Exhibit 10.1
CREDIT AGREEMENT
DATED AS OF MAY 14, 2003,
AMONG
ALL AMERICAN SEMICONDUCTOR, INC.,
THE LENDERS FROM TIME TO TIME PARTIES HERETO,
HARRIS TRUST AND SAVINGS BANK,
AS ADMINISTRATIVE AGENT,
AND
U.S. BANK NATIONAL ASSOCIATION,
AS CO-AGENT
TABLE OF CONTENTS
PAGE
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SECTION 1. THE CREDIT FACILITIES.............................................................................1
Section 1.1 Revolving Credit Commitments.........................................................1
Section 1.2 The Revolving Notes..................................................................2
Section 1.3 Letters of Credit....................................................................2
Section 1.4 Applicable Interest Rates............................................................5
Section 1.5 Minimum Borrowing Amounts; Maximum Eurodollar Loans..................................7
Section 1.6 Manner of Borrowing Loans and Designating Applicable Interest Rates..................7
Section 1.7 Interest Periods....................................................................10
Section 1.8 Maturity of Revolving Loans.........................................................11
Section 1.9 Payments............................................................................11
Section 1.10 Default Rate........................................................................12
Section 1.11 Funding Indemnity...................................................................13
Section 1.12 Commitment Terminations.............................................................13
Section 1.13 Substitution of Lenders.............................................................14
SECTION 2. FEES.............................................................................................15
Section 2.1 Fees................................................................................15
SECTION 3. PLACE AND APPLICATION OF PAYMENTS................................................................16
Section 3.1 Place and Application of Payments...................................................16
Section 3.2 Weekly Settlement...................................................................18
Section 3.3 Computation of Obligations Outstanding..............................................21
SECTION 4. THE COLLATERAL AND GUARANTIES....................................................................21
Section 4.1 Collateral..........................................................................21
Section 4.2 Collateral Proceeds.................................................................22
Section 4.3 Liens on Real Property..............................................................22
Section 4.4 Guaranties..........................................................................23
Section 4.5 Further Assurances; Designated Companies............................................23
SECTION 5. DEFINITIONS; INTERPRETATION......................................................................23
Section 5.1 Definitions.........................................................................23
Section 5.2 Interpretation......................................................................40
Section 5.3 Change in Accounting Principles.....................................................40
SECTION 6. REPRESENTATIONS AND WARRANTIES...................................................................40
Section 6.1 Organization and Qualification......................................................41
Section 6.2 Designated Companies................................................................41
Section 6.3 Authority and Validity of Obligations...............................................41
Section 6.4 Use of Proceeds; Margin Stock.......................................................42
Section 6.5 Financial Reports...................................................................42
Section 6.6 No Material Adverse Change..........................................................43
Section 6.7 Full Disclosure.....................................................................43
Section 6.8 Trademarks, Franchises, and Licenses................................................43
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Section 6.9 Governmental Authority and Licensing................................................43
Section 6.10 Good Title..........................................................................44
Section 6.11 Litigation and Other Controversies..................................................44
Section 6.12 Taxes...............................................................................44
Section 6.13 Approvals...........................................................................44
Section 6.14 Affiliate Transactions..............................................................45
Section 6.15 Investment Company; Public Utility Holding Company..................................45
Section 6.16 ERISA...............................................................................45
Section 6.17 Compliance with Laws................................................................45
Section 6.18 Other Agreements....................................................................45
Section 6.19 Solvency............................................................................45
Section 6.20 No Event of Default.................................................................46
Section 6.21 Business Plans......................................................................46
Section 6.22 Employee Controversies..............................................................46
Section 6.23 Environmental Matters...............................................................46
Section 6.24 Fees to Third Parties...............................................................47
Section 6.25 Subsidiaries; Joint Ventures; Partnerships..........................................47
SECTION 7. CONDITIONS PRECEDENT.............................................................................47
Section 7.1 All Credit Events...................................................................48
Section 7.2 Initial Credit Event................................................................48
SECTION 8. COVENANTS........................................................................................50
Section 8.1 Maintenance of Business.............................................................50
Section 8.2 Maintenance of Properties...........................................................51
Section 8.3 Taxes and Assessments...............................................................51
Section 8.4 Insurance...........................................................................51
Section 8.5 Financial Reports...................................................................52
Section 8.6 Inspection; Appraisals..............................................................55
Section 8.7 Borrowings and Guaranties...........................................................55
Section 8.8 Liens...............................................................................57
Section 8.9 Investments, Acquisitions, Loans and Advances.......................................59
Section 8.10 Mergers, Consolidations and Sales...................................................60
Section 8.11 Maintenance of Subsidiaries.........................................................61
Section 8.12 Dividends and Certain Other Restricted Payments.....................................61
Section 8.13 ERISA...............................................................................62
Section 8.14 Compliance with Laws................................................................62
Section 8.15 Burdensome Contracts With Affiliates................................................62
Section 8.16 No Changes in Fiscal Year...........................................................62
Section 8.17 Formation of Subsidiaries...........................................................63
Section 8.18 Change in the Nature of Business....................................................63
Section 8.19 Use of Loan Proceeds................................................................63
Section 8.20 No Restrictions.....................................................................63
Section 8.21 Subordinated Debt...................................................................63
Section 8.22 Financial Covenants.................................................................63
Section 8.23 Executive Compensation/Bonuses......................................................64
Section 8.24 Amendment of Certificate of Incorporation or By-Laws................................65
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Section 8.25 Inventory Purchases.................................................................65
Section 8.26 Operating Accounts..................................................................65
Section 8.27 Intellectual Property...............................................................65
SECTION 9. EVENTS OF DEFAULT AND REMEDIES...................................................................65
Section 9.1 Events of Default...................................................................65
Section 9.2 Non-Bankruptcy Defaults.............................................................68
Section 9.3 Bankruptcy Defaults.................................................................68
Section 9.4 Collateral for Undrawn Letters of Credit............................................69
Section 9.5 Expenses............................................................................69
SECTION 10. CHANGE IN CIRCUMSTANCES.........................................................................69
Section 10.1 Change of Law.......................................................................69
Section 10.2 Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR.......70
Section 10.3 Increased Cost and Reduced Return...................................................70
Section 10.4 Lending Offices.....................................................................72
Section 10.5 Discretion of Lender as to Manner of Funding........................................72
SECTION 11. THE ADMINISTRATIVE AGENT........................................................................72
Section 11.1 Appointment and Authorization of Administrative Agent...............................72
Section 11.2 Administrative Agent and its Affiliates.............................................73
Section 11.3 Action by Administrative Agent......................................................73
Section 11.4 Consultation with Experts...........................................................74
Section 11.5 Liability of Administrative Agent; Credit Decision..................................74
Section 11.6 Indemnity...........................................................................75
Section 11.7 Resignation of Administrative Agent and Successor Administrative Agent..............75
Section 11.8 L/C Issuer..........................................................................76
Section 11.9 Hedging Liability and Funds Transfer and Deposit Account Liability..................76
Section 11.10 Authorization to Release Liens and Limit Amount of Certain Claims...................76
Section 11.11 Proportionate Interest of Lenders under the Loan Documents..........................77
Section 11.12 Co-Agents...........................................................................77
SECTION 12. MISCELLANEOUS...................................................................................77
Section 12.1 Withholding Taxes...................................................................77
Section 12.2 No Waiver, Cumulative Remedies......................................................78
Section 12.3 Non-Business Days...................................................................79
Section 12.4 Documentary Taxes...................................................................79
Section 12.5 Survival of Representations.........................................................79
Section 12.6 Survival of Indemnities.............................................................79
Section 12.7 Sharing of Set-Off..................................................................79
Section 12.8 Notices.............................................................................80
Section 12.9 Counterparts........................................................................81
Section 12.10 Successors and Assigns..............................................................81
Section 12.11 Participants........................................................................81
Section 12.12 Assignments.........................................................................81
Section 12.13 Amendments..........................................................................83
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Section 12.14 Headings............................................................................83
Section 12.15 Costs and Expenses; Indemnification.................................................83
Section 12.16 Set-off.............................................................................84
Section 12.17 Entire Agreement....................................................................85
Section 12.18 Governing Law.......................................................................85
Section 12.19 Severability of Provisions..........................................................85
Section 12.20 Excess Interest.....................................................................85
Section 12.21 Construction........................................................................86
Section 12.22 Lenders' Obligations Several........................................................86
Section 12.23 Submission to Jurisdiction; Waiver of Jury Trial....................................86
Section 12.24 Confidentiality Agreements..........................................................87
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EXHIBITS AND SCHEDULES
Exhibit A -- Notice of Payment Request
Exhibit B -- Revolving Note
Exhibit C -- Borrowing Base Certificate
Exhibit D -- Compliance Certificate
Exhibit E -- Assignment and Acceptance
Schedule 1 -- Revolving Credit Commitments
Schedule 6.2 -- Designated Companies; Subsidiaries
Schedule 6.8 -- Intellectual Property
Schedule 6.22 -- Employee Controversies
Schedule 6.23 -- Environmental Matters
Schedule 8.7 -- Indebtedness
Schedule 8.8 -- Liens
Schedule 8.9 -- Investments
Schedule 8.15 -- Consulting and Management Fees
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CREDIT AGREEMENT
This Credit Agreement (as the same may be amended or modified
from time to time pursuant to the terms hereof, the "Agreement") is entered into
as of May 14, 2003, by and among All American Semiconductor, Inc., a Delaware
corporation (the "Borrower"), the several financial institutions from time to
time party to this Agreement, as Lenders, Harris Trust and Savings Bank, as
Administrative Agent as provided herein, and U.S. Bank National Association, as
Co-Agent as provided herein. All capitalized terms used herein without
definition shall have the same meanings herein as such terms are defined in
Section 5.1 hereof.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1.
THE CREDIT FACILITIES.
Section 1.1 Revolving Credit Commitments.
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Subject to the terms and conditions hereof, each Lender, by
its acceptance hereof, severally agrees to make a loan or loans (individually a
"Revolving Loan" and collectively the "Revolving Loans") to the Borrower from
time to time on a revolving basis up to the amount of such Lender's Revolving
Credit Commitment, subject to any reductions thereof pursuant to the terms
hereof, before the Termination Date. The sum of the aggregate principal amount
of the Revolving Loans and the L/C Obligations at any time outstanding shall not
exceed the lesser of (i) the aggregate amount of the Revolving Credit
Commitments in effect at such time and (ii) the Borrowing Base as then
determined and computed plus, in the Administrative Agent's sole discretion, any
Permitted Overadvances then in effect. Each Borrowing of Revolving Loans shall
be made ratably from the Lenders in proportion to their respective Revolver
Percentages. As provided in Section 1.6(a) hereof, the Borrower may elect that
each Borrowing of Revolving Loans be either Base Rate Loans or Eurodollar Loans.
Revolving Loans may be repaid and the principal amount thereof re-borrowed
before the Termination Date, subject to the terms and conditions hereof.
Notwithstanding any other provision of this Agreement to the contrary, the
Administrative Agent shall have the right from time to time to establish
reserves against the amount of Revolving Credit which the Borrower may otherwise
request hereunder in such amounts and with respect to such matters (including
without limitation reserves with respect to the Funds Transfer and Deposit
Account Liability and the Hedging Liability) as the Administrative Agent shall
deem necessary or appropriate in its reasonable business judgment. The
Administrative Agent shall provide the Borrower and each Lender with notice of
the imposition of any new categories of reserves as soon as is reasonably
practicable thereafter. The amount of such reserves shall be subtracted from the
Borrowing Base when calculating the amount of availability under the Revolving
Credit Commitments. By way of example and not by way of limitation, the
Administrative Agent may establish reserves with respect to matters such as (i)
amounts owing by any Designated Company to any Person to the extent secured by a
Lien
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on property of such Designated Company (other than Liens described in Sections
8.8(a), (c) (solely with respect to landlord's liens), (e), (f), (g), (h) and
(j)), or that would otherwise adversely affect Lenders' rights in the
Collateral, (ii) other matters adversely affecting Lenders' rights in or access
to the Collateral, (iii) up to three months' rental and other charges relating
to leased locations of Inventory as to which a reasonably satisfactory
landlord's waiver has not been delivered to the Administrative Agent and up to
three months' charges relating to offsite warehouse locations of Inventory as to
which a reasonably satisfactory warehouseman's waiver has not been delivered to
the Administrative Agent, in each case at which more than $250,000 of Inventory
is at any time located and (iv) other sums chargeable to the Borrower as
Revolving Loans under this Agreement.
Section 1.2 The Revolving Notes.
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The Revolving Loans made to the Borrower by a Lender shall be
evidenced by a single promissory note of the Borrower issued to such Lender in
the form of Exhibit B hereto. Each such promissory note, as modified, amended or
supplemented from time to time, is hereinafter referred to as a "Revolving Note"
and collectively such promissory notes are referred to as the "Revolving Notes".
Each Lender shall record on its books and records or on a schedule to its
appropriate Revolving Note the amount of each Revolving Loan advanced, continued
or converted by it, all payments of principal and interest and the principal
balance from time to time outstanding thereon, the type of such Revolving Loan,
and, for any Eurodollar Loan, the Interest Period and the interest rate
applicable thereto. The record thereof, whether shown on such books and records
of a Lender or on a schedule to the relevant Revolving Note, shall be prima
facie evidence as to all such matters; provided, however, that the failure of
any Lender to record any of the foregoing or any error in any such record shall
not limit or otherwise affect the obligation of the Borrower to repay all
Revolving Loans made to it hereunder together with accrued interest thereon. At
the request of any Lender and upon such Lender tendering to the Borrower the
appropriate Revolving Note to be replaced, the Borrower shall furnish a new
Revolving Note to such Lender to replace any outstanding Revolving Note.
Section 1.3 Letters of Credit.
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(a) General Terms. Subject to the terms and conditions
hereof, as part of the Revolving Credit, the L/C Issuer shall issue standby and
commercial letters of credit (each a "Letter of Credit") for the Borrower's
account in an aggregate undrawn face amount at any one time issued and not
expired up to the amount of the L/C Sublimit. Each Letter of Credit shall be
issued by the L/C Issuer, but each Lender shall be obligated to reimburse the
L/C Issuer for such Lender's Revolver Percentage of the amount of each drawing
thereunder and, accordingly, each Letter of Credit shall constitute usage of the
Revolving Credit Commitment of each Lender pro rata in an amount equal to its
Revolver Percentage of the L/C Obligations then outstanding.
(b) Applications. At any time before the Termination
Date, the L/C Issuer shall, at the request of the Borrower, issue one or more
Letters of Credit, in a form satisfactory to the L/C Issuer, with expiration
dates no later than the earlier of 12 months
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from the date of issuance (or be cancelable not later than 12 months from the
date of issuance and each renewal) or the Termination Date, in an aggregate face
amount as set forth above, upon the receipt of an application duly executed by
the Borrower for the relevant Letter of Credit in the form then customarily
prescribed by the L/C Issuer for the Letter of Credit requested (each an
"Application"). Notwithstanding anything contained in any Application to the
contrary: (i) the Borrower shall pay fees in connection with each Letter of
Credit as set forth in Section 2.1 hereof, (ii) except as otherwise provided in
Section 1.9 hereof, before the occurrence of an Event of Default, the L/C Issuer
will not call for the funding by the Borrower of any amount under a Letter of
Credit before being presented with a drawing thereunder, and (iii) if the L/C
Issuer is not timely reimbursed for the amount of any drawing under a Letter of
Credit on the date such drawing is paid (including without limitation pursuant
to a Borrowing hereunder after notice to the Borrower as provided in Section
1.3(c), the Borrower's obligation to reimburse the L/C Issuer for the amount of
such drawing shall bear interest (which the Borrower hereby promises to pay)
from and after the date such drawing is paid at a rate per annum equal to the
sum of 2.0% plus the Applicable Margin plus the Base Rate from time to time in
effect (computed on the basis of a year of 360 days and the actual number of
days elapsed). If the L/C Issuer issues any Letter of Credit with an expiration
date that is automatically extended unless the L/C Issuer gives notice that the
expiration date will not so extend beyond its then scheduled expiration date,
the L/C Issuer will give such notice of non-renewal before the time necessary to
prevent such automatic extension if before such required notice date: (i) the
expiration date of such Letter of Credit if so extended would be after the
Termination Date, (ii) the Revolving Credit Commitments have been terminated, or
(iii) a Default or an Event of Default exists and the Administrative Agent, at
the request or with the consent of the Required Lenders, has given the L/C
Issuer instructions not to so permit the extension of the expiration date of
such Letter of Credit. The L/C Issuer agrees to issue amendments to the
Letter(s) of Credit increasing the amount, or extending the expiration date,
thereof at the request of the Borrower subject to the conditions of Section 7
hereof and the other terms of this Section 1.3.
