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EXHIBIT 4.(f)
AMENDMENT NO. 3 TO NOTE PURCHASE AGREEMENT
This Amendment No. 3 to Note Purchase Agreement (this "Amendment) is
entered into as of August 12, 1996 by PIONEER-STANDARD ELECTRONICS, INC. (the
"Company") and TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA (the
"Noteholder").
PRELIMINARY STATEMENT.
WHEREAS, the Company and the Noteholder have entered into a Note
Purchase Agreement, dated as of October 31, 1990 (the "Original Purchase
Agreement"), pursuant to which, at closing held on November 2, 1990, the
Noteholder purchased $20,000,000 in aggregate principal amount of the Company's
9.79% Senior Notes due November 1, 2000 (the "Notes"), which Original Purchase
Agreement has been amended by that certain Amendment No. 1 to Note Purchase
Agreement, dated as of November 1, 1991, and that certain Amendment No. 2 to
Note Purchase Agreement, dated as of November 30, 1995 (as so amended, the
"Purchase Agreement"). The Noteholder was the sole purchaser and remains the
sole record and beneficial owner of the Notes. Capitalized terms used herein
and not otherwise defined herein are used with the meanings assigned thereto in
the Purchase Agreement.
WHEREAS, on the terms and subject to the conditions set forth in this
Amendment, and as an inducement to the Noteholder to consent to the
Reorganization (as defined herein) and certain other actions, the Company and
the Noteholder desire to amend the Purchase Agreement as set forth below.
NOW, THEREFORE, the Company and the Noteholder agree as follows:
SECTION 1. GENERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Noteholder as follows:
Section 1.1. REPRESENTATIONS AND WARRANTIES IN PURCHASE AGREEMENT. The
representations and warranties with respect to the Company contained in the
Purchase Agreement are true and correct in all material respects and the
Noteholder shall be entitled to rely on such representations and warranties as
if they were made to the Noteholder in this Amendment as of the date hereof.
Section 1.2. REPRESENTATIONS AND WARRANTIES IN CREDIT AGREEMENT. The
representations and warranties with respect to the Company contained in the
Credit Agreement and in any document, certificate or instrument delivered
pursuant to the Credit Agreement are true and
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correct in all material respects and the Noteholder shall be entitled to rely
on such representations and warranties as if they were made to the Noteholder
in this Amendment as of the date hereof.
SECTION 2. AMENDMENTS TO THE PURCHASE AGREEMENT.
The Purchase Agreement is hereby amended in the following respects:
Section 2.1. AMENDMENT TO SECTION 9.12 OF THE PURCHASE AGREEMENT.
Section 9.12 of the Purchase Agreement is hereby amended by deleting it in its
entirety and substituting the following new Section 9.12 in lieu thereof:
Section 9.12 CONSOLIDATED FIXED CHARGE COVERAGE RATIO; FIXED
CHARGE COVERAGE RATIO. The Company shall at all times maintain a ratio
of (a) the sum of Consolidated EBIT plus Operating Lease Rentals to (b)
the sum of Consolidated Interest Expense plus Operating Lease Rentals,
in each instance for the four most recent Fiscal Quarters for which
financial statements are required to have been delivered pursuant to
Section 10.1 hereof of not less than 2.00 to 1.00. Commencing September
30, 1996, the Company shall at all times maintain a ratio of (a) the
sum of Non-consolidated EBIT plus Non-consolidated Operating Lease
Rentals to (b) the sum of Non-consolidated Interest Expense plus
Non-consolidated Operating Lease Rentals, in each instance for the four
most recent Fiscal Quarters for which financial statements are required
to have been delivered pursuant to Section 10.1 hereof of not less than
1.25 to 1.00.
Section 2.2. AMENDMENT TO SECTION 9.13(a) OF THE PURCHASE AGREEMENT.
Section 9.13(a) of the Purchase Agreement is hereby amended by deleting it in
its entirety and substituting the following new Section 9.13(a) in lieu thereof:
Section 9.13 LIENS. (a) Neither the Company nor any Restricted
Subsidiary will create, incur or suffer to exist any Lien on property
which is owned by the Company or such Restricted Subsidiary,
respectively, on the date hereof and which is not presently subject to
any Lien, or any property which is hereafter acquired by the Company or
any Restricted Subsidiary, other than Permitted Liens.
