hereafter existing or incurred, owing from time to time by Borrower to Creditor (plus any interest heretofore, now or hereafter included therein or accrued thereon, including, without limitation, any interest accrued subsequent to the filing of any petition under any bankruptcy, insolvency or similar law). The Subordinated Obligations shall include the obligations represented by the promissory notes referenced on the attachedSchedule 1.
“Subordinated Security Documents” means each and all of the mortgages, security agreements, pledges, assignments and other documents and instruments at any time securing any of the Subordinated Obligations, subject, however, to Bank’s consent in accordance with Section 2(d) of this Agreement.
SECTION 23.Subordination of Subordinated Obligations.
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| 23.1Creditor covenants and agrees that anything in any agreement or instrument creating, evidencing or relating to the Subordinated Obligations to the contrary notwithstanding, the Subordinated Obligations shall be subordinate and junior in right of payment, distribution and lien to the Bank Indebtedness, and without limiting the generality of the foregoing: |
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| | (a) Upon payment or distribution of all or any of the assets or securities of Borrower of any kind or character, whether in cash, property or securities, upon any dissolution, winding up, or total or partial liquidation, reorganization, arrangement, adjustment, protection, relief or composition of Borrower or its debts, whether voluntary or involuntary or in bankruptcy, insolvency, receivership, arrangement, reorganization, relief or other proceeding or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of Borrower or otherwise, all Bank Indebtedness shall first be paid in full in cash before any payment or distribution may be made in respect of the Subordinated Obligations, subject to any applicable exceptions contained within the Bank Security Documents; and |
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| | (b) Subject to any applicable exceptions contained within the Bank Security Documents, no direct or indirect payment shall be made in respect of the Subordinated Obligations if, at the time of such payment, any Bank Indebtedness is outstanding or unpaid or Bank has any obligation to advance funds to or for the account of Borrower under any instrument or document. |
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| Notwithstanding anything to the contrary contained in the foregoing Section 2(a), the parties hereto agree that so long as no default exists under the Bank Indebtedness, the Creditor may receive all regularly scheduled payments, but not prepayments, of principal and interest under the Subordinated Indebtedness. |
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| 23.2If, notwithstanding the foregoing provisions, Creditor shall receive any payment or distribution in respect of the Subordinated Obligations at a time when any Bank Indebtedness is outstanding or unpaid or Bank has any obligation to advance funds to or for the account of Borrower under any instrument or document, then such payment or distribution shall be received and held in trust by Creditor apart from Creditor’s assets and shall be promptly paid over or delivered to Bank for application (in the case of cash) or as collateral for (in the case of non-cash property or securities) the payment or prepayment of the Bank Indebtedness. |
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| 23.3Without notice to or assent by Creditor: |
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| | (a) the Bank Indebtedness and the obligations or liabilities of any other party or parties (including without limitation any guarantor, endorser or co-obligor) in respect of the Bank Indebtedness may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, restated, compromised or released; and |
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| | (b) any and all mortgages, pledges, assignments, encumbrances, liens or security interests (legal or equitable) at any time, present or future, held, given or intended to be given for the Bank Indebtedness, and any rights or remedies in respect thereof, may, from time to time, in whole or in part, be exchanged, sold, surrendered, released, modified, waived, restated or extended by Bank, and Bank may permit or consent to any such action or the result of any such action; |
all as Bank may deem advisable and all without impairing, abridging, diminishing, releasing or affecting the subordination provided for herein to the Bank Indebtedness. All rights and interests of Bank hereunder shall remain in full force and effect irrespective of any circumstance that might constitute a defense available to, or a discharge of, Borrower, or any lack of validity or enforceability of any document or instrument.