(c) The Reimbursement Obligations. Subject to Section
1.3(b) hereof, the obligation of the Borrower to reimburse the L/C Issuer for
all drawings under a Letter of Credit (a "Reimbursement Obligation") shall be
governed by the Application related to such Letter of Credit, except that
reimbursement shall be made by no later than 1:30 p.m. (Chicago time) on the
date when each drawing is paid if the Borrower has been informed of such drawing
by the L/C Issuer on or before 11:30 a.m. (Chicago time) on the date when such
drawing is paid or, if notice of such drawing is given to the Borrower after
11:30 a.m. (Chicago time) on the date when such drawing is paid, by 1:30 p.m.
(Chicago time) on the next Business Day thereafter, in immediately available
funds at the Administrative Agent's principal office in Chicago, Illinois or
such other office as the Administrative Agent may designate in writing to the
Borrower (who shall thereafter cause to be distributed to the L/C Issuer such
amount(s) in like funds). If the Borrower does not make any such reimbursement
payment on the date due and the Participating Lenders fund their participations
therein in the manner set forth in Section 1.3(d) below, then all payments
thereafter received by the Administrative Agent in discharge of any of the
relevant Reimbursement Obligations shall be distributed in accordance with
Section 1.3(d) below.
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(d) The Participating Interests. Each Lender (other than
the Lender then acting as L/C Issuer in issuing the relevant Letters of Credit),
by its acceptance hereof, severally agrees to purchase from the L/C Issuer, and
the L/C Issuer hereby agrees to sell to each such Lender (a "Participating
Lender"), an undivided percentage participating interest (a "Participating
Interest"), to the extent of its Revolver Percentage, in each Letter of Credit
issued by, and each Reimbursement Obligation owed to, the L/C Issuer. Upon any
failure by the Borrower to pay any Reimbursement Obligation at the time required
on the date the related drawing is paid, as set forth in Section 1.3(c) above,
or if the L/C Issuer is required at any time to return to the Borrower or to a
trustee, receiver, liquidator, custodian or other Person any portion of any
payment of any Reimbursement Obligation, each Participating Lender shall, not
later than the Business Day it receives a certificate in the form of Exhibit A
hereto from the L/C Issuer (with a copy to the Administrative Agent) to such
effect, if such certificate is received before 1:30 p.m. (Chicago time), or not
later than 1:30 p.m. (Chicago time) the following Business Day, if such
certificate is received after such time, pay to the Administrative Agent for the
account of the L/C Issuer an amount equal to such Participating Lender's
Revolver Percentage of such unpaid or recaptured Reimbursement Obligation, and
such Participating Lender shall fund its Revolver Percentage thereof together
with interest on such amount accrued from the date the related payment was made
by the L/C Issuer to the date of such payment by such Participating Lender at a
rate per annum equal to: (i) from the date the related payment was made by the
L/C Issuer to the date 2 Business Days after payment by such Participating
Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from
the date 2 Business Days after the date such payment is due from such
Participating Lender to the date such payment is made by such Participating
Lender, the Base Rate in effect for each such day. Each such Participating
Lender shall thereafter be entitled to receive its Revolver Percentage of each
payment received in respect of the relevant Reimbursement Obligation and of
interest paid thereon, with the L/C Issuer retaining its Revolver Percentage as
a Lender hereunder.
The several obligations of the Participating Lenders to the
L/C Issuer under this Section 1.3 shall be absolute, irrevocable and
unconditional under any and all circumstances whatsoever and shall not be
subject to any set-off, counterclaim or defense to payment which any
Participating Lender may have or have had against the Borrower, the L/C Issuer,
the Administrative Agent, any Lender or any other Person whatsoever. Without
limiting the generality of the foregoing, such obligations shall not be affected
by any Default or Event of Default or by any reduction or termination of any
Revolving Credit Commitment of any Lender, and each payment by a Participating
Lender under this Section 1.3 shall be made without any offset, abatement,
withholding or reduction whatsoever.
(e) Indemnification. The Participating Lenders shall, to
the extent of their respective Revolver Percentages, indemnify the L/C Issuer
(to the extent not reimbursed by the Borrower) against any cost, expense
(including reasonable counsel fees and disbursements), claim, demand, action,
loss or liability (except such as result from the L/C Issuer's gross negligence
or willful misconduct) that the L/C Issuer may suffer or incur in connection
with any Letter of Credit issued by it. The obligations of the Participating
Lenders under this Section 1.3(e) and all other parts of this Section 1.3 shall
survive
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termination of this Agreement and of all Applications, Letters of Credit, and
all drafts and other documents presented in connection with drawings thereunder.
(f) Manner of Obtaining Letters of Credit. The Borrower
shall provide at least two (2) Business Days' advance written notice to the
Administrative Agent (by 12:00 noon (Chicago time)) of each request for the
issuance of a Letter of Credit, such notice in each case to be accompanied by an
Application for such Letter of Credit properly completed and executed by the
Borrower and, in the case of an extension or an increase in the amount of a
Letter of Credit, a written request therefor, in a form acceptable to the
Administrative Agent, in each case, together with the fees called for by this
Agreement. The Administrative Agent shall promptly notify the L/C Issuer of the
Administrative Agent's receipt of each such notice and the L/C Issuer shall
promptly notify the Administrative Agent and the Lenders of the issuance of the
Letter of Credit so requested.
Section 1.4 Applicable Interest Rates.
-------------------------
(a) Base Rate Loans. Each Base Rate Loan made or
maintained by a Lender shall bear interest during each Interest Period it is
outstanding (computed on the basis of a year of 360 days and the actual days
elapsed) on the unpaid principal amount thereof from the date such Base Rate
Loan is advanced, continued or created by conversion from a Eurodollar Loan
until maturity (whether by acceleration or otherwise) at a rate per annum equal
to the sum of the Applicable Margin plus the Base Rate from time to time in
effect, payable on the first Business Day following the last day of its Interest
Period and at maturity (whether by acceleration or otherwise).
"Base Rate" means for any day the greater of: (i) the rate of
interest announced or otherwise established by the Administrative Agent from
time to time as its prime commercial rate, as in effect on such day, with any
change in the Base Rate resulting from a change in said prime commercial rate to
be effective as of the date of the relevant change in said prime commercial rate
(it being acknowledged and agreed that such rate may not be the Administrative
Agent's best or lowest rate) and (ii) the sum of (x) the rate determined by the
Administrative Agent to be the average (rounded upward, if necessary, to the
next higher 1/100 of 1%) of the rates per annum quoted to the Administrative
Agent at approximately 10:00 a.m. (Chicago time) (or as soon thereafter as is
practicable) on such day (or, if such day is not a Business Day, on the
immediately preceding Business Day) by two or more Federal funds brokers
selected by the Administrative Agent for sale to the Administrative Agent at
face value of Federal funds in the secondary market in an amount equal or
comparable to the principal amount of Revolving Loans owed to the Administrative
Agent or its Affiliate for which such rate is being determined, plus (y) 1/2 of
1%.
(b) Eurodollar Loans. Each Eurodollar Loan made or
maintained by a Lender shall bear interest during each Interest Period it is
outstanding (computed on the basis of a year of 360 days and actual days
elapsed) on the unpaid principal amount thereof from the date such Eurodollar
Loan is advanced, continued or created by conversion from a Base Rate Loan until
maturity (whether by acceleration or otherwise) at a rate per annum equal to the
sum of the Applicable Margin plus the Adjusted LIBOR applicable for such
Interest
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Period, payable on the last day of the Interest Period and at maturity (whether
by acceleration or otherwise).
"Adjusted LIBOR" means, for any Borrowing of Eurodollar Loans,
a rate per annum determined in accordance with the following formula:
Adjusted LIBOR = LIBOR
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1-Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means, for any Borrowing of
Eurodollar Loans, the daily average for the applicable Interest Period of the
maximum rate, expressed as a decimal, at which reserves (including, without
limitation, any supplemental, marginal, and emergency reserves) are imposed
during such Interest Period by the Board of Governors of the Federal Reserve
System (or any successor) on "eurocurrency liabilities", as defined in such
Board's Regulation D (or in respect of any other category of liabilities that
includes deposits by reference to which the interest rate on Eurodollar Loans is
determined or any category of extensions of credit or other assets that include
loans by non-United States offices of any Lender to United States residents),
subject to any amendments of such reserve requirement by such Board or its
successor, taking into account any transitional adjustments thereto. For
purposes of this definition, the Eurodollar Loans shall be deemed to be
"eurocurrency liabilities" as defined in Regulation D without benefit or credit
for any prorations, exemptions or offsets under Regulation D.
"LIBOR" means, for an Interest Period for a Borrowing of
Eurodollar Loans, (a) the LIBOR Index Rate for such Interest Period, if such
rate is available, and (b) if the LIBOR Index Rate cannot be determined, the
arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) at which deposits in U.S. Dollars in
immediately available funds are offered to the Administrative Agent at 11:00
a.m. (London, England time) 2 Business Days before the beginning of such
Interest Period by 3 or more major banks in the interbank eurodollar market
selected by the Administrative Agent for delivery on the first day of and for a
period equal to such Interest Period and in an amount equal or comparable to the
principal amount of the Eurodollar Loan scheduled to be made by the
Administrative Agent as part of such Borrowing.
"LIBOR Index Rate" means, for any Interest Period, the rate
per annum (rounded upwards, if necessary, to the next higher one
hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a
period equal to such Interest Period, which appears on the Telerate Page 3750 as
of 11:00 a.m. (London, England time) on the day 2 Business Days before the
commencement of such Interest Period.
"Telerate Page 3750" means the display designated as "Page
3750" on the Telerate Service (or such other page as may replace Page 3750 on
that service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits).
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(c) Rate Determinations. The Administrative Agent shall
determine each interest rate applicable to the Revolving Loans and the
Reimbursement Obligations hereunder, and its determination thereof shall be
conclusive and binding except in the case of manifest error.
Section 1.5 Minimum Borrowing Amounts; Maximum
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Eurodollar Loans.
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There shall be no minimum Borrowing amount for Base Rate Loans
hereunder. Each Borrowing of Eurodollar Loans advanced, continued or converted
under the Revolving Credit shall be in an amount equal to $1,000,000 or such
greater amount which is an integral multiple of U.S. $100,000. Without the
Administrative Agent's consent, there shall not be more than five (5) Borrowings
of Eurodollar Loans outstanding under the Revolving Credit at any one time.
Section 1.6 Manner of Borrowing Loans and Designating
-----------------------------------------
Applicable Interest Rates.
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(a) Notice to the Administrative Agent. The Borrower
shall give notice to the Administrative Agent by no later than 1:00 p.m.
(Chicago time): (i) at least 3 Business Days before the date on which the
Borrower requests the Lenders to advance a Borrowing of Eurodollar Loans and
(ii) on the date the Borrower requests the Lenders to advance a Borrowing of
Base Rate Loans. The Loans included in each Borrowing shall bear interest
initially at the type of rate specified in such notice of a new Borrowing.
Thereafter, subject to the terms and conditions hereof, the Borrower may from
time to time elect to change or continue the type of interest rate borne by each
Borrowing or, subject to Section 1.5's minimum amount requirement for each
outstanding Borrowing of Eurodollar Loans, a portion thereof, as follows: (i) if
such Borrowing is of Eurodollar Loans, on the last day of the Interest Period
applicable thereto, the Borrower may continue part or all of such Borrowing as
Eurodollar Loans or convert part or all of such Borrowing into Base Rate Loans
or (ii) if such Borrowing is of Base Rate Loans, on any Business Day, the
Borrower may convert all or part of such Borrowing into Eurodollar Loans for an
Interest Period or Interest Periods specified by the Borrower. The Borrower
shall give all such notices requesting the advance, continuation or conversion
of a Borrowing to the Administrative Agent by telephone or email (which notice
shall be irrevocable once given). Notice of the continuation of a Borrowing of
Eurodollar Loans for an additional Interest Period or of the conversion of part
or all of a Borrowing of Base Rate Loans into Eurodollar Loans must be given by
no later than 1:00 p.m. (Chicago time) at least 3 Business Days before the date
of the requested continuation or conversion. All such notices concerning the
advance, continuation or conversion of a Borrowing shall specify the date of the
requested advance, continuation or conversion of a Borrowing (which shall be a
Business Day), the amount of the requested Borrowing to be advanced, continued
or converted, the type of Revolving Loans to comprise such new, continued or
converted Borrowing and, if such Borrowing is to be comprised of Eurodollar
Loans, the Interest Period applicable thereto. No advance, continuation or
conversion of a Borrowing of Eurodollar Loans may be made if a Default or Event
of Default is then in existence. The Borrower agrees that the Administrative
Agent
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may rely on any such telephonic or email notice given by any person the
Administrative Agent in good faith reasonably believes is an Authorized
Representative without the necessity of independent investigation, and in the
event any such notice by telephone conflicts with any email confirmation such
telephonic notice shall govern if the Administrative Agent has acted in reliance
thereon.
(b) Notice to the Lenders. The Administrative Agent shall
give prompt telephonic or telecopy notice to the Lenders of any notice from the
Borrower received pursuant to Section 1.6(a) above and, if such notice requests
the Lenders to make Eurodollar Loans, the Administrative Agent shall give notice
to the Borrower and the Lenders by like means of the interest rate applicable
thereto promptly after the Administrative Agent has made such determination.
(c) Borrower's Failure to Notify; Automatic Continuations
and Conversions. Any outstanding Borrowing of Base Rate Loans shall
automatically be continued for an additional Interest Period on the last day of
its then current Interest Period unless the Borrower has notified the
Administrative Agent within the period required by Section 1.6(a) that the
Borrower intends to convert such Borrowing, subject to Section 7.1 hereof, into
a Borrowing of Eurodollar Loans or such Borrowing is prepaid in accordance with
Section 1.9(a). If the Borrower fails to give notice pursuant to Section 1.6(a)
above of the continuation or conversion of any outstanding principal amount of a
Borrowing of Eurodollar Loans before the last day of its then current Interest
Period within the period required by Section 1.6(a) or, whether or not such
notice has been given, one or more of the conditions set forth in Section 7.1
for the continuation or conversion of a Borrowing of Eurodollar Loans would not
be satisfied, and such Borrowing is not prepaid in accordance with Section
1.9(a), such Borrowing shall automatically be converted into a Borrowing of Base
Rate Loans. In the event the Borrower fails to give notice pursuant to Section
1.6(a) above of a Borrowing equal to the amount of a Reimbursement Obligation
and has not notified the Administrative Agent by 1:00 p.m. (Chicago time) on the
day such Reimbursement Obligation becomes due that it intends to repay such
Reimbursement Obligation through funds not borrowed under this Agreement, the
Borrower shall be deemed to have requested a Borrowing of Base Rate Loans under
the Revolving Credit on such day in the amount of the Reimbursement Obligation
then due, which Borrowing shall be applied to pay the Reimbursement Obligation
then due.
(d) Authorized Advances. The Borrower hereby irrevocably
authorizes the Administrative Agent and the Lenders to make disbursements of
Revolving Loans on the Borrower's behalf on each Business Day on and after such
time, if any, as the Borrower establishes controlled disbursement accounts with
the Administrative Agent, in each case in an amount equal to the lesser of (i)
the amount available to be borrowed by the Borrower on such Business Day under
Section 1.1 and (ii) the Borrower's cash needs on such Business Day based on the
aggregate face amount of checks clearing the Borrower's account on such Business
Day and the aggregate amount of wire transfers and ACH transactions clearing the
Borrower's account on such Business Day and of which wire transfers and ACH
transactions the Administrative Agent has received prior oral or written notice
from the Borrower (collectively, the "Borrower's Cash Requirements"). The
Administrative Agent and each
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Lender hereby agrees to make such Revolving Loans at such times, so long as all
applicable conditions to making such Revolving Loans contained in this Agreement
have been satisfied. All such Revolving Loans shall be disbursed by the
Administrative Agent, on behalf of the Lenders, to the Borrower's general
operating account described in Section 1.6(e). The Borrower, the Administrative
Agent and the Lenders agree that the foregoing authorization shall be deemed to
be a continuing request by the Borrower for the advance by the Administrative
Agent, on behalf of the Lenders, of Revolving Loans, that is remade on each
Business Day on which the amount of the Borrower's Cash Requirements is greater
than zero. Thus, each advance by the Administrative Agent, on behalf of the
Lenders, under this Section 1.6(d) shall be deemed to have been made in response
to a request therefor by the Borrower. No telephonic or written request for
advances shall be required in order to authorize the Administrative Agent, on
behalf of the Lenders, to make the advances described in this Section 1.6(d).
