1
Exhibit 10
CONSOLIDATED AMENDMENT NO. 3
TO
CREDIT AGREEMENT
This Consolidated Amendment No. 3 to Credit Agreement (this "Amendment"),
dated as of August 3, 1995, is entered into by and among Pioneer Standard
Electronics, Inc. (Borrower), National City Bank, Society National Bank
(successor in interest to Ameritrust Company National Association) and Star
Bank, N.A. (together "banks") and National City Bank in its capacity as agent
of the banks "NCB-Agent") for the purposes of the Credit Agreement referred to
below and the related writings.
WITNESSETH:
WHEREAS, the parties have entered into a Credit Agreement dated January 23,
1992, as amended by Amendment Agreement dated as of June 30, 1993 (the "First
Amendment"), Second Amendment Agreement dated as of May 27, 1994 (the "Second
Amendment"), Consolidated Amendment No. 1 dated as of October 28, 1994 and
Consolidated Amendment No. 2 dated as of February 28, 1995 (as amended, the
"Credit Agreement"; all terms used in the Credit Agreement being used herein
with the same meaning), which sets forth the terms and conditions upon which
Borrower may obtain (a) "subject loans" on a revolving basis until the
"conversion date" (originally January 1, 1995 but previously extended until
January 1, 1998), as that term is defined in the Credit Agreement, and on an
amortizing basis thereafter and (b) "subject BAs"; and
WHEREAS, the parties desire to amend certain provisions of the Credit
Agreement to (a) increase the aggregate amount of the subject commitments from
sixty-five million dollars ($65,000,000) to one hundred million dollars
($100,000,000), (b) extend the term of the subject commitments from January 1,
1998 until July 31, 1998, (c) delete the bankers acceptance financing option
and (d) amend certain covenants; and
WHEREAS, in light of the fact that certain previous amendments set forth
in the First Amendment, the Second Amendment, Consolidated Amendment No. 1
and/or Consolidated Amendment No. 2 have been affected by later amendments
and/or will be affected by this Amendment and for ease of reference, the
parties also desire to restate and consolidate in this Amendment all amendments
to the Credit Agreement that are effective on and as of the date hereof;
NOW, THEREFORE, in consideration of the premises above and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
12
2
SECTION I - AMENDMENTS TO CREDIT AGREEMENT
------------------------------
A. Subsections 2A.01 and 2A.02 of the Credit Agreement are hereby amended in
their entirety to read as follows:
2A.01 AMOUNTS -- The aggregate amount of the subject commitments
shall be one hundred million dollars ($100,000,000), but that amount
may be reduced from time to time pursuant to subsection 2A.03 or 2A.04
and the subject commitments may be terminated pursuant to section 5B.
The amount of each bank's subject commitment (subject to such
reduction or termination), and the proportion (expressed as a
percentage) that it bears to all of the subject commitments, is set
forth opposite the bank's name below, to-wit:
$ 53,500,000 53.5% National City Bank
33,500,000 33.5% Society National Bank
13,000,000 13.0% Star Bank, N.A.
-------------- ------- -------------------------
$100,000,000 100.0% Total
2A.02 TERM -- Each subject commitment shall commence as of the date
of this Agreement and shall remain in effect on a revolving basis
until July 31, 1998 (the "expiration date") EXCEPT that a later
expiration date may be established from time to time pursuant to
subsection 2A.06 and EXCEPT that the subject commitments shall end in
any event upon any earlier reduction thereof to zero pursuant to
subsection 2A.03 or any earlier termination pursuant to section 5B.