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| 23.4Creditor hereby represents and warrants to Bank that none of the Subordinated Obligations or any other obligations of Borrower to Creditor are secured by any assets of Borrower or any other person or entity, and covenants and agrees that, unless otherwise consented to in writing by Bank, none of the Subordinated Obligations or any other obligations of Borrower to Creditor will be secured, directly or indirectly, by any of the assets of Borrower or any other person or entity. Without limitation to the generality of the foregoing, or any of the other provisions hereof, in the event at any time any of the Subordinated Obligations or any other obligations of Borrower to Creditor are secured, it is further hereby agreed and acknowledged that all rights, titles, liens, estates, interest and remedies accruing to Creditor or its successors, assigns, designees, transferees, purchasers at foreclosure and/or other purchasers, whether as mortgagee, secured party, landlord, owner or otherwise, and whether consensual or arising by operation of law or in equity or otherwise, are and shall be subject and subordinate in all respects to all mortgages, security agreements, security interests, assignments, pledges, rights, titles, interests, estates and remedies of Bank and its successors, assigns, designees, transferees, purchasers at foreclosure and/or other purchasers, arising in connection with any of the Bank Indebtedness, whether consensual or arising by operation of law or in equity or otherwise. For so long as any of the Bank Security Documents and any modifications, consolidations, replacements or extensions thereof shall remain in effect, the mortgages, security agreements, security interests, rights, titles, interests, estates and remedies arising under any Subordinated Security Documents shall be superior to any mortgages, security agreements, security interests, rights, titles, liens, interest and estate in favor of any person or entity other than Bank, its successors or assigns, with respect to any collateral under the Bank Security Documents, and Creditor agrees that it shall not voluntarily subordinate any Subordinated Security Document or other lien or interest to any mortgage, lease, |
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| security agreement, indenture, agreement, contract or encumbrance in favor of any person or entity other than Bank, its successors or assigns, respecting any such collateral under the Bank Security Documents. |
Creditor further agrees that, for so long as any Bank Indebtedness remains outstanding, Creditor shall take no action to enforce collection of the Subordinated Obligations (or any other obligations of Borrower to Creditor) against Borrower or any guarantor of such Subordinated Obligations; nor shall the Creditor take any action to foreclose or enforce its rights as a secured creditor or lienholder or to establish its status as a lienholder under any Subordinated Security Documents or otherwise against any assets of Borrower or any guarantor of such Subordinated Obligations, except in accord with Section 4 below. In addition, so long as the Bank Indebtedness remains outstanding, neither the Creditor nor the Borrower shall amend, modify, restate the terms of the Subordinated Indebtedness without the Bank’s prior written consent.
SECTION 24.Subordination Absolute. Neither the subordination provided for herein nor the rights of Bank hereunder shall be affected, modified or impaired by (a) any extension, renewal, modification, restatement, forbearance or waiver of any terms of any Bank Security Documents or any other instrument or document executed in connection herewith nor (b) any release, modification or substitution of any collateral therefor.
SECTION 25.Further Assurances. Creditor agrees to take promptly such actions as Bank may reasonably request to (i) collect the Subordinated Obligations for account of Bank and to file appropriate claims or proofs of claim in respect of the Subordinated Obligations, (ii) execute and deliver to Bank such powers of attorney, assignments or other instruments as Bank may reasonably request in order to enable it to enforce any and all claims with respect to, and any security interests and other liens securing payment of, the Subordinated Obligations, and (iii) collect and receive any and all payments or distributions that may be payable or deliverable upon or with respect to the Subordinated Obligations.
SECTION 26.Reinstatement. The provisions of this Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Bank Indebtedness is rescinded or must otherwise be returned by Bank upon the insolvency, bankruptcy or reorganization of Borrower or otherwise, all as though such payment had not been made.
SECTION 27.Enforcement. Creditor agrees to pay to Bank on demand all costs and expenses of any kind, including, without limitation, attorneys’ fees, expenses and disbursements which Bank may incur in enforcing any of its rights under this Agreement.
SECTION 28.Cumulative Rights; No Waiver; Modification. Nothing herein contained or arising shall limit or restrict any of the obligations or agreements of Creditor or Borrower under any other document or instrument with or in favor of Bank. Each and every right granted to Bank hereunder or in
connection herewith, or allowed by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of Bank to exercise, and no delay in exercising, any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Bank of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No amendment or modification of any provision of this Agreement or any waiver thereof shall in any event be effective unless made by an instrument in writing signed by Bank and the party to be charged therewith.
SECTION 29.Legends. Any instrument evidencing any of the Subordinated Obligations, or any portion thereof, shall be inscribed with a legend, or otherwise include a reference, conspicuously indicating that payment thereof is subordinated pursuant to the terms of this Agreement, and a copy thereof shall be delivered to Bank. Any such instrument shall also provide in substance that any transferee thereof shall, by acceptance thereof, assume, agree to and accept the terms of this Agreement.
SECTION 30.Governing Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of Texas.
