EXHIBIT 10.29
SENIOR SUBORDINATED PROMISSORY NOTE DATED MARCH 18, 1996 FROM THE
COMPANY TO AND ACCEPTED BY CIBC INC. IN THE PRINCIPAL AMOUNT OF
$15,000,000.
SENIOR SUBORDINATED PROMISSORY NOTE
DATED MARCH 18, 1996 FROM THE COMPANY TO AND ACCEPTED BY
CIBC INC. IN THE PRINCIPAL AMOUNT OF $15,000,000.
$15,000,000 New York, New York
March 18, 1996
FOR VALUE RECEIVED, the undersigned, ALL AMERICAN
SEMICONDUCTOR, INC., a Delaware corporation (the "BORROWER"), hereby
unconditionally promises to pay to the order of CIBC INC. (the "LENDER"), at its
office located at 425 Lexington Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately available funds, the
principal amount of FIFTEEN MILLION DOLLARS ($15,000,000) on July 31, 1997 (the
"MATURITY DATE").
The Borrower further agrees to pay interest from the date
hereof until payment in full hereof in like money at such office on the unpaid
principal amount hereof at a fluctuating rate per annum equal to the Alternate
Base Rate PLUS the Applicable Margin, payable quarterly in arrears on the last
day of each Interest Period. Whenever it is calculated on the basis of the Prime
Rate, interest shall be calculated on the basis of a 365- (or 366-, as the case
may be) day year for the actual days elapsed, and, otherwise, interest shall be
calculated on the basis of a 360-day year for the actual days elapsed. Each
change in the interest rate resulting from a change in the Alternate Base Rate
shall become effective as of the opening of business on the day on which such
change becomes effective. The Lender shall as soon as practicable notify the
Borrower of the effective date and the amount of each such change in interest
rate.
The Borrower still further agrees to pay to the Lender on the
first day of each Interest Period (other than the initial Interest Period) a fee
in an amount equal to 1-1/2% of the principal amount hereof outstanding on such
date.
The Borrower may at any time prepay the principal amount
hereof in full, without premium or penalty, upon at least four Business Days'
irrevocable notice to the Lender specifying the date of prepayment, PROVIDED
that any such prepayment of principal shall be in an amount equal to 100% of the
principal amount hereof outstanding on the date of such prepayment. If any such
notice is given, such amount shall be due and payable on the date specified
therein, together with interest and all other amounts which have accrued and are
owing hereunder on such date.
This Note is guaranteed as provided in the Subsidiaries
Guarantee. Reference is hereby made thereto for a description of the nature and
extent of the guarantees, the terms and conditions upon which the guarantees
thereunder were granted and the rights of the holder of this Note in respect
thereof.
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1. DEFINED TERMS. As used in this Note, the following
terms shall have the following meanings:
"ACCOUNTS RECEIVABLE": has the meaning ascribed to the term
"Account" in Section 679.106 of the Florida Statutes, Uniform Commercial Code.
"ADDED VALUE TRANSACTION": as defined in subsection 2(a)
hereof.
"AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the securities having ordinary voting power for the election
of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"ALTERNATE BASE RATE": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day, and (b) the Federal Funds Effective Rate in
effect on such day PLUS 1/2 of 1%. For purposes hereof: "PRIME RATE" shall mean
the rate of interest per annum publicly announced from time to time by the
Lender as its prime rate in effect at its principal office in New York City (the
Prime Rate not being intended to be the lowest rate of interest charged by the
Lender in connection with extensions of credit to debtors); and "FEDERAL FUNDS
EFFECTIVE RATE" shall mean, for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Lender from three federal funds
brokers of recognized standing selected by it. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively.
"APPLICABLE MARGIN": (a) on any day during the initial
Interest Period hereunder, a rate per annum equal to 4%; (b) on any day during
any subsequent Interest Period, a rate per annum equal to the Applicable Margin
in effect during the immediately preceding Interest Period PLUS 1/2 of 1%; and
(c) on any day on which an Event of Default shall have occurred and be
continuing, a rate per annum which is 2% above the rate otherwise in effect as
determined pursuant to clause (a) or (b) of this definition.
"ASSET VALUATION AMOUNT": on any date of determination, an
amount equal to the sum of (a) 50% of Inventory on such date, PLUS (b) 85% of
Receivables on such date.
"BLOCKAGE NOTICE": a written notice from the Borrower or
SunTrust to the Lender that a Payment Event of Default has occurred and is
continuing.
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"BLOCKAGE PERIOD": with respect to any Blockage Notice, the
period commencing on the related Blockage Period Commencement Date and ending on
the date that the Lender receives written notice from SunTrust that the Payment
Event of Default that was the basis for such Blockage Notice has been cured or
waived.
"BLOCKAGE PERIOD COMMENCEMENT DATE": with respect to any
Blockage Notice, the date that such Blockage Notice is received by the Lender.
"BUSINESS DAY": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by
law to close.
"CAPITAL STOCK": any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"CHANGE IN CONTROL" (a) any Person or "group" (within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended) other than executive officers of the Borrower and Continuing Directors,
members of their respective families and trusts under which any of the foregoing
is a beneficiary, or a "group" consisting solely of such executive officers,
Continuing Directors, family members and trusts (i) shall have acquired
beneficial ownership of 30% or more of any outstanding class of capital stock
having ordinary voting power in the election of directors of the Borrower or
(ii) shall obtain the power (whether or not exercised) to elect a majority of
the Borrower's directors or (b) the Board of Directors of the Borrower shall not
consist of a majority of Continuing Directors; as used in this definition,
"CONTINUING DIRECTORS" shall mean the directors of the Borrower on the date
hereof and each other director, if such other director's nomination for election
to the Board of Directors of the Borrower is recommended by a majority of the
then Continuing Directors.