Section 2.3. AMENDMENT TO SECTION 9.14 OF THE PURCHASE AGREEMENT.
Section 9.14 of the Purchase Agreement is hereby amended by deleting it in its
entirety and substituting the following new Section 9.14 in lieu thereof:
Section 9.14 RESTRICTED SUBSIDIARY INDEBTEDNESS. The Company will
not permit any Restricted Subsidiary, directly or indirectly, expressly
or by operation of law, to create, incur, assume, guarantee, in any
manner become liable in respect of or suffer to exist any Restricted
Subsidiary Indebtedness.
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Section 2.4. AMENDMENT TO SECTION 9.15 OF THE PURCHASE AGREEMENT.
Section 9.15 of the Purchase Agreement is hereby amended by deleting it in its
entirety and substituting the following new Section 9.15 in lieu thereof:
Section 9.15 MERGER; SALE OF ASSETS. Other than the
Reorganization, neither the Company nor any Restricted Subsidiary will
enter into any merger, consolidation, reorganization or liquidation or
transfer or otherwise dispose of all or a Substantial Portion of its
property or business, unless approved in advance by the holders of at
least 66-2/3% in aggregate unpaid principal amount of the Notes then
Outstanding.
Section 2.5. AMENDMENT TO SECTION 9.16 OF THE PURCHASE AGREEMENT.
Section 9.16 of the Purchase Agreement is hereby amended by deleting it in its
entirety and substituting the following new Section 9.16 in lieu thereof:
Section 9.16 TRANSFER AND SALE OF ASSETS. As of August 9, 1996,
and at all times thereafter, the Company's Non-consolidated Tangible
Assets shall be equal to or greater than forty percent (40%) of the
Company's Consolidated Tangible Assets.
Section 2.6. AMENDMENT TO SECTION 9.20 OF THE PURCHASE AGREEMENT.
Section 9.20 of the Purchase Agreement is hereby amended by deleting it in its
entirety and substituting the following new Section 9.20 in lieu thereof:
Section 9.20 LIMITATIONS ON CONSOLIDATED FUNDED INDEBTEDNESS. The
Company will not permit the ratio of Consolidated Funded Indebtedness
to Total Capitalization of the Company and its Restricted Subsidiaries
to be greater than (i) 0.65 to 1.00 at any time from the Closing Date
through and including March 30, 1997, (ii) 0.575 to 1.00 at any time
subsequent to March 30, 1997 through and including March 30, 1998 and
(iii) 0.55 to 1.00 at any time subsequent to March 30, 1998.
Section 2.7. AMENDMENT OF SECTION 9.23 TO THE PURCHASE AGREEMENT.
Section 9.23 of the Purchase Agreement is hereby amended by deleting it in its
entirety and substituting the following new Section 9.23 in lieu thereof:
Section 9.23 THIS SECTION INTENTIONALLY OMITTED.
Section 2.8. AMENDMENT OF SECTION 9.24 TO THE PURCHASE AGREEMENT.
Section 9.24 of the Purchase Agreement is hereby amended by deleting it in its
entirety and substituting the following new Section 9.24 in lieu thereof:
Section 9.24 INVESTMENT AND LOAN LIMIT. Neither the Company nor
any Restricted Subsidiary, together or individually, directly or
indirectly, in any instance or in the aggregate over time may: (a)
invest in any manner more than $10,8000,000 in Pioneer/Canada or (b)
loan more than an aggregate
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principal amount of (i) $25,000,000 to Pioneer/Canada; (ii) $55,000,000
to Pioneer/Maryland; (iv) $75,000,000 to Limited Partnership; (v)
$15,000,000 to Pioneer/Minnesota; and (vi) $10,000,000 to
Pioneer/Illinois.