B. Subsection 2A.04 of the Credit Agreement is hereby deleted in its entirety
and replaced with the following:
2A.04 [RESERVED]
C. Subsection 2B.04 of the Credit Agreement is hereby deleted in its entirety
and replaced with the following:
2B.04 [RESERVED]
D. The introductory language and clause (c) of subsection 2B.05 of the Credit
Agreement are hereby amended in their entirety to read as follows:
2B.05 CONTRACT PERIODS -- Each series of fixed-rate loans shall have
applicable thereto a contract period to be duly elected by Borrower in
the credit request therefor. Each contract period shall begin on the
date of borrowing and shall end on such date, not later than the
expiration date, as Borrower may select subject, however, to the
following:
(c) Borrower shall never elect a contract period for any series
of fixed-rate loans the term of which extends beyond the
expiration date.
13
3
E. Subsection 2B.06 of the Credit Agreement is hereby amended in its entirety to
read as follows:
2B.06 MATURITIES -- The stated maturity of each RR loan shall be the
expiration date. The stated maturity of each fixed-rate loan shall be
the last day of the contract period applicable thereto. In no event,
however, shall the stated maturity of any fixed-rate loan be later
than the expiration date.
F. Clause (b) of subsection 2B.09 of the Credit Agreement is hereby amended in
its entirety to read as follows:
(b) Prior to maturity each LIBOR loan shall bear interest during each
contract period applicable to it at a rate equal to the LIBOR
pre-margin rate in effect at the start of the contract period
plus six hundred twenty-five/one-thousandths of one percent
(.625%) per annum.
G. Clause (d) of subsection 2B.10 of the Credit Agreement is hereby amended in
its entirety to read as follows:
(d) No prepayment shall of itself reduce any subject commitment.
H. Subsection 2C.02 of the Credit Agreement is hereby deleted in its entirety
and all other references in the Credit Agreement to "subject BA" shall be of no
further force or effect.
I. Subsections 3B.01, 3B.02, 3B.03, 3B.04 and 3B.05 of the Credit Agreement are
hereby amended in their entirety to read as follows:
3B.01 NET WORTH -- Borrower will not suffer or permit the
consolidated net worth of the companies at any time to be less than
the then required minimum amount. The required minimum amount
shall be one hundred five million dollars ($105,000,000) EXCEPT that
the required minimum amount shall be permanently increased
(a) on June 30, 1995 and on each quarterly date thereafter
by an amount equal to the sum of fifty percent (50%) of the
consolidated net income of the companies, if any, for the
quarter-annual period then ending plus
(b) upon each issuance or other sale by Borrower of any of
its equity securities by an amount equal to the net proceeds
(after costs and expenses) thereof.
3B.02 LEVERAGE -- Borrower will not suffer or permit the total
liabilities of the companies at any time to exceed an amount equal to
two hundred twenty-five percent (225%) of the sum of the net worth of
the companies, all as determined on a consolidated basis.
3B.03 WORKING CAPITAL -- Borrower will not suffer or permit the
companies' consolidated working capital at any time to fall below one
hundred million dollars ($100,000,000).
14
4
3B.04 CURRENT RATIO -- Borrower will not suffer or permit the current
assets of the companies at any time to fall below an amount equal to
one and seven-tenths (1.7) times the amount of their current
liabilities, all as determined on a consolidated basis.
3B.05 FIXED CHARGE COVERAGE -- Borrower will not suffer or permit
the aggregate of
(a) the consolidated net income of the companies (EXCEPT
Borrower's equity in any income or loss of PTGI) plus
(b) the consolidated interest expense of the companies plus
(c) the consolidated federal, state and local income taxes
of the companies plus
(d) the consolidated operating lease expense of the companies
for any four-quarter period to be less than amount equal to one
hundred seventy-five percent (175%) of the sum of
(a) the consolidated interest expense of the companies plus
(b) the consolidated operating lease expenses of the
companies plus
(c) the consolidated principal payments of funded
indebtedness of the companies which are payable within twelve
(12) months after the date as of which this ratio is
determined
for that four-quarter period, all as determined on a fully
consolidated basis.
J. Subsection 3D.01 of the Credit Agreement is hereby amended by replacing the
period at the end thereof with the word "or" and by adding to the end thereof
the following new clauses (iii) and (iv):
(iii) Borrower's investment in Pioneer-Standard Canada Inc.