"CODE": the Internal Revenue Code of 1986, as amended from
time to time.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"CONSOLIDATED EBITDA": for any period, the revenues of the
Borrower and its Subsidiaries for such period from continuing operations, MINUS
associated costs (generally excluding Consolidated Interest Expense, income
taxes, depreciation and amortization), determined in each case on a consolidated
basis in accordance with GAAP consistently applied.
"CONSOLIDATED INTEREST EXPENSE": for any period, the amount of
interest expense for such period of the Borrower and its Subsidiaries,
determined on a consolidated
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basis in accordance with GAAP, on the aggregate principal amount of their
Indebtedness, determined on a consolidated basis in accordance with GAAP
consistently applied.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"DEFAULT": any of the events specified in Section 5 hereof,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"ERISA": the Employee Retirement Income Security Act of
1974, as amended from time to time.
"EVENT OF DEFAULT": any of the events specified in Section 5
hereof, PROVIDED that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"FIXED ASSETS": the Borrower's real property and
improvements thereon, together with all machinery and equipment, furniture,
furnishings and such other property of the Borrower as would be encompassed
within the GAAP definition of "Fixed Assets".
"FIXED CHARGE COVERAGE RATIO": on any date of determination
and for any period, the ratio, computed in accordance with GAAP consistently
applied, of (a) Consolidated EBITDA for such period to (b) the sum of (i)
Consolidated Interest Expense for such period, PLUS (ii) the amount of capital
expenditures made by the Borrower and its consolidated Subsidiaries during such
period.
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time.
"GOVERNMENTAL AUTHORITY": any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING
PERSON"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counter indemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other obligations
(the "PRIMARY OBLIGATIONS") of any other third Person (the "PRIMARY OBLIGOR") in
any manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the
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primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; PROVIDED, HOWEVER, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"INDEBTEDNESS": at any date, any obligation for money
borrowed, whether or not evidenced by notes, bonds, debentures or other similar
instruments, or any obligation under conditional sale or other title retention
agreements or capitalized leases or any obligation issued or assumed as full or
partial payment for property whether or not secured by a purchase money
mortgage.
"INSOLVENCY": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"INSOLVENCY EVENT": with respect to any Person, (i) such
Person's commencing any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or such Person's making a general assignment for the benefit of its
creditors; or (ii) there being commenced against such Person any case,
proceeding or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
60 days; or (iii) there being commenced against such Person any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) such Person's taking any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) such Person's generally not
paying, or being unable to pay, or admitting in writing its inability to pay,
its debts as they become due.
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"INTEREST PERIOD": (a) initially, the period commencing on the
date hereof and ending three months thereafter; and (b) thereafter, each period
commencing on the first day following the last day of the immediately preceding
Interest Period and ending three months thereafter (or, in the case of the
Interest Period commencing in June 1997, ending on the Maturity Date).
"INVENTORY": on any date of determination of the Asset
Valuation Amount, the reported value of "inventories" of the Borrower and its
consolidated Subsidiaries, as disclosed on the most recent balance sheet
furnished to the Lender in accordance with subsection 3(d) hereof (or, in the
case of the initial determination of the Asset Valuation Amount hereunder, the
preliminary unaudited balance sheet for the fiscal year ended December 31,
1995).
"LIABILITIES": as to any Person at any date, all liabilities
of such Person, computed in accordance with GAAP applied on a consistent basis.
"LIEN": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
financing lease having substantially the same economic effect as any of the
foregoing).
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a)
the business, operations, property or condition (financial or otherwise) of the
Borrower and its Subsidiaries, taken as a whole, or (b) the validity or
enforceability of this Note or the Subsidiaries Guarantee or the rights or
remedies, taken as a whole, of the Lender hereunder or thereunder.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"NEW SUBSIDIARY": as defined in subsection 3(g) hereof.
"NOTE": this Senior Subordinated Promissory Note, as the
same may be amended, supplemented or otherwise modified from time to time.
"OBLIGATIONS": the collective reference to the unpaid
principal of and interest on this Note and all other obligations and liabilities
of the Borrower to the Lender hereunder (including, without limitation, interest
accruing at the then applicable rate provided herein after the maturity hereof
and interest accruing at the then applicable rate provided herein after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with this Note or any document made, delivered or given in connection herewith,
whether on account of principal, interest, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of
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counsel to the Lender that are required to be paid by the Borrower pursuant to
the terms of this Note or the Subsidiaries Guarantee).
"PAYMENT EVENT OF DEFAULT": any default in the payment of the
SunTrust Note (whether upon maturity, mandatory prepayment, acceleration or
otherwise) beyond any applicable grace period with respect thereto, which
default has not been confirmed in writing by SunTrust as having been either
cured or waived.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"RECEIVABLES": on any date of determination of the Asset
Valuation Amount, the reported value of "accounts receivable" of the Borrower
and its consolidated Subsidiaries, as disclosed on the most recent balance sheet
furnished to the Lender in accordance with subsection 3(d) hereof (or, in the
case of the initial determination of the Asset Valuation Amount hereunder, the
preliminary unaudited balance sheet for the fiscal year ended December 31,
1995).
"REORGANIZATION": with respect to any Multiemployer Plan,
the condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
ss. 2615.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, the
president or the chief financial officer of the Borrower, but with respect to
financial matters, only the chief financial officer of the Borrower.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
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"SUBSIDIARIES GUARANTEE": that certain Senior Subordinated
Subsidiaries Guarantee, dated as of the date hereof, made by each of the
Subsidiaries in favor of the Lender, as the same may be amended, supplemented or
otherwise modified from time to time.
"SUBSIDIARY": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Note shall refer to a Subsidiary or Subsidiaries of
the Borrower.