Section 2.9. AMENDMENT TO 12.1 OF THE PURCHASE AGREEMENT. Section 12.1
of the Purchase Agreement is hereby amended by deleting the definition of
"Restricted Subsidiary" in its entirety and substituting the following new
definition in lieu thereof:
The term "Restricted Subsidiary" shall mean any Subsidiary of the
Company hereafter designated by action of the Board of Directors of the Company
as a Restricted Subsidiary pursuant to Section 9.22 hereof; PROVIDED, HOWEVER,
that no corporation may be designated a Restricted Subsidiary unless:
(a) such corporation is organized under the laws of the United
States, Canada or any jurisdiction of the foregoing;
(b) such corporation conducts substantially all of its business and
owns substantially all of its property within the United States or
Canada;
(c) a majority of the shares of each class of the capital stock of
such Subsidiary is owned by the Company directly or indirectly through
another Restricted Subsidiary;
(d) such corporation has not previously been designated as a
Restricted Subsidiary hereunder and had such designation rescinded;
(e) such corporation has executed and delivered to the Noteholders a
Non-Borrowing Agreement; and
(f) the requirements of Section 9.22(a) have been complied with or
are complied with concurrently with such designation;
PROVIDED, FURTHER, that the designation of a Restricted Subsidiary may
be rescinded by action of the Board of Directors of the Company pursuant
to Section 9.22(c) hereof.
Section 2.10 FURTHER AMENDMENT TO SECTION 12.1 OF THE PURCHASE
AGREEMENT. Section 12.1 of the Purchase Agreement is hereby amended by deleting
the definition of "Restricted Subsidiary Indebtedness" in its entirety and
substituting the following new definition in lieu thereof:
The term "Restricted Subsidiary Indebtedness" shall mean any
Indebtedness created, incurred, assumed or guaranteed by a Restricted
Subsidiary other than Indebtedness to the Company specifically permitted
by Section 9.24.
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Section 2.11. FURTHER AMENDMENT TO SECTION 12.1 OF THE PURCHASE
AGREEMENT. The following definitions are hereby added to Section 12.1 of the
Purchase Agreement, to be inserted therein in the appropriate alphabetical
order:
The term "Amendment No. 3" shall mean Amendment No. 3 to Note
Purchase Agreement dated as of August 12, 1996 between the Company and
the Noteholder.
The term "Credit Agreement" shall mean that certain Credit
Agreement among the Company and certain lenders, including, without
limitation, National City Bank, a national banking association, as
agent thereunder, pursuant to which the Company may borrow up to
$125,000,000 in the aggregate.
The term "Non-Borrowing Agreement" shall have the meaning set
forth in Amendment No. 3.
The term "Limited Partnership" shall mean Pioneer-Standard
Electronics, Ltd., a Texas limited partnership.
The term "Non-consolidated EBIT" of any Person shall mean, as of
the date of determination thereof, (i) Non-consolidated Net Income of
such Person for such period, PLUS (ii) Non-consolidated Interest
Expense of such Person for such period, PLUS (iii) provisions for
federal, state and local income taxes of such Person for such period,
in each case, for the period of the four most recent Fiscal Quarters
for which financial statements are required to have been delivered
pursuant to Section 10.1 hereof prior to the date of determination
thereof.
The term "Non-consolidated Interest Expense" shall mean, for any
period, without duplication, the aggregate of all interest paid or
accrued by the Company during such period for Indebtedness of the
Company, on a non-consolidated basis, including, without limitation,
interest payable with respect to the Notes and the interest portion of
Capital Lease payments, all as determined in accordance with generally
accepted accounting principles.