Each Borrowing made under this Section 1.6(d) shall be a Base Rate Loan.
(e) Disbursement of Revolving Loans. Not later than 1:00
p.m. (Chicago time) on the date of any requested advance of a new Borrowing,
subject to Section 7 hereof, each Lender shall make available its Revolving Loan
comprising part of such Borrowing in funds immediately available at the
principal office of the Administrative Agent in Chicago, Illinois. The
Administrative Agent shall make the proceeds of each new Borrowing available to
the Borrower at the Administrative Agent's principal office in Chicago,
Illinois, by depositing such proceeds to the credit of the Borrower's general
operating account with the Administrative Agent numbered 166-106-5, in
immediately available funds, upon receipt by the Administrative Agent from each
Lender of its Revolver Percentage of such Borrowing.
(f) The Borrower hereby irrevocably authorize
Administrative Agent and the Lenders to make Revolving Loans from time to time
hereunder for payment of any Obligation then due and payable (whether such
Obligation is for interest then due on a Loan, reimbursement under an
Application or otherwise), and any such Revolving Loan may be made without
regard to the provisions of Section 7 hereof. In the event any such Revolving
Loans are made under this Section 1.6(f), the Administrative Agent shall provide
the Borrower with notice thereof as soon as reasonably practicable thereafter.
The Borrower acknowledges and agrees, however, that neither the Administrative
Agent nor the Lenders shall be under any obligation to make a Revolving Loan
under this Section 1.6(f), and neither the Administrative Agent nor any Lender
shall incur any liability to the Borrower or any other Person for refusing to
make a Revolving Loan under this Section 1.6(f).
(g) Administrative Agent Reliance on Lender Funding.
Unless the Administrative Agent shall have been notified by a Lender prior to
(or, in the case of a Borrowing of Base Rate Loans, by 1:00 p.m. (Chicago time)
on) the date on which such Lender is scheduled to make payment to the
Administrative Agent of the proceeds of a Revolving Loan (which notice shall be
effective upon receipt) that such Lender does not intend to make such payment,
the Administrative Agent may assume that such Lender has made such payment when
due and the Administrative Agent may in reliance upon such assumption (but shall
not be required to) make available to the Borrower the proceeds of the Revolving
Loan to be made by such Lender and, if any Lender has not in fact made such
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payment to the Administrative Agent, such Lender shall, on demand, pay to the
Administrative Agent, the amount made available to the Borrower attributable to
such Lender together with interest thereon in respect of each day during the
period commencing on the date such amount was made available to the Borrower and
ending on (but excluding) the date such Lender pays such amount to the
Administrative Agent, at a rate per annum equal to: (i) from the date the
related advance was made to the date 2 Business Days after payment by such
Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from
the date 2 Business Days after the date such payment is due from such Lender to
the date such payment is made by such Lender, the Base Rate in effect for each
such day. If such amount is not received from such Lender by the Administrative
Agent immediately upon demand, the Borrower will, on demand, repay to the
Administrative Agent, the proceeds of the Revolving Loan attributable to such
Lender with interest thereon at a rate per annum equal to the interest rate
applicable to the relevant Revolving Loan, but without such payment being
considered a payment or prepayment of a Revolving Loan under Section 1.11 hereof
so that the Borrower will have no liability under such Section with respect to
such payment. The Borrower shall retain such other legal and equitable rights
and remedies against such Lender as are available to it under applicable law.
Section 1.7 Interest Periods.
----------------
As provided in Section 1.6(a) hereof, at the time of each
request to advance, continue or create by conversion a Borrowing of Eurodollar
Loans, the Borrower shall select an Interest Period applicable to such Loans
from among the available options. The term "Interest Period" means the period
commencing on the date a Borrowing of Loans is advanced, continued or created by
conversion and ending: (a) in the case of Base Rate Loans, on the last day of
each calendar month in which such Borrowing is advanced, continued or created by
conversion (or on the last day of the following calendar month if such Loan is
advanced, continued or created by conversion on the last day of a calendar
month) and (b) in the case of a Eurodollar Loan, 1, 2 or 3 months thereafter;
provided, however, that:
(i) any Interest Period for a Borrowing of
Revolving Loans consisting of Base Rate Loans that otherwise would end
after the Termination Date shall end on the Termination Date;
(ii) no Interest Period with respect to any
portion of the Revolving Loans shall extend beyond the Termination
Date;
(iii) whenever the last day of any Interest Period
would otherwise be a day that is not a Business Day, the last day of
such Interest Period shall be extended to the next succeeding Business
Day, provided that, if such extension would cause the last day of an
Interest Period for a Borrowing of Eurodollar Loans to occur in the
following calendar month, the last day of such Interest Period shall be
the immediately preceding Business Day; and
(iv) for purposes of determining an Interest
Period for a Borrowing of Eurodollar Loans, a month means a period
starting on one day in a calendar month
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and ending on the numerically corresponding day in the next calendar
month; provided, however, that if there is no numerically corresponding
day in the month in which such an Interest Period is to end or if such
an Interest Period begins on the last Business Day of a calendar month,
then such Interest Period shall end on the last Business Day of the
calendar month in which such Interest Period is to end.
Section 1.8 Maturity of Revolving Loans.
---------------------------
Each Revolving Loan, both for principal and interest not
sooner paid, shall mature and become due and payable by the Borrower on the
Termination Date.
Section 1.9 Payments.
--------
(a) Optional. The Borrower may prepay in whole or in part
(but, if in part, then in an amount such that the minimum amount required for a
Borrowing pursuant to Section 1.5 hereof remains outstanding) any Borrowing at
any time, such prepayment to be made by the payment of the principal amount to
be prepaid and, in the case of any Eurodollar Loans, accrued interest thereon to
the date fixed for prepayment plus any amounts due the Lenders under Section
1.11 hereof.
(b) Mandatory. (i) All proceeds of Collateral, including
without limitation, payments in respect of Receivables, shall be applied to the
Obligations in the manner described in Section 3.1 hereof, immediately upon
receipt thereof by the Administrative Agent in the Concentration Account as
provided in Section 4.2 hereof.
(ii) If any Designated Company shall at any time
or from time to time suffer an Event of Loss relating to any Property,
then (x) the Borrower shall promptly notify the Administrative Agent of
such Event of Loss (including the amount of the estimated Net Cash
Proceeds to be received by the applicable Designated Company in respect
thereof) and (y) promptly upon receipt by a Designated Company of the
Net Cash Proceeds of such Event of Loss, the Borrower shall repay the
outstanding Obligations in an aggregate amount equal to 100% of the
amount of all such Net Cash Proceeds. No such prepayment shall reduce
the amount of the Revolving Credit Commitments.
(iii) If any Designated Company shall at any time
or from time to time make a Disposition of Property, other than (a)
sale of Inventory in the ordinary course of business or (b) a disposal
of Property permitted under Section 8.10 as to which no consideration
is received by such Designated Company in connection with such
disposal, then (I) the Borrower shall promptly notify the
Administrative Agent of such Disposition and (II) promptly upon receipt
by a Designated Company of the Net Cash Proceeds of such Disposition,
the Borrower shall repay the outstanding Obligations in an aggregate
amount equal to 100% of the amount of such Net Cash
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Proceeds. No such prepayment shall reduce the amount of the Revolving
Credit Commitments.
(iv) The Borrower shall, on each date the
Revolving Credit Commitments are reduced pursuant to Section 1.12
hereof, prepay the Revolving Loans and, if necessary, pre-fund the L/C
Obligations by the amount, if any, necessary to reduce the sum of the
aggregate principal amount of Revolving Loans and L/C Obligations then
outstanding to the amount to which the Revolving Credit Commitments
have been so reduced.
(v) If at any time the sum of the unpaid
principal balance of the Revolving Loans and L/C Obligations and any
reserves taken pursuant to Section 1.1 then outstanding shall be in
excess of the Borrowing Base plus any Permitted Overadvances then in
effect as then determined and computed, the Borrower shall immediately
and without notice or demand pay over the amount of the excess to the
Administrative Agent for the ratable account of the Lenders as and for
a mandatory prepayment on such Obligations, with each such prepayment
first to be applied to the Revolving Loans until payment in full
thereof with any remaining balance to be held by the Administrative
Agent, for the ratable benefit of the Lenders, in a Collateral Account
as security for the Obligations owing with respect to the Letters of
Credit.
(vi) Unless the Borrower otherwise directs,
repayments of Loans under this Section 1.9(b) shall be applied first to
Borrowings of Base Rate Loans until payment in full thereof, with any
balance applied to Borrowings of Eurodollar Loans in the temporal order
in which their Interest Periods expire, but subject to Section 3.1
hereof. Each prepayment of Loans under this Section 1.9(b) shall be
made by the payment of the principal amount to be prepaid and, in the
case of any Eurodollar Loans, accrued interest thereon to the date
fixed for prepayment plus any amounts due the Lenders under Section
1.11 hereof. Each pre-funding of L/C Obligations shall be made in
accordance with Section 9.4 hereof.
(c) The Administrative Agent will promptly advise each
Lender of any notice of prepayment it receives from the Borrower. Any amount of
Revolving Loans paid or prepaid before the Termination Date may, subject to the
terms and conditions of this Agreement, be borrowed, repaid and borrowed again.
Section 1.10 Default Rate.
------------
Notwithstanding anything to the contrary contained in Section
1.4 hereof, while any Event of Default exists or after acceleration, the
Borrower shall pay interest (after as well as before entry of judgment thereon
to the extent permitted by law) on the principal amount of all Obligations owing
by it at a rate per annum equal to:
(a) for any Base Rate Loan, the sum of 2.0% plus the
Applicable Margin plus the Base Rate from time to time in effect; and
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(b) for any Eurodollar Loan, the sum of 2.0% plus the
rate of interest in effect thereon at the time of such default until the end of
the Interest Period applicable thereto and, thereafter, at a rate per annum
equal to the sum of 2.0% plus the Applicable Margin for Base Rate Loans plus the
Base Rate from time to time in effect.
Section 1.11 Funding Indemnity.
-----------------
If any Lender shall incur any loss, cost or expense
(including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or re-employment of deposits or other funds acquired by such
Lender to fund or maintain any Eurodollar Loan or the relending or reinvesting
of such deposits or amounts paid or prepaid to such Lender) as a result of:
(a) any payment, prepayment or conversion of a Eurodollar
Loan on a date other than the last day of its Interest Period,
(b) any failure (because of a failure to meet the
conditions of Section 7 or otherwise) by the Borrower to borrow or continue a
Eurodollar Loan, or to convert a Base Rate Loan into a Eurodollar Loan, on the
date specified in a notice given pursuant to Section 1.6(a) hereof,
(c) any failure by the Borrower to make any payment of
principal on any Eurodollar Loan when due (whether by acceleration or
otherwise), or
(d) any acceleration of the maturity of a Eurodollar Loan
as a result of the occurrence of any Event of Default hereunder,
then, upon the demand of such Lender, the Borrower shall pay to such Lender such
amount as will reimburse such Lender for such loss, cost or expense. If any
Lender makes such a claim for compensation, it shall provide to the Borrower,
with a copy to the Administrative Agent, a certificate setting forth the amount
of such loss, cost or expense in reasonable detail and the amounts shown on such
certificate shall be conclusive if reasonably determined.
Section 1.12 Commitment Terminations.
-----------------------
(a) The Borrower shall have the right at any time and
from time to time, upon 5 Business Days prior written notice to the
Administrative Agent, to terminate the Revolving Credit Commitments issued to it
in whole or in part, any partial termination to be (i) in an amount not less
than $1,000,000 and (ii) allocated ratably among the Lenders in proportion to
their respective Revolver Percentages thereto, provided that (a) the Revolving
Credit Commitments may not be reduced below $30,000,000 in the aggregate and (b)
the Revolving Credit Commitments may not be reduced to an amount less than the
sum of the aggregate principal amount of Revolver Loans and L/C Obligations then
outstanding. Any termination or reduction of the Revolving Credit Commitments
below the L/C Sublimit then in effect shall reduce the L/C Sublimit by a like
amount. The Administrative Agent shall give prompt notice to each Lender of any
such termination or reductions of the Revolving Credit Commitments.
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(b) On the effective date of any termination of all of
the Revolving Credit Commitments and prepayment of all of the Obligations, if
such termination and prepayment occurs prior to May 14, 2005, the Borrower shall
pay a prepayment premium to the Administrative Agent for the ratable benefit of
the Lenders in proportion to their respective Revolver Percentages of the
Revolving Credit Commitments, as liquidated damages for the loss of bargain and
not as a penalty, in an amount equal to the percentage set forth below of the
amount of the relevant Revolving Credit Commitments:
PREPAYMENT PREMIUM
SHALL BE THE FOLLOWING
PERCENTAGE OF THE
IF PREPAYMENT OCCURS DURING THE PERIOD REVOLVING CREDIT
COMMITMENTS
FROM AND INCLUDING TO AND INCLUDING
The date hereof May 14, 2004 2.0%
May 15, 2004 May 14, 2005 1.0%
(c) Any termination of the Revolving Credit Commitments
pursuant to this Section 1.12 may not be reinstated.
Section 1.13 Substitution of Lenders.
-----------------------
Upon the receipt by the Borrower of (a) a claim from any
Lender for compensation under Section 10.1 or 12.1 hereof or (b) in the event
any Lender is in default in any material respect with respect to its obligations
under the Loan Documents or (c) in the event any Lender refuses to grant a
requested amendment or waiver under Section 12.13 hereof after receiving a
written request therefor from the Borrower which is otherwise consented to by
the Required Lenders (any such Lender referred to in clauses (a)-(c) above being
hereinafter referred to as an "Affected Lender"), the Borrower may, in addition
to any other rights the Borrower may have hereunder or under applicable law,
require, at its expense, any such Affected Lender to assign, at par plus accrued
interest and fees, if any, without recourse, all of its interest, rights and
obligations hereunder (including all of its Revolving Credit Commitments and the
Revolving Loans and participation interests in Letters of Credit and other
amounts at any time owing to it hereunder and the other Loan Documents) to a
bank or other institutional lender specified by the Borrower, provided that (i)
such assignment shall not conflict with or violate any law, rule or regulation
or order of any court or other governmental authority, (ii) the Borrower shall
have received the written consent of the Administrative Agent, which consent
shall not be unreasonably withheld, to such assignment, (iii) the Borrower shall
have paid to the Affected Lender all monies other than such principal owing to
it hereunder, and (iv) the assignment is entered into in accordance with the
other requirements of Section 12.12 hereof.
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SECTION 2.
FEES.
Section 2.1 Fees.
----
(a) Commitment Fee. The Borrower shall pay to the
Administrative Agent for the ratable account of the Lenders in accordance with
their Revolver Percentages a commitment fee at the rate per annum equal to the
Applicable Margin (computed on the basis of a year of 360 days and the actual
number of days elapsed) for commitment fees on the average daily Unused
Revolving Credit Commitments. Such fee shall be payable monthly in arrears on
the first Business Day of each month in each year (commencing on the first such
date occurring after the date hereof) and on the Termination Date, unless the
Revolving Credit Commitments are terminated in whole on an earlier date, in
which event the commitment fee for the period to the date of such termination in
whole shall be paid on the date of such termination.
(b) Letter of Credit Fees. Quarterly in arrears, on the
first Business Day of each calendar quarter (commencing on the first such date
occurring after the date hereof), the Borrower shall pay to the Administrative
Agent, for the ratable benefit of the Lenders in accordance with their Revolver
Percentages, a letter of credit fee at a rate per annum equal to the Applicable
Margin for Letter of Credit fees (computed on the basis of a year of 360 days
and the actual number of days elapsed) applied to the daily average face amount
of Letters of Credit outstanding during such quarter. In addition, the Borrower
shall pay to the L/C Issuer for its own account the L/C Issuer's standard
issuance, drawing, negotiation, amendment, and other administrative fees for
each Letter of Credit. Such standard fees referred to in the preceding sentence
may be established by the L/C Issuer from time to time.
(c) Other Fees. The Borrower shall pay to the
Administrative Agent, for its own use and benefit, the fees agreed to between
the Administrative Agent and the Borrower in a fee letter dated the date hereof,
or as thereafter amended in writing between them.