"SUBSIDIARY GUARANTORS": the Subsidiaries parties to the
Subsidiaries Guarantee (each such Subsidiary, individually, a "SUBSIDIARY
GUARANTOR").
"SUNTRUST": SunTrust Bank, Miami, N.A., formerly known as Sun
Bank/Miami, National Association, in its capacity as lender under the SunTrust
Credit Agreement.
"SUNTRUST CREDIT AGREEMENT": that certain Revolving Credit
Agreement dated December 29, 1992 between the Borrower and SunTrust, as the same
heretofore has been and hereafter may from time to time be amended, supplemented
or otherwise modified.
"SUNTRUST LOANS": the loans made by SunTrust to the Borrower
pursuant to the SunTrust Credit Agreement.
"SUNTRUST NOTE": the Revolving Line Note (as defined in the
SunTrust Credit Agreement).
"SUNTRUST OBLIGATIONS": the collective reference to the unpaid
principal of and interest on the SunTrust Note (including, without limitation,
interest accruing at the then applicable rate provided in the SunTrust Credit
Agreement after the maturity of the SunTrust Loans and interest accruing at the
then applicable rate provided in the SunTrust Credit Agreement after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
and all other obligations and liabilities, whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the SunTrust Credit
Agreement, the SunTrust Note, or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to
SunTrust that are required to be paid by the Borrower pursuant to the terms of
the SunTrust Credit Agreement).
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2. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Lender that:
(a) FINANCIAL CONDITION. The consolidated balance sheet
of the Borrower and its consolidated Subsidiaries as at December 31, 1994 and
the related consolidated statements of income and of cash flows for the fiscal
year ended on such date, reported on by Lazar, Levine & Company LLP, copies of
which have heretofore been furnished to the Lender, are complete and correct and
present fairly the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the fiscal year then ended. The
unaudited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at September 30, 1995 and the related unaudited consolidated
statements of income and of cash flows for the nine-month period ended on such
date, included in the Form 10-Q filed by the Borrower with the Securities and
Exchange Commission and copies of which have heretofore been furnished to the
Lender, are complete and correct and present fairly the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at such date, and
the consolidated results of their operations and their consolidated cash flows
for the nine-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein). Neither the
Borrower nor any of its consolidated Subsidiaries had, at the date of the most
recent balance sheet referred to above, any material Guarantee Obligation,
contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected in
the foregoing statements or in the notes thereto. During the period from
September 30, 1995 to and including the date hereof there has been no sale,
transfer or other disposition by the Borrower or any of its consolidated
Subsidiaries of any material part of its business or property and no purchase or
other acquisition of any business or property (including any capital stock of
any other Person) material in relation to the consolidated financial condition
of the Borrower and its consolidated Subsidiaries at September 30, 1995, other
than the the Borrower's acquisition by merger of Added Value Electronics
Distribution, Inc., a California corporation, and A.V.E.D.-Rocky Mountain,
Inc., a Colorado corporation (such acquisition, the "ADDED VALUE TRANSACTION").
(b) NO CHANGE. Since September 30, 1995, there has been
no development or event which has had or would reasonably be expected to have a
Material Adverse Effect.
(c) CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of
the Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and
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(d) is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(d) CORPORATE POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS. The Borrower and each Subsidiary Guarantor have the corporate power
and authority, and the legal right, to make, deliver and perform this Note or
the Subsidiaries Guarantee, as the case may be, and, in the case of the
Borrower, to borrow the loan evidenced hereby, and the Borrower and each
Subsidiary Guarantor have taken all necessary corporate action to authorize, in
the case of the Borrower, such borrowing on the terms and conditions hereof and
to authorize the execution, delivery and performance hereof or of the
Subsidiaries Guarantee, as the case may be. No consent or authorization of,
filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person (other than SunTrust) is required in connection
with the borrowing evidenced hereby or with the execution, delivery,
performance, validity or enforceability hereof or of the Subsidiaries Guarantee.
This Note has been duly executed and delivered on behalf of the Borrower, and
the Subsidiaries Guarantee has been duly executed and delivered on behalf of
each Subsidiary Guarantor. This Note constitutes a legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
its terms, and the Subsidiaries Guarantee constitutes a legal, valid and binding
obligation of each Subsidiary Guarantor enforceable against such Subsidiary
Guarantor in accordance with its terms, subject in each case to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
(e) NO LEGAL BAR. The execution, delivery and
performance hereof and of the Subsidiaries Guarantee, the borrowing evidenced
hereby and the use of the proceeds of such borrowing will not violate any
Requirement of Law or Contractual Obligation of the Borrower or of any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
(f) NO MATERIAL LITIGATION. No litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of the Borrower, threatened by or
against the Borrower or any of its Subsidiaries or against any of its or their
respective properties or revenues (i) with respect to this Note, the
Subsidiaries Guarantee or any of the transactions contemplated hereby or
thereby, or (ii) which would reasonably be expected to have a Material Adverse
Effect.
(g) NO DEFAULT. After the making of the loan evidenced
hereby, neither the Borrower nor any of its Subsidiaries is in default under or
with respect to any of its Contractual Obligations in any respect which would
reasonably be expected to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
(h) OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower
and its Subsidiaries has good record and marketable title in fee simple to, or
a valid leasehold
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interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, and none of such property is subject to
any Lien except as permitted by subsection 4(g) hereof.
(i) NO BURDENSOME RESTRICTIONS. No Requirement of Law
or Contractual Obligation of the Borrower or any of its Subsidiaries has or
would reasonably be expected to have a Material Adverse Effect.