The term "Non-consolidated Net Income (or Net Loss)" shall mean,
for any period, the non-consolidated net income (or net loss) of the
Company for such period determined in accordance with generally
accepted accounting principles applied on a consistent basis, after
eliminating all items to be eliminated in accordance with generally
accepted accounting principles, excluding:
(a) any gains or losses on the sale or other disposition
(other than a sale or other disposition in the ordinary course of
business) of investments or fixed or capital Assets, and any taxes
on such excluded gains and any tax deductions or credits on
account of any such excluded losses;
(b) all items properly classified as extraordinary in
accordance with generally accepted accounting principles;
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(d) net earnings and losses of any Person (other than the
Company), substantially all the Assets of which have been acquired
by the Company in any manner, realized by such other Person prior to
the date of such acquisition;
(e) net earnings and losses of any Person (other than the
Company) which shall have been merged into or consolidated with the
Company prior to the date of such merger or consolidation;
(f) net earnings of any Person (other than the Company) in
which the Company has an ownership interest, except to the extent
such net earnings shall have actually been received by the Company in
the form of cash distributions;
(g) earnings resulting from any reappraisal, revaluation or
write-up of Assets subsequent to March 31, 1990;
(h) any gain after applicable taxes arising from the
acquisition of any capital stock or other securities of the Company;
and
(i) earnings resulting from the elimination of all or a
portion of any reserve established prior to the accounting period
for which Non-consolidated Net Income (or Net Loss) is being
determined; PROVIDED, HOWEVER, that earnings in any such period
resulting from the elimination of all or a portion of one or more
reserves established prior to such period with respect to
transactions in the ordinary course of business need not be
excluded to the extent that they do not in the aggregate exceed
5% of Non-consolidated Net Income for such period.
The term "Non-consolidated Operating Lease Rentals" shall mean, as of
any date of determination, without duplication, rentals accrued or paid by the
Company on Operating Leases on a non-consolidated basis for the four Fiscal
Quarters immediately preceding the date of determination for which financial
statements have been delivered or are required to have been delivered pursuant
to Section 10.1 hereof.
The term "Non-consolidated Tangible Assets", with respect to the
Company, shall mean, as of any date of determination, the total amount of
Assets of the Company after deducting therefrom (i) all investments and loans
of the Company to its Subsidiaries, as permitted under this Agreement, and (ii)
all goodwill of the Company, valued at book value (established in accordance
with generally accepted accounting principles).
The term "Pioneer/Illinois" shall mean Pioneer-Standard of Illinois,
Inc., an Illinois corporation.
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The term "Pioneer/Minnesota" shall mean Pioneer-Standard of Minnesota,
Inc., a Minnesota corporation.
The term "Property" of a Person shall mean any and all property,
whether real, personal, tangible, intangible, or mixed, of such Person, or
other assets owned, leased or operated by such Person.
The term "Reorganization" shall mean the corporate reorganization
described in Item 5 of Exhibit C hereto.
The term "Substantial Portion" shall mean, with respect to the Property
of the Company and its Restricted Subsidiaries, Property which represents more
than two percent (2%) of the consolidated assets of the Company and its
Restricted Subsidiaries as would be shown in the consolidated financial
statements of the Company and its Restricted Subsidiaries as at the beginning
of the twelve-month period ending with the month in which such determination
is made.
Section 2.12. AMENDMENT TO EXHIBIT C TO THE PURCHASE AGREEMENT. Exhibit
C to the Purchase Agreement is hereby amended by adding the following Item 5
thereto:
5. DESCRIPTION OF BORROWER'S CORPORATE REORGANIZATION AND TRANSFER OF
ASSETS
Pursuant to the restructuring of Pioneer-Standard Electronics, Inc.
(the "Company") for state tax planning purposes, the Company will contribute
certain classes of assets as follows:
The Company's Illinois operations and employees, will be
transferred to a new corporation, Pioneer-Standard Illinois
("Illinois"). The assets transferred to Illinois will have a value of
approximately $7,060,000 and Illinois will assume liabilities of
approximately $5,650,000.
The Company's Minnesota operations, Minnesota employees and
the Company's intangibles will be transferred to a new corporation,
Pioneer-Standard Minnesota ("Minnesota"). Minnesota will license the
right to use the intangibles to the rest of the affiliated group
for a royalty. The assets transferred to Minnesota will have a value
of approximately $9,065,000 and Minnesota will assume liabilities of
approximately $7,250,000.
The Company's Texas operations and employees along with the
Packard line of business will be transferred to the newly formed
limited partnership, Pioneer-Standard Electronics, Ltd. ("Pioneer
LP"). The assets transferred to Pioneer LP will have a value of
approximately $64,345,000 and Pioneer LP will assume liabilities
of approximately $51,475,000.
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The dollar amounts set forth above are based upon the actual value, as
of April 1, 1996, of the assets and liabilities which will be transferred. The
actual transfer is anticipated to take place in the second half of 1996.