(d) Audit Fees. The Borrower shall pay to the
Administrative Agent for its own use and benefit charges for audits of the
Collateral performed by the Administrative Agent or its agents or
representatives in such amounts as the Administrative Agent may from time to
time request (the Administrative Agent acknowledging and agreeing that such
charges shall be computed in the same manner as it at the time customarily uses
for the assessment of charges for similar collateral audits, but that in any
event such charges for audit personnel shall not exceed a rate of $750 per man
day, plus reimbursement for out-of-pocket costs and expenses). Notwithstanding
the foregoing, in the absence of any Default and Event of Default, the Borrower
shall not be required to pay the Administrative Agent or any Lender for the
charges, costs or expenses of more than 3 such audits per calendar year.
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SECTION 3.
PLACE AND APPLICATION OF PAYMENTS.
Section 3.1 Place and Application of Payments.
---------------------------------
(a) All payments of principal of and interest on the
Revolving Loans and the Reimbursement Obligations, and of all other Obligations
payable by the Borrower under this Agreement and the other Loan Documents, shall
be made by the Borrower to the Administrative Agent by no later than 1:00 p.m.
(Chicago time) on the due date thereof at the office of the Administrative Agent
in Chicago, Illinois (or such other location as the Administrative Agent may
designate to the Borrower in writing). Any payments received after such time
shall be deemed to have been received by the Administrative Agent on the next
Business Day. All such payments shall be made in U.S. Dollars, in immediately
available funds at the place of payment. The Administrative Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest on Revolving Loans and on Reimbursement Obligations in
which the Lenders have purchased Participating Interests ratably to the Lenders
in accordance with their respective Revolver Percentages and like funds relating
to the payment of any other amount payable to any Lender to such Lender, in each
case to be applied in accordance with the terms of this Agreement.
(b) Application of Collateral Proceeds Before Default.
Prior to the occurrence of an Event of Default, all proceeds of Collateral shall
(subject to the other terms of this Agreement) be applied by the Administrative
Agent against the outstanding Obligations as follows:
(i) first, to any outstanding fees, charges, and
expenses then due to the Administrative Agent and the Lenders;
(ii) second, to outstanding interest charges then
due in respect of the Obligations;
(iii) third, to the outstanding principal balance
of the Revolving Loans and Reimbursement Obligations in respect of
amounts drawn under Letters of Credit;
(iv) fourth, to any amounts then due in respect
of Hedging Liability and Funds Transfer and Deposit Account Liability;
and
(v) finally, to be applied to, or held as
security (in a non-interest bearing account) for, any remaining unpaid
or unsatisfied Obligations.
Notwithstanding clause (iii) above, after any payments required under clauses
(i) and (ii) above have been made, to the extent any Eurodollar Loans are
outstanding and there are no Base Rate Loans outstanding to the Borrower, the
Borrower may direct that such proceeds be held in a cash collateral account
maintained by the Administrative Agent for the ratable benefit of the Lenders
and not applied to the Obligations consisting of Eurodollar Loans until
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the earlier of (i) the last day of the Interest Period applicable to such
Eurodollar Loans and (ii) the occurrence of an Event of Default; provided
further, that unless a Default or an Event of Default is in existence, the funds
held in such cash collateral account, at the Borrower's direction, (x) shall be
invested at the Administrative Agent as directed by the Borrower (to the extent
such investments are available at the Administrative Agent), with interest
thereon accruing for the Borrower's account or (y) shall be disbursed, at the
Borrower's direction, so long as after giving effect to such disbursement, the
Borrower is in compliance with the applicable limits and ratios contained in the
definitions of the term "Borrowing Base", "Eligible Inventory" and "Eligible
Receivables" contained in this Agreement.
(c) Application After Default. Anything contained herein
to the contrary notwithstanding, all payments and collections received in
respect of the Obligations and all proceeds of the Collateral received, in each
instance, by the Administrative Agent or any of the Lenders after the occurrence
of an Event of Default shall be remitted to the Administrative Agent and
distributed as follows:
(i) first, to the payment of any outstanding
costs and expenses incurred by the Administrative Agent in monitoring,
verifying, protecting, preserving or enforcing the Liens on the
Collateral, and in protecting, preserving or enforcing rights under
this Agreement or any of the other Loan Documents, and payable by the
Borrower under this Agreement, including without limitation under
Section 12.15 (such funds to be retained by the Administrative Agent
for its own account unless it has previously been reimbursed for such
costs and expenses by the Lenders, in which event such amounts shall be
remitted to the Lenders to reimburse them for payments theretofore made
to the Administrative Agent);
(ii) second, to the payment of any indemnifiable
costs and expenses incurred by any of the Lenders and reimburseable
pursuant to Section 12.15;
(iii) third, to the payment of any outstanding
interest or fees due under the Loan Documents to be allocated pro rata
in accordance with the aggregate unpaid amounts owing to each holder
thereof;
(iv) fourth, to the payment of principal on the
Revolving Notes, unpaid Reimbursement Obligations, together with
amounts to be held by the Administrative Agent as collateral security
for any outstanding L/C Obligations pursuant to Section 9.4 hereof
(until the Administrative Agent is holding an amount of cash equal to
105% of the then outstanding amount of all such L/C Obligations), the
aggregate amount paid to, or held as collateral security for, the
Lenders to be allocated pro rata in accordance with the aggregate
unpaid amounts owing to each holder thereof;
(v) fifth, to the payment of all other unpaid
Obligations (including without limitation Hedging Liability and Funds
Transfer and Deposit Account Liability) and all other indebtedness,
obligations, and liabilities of the Designated
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Companies secured by the Collateral Documents to be allocated pro rata
in accordance with the aggregate unpaid amounts owing to each holder
thereof; and
(vi) finally, to the Borrower or to whomever the
Administrative Agent reasonably determines to be lawfully entitled
thereto.
(d) Except as otherwise specifically provided for herein,
the Borrower hereby irrevocably waives the right to direct the application of
payments and collections at any time received by the Administrative Agent or any
of the Lenders from or on behalf of the Borrower, and the Borrower hereby
irrevocably agrees that the Administrative Agent shall have the continuing
exclusive right to apply and reapply any and all such payments and collections
received at any time by the Administrative Agent or any of the Lenders against
the Obligations in the manner described above. In the event that the amount of
any Hedging Liability is not fixed and determined at the time proceeds of
Collateral are received which are to be allocated thereto, the proceeds of
Collateral so allocated shall be held by the Administrative Agent, for the
ratable benefit of the Lenders, as collateral security (in a non-interest
bearing account) until such Hedging Liability is fixed and determined and then
the same shall (if and when, and to the extent that, payment of such liability
is required by the terms of the relevant contractual arrangements) be applied to
such liability.
(e) The Borrower hereby irrevocably authorizes the
Administrative Agent or any Lender to charge any of the Borrower's deposit
accounts maintained with the Administrative Agent or any Lender for the amounts
from time to time necessary to pay any then due Obligations; provided that the
Borrower acknowledges and agrees that neither the Administrative Agent nor any
Lender shall be under an obligation to do so and neither the Administrative
Agent nor any Lender shall incur any liability to the Borrower or any other
Person for the Administrative Agent's or any Lender's failure to do so.
Section 3.2 Weekly Settlement.
-----------------
(a) In order to minimize the frequency of transfers of
funds between the Administrative Agent and each Lender, advances and repayments
of Revolving Loans will be settled according to the procedures described in this
Section 3.2. The Administrative Agent shall, once every seven (7) days, or
sooner, if so elected by the Administrative Agent in its discretion, but in each
case on a Business Day (each such day being a "Settlement Date"), distribute to
each Lender a statement (the "Administrative Agent's Report") disclosing as of
the immediately preceding Business Day, the aggregate unpaid principal balance
of Revolving Loans outstanding as of such date (including Revolving Loans made
by the Administrative Agent under Section 3.2(e) hereof), repayments and
prepayments of principal received from the Borrower with respect to the
Revolving Loans since the immediately preceding Administrative Agent's Report,
additional Revolving Loans made to the Borrower since the date of the
immediately preceding Administrative Agent's Report and the Borrowing Base as of
the most recent determination thereof. Each Administrative Agent's Report shall
disclose the net amount (the "Settlement Amount") due to or due from the Lenders
to effect a settlement of any Revolving Loan and the calculations therefor. The
Administrative Agent's Report submitted to a Lender shall be prima facie
evidence of the
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amount due to or from such Lender to effect a settlement of any Revolving Loan.
If the Administrative Agent's Report discloses a net amount due from the
Administrative Agent to any Lender to effect the settlement of any Revolving
Loan, the Administrative Agent, concurrently with the delivery of the
Administrative Agent's Report to the Lenders, shall transfer, by wire transfer
or otherwise, such amount to such Lender in funds immediately available to such
Lender, in accordance with such Lender's instructions. If the Administrative
Agent's Report discloses a net amount due to the Administrative Agent from any
Lender to affect the settlement of any Revolving Loan, then such Lender shall
wire transfer such amount, in funds immediately available to the Administrative
Agent as instructed by the Administrative Agent. Such net amount due from a
Lender to the Administrative Agent shall be due on the Settlement Date if such
Administrative Agent's Report is received before 12:00 noon (Chicago time) and
such net amount shall be due on the first Business Day following the Settlement
Date if such Administrative Agent's Report is received after 12:00 noon (Chicago
time). Notwithstanding the foregoing, payments actually received by the
Administrative Agent with respect to the following items shall be distributed by
the Administrative Agent to each Lender as follows:
(i) as soon as possible, but in any event,
within one Business Day after receipt thereof by the Administrative
Agent, payments applicable to interest on the Loans shall be paid to
each Lender in proportion to its pro rata share of such Loans, subject
to any adjustments for any Revolving Loans made by the Administrative
Agent under Section 3.2(e) hereof so that the Administrative Agent
alone shall receive interest on the Revolving Loans so made until
settlement with such Lender on such Revolving Loans and each Lender
shall only receive interest on the amount of funds actually advanced by
such Lender. Each Lender's share of interest accruing each day on the
Revolving Loans shall be based on such Lender's daily funded loan
balance; and
(ii) as soon as possible, but in any event,
within one Business Day after receipt thereof by the Administrative
Agent payments applicable to the fees set forth in Section 2.1 hereof
and expenses payable under this Agreement, shall in each case be paid
to each Lender as set forth in the applicable Section hereof.
(b) All funds advanced to the Borrower by the
Administrative Agent or a Lender pursuant to this Section 3.2 shall for all
purposes be treated as a Revolving Loan made by such Lender against the
Revolving Note of such Lender and all funds received by any Lender pursuant to
this Section 3.2 shall for all purposes be treated as a repayment of amounts
owed with respect to Revolving Loans made by such Lender against the Revolving
Note of such Lender.
(c) In the event that any bankruptcy, reorganization,
liquidation, receivership or similar cases or proceedings in which the Borrower
is a debtor prevent the Administrative Agent or any Lender from making any
Revolving Loan to effect a settlement contemplated hereby, the Administrative
Agent or such Lender, as the case may be, will make such dispositions and
arrangements with the other Lenders with respect to such Revolving Loans, either
by way of purchase of participations, distribution, pro tanto
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assignment of claims, subrogation or otherwise, as shall result in each Lender's
share of the outstanding Revolving Loans being equal to its Revolver Percentage
of all outstanding Revolving Loans.
(d) Payments to effect a settlement shall be made without
set-off, counterclaim or reduction of any kind. The failure or refusal of any
Lender to make available to the Administrative Agent at the aforesaid time and
place the amount of the Settlement Amount due from such Lender (i) shall not
relieve any other Lender from its several obligation hereunder to make available
to the Administrative Agent the amount of such other Lender's Settlement Amount
and (ii) shall not impose upon such other Lender any liability with respect to
such failure or refusal or otherwise increase the relevant Revolving Credit
Commitment of such other Lender.
(e) Notwithstanding the notice requirements set forth in
Section 1.6 above, the Administrative Agent may, in its sole discretion without
conferring with the Lenders but on their behalf, make Revolving Loans in an
amount requested by the Borrower, each of which shall constitute Base Rate Loans
under the Revolving Credit. Any such Revolving Loans so funded by the
Administrative Agent shall be deemed Revolving Loans made by the Administrative
Agent under its Revolving Credit Commitment, except for purposes of Section
2.1(a) hereof. Each Lender's obligation to fund its portion of any such
Revolving Loan made by the Administrative Agent will commence on the date such
Revolving Loan is actually so made by the Administrative Agent. However, until
the date on which the settlement of such Revolving Loan is required in
accordance with this Section 3.2 above, such obligation of the Lender shall be
satisfied by the Administrative Agent making such Revolving Loan. The Borrower
acknowledges and agrees that the making of such Revolving Loans by the
Administrative Agent under this Section 3.2(e) shall, in each case, be subject
in all respects to the provisions of this Agreement as if each such Revolving
Loan were made in response to a notice requesting such Revolving Loan made in
accordance with Section 1.6 hereof, including, without limitation, the
limitations set forth in Section 1.1 hereof and the requirements of Section 7.1
hereof (except that the parties hereto acknowledge and agree that the
Administrative Agent may, in its sole discretion, without conferring with the
Lenders, but on their behalf, elect to make Revolving Loans under this Section
3.2(e) notwithstanding the failure of the Borrower to satisfy one or more of the
conditions set forth in Section 7.1 until the Revolving Credit Commitments are
suspended or terminated in accordance with Section 9.2 or 9.3 hereof or until
the Administrative Agent is provided a written notice from any Lender (a "Stop
Funding Notice") advising the Administrative Agent of such Lender's decision not
to extent further credit as a result of the Borrowers' failure to satisfy the
conditions set forth in Section 7.1, after receipt of which Stop Funding Notice
the Administrative Agent will not make or request additional advances under this
Section (other than Permitted Advances) until such Stop Funding Notice is
withdrawn by such Lender; provided that the Administrative Agent shall not
knowingly make an advance hereunder if after giving effect thereto the sum of
the aggregate principal amount of Revolving Loans and the L/C Obligations then
outstanding, plus any reserves taken pursuant to Section 1.1 hereof, would
exceed the lesser of (i) the Revolving Credit Commitments in effect at such time
and (ii) the sum of Borrowing Base plus any then Permitted Overadvances). All
actions taken by
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the Administrative Agent pursuant to the provisions of this Section 3.2(e) shall
be conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. Notwithstanding anything herein to the contrary, prior to the
settlement with any Lender of any Revolving Loan funded by the Administrative
Agent under this Section, interest payable on such Revolving Loan otherwise
allocable to such Lender shall be for the sole account of the Administrative
Agent and payment of principal on such Revolving Loan otherwise allocable to
such Lender shall be for the sole account of the Administrative Agent.
Section 3.3 Computation of Obligations Outstanding.
--------------------------------------
For the purpose of calculating the aggregate principal balance
of Obligations outstanding hereunder, Obligations shall be deemed to be paid on
the date payments or collections, as the case may be, are applied by the
Administrative Agent to such Obligations; provided, however, for purposes of
calculating interest payable by the Borrower on the Loans and on any other
interest-bearing Obligations under this Agreement, any payment or collection of
the Obligations by virtue of the application of proceeds of Collateral pursuant
to Section 3.1 hereof shall be deemed to be applied to the Revolving Loans or
other interest-bearing Obligations two (2) Business Days after receipt of such
payment or collection by the Administrative Agent (any additional amount payable
by the Borrower solely by virtue of this deemed application to be paid to and
retained by the Administrative Agent for its sole account as an administrative
fee, with the Lenders to have no right to any share thereof); further provided,
however, that each payment or collection received by wire or ACH transfer
directly to the Concentration Account maintained with the Administrative Agent
as contemplated by Section 4 hereof shall be deemed applied on the date of the
Administrative Agent's receipt of such transfer. The Administrative Agent shall
apply all payments and collections received in respect of the Obligations, and
all proceeds of Collateral, in each case received by the Administrative Agent,
in reduction of the Obligations immediately after the Administrative Agent deems
such sums collected in good funds in accordance with its then standard criteria
for determining availability of funds. Notwithstanding the foregoing, if any
item credited by the Administrative Agent in reduction of the Obligations is not
honored, the Administrative Agent may reverse any provisional credit which has
been given for the item and make appropriate adjustments to the amount of
interest and principal otherwise due hereunder.
SECTION 4.
THE COLLATERAL AND GUARANTIES.
Section 4.1 Collateral.