SECTION 31.Termination. This Agreement is a continuing agreement and shall remain in full force and effect until the final indefeasible payment in full of all of the Bank Indebtedness, expiration of all commitments by Bank to make advances to Borrower under any document or instrument and the termination of all documents and instruments evidencing and/or securing any Bank Indebtedness.
SECTION 32.Descriptive Headings. The captions in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof.
SECTION 33.Binding Effect. Wherever in this Agreement one of the parties hereto is named or referred to, the heirs, administrators, executors, successors, assigns, distributees and legal and personal representatives of such party shall be included, and all covenants and agreements contained in this Agreement by or on behalf of Creditor and/or Borrower or by or on behalf of Bank shall bind and inure to the benefit of their respective heirs, administrators, executors, successors, assigns, distributees, and legal and personal representatives, whether so expressed or not. Notwithstanding the foregoing, neither Creditor nor Borrower shall be entitled to assign any of their respective rights, titles, and interest hereunder, delegate any of their respective obligations, liabilities, duties, or responsibilities hereunder, or permit any such assignment or delegation to occur (voluntarily or involuntarily, or directly or indirectly), without the prior written consent of Bank.
SECTION 34.Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever.
SECTION 35.Amendment and Restatement. This Agreement amends and restates that certain Creditors’ Subordination Agreement executed by the parties hereto dated as of _____, 200__.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the 19th day of June, 2007.
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| BORROWER: |
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| UNIVERSAL POWER GROUP, INC., a Texas corporation |
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| CREDITOR: |
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| ZUNICOM, INC.,a Texas corporation |
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| BANK: |
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| COMPASS BANK |
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STATE OF TEXAS
COUNTY OF DALLAS
I, the undersigned, Notary Public in and for said County in said State, hereby certify that _________________, whose name as _________________ ofUniversal Power Group, Inc., a Texas corporation, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, _ he, as such and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand this the ________ day of _______________, 2007.
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| Notary Public |
[NOTARIAL SEAL] | My Commission Expires:_________________ |
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STATE OF TEXAS
COUNTY OF DALLAS
I, the undersigned, Notary Public in and for said County in said State, hereby certify that _______________________, whose name as ________________ ofZunicom, Inc., a Texas corporation, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, _he, as such and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand this the ________ day of _______________, 2007.
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| Notary Public |
[NOTARIAL SEAL] | My Commission Expires:_________________ |
STATE OF TEXAS
COUNTY OF DALLAS
I, the undersigned, Notary Public in and for said County in said State, hereby certify that _____________________, whose name as _______________ ofCOMPASS BANK, an Alabama banking corporation, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, _he, as such and with full authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand this the ________ day of _______________, 2007.
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[NOTARIAL SEAL] | My Commission Expires:_________________ |
Schedule 1
Subordinated Indebtedness
Payee is Zunicom, Inc. on two Unsecured notes
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| 1. | Note in the amount of $2,850,000 originated on December 20, 2006 and due June 20, 2012 |
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| 2. | Note in the amount of $3,000,000 originated on December 20, 2006 and due June 20, 2012 |
Copies of both notes payable to Zunicom, Inc. attached.
Dated as of June 19, 2007
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SECTION 36. | NOTICE OF FINAL AGREEMENT |
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To: | Borrower and All Other Obligors with Respect to the Loan Which is Identified below: |
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1. | THE WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. |
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| THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. |
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2. | As used in this Notice: |
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| “Borrower” means the Borrower identified in the signature blocks below in this Notice. |
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| “Lender” means Compass Bank. |
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| “Loan” means the prospective loan by Lender to be evidenced by the promissory note or other evidence of indebtedness dated as of June 19, 2007 executed by Borrower, payable to the order of Lender, in the original principal face amount of $30,000,000. |
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| “Loan Agreement” means one or more promises, promissory notes, agreements, guarantees, undertakings, security agreements, pledge agreements, deeds of trust or other documents, or commitments, or any combination of those actions or documents, relating to the Loan. |
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3. | This Notice is given by Lender with respect to the Loan, pursuant to Section 26.02 of the Texas Business and Commerce Code. Borrower and each other obligor with respect to the Loan who signs below acknowledges, represents and warrants to Lender that Lender has given and such party has received and retained a copy of this Notice on the Date of this Notice stated above. |
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4. | This Notice may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Notice and all of which, when taken together, will be deemed to constitute one and the same Notice. |
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LENDER | BORROWER |
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COMPASS BANK | UNIVERSAL POWER GROUP, INC. |
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Current as of 8/4/2007