Attached as Annex 1 is the projected balance sheets of the affiliated companies
after the proposed transaction based upon the April 1, 1996 valuations.
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ANNEX 1
PIONEER-STANDARD ELECTRONICS, INC.
BALANCE SHEETS AFTER TRANSFER OF ASSETS, LIABILITIES AND CONTRIBUTED CAPITAL TO NEW ENTITIES
(4/1/96 Used for Simplicity, Actual Transfer Anticipated 6/1/96)
PIONEER-STANDARD PIONEER-STANDARD ,
MARYLAND AND TRANSFER OF ASSETS MARYLAND AND PIONEER-STANDARD
CANADA AND LIABILITIES AND CANADA ELECTRONICS, LTD.
ESTIMATED 3/31/96 CAPITAL CONTRIBUTION 4/1/96 4/1/96
BALANCE SHEET
Assets:
Cash $ 24,782,000 $ 24,782,000
Net Assets Receivable 189,296,000 $(49,801,771) 139,494,229 $36,595,806
Intercompany Receivable 64,372,842 64,372,842
Net Inventory 238,371,000 (23,765,369) 214,605,831 22,288,818
Net Prop. and Equip. 48,679,000 (6,898,913) 41,780,087 5,458,078
Investment in Subsidiaries 16,093,211 18,093,211
Other Current Assets 58,809,000 56,609,000
Total Assets $559,937,000 $ (0) $559,937,000 $64,342,702
Liabilities and
Shareholders' Equity:
Liabilities:
Notes Payable $ 21,000,000 $ 21,000,000
Accounts Payable 184,947,000 184,947,000
Intercompany Payable $51,474,162
Other Accrued Liabilities 36,522,000 36,522,000
Long Term Debt 164,447,000 164,447,000
Deferred Income Taxes 2,328,000 2,328,000
Total Liabilities $409,244,000 $ (0) 409,244,000 $51,474,162
Shareholders' Equity:
Common Shares and PIC $ 23,888,000 $ 23,888,000 $12,866,540
Retained Earnings 126,506,000 126,506,000
Foreign Currency Translation 299,000 299,000
Total Shareholders' Equity $150,693,000 $150,693,000 $12,866,540
Total Liabilities and
Shareholders' Equity $559,937,000 $ (0) $559,937,000 $64,342,702
CONSOLIDATED
PIONEER-STANDARD PIONEER-STANDARD TOTAL WITH
MINNESOTA, INC. ILLINOIS, INC. NEW ENTITIES
4/1/96 4/1/96 ELIMINATIONS 4/1/96
BALANCE SHEET
Assets:
Cash $ 24,782,000
Net Assets Receivable $ 7,021,293 $6,184,672 189,296,000
Intercompany Receivable $(64,372,642)
Net Inventory 1,410,167 66,384 238,371,000
Net Prop. and Equip. 632,351 808,484 48,679,000
Investment in Subsidiaries (16,093,211)
Other Current Assets 58,809,000
Total Assets $ 9,063,811 $7,059,540 $(80,466,053) $ 559,937,000
Liabilities and
Shareholders' Equity:
Liabilities:
Notes Payable $ 21,000,000
Accounts Payable 184,947,000
Intercompany Payable $ 7,251,049 $5,647,632 $ 64,372,842 0
Other Accrued Liabilities 36,522,000
Long Term Debt 164,447,000
Deferred Income Taxes 2,328,000
Total Liabilities $ 7,251,049 $5,647,632 $ 409,244,000
Shareholders' Equity:
Common Shares and PIC $ 1,812,762 $1,411,906 $ 16,093,211 $ 23,888,000
Retained Earnings 126,506,000
Foreign Currency Translation 299,000
Total Shareholders' Equity $ 1,812,762 $1,411,908 $ 150,693,000
Total Liabilities and
Shareholders' Equity $ 9,063,811 $7,059,540 $ 80,466,053 $ 559,937,000
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SECTION 3. RELEASE OF GUARANTEES.
The Noteholder hereby unconditionally releases Pioneer/Maryland and
Pioneer/Canada from all obligations under and in respect of the Maryland
Guarantee and the Canada Guarantee, respectively, which shall hereinafter no
longer be in force and effect.