----------
The Obligations shall be secured by valid, perfected and
enforceable Liens on all right, title and interest of the Borrower and each
other Designated Company in all real and personal property and fixtures of such
Person, including all accounts, chattel paper, instruments, documents, general
intangibles (including payment intangibles and software, all patents,
trademarks, copyrights and similar intellectual property rights, and all
application and registrations therefor, and all tax refunds), letter-of-credit
rights, supporting obligations, deposit accounts, investment property,
inventory, equipment, fixtures, and commercial tort
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claims, whether now owned or hereafter acquired or arising, and all proceeds
thereof. The Borrower acknowledges and agrees that the Liens on the Collateral
shall be granted to the Administrative Agent for the benefit of itself, the L/C
Issuer, the Lenders and their Affiliates, and shall be valid and perfected first
priority Liens subject only to Liens permitted by Section 8.8 hereof, in each
case pursuant to one or more Collateral Documents from such Persons, each in
form and substance satisfactory to the Administrative Agent; provided, that such
Liens may not be perfected to the extent they relate to fixtures that may be
located at a sales office of any Designated Company.
Section 4.2 Collateral Proceeds.
-------------------
The Borrower agrees to make, and to cause each other
Designated Company to make, such arrangements as shall be necessary or
appropriate to assure (through the use of one or more lockboxes under the sole
control of the Administrative Agent) that all proceeds of the Collateral are
deposited (in the same form as received) in one or more remittance accounts
maintained with or otherwise under the control of the Administrative Agent, for
the ratable benefit of the Lenders, all of which are maintained with the
Administrative Agent (each special restricted account maintained with the
Administrative Agent to be referred to herein as a "Concentration Account"). Any
proceeds of Collateral received by any Designated Company shall be held by such
Designated Company in trust for the Administrative Agent and the Lenders in the
same form in which received, shall not be commingled with any assets of any
Designated Company, and shall be delivered immediately to the Administrative
Agent (together with any necessary endorsements thereto) for deposit into a
Concentration Account. The Borrower acknowledges (on behalf of itself and the
other Designated Companies) that the Administrative Agent has (and is hereby
granted to the extent it does not already have) a Lien on each Concentration
Account and all funds contained therein to secure the Obligations, for the
ratable benefit of the Lenders. No amounts deposited in any Concentration
Account shall be released to the Borrower, but shall instead be applied to, or
otherwise held as collateral security for, the outstanding Obligations to the
extent and as set forth in Section 3.1 hereof, it being understood and agreed
that the Borrower, notwithstanding such application, shall have the right to
obtain additional Revolving Loans and Letters of Credit under this Agreement
subject to the terms and conditions hereof.
Section 4.3 Liens on Real Property.
----------------------
In the event that any Designated Company owns or hereafter
acquires any fee interest in real property, the Borrower shall, or shall cause
such other Designated Company to, execute and deliver to the Administrative
Agent (or a security trustee therefor) a mortgage or deed of trust reasonably
acceptable in form and substance to the Administrative Agent for the purpose of
granting to the Administrative Agent for the benefit of itself, the L/C Issuer,
the Lenders and their Affiliates a Lien on such real property to secure the
Obligations shall pay all taxes, costs and expenses incurred by the
Administrative Agent in recording such mortgage or deed of trust, and shall
supply to the Administrative Agent at the Borrower's cost and expense a survey,
environmental report (including Phase I and, if reasonably required by the
Administrative Agent at any time, Phase 2 environmental assessments),
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hazard insurance policy, appraisals and a mortgagee's policy of title insurance
from a title insurer reasonably acceptable to the Administrative Agent, in
Administrative Agent's name, insuring the validity of such mortgage or deed of
trust and its status as a first Lien (subject to Liens permitted by this
Agreement) on the real property encumbered thereby and such other instruments,
documents, certificates, and opinions reasonably required by the Administrative
Agent in connection therewith.
Section 4.4 Guaranties.
----------
The payment and performance of the Obligations shall at all
times be guaranteed by each Designated Company other than Borrower, pursuant to
one or more Guaranties in form and substance reasonably acceptable to the
Administrative Agent.
Section 4.5 Further Assurances; Designated Companies.
----------------------------------------
The Borrower agrees that it shall, and shall cause each other
Designated Company to, from time to time at the request of the Administrative
Agent, execute and deliver such documents and do such acts and things as the
Administrative Agent may reasonably request in order to provide for or perfect
or protect the Administrative Agent's Liens on the Collateral. In the event any
Designated Company forms or acquires any other Designated Company after the date
hereof, the Borrower shall promptly upon such formation or acquisition cause
such newly formed or acquired Designated Company to execute a Guaranty and such
Collateral Documents as the Administrative Agent may then require, and the
Borrower shall also deliver to the Administrative Agent, or cause such other
Designated Company to deliver to the Administrative Agent, at the Borrower's
cost and expense, such other instruments, documents, certificates, and opinions
reasonably required by the Administrative Agent in connection therewith,
including without limitation a Pledge Agreement relating to the equity of such
new Designated Company, appropriate Uniform Commercial Code financing
statements, evidence of corporate authority and appropriate legal opinions.
SECTION 5.
DEFINITIONS; INTERPRETATION.
Section 5.1 Definitions.
-----------
The following terms when used herein shall have the following
meanings:
"AASI Korea" means AGD Electronics Asia Pacific Co. Ltd., a
corporation organized under the laws of South Korea.
"AASI Mexico" means AllAmMex Components S.de.R.L. de C.V., a
corporation organized under the laws of Mexico.
"AASI UK" means AGD Electronics Limited, a corporation
organized under the laws of England and Wales.
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"Account Debtor" means the Person who is obligated on a
Receivable.
"Adjusted LIBOR" is defined in Section 1.4 hereof.
"Administrative Agent" means Harris Trust and Savings Bank in
its capacity as administrative agent hereunder, and any successor pursuant to
Section 11.7 hereof.
"Affiliate" means any Person directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
another Person. A Person shall be deemed to control another Person for the
purposes of this definition if such Person possesses, directly or indirectly,
the power to direct, or cause the direction of, the management and policies of
the other Person, whether through the ownership of voting securities, common
directors, trustees or officers, by contract or otherwise; provided that, in any
event for purposes of this definition, any Person that owns, directly or
indirectly, 25% or more of the securities having the ordinary voting power for
the election of directors or governing body of a corporation or 25% or more of
the partnership or other ownership interest of any other Person (other than as a
limited partner of such other Person) will be deemed to control such corporation
or other Person. Notwithstanding anything to the contrary contained herein,
ParView shall not be deemed to be an Affiliate of the Borrower or any other
Designated Company or Subsidiary of the Borrower.
"Agreement" means this Credit Agreement, as the same may be
amended, modified, or supplemented from time to time pursuant to the terms
hereof.
"Applicable Margin" means, with respect to Revolving Loans,
Reimbursement Obligations, the commitment fees payable under Section 2.1(a)
hereof and the Letter of Credit fees payable under Section 2.1(b) hereof, in
each case until the first Pricing Date, the rates per annum shown opposite Level
III below, and thereafter from one Pricing Date to the next the Applicable
Margin means the rates per annum determined in accordance with the following
schedule:
APPLICABLE MARGIN APPLICABLE MARGIN
FOR BASE RATE LOANS FOR EURODOLLAR
UNDER REVOLVING LOANS UNDER APPLICABLE
CREDIT AND REVOLVING CREDIT MARGIN FOR
DEBT SERVICE COVERAGE REIMBURSEMENT AND LETTER OF COMMITMENT
LEVEL RATIO FOR SUCH PRICING DATE OBLIGATIONS SHALL BE: CREDIT FEES SHALL BE: FEES SHALL BE:
I Greater than 2.0 to 1.0 0.50% 2.75% 0.25%
II Less than or equal to 2.0 to 1.0, but 1.00% 3.25% 0.375%
greater than 1.5 to 1.0
III Less than or equal to 1.5 to 1.0 1.50% 3.75% 0.375%
For purposes hereof, the term "Pricing Date" means, for any fiscal quarter of
the Borrower ending on or after June 30, 2003, the date on which the
Administrative Agent is in receipt of the Borrower's most recent financial
statements (and, in the case of the year-end financial statements, audit report)
for the fiscal quarter then ended, pursuant to Section 8.5 hereof.
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The Applicable Margin shall be established based on the Debt Service Coverage
Ratio for the 12 month period ended on the last day of the most recently
completed fiscal quarter and the Applicable Margin established on a Pricing Date
shall remain in effect until the next Pricing Date. If the Borrower has not
delivered its financial statements by the date such financial statements (and,
in the case of the year-end financial statements, audit report) are required to
be delivered under Section 8.5 hereof, until such financial statements and audit
report are delivered, the Applicable Margin shall be the highest Applicable
Margin (i.e., Level III pricing). If the Borrower subsequently delivers such
financial statements before the next Pricing Date, the Applicable Margin
established by such late delivered financial statements shall take effect from
the date of delivery until the next Pricing Date. In all other circumstances,
the Applicable Margin established by such financial statements shall be in
effect from the Pricing Date that occurs immediately after the end of the fiscal
quarter covered by such financial statements until the next Pricing Date. Each
determination of the Applicable Margin made by the Administrative Agent in
accordance with the foregoing shall be conclusive and binding on the Borrower
and the Lenders, subject to adjustment for manifest error.
"Application" is defined in Section 1.3(b) hereof.
"Authorized Representative" means those persons shown on the
list of officers and employees of the Borrower provided by the Borrower pursuant
to Section 7.2(h) hereof or on any update of any such list provided by the
Borrower to the Administrative Agent, or any further or different officers and
employees of the Borrower so named by any Authorized Representative of the
Borrower in a written notice to the Administrative Agent.
"Base Rate" is defined in Section 1.4(a) hereof.
"Base Rate Loan" means a Revolving Loan bearing interest at a
rate specified in Section 1.4(a) hereof.
"Borrower" is defined in the introductory paragraph of this
Agreement.
"Borrowing" means the total of Revolving Loans of a single
type advanced, continued for an additional Interest Period, or converted from a
different type into such type by the Lenders under the Revolving Credit on a
single date and, in the case of Eurodollar Loans, for a single Interest Period.
Borrowings of Revolving Loans are made and maintained ratably from each of the
Lenders under the Revolving Credit according to their Revolver Percentages. A
Borrowing is "advanced" on the day Lenders advance funds comprising such
Borrowing to the Borrower, is "continued" on the date a new Interest Period for
the same type of Revolving Loans commences for such Borrowing, and is
"converted" when such Borrowing is changed from one type of Revolving Loans to
the other, all as determined pursuant to Section 1.6 hereof.
"Borrowing Base" means, as of any time it is to be determined,
the sum of:
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(a) up to 85% of the difference between the then
outstanding unpaid amount of Eligible Receivables less any and all returns,
rebates, discounts, claims, credits, allowances and/or finance charges of any
nature at any time issued, owing, available to or claimed by Account Debtors,
granted, outstanding or payable in connection with such Eligible Receivables at
such time; plus
(b) the least of (i) $35,000,000, (ii) up to 40% of the
value (computed at the lower of market or cost using the first-in first-out
method of Inventory valuation applied by the Borrower in accordance with GAAP
but excluding from any such value inventoriable variances (defined herein to
mean that portion of capitalized overhead costs which represent the portion of
such costs in excess of standard overhead costs which are needed to state the
Borrower's Inventory at actual FIFO cost and intercompany profits associated
with intercompany sales) of Eligible Inventory and (iii) 100% of the amount
derived pursuant to clause (a) above;
provided that the Borrowing Base shall be computed only as against and on so
much of the Collateral as is included on the Borrowing Base Certificates
furnished from time to time by the Borrower pursuant to the terms hereof and, if
required by the Administrative Agent pursuant to any of the terms hereof or any
Collateral Document, as verified by such other evidence reasonably required to
be furnished to the Administrative Agent pursuant hereto or pursuant to any such
Collateral Document.
"Borrowing Base Certificate" means the certificate in the form
of Exhibit C hereto, or in such other form acceptable to the Administrative
Agent, to be delivered to the Administrative Agent and the Lenders pursuant to
Sections 7.2 and 8.5 hereof.
"Business Day" means any day (other than a Saturday or Sunday)
on which banks are not authorized or required to close in Chicago, Illinois and,
if the applicable Business Day relates to the advance or continuation of, or
conversion into, or payment of a Eurodollar Loan, on which banks are dealing in
U.S. Dollar deposits in the interbank eurodollar market in London, England and
Nassau, Bahamas.
"Capital Expenditures" means, with respect to any Person for
any period, the aggregate amount of all expenditures (whether paid in cash or
accrued as a liability in accordance with GAAP) by such Person during that
period for the acquisition or leasing (pursuant to a Capital Lease) of fixed or
capital assets or additions to property, plant, or equipment (including
replacements, capitalized repairs, and improvements) which should be capitalized
on the balance sheet of such Person in accordance with GAAP.
"Capital Lease" means any lease of Property which in
accordance with GAAP is required to be capitalized on the balance sheet of the
lessee.
"Capitalized Lease Obligation" means, for any Person, the
amount of the liability shown on the balance sheet of such Person in respect of
a Capital Lease determined in accordance with GAAP.
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"Closing Date" means the date of this Agreement or such later
Business Day upon which each condition described in Section 7.2 shall be
satisfied or waived in a manner acceptable to the Administrative Agent in its
reasonable discretion.
"Closing Date Prepayment Fees" means cash prepayment fees and
charges paid by the Borrower to the Existing Lender Group on the Closing Date in
connection with the prepayment of the Borrower's Indebtedness for Borrowed Money
owing to the Existing Lender Group (but not any such amounts applied by any
Lender against any closing or facility fee payable to such Lender hereunder or
in connection herewith).
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto.
"Collateral" means all properties, rights, interests and
privileges from time to time subject to the Liens granted to the Administrative
Agent, for the ratable benefit of the Lenders, or any security trustee therefor,
by the Collateral Documents.
"Collateral Account" is defined in Section 9.4 hereof.
"Collateral Documents" means the Pledge Agreements, the
Security Agreements, and all other mortgages, deeds of trust, security
agreements, pledge agreements, assignments, financing statements and other
documents as shall from time to time secure or relate to the Obligations, or any
part thereof.
"Companies" means, collectively, the Borrower and its
Subsidiaries; and "Company" shall mean any one of the Companies.
"Concentration Account" is defined in Section 4.2 hereof.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with a Designated Company, are treated as a
single employer under Section 414 of the Code.
"Credit Event" means the advancing of any Revolving Loan, the
continuation of or conversion into a Eurodollar Loan, or the issuance of, or
extension of the expiration date or increase in the amount of, any Letter of
Credit.
"Debt Service Coverage Ratio" means with respect to the
Designated Companies for any period, the ratio of (a) the sum of (i) EBITDA less
(ii) unfinanced Capital Expenditures less (iii) cash taxes paid, divided by (b)
the sum of (i) cash Interest Expense (exclusive of any Closing Date Prepayment
Fees treated by the Designated Companies as interest expenses) and (ii) the
aggregate amount of payments required to be made in that period in respect of
principal for all Indebtedness for Borrowed Money (whether at maturity, as a
result of mandatory sinking fund redemption, mandatory prepayment, acceleration
or otherwise, but exclusive of (A) payments made in respect of the Revolving
Credit and
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(B) principal payments made on June 14, 2004 in respect of the 1994 Debt), all
determined for such period on a consolidated basis and in accordance with GAAP.
"Default" means any event or condition the occurrence of which
would, with the passage of time or the giving of notice, or both, constitute an
Event of Default.
"Designated Companies" means collectively, (a) the Borrower,
(b) each other Company existing on the date hereof and listed on Schedule 6.2
and (c) each other Company so designated by the Borrower from time to time
hereafter and consented to by the Administrative Agent or otherwise approved to
be a Designated Company pursuant to the terms of this Agreement.
"Disposition" means the sale, lease, conveyance, or other
disposition of Property.
"EBITDA" means, with respect to the Designated Companies for
any period, Net Income (determined for purposes hereof without giving effect to
extraordinary gains or losses incurred in connection with the sale of assets
outside of the ordinary course of business and any nonrecurring charges) plus
the sum of all amounts deducted in arriving at such Net Income amount in respect
of (i) Interest Expense, (ii) federal, state and local income taxes and (iii)
depreciation of fixed assets and amortization of intangible assets for such
period, all determined for such period on a consolidated basis in accordance
with GAAP.