(j) TAXES. Each of the Borrower and its Subsidiaries
(i) has filed or caused to be filed all tax returns which, to the knowledge of
the Borrower, are required to be filed and (ii) has paid all taxes shown to be
due and payable on said returns or on any assessments made against it or any of
its property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower or its Subsidiaries, as the case may be),
other than (A) in the case of the Subsidiaries, any such taxes, fees or other
charges in an amount the failure to pay which could not reasonably be expected
to have a Material Adverse Effect, and (B) in the case of the Borrower, any such
taxes, fees and other charges in an aggregate amount not in excess of $5,000; no
tax Lien has been filed, and, to the knowledge of the Borrower, no claim is
being asserted, with respect to any such tax, fee or other charge.
(k) FEDERAL REGULATIONS. No part of the proceeds of the
loan evidenced hereby will be used for "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation G or Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect.
(l) INVESTMENT COMPANY ACT; OTHER REGULATIONS. The
Borrower is not an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. The Borrower is not subject to regulation under any Federal or State
statute or regulation (other than Regulation X of the Board of Governors of the
Federal Reserve System) which limits its ability to incur Indebtedness.
(m) SUBSIDIARIES. The following constitute all of the
Subsidiaries of the Borrower as of the date hereof: Access Micro Products, Inc.,
All American Added Value, Inc., All American A.V.E.D., Inc., All American
Semiconductor of Atlanta, Inc., All American Semiconductor of Canada, Inc., All
American Semiconductor of Chicago, Inc., All American Semiconductor of Florida,
Inc., All American Semiconductor of Huntsville, Inc., All American Semiconductor
of Massachusetts, Inc., All American Semiconductor of Michigan, Inc., All
American Semiconductor of Minnesota, Inc., All American Semiconductor of New
York, Inc., All American Semiconductor-Northern California, Inc., All American
Semiconductor of Philadelphia, Inc., All American Semiconductor of Phoenix,
Inc., All American Semiconductor of Portland, Inc., All American Semiconductor
of Rockville, Inc., All American Semiconductor of Salt Lake, Inc., All American
Semiconductor of Texas, Inc., All American Technologies, Inc., All American
Transistor of California, Inc.,
12
American Assemblies & Design, Inc., Aved Industries, Inc., Palm Electronics
Manufacturing Corp. and All American Semiconductor of Washington, Inc.
(n) PURPOSE OF LOAN. The proceeds of the loan evidenced
hereby shall be used by the Borrower, whether directly or indirectly, for
working capital purposes in the ordinary course of business.
3. AFFIRMATIVE COVENANTS. The Borrower hereby agrees
that, so long as any amount is owing to the Lender hereunder, the Borrower shall
and (except in the case of delivery of financial information, reports and
notices) shall cause each of its Subsidiaries to:
(a) CORPORATE EXISTENCE. Do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain, preserve and
protect all rights, privileges, licenses, permits and franchises necessary or
desirable in the normal conduct of its business; comply with all Contractual
Obligations except to the extent that failure to comply therewith would not, in
the aggregate, have a Material Adverse Effect; and conduct and operate its
business in substantially the same manner in which presently conducted and
operated (subject to changes in the ordinary course of business).
(b) MAINTENANCE OF PROPERTY; INSURANCE. Preserve and
maintain all property useful and necessary in its business in good working order
and condition; maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks as are usually insured against in the same general area by companies
engaged in the same or a similar business; and furnish to the Lender, upon
written request, full information as to the insurance carried.
(c) OBLIGATIONS AND TAXES. Pay and discharge promptly
all taxes, assessments and governmental charges or levies imposed upon it or in
respect of its properties (other than, in the case of the Subsidiaries, any such
taxes, assessments, charges or levies the failure to pay which could not
reasonably be expected to have a Material Adverse Effect, and, in the case of
the Borrower, any such taxes, assessments, charges and levies in an aggregate
amount not in excess of $5,000), before the same shall become in default, as
well as all lawful claims for labor, materials and supplies or otherwise, which,
if unpaid, might become a Lien or charge upon such properties or any part
thereof; provided, however, that neither the Borrower nor any of its
Subsidiaries shall be required to pay and discharge, or to cause to be paid and
discharged, any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings and adequate reserves have been set aside on its books with respect
to any such tax, assessment, charge, levy or claim so contested.