(exclusive of retained earnings of Pioneer-Standard Canada Inc.) so
long as the aggregate amount of such investments does not exceed ten
million eight hundred thousand ($10,800,000) or
(iv) any acquisition of the assets or stocks of any corporation if
the aggregate of the consideration paid by Borrower for such
acquisition does not exceed twelve million dollars ($12,000,000).
K. Subsection 3D.02 of the Credit Agreement is hereby amended by replacing the
period at the end thereof with the word "or" and by adding to the end thereof
the following new clause (v):
(v) any advance or loan to, or guaranty of the obligations of,
Pioneer-Standard Canada Inc., so long as the aggregate amount of all
such advances, loans and guaranties does not exceed twenty million
dollars ($20,000,000) at any one time.
L. Subsection 3D.03(ii)(A) of the Credit Agreement is hereby amended by
deleting the reference to "twenty million dollars ($20,000,000)" and
substituting in lieu thereof a reference to "thirty million dollars
($30,000,000)".
M. Subsection 3D.05 of the Credit Agreement is hereby amended in its entirety to
read as follows:
15
5
3D.05 FIXED ASSETS -- Borrower will not invest (net after trade-ins,
if any) in fixed assets and leasehold improvements during any fiscal
year (commencing with the present year) more than the following
amounts for the following periods:
For the fiscal year ending March 31, 1996 $25,000,000
For the fiscal year ending March 31, 1997 $15,000,000
For the fiscal year ending March 31, 1998 $15,000,000
N. The definitions of "amortization date," "amortization payment" and
"conversion date" are hereby deleted from the Credit Agreement and the
following new definitions are hereby added to section 9 of the Credit Agreement:
COMPANY refers to Borrower or to a subsidiary of Borrower, as the case
may be;
EXPIRATION DATE means the date referred to as such in subsection
2A.02, except that in the event of any extension pursuant to
subsection 2A.06, "expiration date" shall mean the latest date to
which the subject commitments shall have been so extended;
O. All references in the Credit Agreement to "conversion date" shall be
deemed to be references to the "expiration date."
SECTION II - CONDITIONS PRECEDENT
--------------------
It is a condition precedent to the effectiveness of this Amendment
that, prior to or on the date hereof, the following items shall have been
delivered to NCB-Agent (in form and substance acceptable to NCB-Agent):
(A) an Amended and Restated Promissory Note ("Amended Note") in
favor of each bank, in the form of EXHIBIT A to this Amendment, with
all blanks appropriately completed, duly executed by Borrower;
(B) an Acknowledgment of Receipt of a copy of, and Consent and
Agreement to the terms of, this Amendment and the Amended Notes by
Pioneer-Standard Canada Inc. with respect to a certain Continuing
Guaranty of Payment executed and delivered to NCB-Agent by such entity
and dated May 27, 1994;
(C) a Certificate, dated as of the date hereof, of the secretary
of Borrower certifying (1) that Borrower's Articles of Incorporation
and Code of Regulations have not been amended since the execution of
the Credit Agreement (or certifying that true, correct and complete
copies of any amendments are attached), (2) that copies of resolutions
of the Board of Directors of Borrower are attached with respect to the
approval of this Amendment and of the matters contemplated hereby and
authorizing the execution, delivery and performance by Borrower of
this Amendment and each other document to be delivered pursuant
hereto and (3) as to the incumbency and signatures of the
16
6
officers of Borrower signing this Amendment and each other document
to be delivered pursuant hereto;
(D) a separate agreement from Borrower in which Borrower has
agreed to pay NCB-Agent, for its own account, certain fees; and
(E) Such other documents as NCB-Agent may request to implement
this Amendment and the transactions contemplated hereby.