SECTION 4. CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT.
This Amendment (including, without limitation, Section 3 hereof) shall
not be effective unless and until each party hereto shall have executed and
delivered an original counterpart hereof and the following conditions shall
have been satisfied or waived;
Section 4.1. OPINIONS OF COUNSEL FOR THE COMPANY. The Noteholder and its
special counsel shall have received from Calfee, Halter & Griswold, Cleveland,
Ohio, special counsel for the Company, an opinion, dated the date hereof, in
form and substance satisfactory to the Noteholder and its special counsel,
relating to the due authorization, execution and delivery by the Company of this
Amendment and the enforceability against the Company of this Amendment, in
accordance with its terms.
Section 4.2. CREDIT AGREEMENT. The Credit Agreement and all other
documents, certificates or instruments delivered pursuant thereto shall have
been reduced to writing and furnished to the Noteholder and its special
counsel, and the Credit Agreement and such other documents, certificates and
instruments shall be in form and substance satisfactory to the Noteholder
and its special counsel. The Noteholder shall have received an Officer's
Certificate of the Company certifying that attached thereto are true, correct
and complete copies of a fully executed Credit Agreement and such other
documents, certificates and instruments, that such documents are the only
agreements between such parties relating to the transactions contemplated by
the Credit Agreement, that each such document is in full force and effect
without any term or condition thereof having been amended, modified or waived,
that there is no default thereunder and that each of the conditions set forth
in Section 3.1 of the Credit Agreement has been satisfied (without any thereof
having been waived).
Section 4.3. ADDITIONAL INTEREST. In consideration for its agreement to
enter into this Amendment, the Noteholder shall have received a payment in
immediately available funds of $10,000, representing additional interest in
respect of the Notes.
Section 4.4. NON-BORROWING AND NON-PLEDGE AGREEMENT. The Non-Borrowing
and Non-Pledge Agreement dated as of August 12, 1996 (the "Non-Borrowing
Agreement") among each of the Restricted Subsidiaries and the Noteholder shall
have been duly authorized by necessary corporate action. Each of the Restricted
Subsidiaries shall have duly executed and delivered a Non-Borrowing Agreement in
the form of EXHIBIT A attached hereto.
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SECTION 5. MISCELLANEOUS.
Section 5.1. CROSS-REFERENCES. References in this Amendment to any
Section (or "Section ") are, unless otherwise specified, to such Section
(or "Section") of this Amendment.
Section 5.2. INSTRUMENT PURSUANT TO PURCHASE AGREEMENT. This Amendment
is executed pursuant to Section 13.4 of the Purchase Agreement and shall (unless
otherwise expressly indicated herein) be construed, administered and applied in
accordance with all of the terms and provisions of the Purchase Agreement.
Except as expressly amended hereby, all of the representations, warranties,
terms, covenants and conditions of the Purchase Agreement and the Notes shall
remain unamended and unwaived. The amendments set forth herein shall be limited
precisely as provided for herein to the provisions expressly amended herein and
shall not be deemed to be a waiver of, amendment of, consent to or modification
of any other term or provision of the Purchase Agreement or the Notes or of any
term or provision of any other document or of any transaction or further action
on the part of the Company which would require the consent of any Noteholder
under the Purchase Agreement.
5.3. SUCCESSORS AND ASSIGNS. The Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
5.4. COUNTERPARTS. This Amendment may be executed simultaneously in two
or more counterparts, each of which shall be deemed to be an original but all
of which shall constitute together but one and the same instrument.
5.5. GOVERNING LAW. This Amendment shall be governed by and construed
in accordance with the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers duly authorized thereunto as of the date
and year first above written.
PIONEER-STANDARD ELECTRONICS, INC.
By: /s/ John V. Goodger
-----------------------------
Name: John V. Goodger
Title: Vice President, Assistant
Secretary and Treasurer
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ Loren S. Archibold
-----------------------------
Name: Loren S. Archibold
Title: Managing Director-Private
Placement
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EXHIBIT A
FORM OF NON-BORROWING AND NON-PLEDGE AGREEMENT
The Non-Borrowing and Non-Pledge Agreement dated as of August 12, 1996
(this "Agreement") is Made by (NAME OF SUBSIDIARY) (the "Maker") in favor of
Teachers Insurance and Annuity Association of America (the "Noteholder") and
each of the other holders (collectively with the "Noteholders") from time to
time of the 9.79% Senior Notes due November 1, 2000 (the "Notes") of
Pioneer-Standard Electronics, Inc., an Ohio Corporation (the "Company").