13
(d) REPORTING REQUIREMENTS. Furnish to the Lender:
(i) as soon as available, but in any event no
later than ninety (90) days after the close of each fiscal year of the Borrower,
a copy of the Borrower's report on Form 10-K for such fiscal year;
ii) as soon as available, but in any event not
later than forty-five (45) days after the end of each fiscal quarter of the
Borrower, a copy of the Borrower's report on Form 10-Q for such fiscal quarter;
(iii) concurrently with the delivery of each
report referred to in clause (i) above, a certificate of the independent
certified public accountants reporting on the financial statements contained in
such report, stating that, in making the examination necessary therefor, no
knowledge was obtained of any Default or Event of Default, except as
specifically indicted in such certificate;
(iv) concurrently with the delivery of the
reports referred to in clauses (i) and (ii) above, a certificate of a
Responsible Officer of the Borrower: (A) stating that, to the best of his
knowledge, each of the Borrower and its Subsidiaries, during such period, has
kept, observed, performed and fulfilled in all material respects each and every
covenant and condition contained in this Note, and that he has obtained no
knowledge of any Default or Event of Default then existing hereunder except as
specifically indicated in such certificate, and (B) showing in detail the
calculations supporting such statement in respect of subsections 4(a) and 4(p)
of this Note;
(v) promptly upon receipt thereof, any
"Management Letter" received from the Borrower's independent certified public
accountants, together with any comments made by the Borrower with respect
thereto;
(vi) promptly after the same are sent, copies
of all proxy statements, financial statements and reports which the Borrower
sends to its stockholders, and promptly after the same are filed, copies of all
regular, periodic and special reports (including, but not limited to, reports on
Form 8-K), and all registration statements which the Borrower files with the
Securities and Exchange Commission or any Governmental Authority which may be
substituted therefor, or with any national securities exchange;
(vii) as soon as possible, and in any event,
within 30 days after any officer of the Borrower knows or has reason to know
that any Reportable Event has occurred, a statement of a Responsible Officer of
the Borrower setting forth details as to such Reportable Event and the action
which the Borrower proposes to take with respect thereto, together with a copy
of the notice of such Reportable Event given to the PBGC;
(viii) promptly after the filing thereof with
the United States Secretary of Labor or the PBGC, copies of any annual or other
report with respect to any Plan;
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(ix) promptly after receipt thereof, a copy of
each notice the Borrower receives from the PBGC relating to the PBGC's intention
to terminate any Plan or to appoint a trustee to administer any Plan;
(x) within 10 days after the service of
process or equivalent notice, written notice of any litigation, including
arbitrations, and of any proceeding by or before any Governmental Authority
where the amount involved or the nature of the proceeding would reasonably be
expected to have a Material Adverse Effect;
(xi) prompt written notice of (A) any Default
under any of the terms and provisions of this Note, (B) any change in executive
officers, the Borrower's name or the form in which it is currently doing
business, or (C) any default under any note, agreement, contract, indenture,
document or instrument entered into or to be entered into by it, or any other
matter, which has resulted in, or would reasonably be expected to result in, a
Material Adverse Effect;
(xii) within 10 days after the end of each
month, an account receivables aging summary report for such month; and
(xiii) promptly, from time to time, such other
information relating to its business, properties, condition or operations,
financial or otherwise, as the Lender may request.
(e) BOOKS AND RECORDS. Keep and maintain full and
accurate accounts and records of its operations in accordance with GAAP
consistently applied, and permit the Lender or any of its designated officers,
employees, agents and representatives, to have access thereto (including
computer data), and to make examination thereof at all reasonable times and as
often as the Lender may require, and to inspect and otherwise check the
Borrower's properties, real, personal and mixed.
(f) COMPLIANCE WITH LAW. Comply, in all material
respects, with all Requirements of Law and orders of Governmental Authorities
relating to the conduct of their respective businesses.
(g) NEW SUBSIDIARIES. Simultaneously with the formation
or acquisition of any Subsidiary which is not among those listed in subsection
2(m) hereof (each, a "NEW SUBSIDIARY"), have such New Subsidiary guarantee the
Obligations by becoming a party to the Subsidiaries Guarantee, all at the
Borrower's sole expense.
(h) EXECUTION OF OTHER DOCUMENTS. Promptly upon demand
by the Lender, execute or have executed all such additional agreements,
documents and instruments in connection with this Note or the Subsidiaries
Guarantee as the Lender may reasonably request.
15
4. NEGATIVE COVENANTS. The Borrower hereby agrees
that, so long as any amount is owing to the Lender hereunder, the Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly
(without the express written consent of or waiver by the Lender in accordance
with the terms hereof):
(a) FIXED CHARGE COVERAGE RATIO. On each date of
determination set forth under the column headed "Determination Date" below,
permit the Fixed Charge Coverage Ratio for the Borrower and its consolidated
Subsidiaries for the period indicated opposite such "Determination Date" under
the column headed "Measurement Period" below to be less than 1.10 to 1.00:
DETERMINATION DATE MEASUREMENT PERIOD
------------------ ------------------
June 30, 1996 preceding three months
September 30, 1996 preceding six months
December 31, 1996 preceding nine months
March 31, 1997
and the last day of each
fiscal quarter thereafter preceding twelve months.
(b) INDEBTEDNESS. Incur, create, assume or permit to
exist any Indebtedness at any time outstanding, except:
(i) Indebtedness to the Lender hereunder;
(ii) amounts due for partial, progress or
advance payments pursuant to purchase contracts;
(iii) Indebtedness for wages and salaries to
employees (including all FICA, tax and pension accruals
related thereto), rents due and payable in the ordinary course
of business, accounts and other payables due to vendors of
goods or services furnished in the ordinary and usual course
of business with the Borrower, and any municipal, state and
federal taxes payable in the ordinary course of business;
(iv) capitalized lease obligations for normal
and customary office equipment and furniture;
(v) Indebtedness incurred for capital
expenditures;
(vi) Indebtedness pursuant to the SunTrust
Credit Agreement in a principal amount at any one time
outstanding not in excess of $45,000,000;
(vii) the obligations arising from the Added
Value Transaction; and
16
(viii) Indebtedness, other than that listed in
the preceding clauses (i) through (vii), existing as of the
date hereof (and any renewals, extensions, modifications or
other refinancings thereof on substantially similar terms
thereto), as disclosed in the financial statements referred
to in subsection 2(a) hereof.
(c) TRANSACTIONS WITH AFFILIATES. Enter into any
transaction with any Affiliate (other than a Subsidiary) unless such transaction
is (i) not otherwise prohibited hereunder, (ii) in the ordinary course of the
Borrower's or such Subsidiary's business and (iii) upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary, as the case may be,
than it would obtain in a comparable arm's-length transaction with a Person
which is not an Affiliate.
(d) DISPOSAL OF PROPERTY. Sell, lease, transfer or
otherwise dispose of all or any substantial portion of its properties and assets
now owned or hereafter acquired, except in the ordinary course of business and
in compliance with all governmental requirements therefor which may now or
hereafter exist.