If NCB-Agent or banks shall consummate the transactions contemplated hereby
prior to the fulfillment of any of the conditions precedent set forth above,
the consummation of such transactions shall constitute only an extension of
time for the fulfillment of such conditions and not a waiver thereof. Upon
receipt of the properly completed and executed Amended Notes, banks agree to
return to Borrower the previously executed notes respecting the subject loans
and the same shall be marked "Replaced" or "Substituted" or with words of like
import.
SECTION III - AGREEMENTS CONCERNING PIONEER-STANDARD CANADA INC.
--------------------------------------------------
Borrower agrees to cause its subsidiary, Pioneer-Standard Canada Inc.,
to comply with all the provisions of sections 3A, 3B, 3C and 3D of the Credit
Agreement and agrees that all references to financial information in section 3A
shall be deemed to be references to financial information of Borrower and its
subsidiaries on a consolidating and consolidated basis; PROVIDED, that
Pioneer-Standard Canada Inc. shall not be required to comply with the
provisions of subsection 3D.06 (captioned "DIVIDENDS").
SECTION IV - REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower hereby represents and warrants to each of the other parties
to this Amendment that
(A) none of the representations and warranties made in subsections
4B.01 through 4B.08 of the Credit Agreement has ceased to be true and
complete in any material respect as of the date hereof; and
(B) as of the date hereof no "default under this Agreement" has
occurred that is continuing.
SECTION V - ACKNOWLEDGMENTS CONCERNING OUTSTANDING LOANS
--------------------------------------------
Borrower acknowledges and agrees that, as of the date hereof, all of
Borrower's outstanding loan obligations to banks are owed without any offset,
deduction, defense or counterclaim of any nature whatsoever.
SECTION VI - REFERENCES
----------
On and after the effective date of this Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", or words of
like import referring to the Credit Agreement, and in the subject notes or
other related writings to the "Credit Agreement", "thereof", or words of like
import
17
7
referring to the Credit Agreement shall mean and refer to the Credit Agreement
as amended hereby. The Credit Agreement, as amended by this Amendment, is and
shall continue to be in full force and effect and is hereby ratified and
confirmed in all respects. To the extent any amendment set forth in the First
Amendment, the Second Amendment, Consolidated Amendment No. 1 or Consolidated
Amendment No. 2 is omitted from this Amendment, the same shall be deemed
eliminated as between Borrower and the other parties hereto as of the date
hereof. The execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of NCB-Agent or banks under
the Credit Agreement or constitute a waiver of any provision of the Credit
Agreement except as specifically set forth herein. From and after the date of
this Amendment references in the Credit Agreement to EXHIBIT B shall be deemed
to be references to the form of the Amended Note attached hereto as EXHIBIT A.
SECTION VII - COUNTERPARTS AND GOVERNING LAW
------------------------------
This Amendment may be executed in any number of counterparts, each
counterpart to be executed by one or more of the parties but, when taken
together, all counterparts shall constitute one agreement. This Amendment, and
the respective rights and obligations of the parties hereto shall be construed
in accordance with and governed by Ohio law.
IN WITNESS WHEREOF, the Borrower, NCB-Agent and the banks have caused
this Amendment to be executed by their authorized officers as the date and year
first above written.
National City Bank, Agent Pioneer-Standard Electronics, Inc.
By: Janice E. Focke By: John V. Goodger
--------------------------------- --------------------------------
Printed Name: Janice E. Focke Printed Name: John V. Goodger
----------------------- ----------------------
Title: Vice President Title: Vice President & Treasurer
------------------------------ -----------------------------
National City Bank Star Bank, N.A.
By: Janice E. Focke By: John D. Barrett
--------------------------------- --------------------------------
Printed Name: Janice E. Focke Printed Name: John D. Barrett
----------------------- ----------------------
Title: Vice President Title: Vice President
------------------------------ -----------------------------
Society National Bank
By: Lawrence A. Mack
---------------------------------
Printed Name: Lawrence A. Mack
-----------------------
Title: Vice President
------------------------------
18