All terms used herein but not otherwise defined herein, shall have the
meaning ascribed to those terms in the Note Purchase Agreement dated as of
October 31, 1990, (the "Note Purchase Agreement") by and between the Company
and the Noteholder, as amended.
W I T N E S S E T H :
WHEREAS, the Company and the Noteholder are entering into an Amendment
No. 3 to the Note Purchase Agreement of even date herewith (the "Amendment");
WHEREAS, Maker is a Restricted Subsidiary of the Company;
WHEREAS, it is a condition precedent to the effectiveness of the
Amendment that Maker execute and deliver this Agreement.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by Maker, the Maker agrees as follows:
SECTION 1. RESTRICTION ON INDEBTEDNESS. Maker covenants and agrees that
it shall not create, incur, issue, assume or guarantee any Indebtedness for
Borrowed Money other than any Indebtedness for Borrowed Money owed to the
Company pursuant to a loan from the Company in accordance with the terms of the
Note Purchase Agreement. The term "Indebtedness for Borrowed Money" means at
any time, all Indebtedness required by GAAP to be reflected as such on Makers
balance sheet, including as appropriate, all Indebtedness (i) in respect of any
money borrowed; (ii) under or in respect of any Contingent Obligation (as
defined in the Credit Agreement) (whether direct or indirect) of any money
borrowed (iii) evidenced by any loan or credit agreement, promissory note,
debenture, bond, guaranty or other similar written obligation to pay money; or
(iv) arising under Capitalized Lease Obligations.
SECTION 2. RESTRICTION ON LIEN. Other than as permitted under the Note
Purchase Agreement, Maker covenants and agrees that it shall not create, permit
the creation of, or incur a Lien on any of its Property.
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SECTION 3. REPRESENTATIONS AND WARRANTIES. Other than as specifically
permitted under the Note Purchase Agreement, Maker hereby represents and
warrants to, and covenants with, the Noteholders, that:
(a) Maker is duly authorized to make and enter into this Agreement and
to carry out the terms and conditions contemplated herein.
(b) This Agreement has been duly executed and delivered by Maker and
constitutes the legal, valid, and binding obligation of Maker, enforceable
against Maker in accordance with its terms;
(c) Maker has no Indebtedness for Borrowed Money as of the date hereof.
(d) Maker has no Liens on any of its Property as of the date hereof.
SECTION 4. EVENT OF DEFAULT. The breach of any of the terms or
provisions of Sections 1, 2 or 3 above shall constitute a default under this
Agreement. ("Default"). In the event of a Default the Noteholders shall have
all the rights and remedies provided for upon the occurrence of an Event of
Default under the Note Purchase Agreement.
SECTION 5. MISCELLANEOUS
(a) No failure on the part of the Noteholder to exercise, and no delay
in exercising, any right under this Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude
any other or further exercise thereof or the exercise of any other right. The
rights and remedies of the Noteholder provided herein and therein are not
exclusive of, any rights or remedies provided by law.
(b) This agreement shall be governed by and construed in accordance
with the law of the State of New York.
(c) MAKER HEREBY IRREVOCABLY SUBMITS TO THE NON EXCLUSIVE JURISDICTION
OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK COUNTY
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
THE NOTE PURCHASE AGREEMENT AND MAKER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR
THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL IMPAIR THE
RIGHT OF ANY NOTEHOLDER TO BRING PROCEEDING AGAINST MAKER IN THE COURTS OF ANY
OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY OR AGAINST ANY NOTEHOLDER OR ANY
AFFILIATE OF ANY NOTEHOLDER INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER IN ANY
WAY ARISING
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OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN A
COURT IN NEW YORK COUNTY, NEW YORK.
____________________, a _______________________
corporation
By:____________________________________________
Its:___________________________________________