(e) LIENS. From and after the date hereof, incur,
create, assume or permit to exist any Lien of any nature whatsoever on any of
its property, assets or revenues, whether now owned or hereafter acquired,
except for:
(i) Liens in effect on the date hereof (A) in favor
of SunTrust securing the SunTrust Obligations and (B) securing
Indebtedness permitted hereunder;
(ii) Liens for taxes or assessments and similar
charges either (A) not yet due; or (B) being contested in good
faith by appropriate proceedings, PROVIDED that adequate
reserves with respect thereto are maintained on the books of
the Borrower or its Subsidiaries, as the case may be, in
conformity with GAAP;
(iii) Liens incurred or pledges and deposits in
connection with worker's compensation, unemployment insurance,
old age pensions and other social security benefits or
securing the performance of bids, tenders, leases, contracts
(other than for the repayment of borrowed money), statutory
obligations, surety and appeal bonds, and other obligations of
like nature, incurred in the ordinary course of business;
(iv) non-consensual Liens imposed by law, such as
landlord's, mechanic's, carriers', warehousemen's,
materialmen's and vendor's liens, incurred in good faith in
the ordinary course of business;
(v) Liens securing capital expenditures;
(vi) Liens securing the Obligations.
17
(f) SALE AND LEASEBACK. Enter into any sale and
leaseback arrangement with respect to any of its Fixed Assets.
(g) GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation, except:
(i) endorsements by the Borrower of negotiable
instruments for collection in the ordinary course of business;
(ii) loans to its employees in an aggregate amount
at any one time outstanding not to exceed $25,000;
(iii) guarantees made by Subsidiaries in favor of
SunTrust in connection with the SunTrust Credit Agreement; and
(iv) guarantees of the obligations of any
Subsidiary made by the Borrower in the ordinary course of
business and in keeping with the current business practices of
the Borrower and its Subsidiaries as of the date hereof.
(h) INVESTMENTS. Purchase, acquire or hold beneficially
any stock or other securities of or evidences of indebtedness of, or make or
permit to exist any investment in, or acquire or permit to exist any interest
whatsoever in, or purchase all or a substantial part of the assets of, any other
Person, except:
(i) direct obligations of the United States
Government or any agency thereof, maturing in one year or
less;
(ii) certificates of deposit or repurchase agreements
of any domestic commercial bank which has combined capital and
surplus in excess of $100,000,000;
(iii) commercial paper maturing in 270 days or less
and rated as Prime-1 by Moody's Investors Service, Inc., or
as A-1 by Standard and Poor's Ratings Services or similarly
rated by any successor to either of such investment rating
services;
(iv) prepayments for merchandise in the ordinary
course of business;
(v) in the case of the Borrower, investments in
its Subsidiaries, to the extent not otherwise prohibited
hereunder;
(vi) the acquisition by the Borrower of Programming
Plus, Incorporated for a purchase price which includes cash
consideration not in excess of $250,000 (excluding any
contingent cash consideration, payable over time to the
sellers, in an amount to be determined based upon a percentage
of the future earnings of the acquired business); and
18
(vii) stock acquired towards repayment of Accounts
Receivable owing to the Borrower or any of its Subsidiaries.
(i) CONSOLIDATION, MERGER, ACQUISITION OF ASSETS.
Consolidate with, or merge into, any other Person (other than Subsidiaries),
acquire all or any substantial portion of the stock, property or assets of any
other Person (other than Subsidiaries), or permit any Person (other than
Subsidiaries), to merge into it, acquire any of its stock (other than through
normal trading on public securities exchanges) or all or any substantial portion
of its property or assets; PROVIDED that this subsection 4(i) shall be deemed
not to apply to an acquisition by the Borrower of Programming Plus, Incorporated
for a purchase price which includes cash consideration not in excess of $250,000
(excluding any contingent cash consideration, payable over time to the sellers,
in an amount to be determined based upon a percentage of the future earnings of
the acquired business).
(j) DIVIDENDS, DISTRIBUTIONS. Declare, pay, make or
otherwise obligate itself for any dividend or distribution of assets to its
shareholders (other than dividends payable solely in common stock of the
Borrower).
(k) STOCK TRANSACTIONS. Redeem, purchase, retire or
otherwise acquire, directly or indirectly, for a consideration, any shares of
its Capital Stock, except as not otherwise prohibited hereunder and expressly
permitted under the SunTrust Credit Agreement.
(l) PREPAYMENTS OF LONG-TERM INDEBTEDNESS. Repurchase,
prepay, retire or redeem, other than as required by the terms of legally binding
agreements existing on the date hereof or the refinancing of existing capital
leases or other long-term Indebtedness or the repayments of the SunTrust Loans,
any Indebtedness which, by its terms, matures more than one year from the date
of such prepayment, except for payments or prepayments by the Borrower to the
Lender on account of the Obligations as permitted hereunder.
(m) NATURE OF BUSINESS. Enter into any business, either
directly or through any Subsidiary, except for businesses in which the Company
and its Subsidiaries are engaged on the date hereof and business directly
related to such existing businesses.
(n) CHANGE IN CONTROL. Permit a Change in Control to
occur.
(o) SUBSIDIARIES' LIABILITIES. Permit any Subsidiary to
incur, create, assume or permit to exist any Liabilities at any time
outstanding, except (i) trade debt incurred in the ordinary course of business
but at no time exceeding $20,000, (ii) Liabilities to the Lender or to SunTrust,
(iii) commissions payable, payroll and miscellaneous accruals, (iv) intercompany
liabilities among the Borrower and its Subsidiaries, and (v) Liabilities in
connection with such Subsidiary's premises or operating leases, employment
agreements with its employees, and similar routine obligations, and Liabilities
in connection with acquisitions of assets and businesses not otherwise
prohibited hereunder (including, without limitation, deferred purchase price and
noncompete payment obligations, obligations to assume liabilities and employment
agreement obligations).