"Eligible Inventory" means any Inventory of any Designated
Company in which the Administrative Agent has a perfected first Lien and which
complies with each of the following requirements:
(a) it consists of either (i) Franchise Inventory or (ii)
up to $2,500,000 of Inventory of the AVED Memory division of AVED Industries,
Inc. consisting of memory components or memory modules;
(b) it consists of Inventory which is not damaged and is
readily usable or marketable by such Designated Company in the ordinary course
of its business;
(c) it substantially conforms to such Designated
Company's advertised or represented specifications, applicable government
standards and regulations and other quality standards and has not been
determined by the Administrative Agent to be unacceptable due to type, variety,
quality or quantity;
(d) it is not Slow-Moving Inventory;
(e) it is not covered by a warehouse receipt or similar
document, unless the same has been delivered to the Administrative Agent and
unless the issuer thereof has waived any Liens it might have to secured charges
owing to such issuer in a manner reasonably satisfactory to the Administrative
Agent;
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(f) all warranties of the Designated Companies in the
Loan Documents are true and correct in all material respects with respect
thereto;
(g) it has been identified to the Administrative Agent in
the manner required by the Administrative Agent pursuant to the Security
Agreement;
(h) it has not been consigned to a third party, unless
the Borrower has furnished or caused to be furnished to the Administrative Agent
(i) a reasonably acceptable consignment agreement with such third party, (ii)
Uniform Commercial Code financing statements showing the consignee as debtor,
the applicable Designated Company as secured party and the Administrative Agent
as assignee of secured party, (iii) UCC searches of the Borrower and the
consignee at such location and (iv) evidence that the applicable Designated
Company has appropriately notified (with a copy to the Administrative Agent)
each other Person claiming a lien on such Inventory of such Designated Company's
and the Administrative Agent's rights with respect thereto;
(i) it is located at a location disclosed to the
Administrative Agent, and if requested by the Administrative Agent, any Person
(other than the Borrower or a Designated Company) owning or controlling such
location shall have waived all right, title and interest in and to such
Inventory in a manner reasonably satisfactory to the Administrative Agent (it
being agreed that no such waiver shall be required from any such third-party (a)
if and to the extent that a reserve therefor has been established and is being
maintained in accordance with Section 1.1 hereof or (b) if no more than $250,000
of Inventory is at any time located at such location;
(j) it is not in-transit;
(k) it is free and clear of all Liens other than Liens
granted in favor of the Administrative Agent and Liens permitted by Sections
8.8(b) and (c) hereof;
(l) it does not consist of packaging supplies; and
(m) it is otherwise deemed to be Eligible Inventory in
the reasonable judgment of the Administrative Agent.
"Eligible Receivables" means any Receivable of any Designated
Company in which the Administrative Agent has a first priority perfected Lien
and which complies with each of the following requirements:
(a) it is payable in U.S. Dollars and arises out of a
bona fide sale of Inventory delivered to the Account Debtor, or the provision of
services which have been fully performed for the Account Debtor, in the ordinary
course of business;
(b) all warranties of the Designated Companies in the
Loan Documents are true and correct in all material respects with respect
thereto;
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(c) it is evidenced by an invoice to the Account Debtor
thereunder dated not more than 5 Business Days subsequent to the shipment date
of the relevant Inventory;
(d) it has not remained unpaid in whole or in part more
than 90 days from and after its invoice date;
(e) it is net of any credit or allowance given by any
Designated Company to such Account Debtor;
(f) it is not owing by an Account Debtor who (i) has
become insolvent, (ii) is the subject of any bankruptcy, arrangement,
reorganization proceedings or other proceedings for relief of debtors, (iii) has
admitted its inability to pay its debt generally or has stopped paying its debts
generally or (iv) is an Affiliate of a Designated Company;
(g) the Account Debtor is not principally located outside
the United States of America or Canada (other than the Province of Quebec)
unless such Receivable is either (i) secured by an irrevocable letter of credit
issued by a commercial bank located in the United States and which is on terms
and conditions reasonably acceptable to the Administrative Agent, and which has
been assigned or transferred to the Administrative Agent on terms and conditions
reasonably acceptable to the Administrative Agent or (ii) secured by an
insurance policy issued by EXIM Bank or any other insurer reasonably
satisfactory to the Administrative Agent (which in any event shall insure not
less than ninety percent (90%) of the face amount of such Receivable and shall
be subject to such deductions as are reasonably acceptable to the Administrative
Agent), and the proceeds of which has been assigned or transferred to the
Administrative Agent on terms and conditions reasonably acceptable to the
Administrative Agent; provided, that the Administrative Agent agrees to consider
on a case-by-case basis, in its reasonable business judgment, treating as
Eligible Receivables up to an aggregate amount of $3,000,000 of Receivables
owing from Account Debtors that are multinational corporations operating in
industrialized countries outside of the United States or Canada (other than the
Province of Quebec);
(h) it is not owing by the United States of America or
Canada or any state or province or political subdivision thereof, or any
department, agency or instrumentality thereof, unless the Administrative Agent
shall have received evidence satisfactory to the Administrative Agent of
compliance with the Assignment of Claims Act or similar state or local or
provincial statute;
(i) it is not owing by an Account Debtor if 50% or more
of all Receivables owed by such Account Debtor are ineligible for any reason;
(j) it is not subject to any counterclaim or defense
asserted by the Account Debtor thereunder, nor is it subject to any offset or
contra account payable to the Account Debtor, including without limitation any
potential offset for advertising rebates (in any case, unless the amount of such
Receivable is net of such counterclaim, defense, offset or contra account
established to the reasonable satisfaction of the Administrative Agent);
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(k) it is not evidenced by an instrument or chattel
paper;
(l) it does not arise from a sale to an Account Debtor on
a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment
or other repurchase or return basis;
(m) it is free and clear of all Liens other than Liens
granted in favor of the Administrative Agent and Liens permitted by Sections
8.8(b) and (c) hereof;
(n) it has not been pre-billed by a Designated Company;
(o) it is not owing by an Account Debtor whose total
obligations to the Designated Companies exceeds a credit limit determined by the
Administrative Agent in its reasonable business judgment;
(p) it is not owing by ParView; and
(q) it is otherwise deemed to be an Eligible Receivable
in the reasonable business judgment of the Administrative Agent.
"Environmental Laws" means all federal, state, local and
foreign laws, statutes, rules, regulations, ordinances, programs, permits,
guidances, orders and consent decrees relating to health, safety and
environmental matters applicable to the business and property of each Designated
Company. Such laws and regulations include but are not limited to the Resource
Conservation and Recovery Act, 42 U.S.C.ss. 6901 et seq., as amended; the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C.ss. 9601 et seq., as amended; the Toxic Substance Act, 15 U.S.C.ss.
2601 et seq., as amended; the Clean Water Act, 33 U.S.C.ss. 466 et seq., as
amended; the Clean Air Act, 42 U.S.C.ss. 7401 et seq., as amended; state and
federal superlien and environmental cleanup programs; and U.S. Department of
Transportation regulations.
"Environmental Notice" means any summons, citation, directive,
information request, notice of potential responsibility, notice of violation or
deficiency, order, claim, complaint, investigation, proceeding, judgment,
letters or other written communication, actual or threatened, from the United
States Environmental Protection Agency or other federal, state, local or foreign
agency or authority, or any other entity or individual, public or private,
concerning any intentional or unintentional act or omission which involves
Management of Hazardous Substances on or off the property of any Designated
Company; the imposition of any lien on property, including but not limited to
liens asserted by government entities in connection with Responses to the
presence or Release of Hazardous Substances; any alleged violation of or
responsibility under Environmental Laws; and, after due inquiry and
investigation, any knowledge of any facts which could give rise to any of the
above.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute thereto.
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"Eurodollar Loan" means a Revolving Loan bearing interest at
the rate specified in Section 1.4(b) hereof.
"Eurodollar Reserve Percentage" is defined in Section 1.4(b)
hereof.
"Event of Loss" means, with respect to any Property, any of
the following: (a) any loss, destruction or damage of such Property or (b) any
condemnation, seizure, or taking, by exercise of the power of eminent domain or
otherwise, of such Property, or confiscation of such Property or the requisition
of the use of such Property.
"Event of Default" means any event or condition identified as
such in Section 9.1 hereof.
"Excess Availability" shall mean, as of any time the same is
to be determined, the amount (if any) by which (a) the lesser of the Borrowing
Base as then determined and computed or the Revolving Credit Commitment as then
in effect exceeds (b) the aggregate principal amount of Revolving Loans and L/C
Obligations then outstanding and all reserves taken pursuant to Section 1.1.
"Existing Lender Group" means the agents and the lenders under
the certain Loan and Security Agreement dated May 3, 1996 among the Borrower,
Harris Trust and Savings Bank, as Administrative Agent and a Lender, American
National Bank and Trust Company of Chicago, as Collateral Agent and a Lender and
the other Lenders party thereto, as amended to date.
"Federal Funds Rate" means the fluctuating interest rate per
annum described in part (x) of clause (ii) of the definition of Base Rate
appearing in Section 1.4(a) hereof.
"Foreign Subsidiary" means a Subsidiary of the Borrower or any
Designated Company organized under the laws of any country (or any political
subdivision thereof) other than the United States of America or Canada.
"Franchise Inventory" shall mean Inventory (a) originally
purchased by the Borrower pursuant to a vendor, supplier or distributor
agreement that provides, unless otherwise agreed by the Administrative Agent in
its reasonable business judgment, the Borrower with either of the following
rights: stock rotation privileges or price protections substantially similar to
those found in the Borrower's agreements with its vendors, suppliers and
distributors in existence as of the Closing Date or (b) subject to written
customer or supplier agreement(s) requiring the customer or supplier (as the
case may be) to purchase all such Inventory upon termination of such
agreement(s), in a manner reasonably satisfactory to the Administrative Agent.
"Funds Transfer and Deposit Account Liability" means the
liability of any of the Designated Companies owing to any of the Lenders, or any
Affiliates of such Lenders, arising out of (a) the execution or processing of
electronic transfers of funds by automatic clearing house transfer, wire
transfer or otherwise to or from the deposit accounts of any Designated Company
now or hereafter maintained with any of the Lenders or their Affiliates,
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(b) the acceptance for deposit or the honoring for payment of any check, draft
or other item with respect to any such deposit accounts, and (c) any other
deposit, disbursement, and cash management services afforded to any Designated
Company by any of such Lenders or their Affiliates.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
date of determination.
"Guaranties" means any guaranty of the Obligations now or
hereafter delivered to the Administrative Agent.
"Hazardous Substances" means hazardous substances, hazardous
wastes, hazardous waste constituents and reaction by-products, hazardous
materials, pesticides, oil and other petroleum products, and toxic substances,
including asbestos and PCBs, as those terms are defined pursuant to
Environmental Laws.
"Hedging Liability" means the liability of any Designated
Company under any agreements with respect of any interest rate, foreign currency
and/or commodity exchanges, swaps, caps, collars, floors, forwards, options, or
other similar arrangements as any Designated Company may from time to time enter
into with any one or more of the Lenders party to this Agreement or their
Affiliates for the purpose of hedging or otherwise protecting against interest
rate, foreign currency and/or commodity exposure.
"Immaterial Designated Company" means a Designated Company
(other than the Borrower) which at the relevant time has assets with an
aggregate book value of $100,000 or less.
"Indebtedness for Borrowed Money" means for any Person
(without duplication) (a) all indebtedness of such Person for borrowed money,
whether current or funded, or secured or unsecured, (b) all indebtedness for the
deferred purchase price of Property or services, (c) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to Property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of a default are
limited to repossession or sale of such Property), provided, that if recourse
for such indebtedness is limited to the Property acquired, the amount of such
indebtedness shall be deemed to be equal to the book value of such Property, (d)
all indebtedness secured by a purchase money mortgage or other Lien to secure
all or part of the purchase price of Property subject to such mortgage or Lien,
(e) all obligations under leases which shall have been or must be, in accordance
with GAAP, recorded as Capital Leases in respect of which such Person is liable
as lessee, (f) any liability in respect of banker's acceptances or letters of
credit, (g) any indebtedness, whether or not assumed, secured by Liens on
Property acquired by such Person at the time of acquisition thereof, it being
understood that the term
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"Indebtedness for Borrowed Money" shall not include trade payables arising in
the ordinary course of business (including, without limitation, trade accounts
payable arising in the ordinary course of business between the Borrower and the
other Designated Companies but only to the extent the same represents payment
for goods sold and delivered in an arms length transaction on ordinary trade
terms and are paid on a current basis), (h) obligations in respect of interest
rate, foreign currency and/or commodity exchanges, swaps, caps, collars, floors,
forward options or other similar arrangements entered into for the purpose of
hedging or otherwise protecting against interest rate, foreign currency and/or
commodity exposure, and (i) any guaranty of any of the foregoing.
"Interest Expense" means, with reference to any Person for any
period, the sum of all interest expense of such Person determined in accordance
with GAAP.
"Interest Period" is defined in Section 1.7 hereof.
"Inventory" means all finished goods, work-in-progress and raw
materials (other than packaging, crating, and supplies inventory) held for sale
in which any Designated Company now has or hereafter acquires title.
"Inventory Turnover" means an amount, determined as of March
31, 2003 and as of the last day of each calendar quarter thereafter, for the
three-month period ending on such date, equal to (i) the product of the
aggregate cost of goods sold for the applicable three-month period, multiplied
by four (4), divided by (ii) the result of the aggregate gross book value of
Inventory on the first day of each calendar month within such three-month
period, divided by three (3). Inventory Turnover shall be calculated for the
Designated Companies on a consolidated basis in accordance with GAAP and with
reference to the financial statements of the Designated Companies for such
period to be delivered to the Administrative Agent pursuant to Section 8.5(c).
"Junior Debt" means, collectively, (i) the 1994 Debt and (ii)
Indebtedness for Borrowed Money owing to the landlord of Borrower's Miami,
Florida facility under a certain promissory note dated May, 1994 in the original
principal amount of $865,000, a certain promissory note dated May 1, 1995 in the
original principal amount of $90,300, a certain promissory note dated October,
1996 in the original principal amount of $161,500 and a certain promissory note
dated June 1, 1998 in the original amount of $32,000.
"L/C Issuer" means Harris Trust and Savings Bank.
"L/C Obligations" means the aggregate undrawn face amounts of
all outstanding Letters of Credit and all unpaid Reimbursement Obligations.
"L/C Sublimit" means $15,000,000, as reduced from time to time
pursuant to the terms hereof.
"Lease Lender" means a Person reasonably acceptable to the
Administrative Agent that is providing Permitted Lease Financing to a Designated
Company.
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"Lenders" means and includes Harris Trust and Savings Bank and
the other financial institutions from time to time party to this Agreement,
including each assignee Lender pursuant to Section 12.12 hereof.
"Lending Office" is defined in Section 10.4 hereof.
"Letter of Credit" is defined in Section 1.3(a) hereof.
"LIBOR" is defined in Section 1.4(b) hereof.
"Lien" means any mortgage, lien, security interest, pledge,
charge or encumbrance of any kind in the nature of the foregoing in respect of
any Property, including the interests of a vendor or lessor under any
conditional sale, Capital Lease or other title retention arrangement.
"Loan" means any Revolving Loan, whether outstanding as a Base
Rate Loan or Eurodollar Loan, each of which is a "type" of Loan hereunder.
"Loan Documents" means this Agreement, the Revolving Notes,
the Applications, the Collateral Documents, the Guaranties, and each other
instrument or document to be delivered hereunder or thereunder or otherwise in
connection therewith.
"Manage" or "Management" means to generate, handle,
manufacture, process, treat, store, use, re-use, refine, recycle, reclaim, blend
or burn for energy recovery, incinerate, accumulate speculatively, transport,
transfer, dispose of, release, threaten to release or abandon Hazardous
Substances.
"Material Adverse Effect" means (a) a material adverse change
in, or material adverse effect upon, the operations, business, Properties,
financial condition or performance of the Designated Companies, taken as a
group, (b) a material impairment of the ability of the Designated Companies,
taken as a group, to fulfill their obligations under the Loan Documents, or (c)
a material adverse effect upon (i) the legality, validity, binding effect or
enforceability against the Designated Companies of any Loan Document or the
rights and remedies of the Administrative Agent and the Lenders thereunder or
(ii) the perfection or priority of any Lien granted under any Collateral
Document with respect to any material portion of the Collateral.
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Proceeds" means, as applicable, (a) with respect to
any Disposition by a Person, cash and cash equivalent proceeds received by or
for such Person's account, net of (i) reasonable direct costs relating to such
Disposition and (ii) income, capital gains, sale, use or other transactional
taxes paid or payable by such Person at the time of such Disposition as a direct
result of such Disposition; and (b) with respect to any Event of Loss of a
Person, cash and cash equivalent proceeds received by or for such Person's
account (whether as a result of payments made under any applicable insurance
policy therefor or in connection with condemnation proceedings or otherwise),
net of (i) reasonable direct costs
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incurred in connection with the collection of such proceeds, awards or other
payments and (ii) income or capital gains taxes paid or payable by such Person
at the time of receipt of such insurance proceeds as a direct result of such
Event of Loss.