19
(p) ASSET VALUATION AMOUNT. Permit the Asset Valuation
Amount, determined on the date hereof and on the last day of each fiscal quarter
of the Borrower, to be less than the sum of (i) the outstanding principal amount
of SunTrust Loans on such date of determination, PLUS (ii) the outstanding
principal amount hereof on such date.
5. EVENTS OF DEFAULT. If any of the following events
shall occur and be continuing:
(a) The Borrower shall fail to pay any principal hereof when
due in accordance with the terms hereof; or the Borrower shall fail to pay any
interest on this Note, or any fee or other amount payable hereunder, within five
days after any such interest, fee or other amount becomes due in accordance with
the terms hereof; or
(b) Any representation or warranty made by the Borrower herein
or by any Subsidiary Guarantor in the Subsidiaries Guarantee or which is
contained in any certificate, document or financial or other statement furnished
by it at any time under or in connection with this Note or the Subsidiaries
Guarantee shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or
(c) The Borrower or any Subsidiary shall default in the
observance or performance of any agreement contained in Section 4 hereof; or
(d) The Borrower or any Subsidiary shall default in the
observance or performance of any other agreement contained in this Note (other
than as provided in paragraphs (a) through (c) of this section), and such
default shall continue unremedied for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default
in any payment of principal at final maturity of any Indebtedness (other than
the obligations under this Note); or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause such Indebtedness to become due prior to its stated maturity or such
Guarantee Obligation to become payable; PROVIDED, HOWEVER, that no Default or
Event of Default shall exist under this paragraph unless the aggregate amount of
Indebtedness and/or Guarantee Obligations in respect of which any default or
other event or condition referred to in this paragraph shall have occurred shall
be equal to at least $250,000; or
(f) There shall occur (i) an Insolvency Event with respect to
the Borrower or (ii) an Insolvency Event with respect to any Subsidiary or
Subsidiaries which, either individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect; or
20
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Lender, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Lender is likely to, incur any liability in connection with a withdrawal
from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, would reasonably be expected
to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Borrower or any Subsidiary or Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $250,000 or more and, in
the case of the Subsidiaries, such judgments or decrees would reasonably be
expected to have a Material Adverse Effect, and, in all cases, such judgments or
decrees shall not have been satisfied, vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof; or
(i) The Subsidiaries Guarantee shall cease, for any reason, to
be in full force and effect or any Subsidiary Guarantor thereunder shall so
assert;
then, and in any such event, (A) if such event is an Event of Default pursuant
to paragraph (f) of this Section 5 by virtue of its being an event specified in
clause (i) or (ii) of the definition of "Insolvency Event" hereunder with
respect to the Borrower, automatically the principal hereof which remains due
and outstanding at the time of such event (with accrued interest thereon) and
all other amounts owing under this Note shall immediately become due and
payable, and (B) if such event is any other Event of Default, the Lender may, by
notice to the Borrower, declare the principal hereof which remains due and
outstanding at the time of such event (with accrued interest thereon) and all
other amounts owing under this Note to be due and payable forthwith, whereupon
the same shall immediately become due and payable. Except as expressly provided
above in this Section 5, presentment, demand, protest and all other notices of
any kind are hereby expressly waived.
6. SUBORDINATION. (a) The Borrower and the Lender
agree that the Obligations are expressly "subordinate and junior in right of
payment" (as that phrase is defined in paragraph 6(b) below) to the SunTrust
Obligations.
21
(b) "SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT" means
that:
(i) upon the occurrence of any Insolvency Event with
respect to the Borrower, (A) all SunTrust Obligations shall be paid in
full before any payment or distribution (other than a payment or
distribution of securities which are subordinate to the payment of all
SunTrust Obligations then outstanding) is made with respect to the
Obligations; and (B) any payment or distribution of assets of the
Borrower, whether in cash, property or securities (other than a payment
or distribution of securities which are subordinate to the payment of
all SunTrust Obligations then outstanding), to which the Lender would
be entitled except for the provisions of this Section 6, shall be paid
or delivered by the Borrower, or any receiver, trustee in bankruptcy,
liquidating trustee, disbursing agent or other Person making such
payment or distribution, directly to SunTrust, to the extent necessary
to pay in full all SunTrust Obligations, before any payment or
distribution shall be made to the Lender on account of the Obligations;
and
(ii) unless and until the SunTrust Obligations have
been paid in full and SunTrust's commitment to make loans under the
SunTrust Credit Agreement has been terminated, without the express
prior written consent of SunTrust, no interest or principal on account
of this Note shall be paid (whether directly or indirectly, by set-
off, redemption, purchase or otherwise) during such time as a Blockage
Period is in effect.
(c) Subject to the payment in full of the SunTrust
Obligations, the Lender shall be subrogated to the rights of SunTrust to receive
payments or distributions of assets of the Borrower in respect of the SunTrust
Obligations until the SunTrust Obligations shall be paid in full. For the
purposes of such subrogation, payments or distributions to SunTrust of any
money, property or securities to which the Lender would be entitled except for
the provisions of this Section 6 shall be deemed, as between the Borrower and
its creditors other than SunTrust and the Lender, to be a payment by the
Borrower to or on account of the Obligations, it being understood that the
provisions of this Section 6 are, and are intended solely, for the purpose of
defining the relative rights of the Lender and SunTrust.
(d) The subordination of the Obligations to the
SunTrust Obligations in accordance with this Section 6 shall continue to be
effective, or be reinstated, as the case may be, to the extent that any payment
in respect of the SunTrust Obligations is rescinded or must otherwise be
disgorged, restored or returned by SunTrust in connection with any Insolvency
Event.
7. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. Neither
this Note nor any of the terms hereof may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Lender and the
Borrower. In the case of any waiver, the Borrower and the Lender shall be
restored to their former positions and rights hereunder, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon.
22
(b) NOTICES. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing
(including by facsimile transmission) and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made (a) in the case of
delivery by hand, when delivered, (b) in the case of delivery by mail, three
days after being deposited in the mails, postage prepaid, certified or
registered mail return receipt requested, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrower and the Lender, or to such other address as
may be hereafter notified thereby:
The Borrower: All American Semiconductor, Inc.
16115 Northwest 52nd Avenue
Miami, Florida 33014
Attention: Bruce M. Goldberg
Fax: (305) 624-5258
with a copy to:
Rubin Baum Levin Constant Friedman & Bilzin
2500 First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131
Attention: Alan Axelrod, Esq.
Fax: (305) 374-7593
The Lender: CIBC Inc.
425 Lexington Avenue
New York, New York 10017
Attention: Timothy E. Doyle
Fax: (212) 856-3991
with copies to:
CIBC Credit Administration
2 Paces West
Atlanta, Georgia 30339
Attention: Kim Perrone
Fax: (707) 319-4950
and
CIBC Wood Gundy Securities Corp.
425 Lexington Avenue
New York, New York 10017
Attention: Brian Gerson
Fax: (212) 856-3991
23
(c) NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of the Lender, any right,
remedy, power or privilege hereunder or under the Subsidiaries Guarantee shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
(d) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder, in the Subsidiaries Guarantee and
in any document, certificate or statement delivered pursuant hereto or thereto
or in connection herewith or therewith shall survive the execution and delivery
of this Note.
(e) PAYMENT OF EXPENSES AND TAXES. The Borrower agrees
(a) to pay or reimburse the Lender for all its reasonable out-of-pocket costs
and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Note, the
Subsidiaries Guarantee and any other documents prepared in connection herewith
or therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Lender, (b) to pay or reimburse the
Lender for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Note, the Subsidiaries
Guarantee and any such other documents, including, without limitation, the fees
and disbursements of counsel to the Lender, (c) to pay, indemnify, and hold the
Lender harmless from any and all administrative fees and any and all liabilities
with respect to, or resulting from, any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Note, the Subsidiaries
Guarantee and any such other documents, and (d) to pay, indemnify, and hold the
Lender harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Note, the
Subsidiaries Guarantee and any such other documents (all of the foregoing in
this clause (d), collectively, the "INDEMNIFIED LIABILITIES"), PROVIDED that the
Borrower shall have no obligation hereunder to the Lender with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of the Lender. The agreements in this subsection shall survive repayment of the
principal hereof and all other amounts payable hereunder.
(f) SUCCESSORS AND ASSIGNS. This Note shall be binding
upon and inure to the benefit of the Borrower, the Lender and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Note without the prior written consent
of the Lender.
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(g) COUNTERPARTS. This Note may be executed by one or
more of the parties hereto on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Note signed by all the parties shall be lodged with the Borrower and the Lender.
(h) SEVERABILITY. Any provision of this Note which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(i) INTEGRATION. This Note and the Subsidiaries
Guarantee represent the agreement of the Borrower and the Lender with respect to
the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Lender relative to subject matter hereof
not expressly set forth or referred to herein or in the Subsidiaries Guarantee.
(j) GOVERNING LAW. THIS NOTE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(k) SUBMISSION TO JURISDICTION; WAIVERS. The Borrower
hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Note and the
Subsidiaries Guarantee, or for recognition and enforcement of
any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may
be brought in such courts and waives any objection that it may
now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead
or claim the same;
(iii) agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof
by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to the Borrower at its address
set forth in subsection 7(b) hereof or at such other address
of which the Lender shall have been notified pursuant thereto;
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(iv) agrees that nothing herein shall affect the
right to effect service of process in any other manner
permitted by law or shall limit the right to sue in any other
jurisdiction; and
(v) waives, to the maximum extent not prohibited by
law, any right it may have to claim or recover in any legal
action or proceeding referred to in this subsection any
special, exemplary, punitive or consequential damages.
(l) ACKNOWLEDGEMENTS. The Borrower hereby acknowledges
that:
(i) it has been advised by counsel in the
negotiation, execution and delivery of this Note and the
Subsidiaries Guarantee;
(ii) the Lender has no fiduciary relationship with or
duty to the Borrower arising out of or in connection with this
Note or the Subsidiaries Guarantee, and the relationship
between the Lender and the Borrower in connection herewith or
therewith is solely that of debtor and creditor; and
(iii) no joint venture is created hereby or by the
Subsidiaries Guarantee or otherwise exists by virtue of the
transactions contemplated hereby or thereby between the Lender
and the Borrower.
(m) WAIVERS OF JURY TRIAL. THE BORROWER AND THE LENDER
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS NOTE OR THE SUBSIDIARIES GUARANTEE AND FOR ANY
COUNTERCLAIM THEREIN.
(n) WAIVER OF NOTICES. All parties now and hereafter
liable with respect to this Note, whether maker, principal, surety, guarantor,
endorser or otherwise, hereby waive presentment, demand, protest and all other
notices of any kind, except as specifically provided herein to the contrary.
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IN WITNESS WHEREOF, the Borrower has caused this Senior
Subordinated Promissory Note to be duly executed and delivered by its proper and
duly authorized officer as of the day and year first above written.
ALL AMERICAN SEMICONDUCTOR, INC.
By: /s/ HOWARD L. FLANDERS
---------------------------
Name: HOWARD L. FLANDERS
---------------------------
Title: V.P & CFO
---------------------------
Accepted and Agreed:
CIBC INC.
By: /s/ TIMOTHY E. DOYLE
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Name: TIMOTHY E. DOYLE
--------------------
Title: MANAGING DIRECTOR
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