"Net Income" means, with reference to any Person for any
period, the net income (or net loss) of such Person for such period computed in
accordance with GAAP.
"1994 Debt" means all indebtedness of the Borrower in respect
of the certain $5,150,000 10-year 9% Subordinated Debenture due June 14, 2004
issued by the Borrower on June 14, 1994.
"Obligations" means all obligations of the Borrower to pay
principal and interest on the Loans, all Reimbursement Obligations owing under
the Applications, all fees and charges payable hereunder, and all other payment
obligations of the Borrower or any other Designated Company arising under or in
relation to any Loan Document, all obligations of the Borrower or any other
Designated Company in respect of Hedging Liabilities and all obligations of the
Borrower or any other Designated Company in respect of Funds Transfer and
Deposit Account Liability, in each case whether now existing or hereafter
arising, due or to become due, direct or indirect, absolute or contingent, and
howsoever evidenced, held or acquired.
"Participating Interest" is defined in Section 1.3(d) hereof.
"Participating Lender" is defined in Section 1.3(d) hereof.
"ParView" means, collectively, ParView, Inc. and each of its
Affiliates.
"ParView Leases" means, collectively, all leases or similar
agreements in existence between ParView and its customers and relating to
products of any Designated Company.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Person succeeding to any or all of its functions under ERISA.
"Permitted Lease Financing" means indebtedness not in excess
of $5,000,000 incurred by a Designated Company to Lease Lender on terms and
conditions, and pursuant to agreements and documents, reasonably satisfactory to
the Administrative Agent and secured only by Liens permitted under Section
8.7(k) hereof.
"Permitted Overadvance" means an amount approved in the sole
discretion of the Administrative Agent not to exceed $2,000,000 at any one time
outstanding by which the outstanding principal balance of Revolving Loans, L/C
Obligations and reserves taken pursuant to Section 1.1 hereof knowingly exceeds
the Borrowing Base as then determined and computed and/or subsequent to the
occurrence of a Default or Event of Default; provided, however, that (a)
Permitted Overadvances shall be advanced only if, in Administrative Agent's
judgment, such Permitted Overadvances are necessary or desirable to preserve or
protect the Collateral, or any portion thereof, or to enhance the likelihood of,
or
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maximize the amount of, repayment by the Borrower of the Obligations, (b)
Permitted Overadvances shall not knowingly be permitted to be outstanding for a
period exceeding 60 consecutive days (herein a "Permitted Overadvance Period"),
(c) each Permitted Overadvance Period shall be separated from all other
Permitted Overadvance Periods by at least 30 consecutive days, and (d) no more
than 2 such Permitted Overadvance Periods shall be permitted to occur in any
period of 365 consecutive days.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated organization or
any other entity or organization, including a government or agency or political
subdivision thereof.
"Plan" means any employee pension benefit plan covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code that either (a) is maintained by a member of the Controlled Group
for employees of a member of the Controlled Group or (b) is maintained pursuant
to a collective bargaining agreement or any other arrangement under which more
than one employer makes contributions and to which a member of the Controlled
Group is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions.
"Pledge Agreements" means, collectively, (a) that certain
Pledge Agreement of even date herewith, between the Borrower and the
Administrative Agent, and (b) each other Pledge Agreement now delivered by any
Designated Company to the Administrative Agent with respect to the equity of any
other Designated Company, as each of the same may be amended, modified,
supplemented or restated from time to time.
"Property" means, as to any Person, all types of real,
personal, tangible, intangible or mixed property owned by such Person whether or
not included in the most recent balance sheet of such Person and its
subsidiaries under GAAP.
"Receivables" means all rights to the payment of a monetary
obligation, now or hereafter owing to any Designated Company, evidenced by
accounts, contract rights, instruments, chattel paper or general intangibles.
"Reimbursement Obligation" is defined in Section 1.3(c)
hereof.
"Release" means any actual or threatened spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of Hazardous Substances into the environment, as
"environment" is defined in CERCLA.
"Required Lenders" means, as of the date of determination
thereof, (a) so long as there are only two or fewer Lenders, all Lenders and (b)
to the extent there are more than two Lenders, at least two Lenders whose
outstanding Loans and interests in Letters of Credit and Unused Revolving Credit
Commitments constitute more than 50% of the sum of the total outstanding Loans,
interests in Letters of Credit, and Unused Revolving Credit Commitments of the
Lenders.
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"Respond" or "Response" means any action taken pursuant to
Environmental Laws to correct, remove, remediate, cleanup, prevent, mitigate,
monitor, evaluate, investigate or assess the Release of a Hazardous Substance.
"Restricted Payments" is defined in Section 8.12 hereof.
"Revolver Percentage" means, for each Lender, the percentage
of the Revolving Credit Commitments represented by such Lender's Revolving
Credit Commitment or, if the Revolving Credit Commitments have been terminated,
the percentage held by such Lender (including through participation interests in
Reimbursement Obligations) of the aggregate principal amount of all Revolving
Loans and L/C Obligations then outstanding.
"Revolving Credit" means the credit facility for making
Revolving Loans and issuing Letters of Credit described in Sections 1.1 and 1.3
hereof.
"Revolving Credit Commitment" means, as to any Lender, the
obligation of such Lender to make Revolving Loans and to participate in Letters
of Credit issued for the account of the Borrower hereunder in an aggregate
principal or face amount at any one time outstanding not to exceed the amount
set forth opposite such Lender's name on Schedule 1 attached hereto and made a
part hereof, as the same may be reduced or modified at any time or from time to
time pursuant to the terms hereof. The Borrower and the Lenders acknowledge and
agree that the Revolving Credit Commitments of the Lenders aggregate $65,000,000
on the date hereof.
"Revolving Loan" is defined in Section 1.1 hereof and, as so
defined, includes a Base Rate Loan or a Eurodollar Loan, each of which (as so
defined) is a "type" of Revolving Loan hereunder.
"Revolving Note" is defined in Section 1.2 hereof.
"S&P" means Standard & Poor's Ratings Services Group, a
division of The McGraw-Hill Companies, Inc.
"Security Agreements" means, collectively, (a) that certain
Security Agreement of even date herewith, between the Borrower and the
Administrative Agent and (b) each other Security Agreement now or hereafter
executed by a Designated Company and delivered to the Administrative Agent, as
each of the same may be amended, modified, supplemented or restated from time to
time.
"Slow-Moving Inventory" means the sum of (a) 50% of the value
of Inventory aged more than 18 months from the date of last receipt, but less
than or equal to 36 months from the date of last receipt, and (b) 100% of the
value of Inventory aged more than 36 months from the date of last receipt.
"Subordinated Debt" means collectively, (i) the Junior Debt
and (ii) all other Indebtedness for Borrowed Money owing to any Person on terms
and conditions, and in such amounts, as are reasonably acceptable to the
Administrative Agent and the Required Lenders
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and which is subordinated in right of payment to the prior payment in full of
the Obligations pursuant to written subordination provisions approved in writing
by the Administrative Agent and the Required Lenders.
"Subsidiary" means, as to any particular parent corporation or
organization, any other corporation or organization more than 50% of the
outstanding Voting Stock of which is at the time directly or indirectly owned by
such parent corporation or organization or by any one or more other entities
which are themselves subsidiaries of such parent corporation or organization.
Unless otherwise specifically referred to herein, the term "Subsidiary" means a
Subsidiary of the Borrower or of any of its direct or indirect Subsidiaries.
"Tangible Net Worth" means, with respect to the Designated
Companies, the total shareholders' equity (including capital stock, additional
paid-in-capital and retained earnings after deducting treasury stock, but
excluding minority interests in Subsidiaries) which would appear on the balance
sheet of such Person determined in accordance with GAAP, minus the sum of (a)
all assets which would be classified as intangible assets under GAAP, including,
without limitation, goodwill, patents, trademarks, trade names, copyrights,
franchises and deferred charges (including, without limitation, unamortized debt
discount and expense, organization costs and deferred research and development
expense) and similar assets and (b) the write-up of assets above cost, all
determined on a consolidated basis in accordance with GAAP, and plus any Closing
Date Prepayment Fees that are capitalized by the Designated Companies.
"Termination Date" means May 14, 2006, or such earlier date on
which the Revolving Credit Commitments are terminated in whole pursuant to
Sections 1.12, 9.2 or 9.3 hereof.
"Unfunded Vested Liabilities" means, for any Plan at any time,
the amount (if any) by which the present value of all vested nonforfeitable
accrued benefits under such Plan exceeds the fair market value of all Plan
assets allocable to such benefits, all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess represents
a potential liability of a member of the Controlled Group to the PBGC or the
Plan under Title IV of ERISA.
"Unused Revolving Credit Commitments" means, at any time, the
difference between the Revolving Credit Commitments then in effect and the
aggregate outstanding principal amount of Revolving Loans and L/C Obligations.
"Voting Stock" of any Person means capital stock or other
equity interests of any class or classes (however designated) having ordinary
power for the election of directors or other similar governing body of such
Person, other than stock or other equity interests having such power only by
reason of the happening of a contingency.
"Welfare Plan" means a "welfare plan" as defined in Section
3(1) of ERISA.
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"Wholly-owned Subsidiary" means a Subsidiary of which all of
the issued and outstanding shares of capital stock (other than directors'
qualifying shares as required by law) or other equity interests are owned by the
Borrower and/or one or more Wholly-owned Subsidiaries within the meaning of this
definition.
Section 5.2 Interpretation.
--------------
The foregoing definitions are equally applicable to both the
singular and plural forms of the terms defined. The words "hereof", "herein",
and "hereunder" and words of like import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All references to time of day herein are references to Chicago,
Illinois, time unless otherwise specifically provided. Where the character or
amount of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, it shall be done in accordance with
GAAP except where such principles are inconsistent with the specific provisions
of this Agreement.
Section 5.3 Change in Accounting Principles.
-------------------------------
If, after the date of this Agreement, there shall occur any
change in GAAP from those used in the preparation of the financial statements
referred to in Section 6.5 hereof and such change shall result in a change in
the calculation of any financial covenant, standard or term found in this
Agreement, either the Borrower or the Required Lenders may by notice to the
Lenders and the Borrower, respectively, require that the Lenders and the
Borrower negotiate in good faith (with no fee payable by the Borrower with
respect thereto) to amend such covenants, standards, and term so as equitably to
reflect such change in accounting principles, with the desired result being that
the criteria for evaluating the financial condition of the Borrower and its
Subsidiaries shall be the same as if such change had not been made. No delay by
the Borrower or the Required Lenders in requiring such negotiation shall limit
their right to so require such a negotiation at any time after such a change in
accounting principles. Until any such covenant, standard, or term is amended in
accordance with this Section 5.3, financial covenants shall be computed and
determined in accordance with GAAP in effect prior to such change in accounting
principles. Without limiting the generality of the foregoing, the Borrower shall
neither be deemed to be in compliance with any financial covenant hereunder nor
out of compliance with any financial covenant hereunder if such state of
compliance or noncompliance, as the case may be, would not exist but for the
occurrence of a change in accounting principles after the date hereof.
SECTION 6.
REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Administrative
Agent and the Lenders as follows:
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Section 6.1 Organization and Qualification.
------------------------------
The Borrower is duly organized, validly existing and in good
standing as a corporation under the laws of the State of Delaware, has full and
adequate power to own its Property and conduct its business as now conducted,
and is duly licensed or qualified and in good standing in each jurisdiction in
which the nature of the business conducted by it or the nature of the Property
owned or leased by it requires such licensing or qualifying, except where the
failure to do so would not have a Material Adverse Effect.
Section 6.2 Designated Companies.
--------------------
Each Designated Company (other than the Borrower) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, as the case may be, has
full and adequate power to own its Property and conduct its business as now
conducted, and is duly licensed or qualified and in good standing in each
jurisdiction in which the nature of the business conducted by it or the nature
of the Property owned or leased by it requires such licensing or qualifying,
except where the failure to do so would not have a Material Adverse Effect.
Schedule 6.2 hereto identifies each such Designated Company, the jurisdiction of
its incorporation or organization, as the case may be, the percentage of issued
and outstanding shares of each class of its capital stock or other equity
interests owned by the Borrower and the other Designated Companies and, if such
percentage is not 100% (excluding directors' qualifying shares as required by
law), a description of each class of its authorized capital stock and other
equity interests and the number of shares of each class issued and outstanding.
All of the outstanding shares of capital stock and other equity interests of
each Designated Company are validly issued and outstanding and fully paid and
nonassessable and all such shares and other equity interests indicated on
Schedule 6.2 as owned by the Borrower or another Designated Company are owned,
beneficially and of record, by the Borrower or such other Designated Company
free and clear of all Liens other than the Liens granted in favor of the
Administrative Agent pursuant to the Collateral Documents. There are no
outstanding commitments or other obligations of any Designated Company to issue,
and no options, warrants or other rights of any Person to acquire, any shares of
any class of capital stock or other equity interests of any Designated Company.
Section 6.3 Authority and Validity of Obligations.
-------------------------------------
The Borrower has full right and authority to enter into this
Agreement and the other Loan Documents executed by it, to make the borrowings
herein provided for, to issue its Revolving Notes in evidence thereof, to grant
to the Administrative Agent the Liens described in the Collateral Documents
executed by the Borrower, and to perform all of its obligations hereunder and
under the other Loan Documents executed by it. Each Designated Company (other
than the Borrower) has full right and authority to enter into the Loan Documents
executed by it, to guarantee the obligations of the Borrower, to grant to the
Administrative Agent the Liens described in the Collateral Documents executed by
such Person, and to perform all of its obligations under the Loan Documents
executed by it. The Loan Documents delivered by each Designated Company have
been duly authorized,
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executed, and delivered by such Person and constitute valid and binding
obligations of such Person enforceable against it in accordance with their
terms, except as such enforceability may be limited by applicable bankruptcy
laws and laws affecting the enforcement of creditors' rights generally; and this
Agreement and the other Loan Documents do not, nor does the performance or
observance by any Designated Company of any of the matters and things herein or
therein provided for, (a) contravene or constitute a default under any provision
of law or any judgment, injunction, order or decree binding upon any Designated
Company or any provision of the organizational documents (e.g., charter,
articles of incorporation or by-laws, articles of association or operating
agreement, or partnership agreement, or other similar constituent document) of
any Designated Company, (b) contravene or constitute a default under any
covenant, indenture or agreement of or affecting any Designated Company or any
of its Property, which default could reasonably be expected to have a Material
Adverse Effect, or (c) result in the creation or imposition of any Lien on any
Property of any Designated Company other than the Liens granted in favor of the
Administrative Agent pursuant to the Collateral Documents.
Section 6.4 Use of Proceeds; Margin Stock.
------------------------------
The Borrower shall use the proceeds of the Revolving Credit
made available hereunder to repay in full Indebtedness for Borrowed Money owing
to the Existing Lender Group, for general working capital purposes, for
financing Capital Expenditures permitted by this Agreement, and for such other
legal and proper purposes as are consistent with this Agreement and all
applicable laws. No Designated Company is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Revolving Loan or any other
extension of credit made hereunder will be used to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock. Margin stock (as hereinabove defined)
constitutes less than 25% of those assets of the Designated Companies which are
subject to any limitation on sale, pledge, or other restriction hereunder. On
the Closing Date, and immediately following the execution and delivery of this
Agreement, the parties acknowledge that the Borrower has used the proceeds of
the Revolving Credit to repay and satisfy in full all of the Indebtedness for
Borrowed Money and other obligations owing by the Borrower and the other
Designated Companies to the Existing Lender Group and, in connection therewith,
the Collateral Agent thereunder has released all of its Liens on the Property of
the Borrower and the other Designated Companies and the certain Loan and
Security Agreement dated May 3, 1996, as amended, with the Existing Lender Group
has been terminated (other than with respect to indemnity obligations that by
their terms survive the termination thereof).
Section 6.5 Financial Reports.
-----------------
The consolidated balance sheet of the Companies as at December
31, 2002, and the related consolidated statements of income, retained earnings
and cash flows of the Companies for the fiscal year then ended, and accompanying
notes thereto, and the unaudited interim consolidated balance sheet of the
Companies as at February 28, 2003, and the related
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unaudited consolidated statements of income, retained earnings and cash flows of
the Companies for the two (2) months then ended, heretofore furnished to the
Administrative Agent and the Lenders, fairly present the consolidated financial
condition of the Companies as at said dates and the consolidated results of
their operations and cash flows for the periods then ended in conformity with
GAAP applied on a consistent basis (and, in the case of interim financial
statement, subject to the absence of footnote disclosures and normal quarter or
year-end adjustments). No Designated Company has contingent liabilities which
are material to it other than as indicated on such financial statements (or the
notes thereto) or, with respect to future periods, on the financial statements
furnished pursuant to Section 8.5 hereof.
Section 6.6 No Material Adverse Change.
--------------------------
Since December 31, 2002, there has been no change in the
financial condition or business prospects of the Designated Companies except
those occurring in the ordinary course of business, none of which individually
or in the aggregate could reasonably be expected to result in a Material Adverse
Effect.
Section 6.7 Full Disclosure.
---------------
The written statements and information furnished to the
Administrative Agent and the Lenders in connection with the negotiation of this
Agreement and the other Loan Documents and the commitments by the Lenders to
provide all or part of the financing contemplated hereby do not contain any
untrue statements of a material fact or omit a material fact necessary to make
the material statements contained herein or therein not materially misleading.
Section 6.8 Trademarks, Franchises, and Licenses.
------------------------------------
Each Designated Company owns, possesses, or has the right to
use all necessary patents, licenses, franchises, trademarks, trade names, trade
styles, copyrights, trade secrets, know how and confidential commercial and
proprietary information material to the conduct of its businesses as now
conducted, without known conflict with any patent, license, franchise,
trademark, trade name, trade style, copyright or other proprietary right of any
other Person, which conflict could reasonably be expected to have a Material
Adverse Effect, all of which as of the Closing Date are described on Schedule
6.8 hereto.
Section 6.9 Governmental Authority and Licensing.
------------------------------------
Each Designated Company has received all licenses, permits,
and approvals of all federal, state, and local governmental authorities, if any,
necessary to conduct their businesses, in each case where the failure to obtain
or maintain the same could reasonably be expected to have a Material Adverse
Effect. No investigation or proceeding which, if adversely determined, could
reasonably be expected to result in revocation or denial of any license, permit,
or approval is pending or, to the knowledge of the Borrower, threatened, which
revocation or denial could reasonably be expected to have a Material Adverse
Effect.
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Section 6.10 Good Title.
----------
Each Designated Company has good and defensible title (or
valid leasehold interests) to all of its material assets as reflected on the
most recent consolidated balance sheet of the Companies furnished to the
Administrative Agent and the Lenders (except for sales of assets in the ordinary
course of business and disposals of Property permitted pursuant to Section
8.10), subject to no Liens other than such thereof as are permitted by Section
8.8 hereof.
Section 6.11 Litigation and Other Controversies.
----------------------------------
No judgments are outstanding against any Designated Company
nor is there any litigation or governmental or arbitration proceeding or labor
controversy pending, nor to the knowledge of the Borrower threatened, against
any Designated Company, except judgments, litigations, proceedings and
controversies which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
Section 6.12 Taxes.
-----
All tax returns involving tax liabilities in an aggregate
amount in excess of $100,000 required to be filed (taking into account any
extensions thereof) by any Designated Company in any jurisdiction have, in fact,
been filed, and all taxes, assessments, fees and other governmental charges upon
each Designated Company or upon any of its Property, income or franchises, in an
aggregate amount in excess of $100,000 and which are shown to be due and payable
in such returns, have been paid, except such taxes, assessments, fees and
governmental charges, if any, as are being contested in good faith and by
appropriate proceedings which prevent enforcement of the matter under contest
and as to which adequate reserves established in accordance with GAAP have been
provided. As of the date hereof, the Borrower does not know of any proposed
additional tax assessments in an aggregate amount in excess of $100,000 against
any Designated Company for which adequate provisions in accordance with GAAP
have not been made on their accounts. Adequate provisions in accordance with
GAAP for taxes on the books of each Designated Company have been made for all
open years, and for its current fiscal period. The parties hereto acknowledge
that Borrower's federal tax return for 2001 is currently being audited by the
Internal Revenue Service.
Section 6.13 Approvals.
---------
No authorization, consent, license, or exemption from, or
filing or registration with, any court or governmental department, agency or
instrumentality, nor any approval or consent of any other Person, is or will be
necessary to the valid execution, delivery or performance by any Designated
Company of any Loan Document, except for (a) such approvals which have been
obtained prior to the date of this Agreement and remain in full force and effect
and (b) the filing of Uniform Commercial Code financing statements by the
Administrative Agent.
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Section 6.14 Affiliate Transactions.
----------------------
Except as set forth in Section 8.15, no Designated Company is
a party to any contracts or agreements with any of its Affiliates involving
consideration in excess of $100,000 on terms and conditions which are less
favorable to such Designated Company than would be usual and customary in
similar contracts or agreements between Persons not affiliated with each other.
Section 6.15 Investment Company; Public Utility Holding
------------------------------------------
Company.
- -------
No Designated Company is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 6.16 ERISA.
-----
Each Designated Company and each other member of its
Controlled Group has fulfilled its obligations under the minimum funding
standards of and is in compliance in all material respects with ERISA and the
Code to the extent applicable to it and has not incurred any liability to the
PBGC or a Plan under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA. No Designated Company has any contingent
liabilities in excess of $100,000 with respect to any post-retirement benefits
under a Welfare Plan, other than liability for continuation coverage described
in article 6 of Title I of ERISA.
Section 6.17 Compliance with Laws.
--------------------
Each Designated Company is in compliance with the requirements
of all federal, state and local laws, rules and regulations applicable to or
pertaining to their Property or business operations (including, without
limitation, the Occupational Safety and Health Act of 1970 and the Americans
with Disabilities Act of 1990), where any such non-compliance, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
Section 6.18 Other Agreements.
----------------
No Designated Company is in default under the terms of any
covenant, indenture or agreement of or affecting such Person or any of its
Property, which default if uncured could reasonably be expected to have a
Material Adverse Effect. There is no dispute regarding any agreement, contract,
lease or commitment, which dispute would be reasonably likely to have a Material
Adverse Effect.
Section 6.19 Solvency.
--------
Each Designated Company is solvent, able to pay its debts as
they become due, and have sufficient capital to carry on their business and all
businesses in which it is
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about to engage, and now owns property having a value both at fair valuation,
and at present fair saleable value, greater than the amount required to pay its
debts, including without limitation the Obligations. The Eligible Inventory and
the Eligible Receivables supporting the Revolving Loans to the Borrower are
sufficient in value to provide the Borrower and the other Designated Companies
with sufficient working capital and Excess Availability to enable them to
profitably operate their businesses, meet all debt amortization requirements and
perform their obligations under the Loan Documents and the other agreements
evidencing Indebtedness for Borrowed Money of the Designated Companies. No
Designated Company will be rendered insolvent by the execution and delivery of
any of the Loan Documents or by completion of the transactions contemplated
hereunder or thereunder.
Section 6.20 No Event of Default.
-------------------
No Event of Default has occurred and is continuing.
Section 6.21 Business Plans.
--------------
Borrower's business plans furnished on the date hereof have
been, and the Borrower's business plans to be furnished in accordance with
Section 7.1 will be, prepared by the Borrower and its financial personnel in
light of the past business of the Designated Companies and represent or will
represent, as applicable, as of the date thereof, the reasonable good faith
belief of the Borrower and such personnel as to the probable course of the
business of the Designated Companies, subject to the assumptions and
qualifications stated therein, it being understood that no assurance is given
that the actual financial results of the Designated Companies will not be
materially different from the projected results set forth in such business plans
as a result of events or factors that impact or effect the assumptions and
qualifications underlying such business plans.
Section 6.22 Employee Controversies.
----------------------
Except as disclosed on Schedule 6.22 attached hereto, (a)
there are no controversies pending or, to the best of the Borrower's knowledge,
threatened, between any Designated Company and any of its respective employees,
other than employee grievances and controversies arising in the ordinary course
of business which would not, in the aggregate, be reasonably likely to have a
Material Adverse Effect, (b) each Designated Company is in material compliance
with all federal and state laws respecting employment and employment terms,
conditions and practices, except for such noncompliance as would not be
reasonably likely to have a Material Adverse Effect and (c) as of the date
hereof, no Designated Company has any union representation questions,
grievances, discrimination or unfair labor practice complaints pending or
threatened against it.
Section 6.23 Environmental Matters.
---------------------
Except as disclosed on Schedule 6.23 attached hereto, (a) no
Designated Company has Managed Hazardous Substances on or off its property other
than in compliance with Environmental Laws, except for such noncompliance as
could not be reasonably likely
-46-
to have a Material Adverse Effect; (b) each Designated Company has complied in
all material respects with Environmental Laws regarding transfer, construction
on and operation of its business and property, including but not limited to
notifying authorities, observing restrictions on use, transferring, modifying or
obtaining permits, licenses, approvals and registrations, making required
notices, certifications and submissions, complying with financial liability
requirements, Managing Hazardous Substances and Responding to the presence or
Release of Hazardous Substances connected with operation of the business or
property; (c) the noncompliance by each Designated Company with Environmental
Laws would not be reasonably likely to have a Material Adverse Effect; (d) no
Designated Company has any material contingent liability with respect to the
Management of any Hazardous Substance; (e) no Designated Company shall permit
others to Manage, whether on or off its respective property, Hazardous
Substances connected with the operation of its business or property, except in
compliance with Environmental Laws, except for such noncompliance as could not
be reasonably likely to have a Material Adverse Effect; (f) each Designated
Company shall take prompt action in compliance with Environmental Laws to
Respond to the on-site or off-site Release of Hazardous Substances connected
with the operation of its business or property; and (g) no Designated Company
has received any Environmental Notice, a copy of which has not been promptly
forwarded to the Administrative Agent.
Section 6.24 Fees to Third Parties.
---------------------
As of the date hereof, no Company is in any way obligated to
any Person in respect of any finder's or broker's fee or similar commission in
connection with the closing of the transactions evidenced by the Loan Documents.
The Borrower agrees to indemnify the Administrative Agent and each Lender and
hold the Administrative Agent and each Lender harmless from any claims for any
finder's or broker's fees or similar commissions from any Persons.
Section 6.25 Subsidiaries; Joint Ventures; Partnerships.
------------------------------------------
As of the date hereof, no Designated Company has any
Subsidiaries except as set forth on Schedule 6.2 attached hereto. Schedule 6.2
specifically identifies each such Subsidiary that is not a Designated Company.
No Designated Company is engaged in any joint venture or partnership with any
other Person, except as set forth on Schedule 6.2 attached hereto.
SECTION 7.
CONDITIONS PRECEDENT.
The obligation of each Lender to advance any Revolving Loan or
of the L/C Issuer to issue, extend the expiration date (including by not giving
notice of non-renewal) of or increase the amount of any Letter of Credit under
this Agreement, shall be subject to the following conditions precedent:
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Section 7.1 All Credit Events.
-----------------
At the time of each Credit Event hereunder:
(a) each of the representations and warranties set forth
herein and in the other Loan Documents shall be and remain true and correct in
all material respects as of said time, except to the extent the same expressly
relate to an earlier date;
(b) the Designated Companies shall be in compliance in
all material respects with all of the terms and conditions hereof and of the
other Loan Documents, and no Default or Event of Default shall have occurred and
be continuing or would occur as a result of such Credit Event; provided,
however, that the Lenders (or the Administrative Agent, in the case of Revolving
Loans made pursuant to Section 3.2(e) hereof), in their sole discretion, may
continue to make advances with respect to a Credit Event notwithstanding the
existence of any Default or Event of Default and any such advances so made shall
not be deemed a waiver of any such Default or Event of Default;
(c) in the case of any request for an extension of credit
under the Revolving Credit, after giving effect to such extension of credit, the
aggregate principal amount of all Revolving Loans, L/C Obligations and any
reserves taken pursuant to Section 1.1 hereof shall not exceed the lesser of (i)
the Revolving Credit Commitments and (ii) the Borrowing Base plus any then
Permitted Overadvances as then determined and computed;
(d) in the case of a Borrowing the Administrative Agent
shall have received the notice required by Section 1.6 hereof, in the case of
the issuance of any Letter of Credit the L/C Issuer shall have received a duly
completed Application for such Letter of Credit together with any fees called
for by Section 2.1 hereof, and, in the case of an extension or increase in the
amount of a Letter of Credit, a written request therefor in a form reasonably
acceptable to the L/C Issuer together with fees called for by Section 2.1
hereof; and
(e) such Credit Event shall not violate any order,
judgment or decree of any court or other governmental authority or any provision
of law or regulation applicable to the Administrative Agent or any Lender
(including, without limitation, Regulation U of the Board of Governors of the
Federal Reserve System) as then in effect.
Each request for a Borrowing hereunder and each request for
the issuance of, increase in the amount of, or extension of the expiration date
of, a Letter of Credit shall be deemed to be a representation and warranty by
the Borrower on the date on such Credit Event as to the facts specified in
subsections (a) through (d), both inclusive, of this Section.
Section 7.2 Initial Credit Event.
--------------------
Before or concurrently with the initial Credit Event:
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(a) the Administrative Agent shall have received for each
Lender this Agreement duly executed by the Borrower and the Lenders;
(b) the Administrative Agent shall have received for each
Lender such Lender's duly executed Revolving Notes of the Borrower dated the
date hereof and otherwise in compliance with the provisions of Section 1.2
hereof;
(c) the Administrative Agent shall have received the duly
executed Collateral Documents, together with (to the extent not heretofore
delivered to the Administrative Agent) (i) except to the extent represented by
uncertificated securities, original stock certificates or other similar
instruments or securities representing all of the issued and outstanding shares
of capital stock or other equity interests of each Designated Company (other
than the Borrower), (ii) patent, trademark, and copyright collateral agreements
as the Administrative Agent shall reasonably require, and (iii) subject to
Section 4.2 hereof, deposit account and securities account control agreements as
the Administrative Agent shall reasonably require and the duly executed Guaranty
of each Designated Company other than the Borrower;
(d) the Administrative Agent shall have received evidence
of insurance required to be maintained under the Loan Documents, naming the
Administrative Agent as lenders loss payee and additional insured, as
applicable;
(e) the Administrative Agent shall have received for each
Lender copies of each Designated Company's organizational documents (e.g.,
articles of incorporation or by-laws, or other similar constituent document) and
any amendments thereto, certified in each instance by its Secretary or Assistant
Secretary;
(f) the Administrative Agent shall have received for each
Lender copies of resolutions of each Designated Company's Board of Directors
authorizing the execution, delivery and performance of this Agreement and the
other Loan Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby, together with specimen signatures
of the persons authorized to execute such documents on such Designated Company's
behalf, all certified in each instance by its Secretary or Assistant Secretary;
(g) the Administrative Agent shall have received for each
Lender copies of the certificates of good standing for each Designated Company
(dated no earlier than 25 days prior to the date hereof) from the office of the
secretary of the state of its incorporation or organization and of each state in
which it is qualified to do business as a foreign corporation or organization;
(h) the Administrative Agent shall have received for each
Lender a list of the Borrower's Authorized Representatives;
(i) the Administrative Agent shall have received an
executed fee letter called for by Section 2.1(c) hereof, and the Administrative
Agent shall have received for
-49-
itself and for the Lenders the initial fees called for by Section 2.1 hereof and
all reimbursement for expenses of the Administrative Agent incurred through the
date thereof;
(j) the Administrative Agent shall have received
financing statement, tax, suit and judgment lien search results against the
Property of Designated Companies evidencing the absence of Liens on its Property
except as permitted by Section 8.8 hereof;
(k) all financing statements and other documents relating
to the Collateral shall have been filed or recorded, as appropriate;
(l) the Administrative Agent shall have received a
Solvency Certificate with respect to the Designated Companies;
(m) the Administrative Agent shall have received a
Borrowing Base Certificate in the form attached hereto as Exhibit C showing the
computation of the Borrowing Base in reasonable detail as of the close of
business not earlier than five (5) days prior to the initial Credit Event
hereunder; and such Borrowing Base Certificate shall reflect that after the
initial Revolving Loans have been made hereunder, the initial Letters of Credit
have been issued hereunder, all closing costs in connection with the transaction
contemplated hereby have been paid (or if accrued, treated as paid) and all
Indebtedness for Borrowed Money of the Borrower to the Existing Lender Group has
been repaid in full, Excess Availability is at least $10,000,000;
(n) the Administrative Agent shall have received for each
Lender the favorable written opinion of counsel to the Designated Companies, in
form and substance satisfactory to the Administrative Agent; and
(o) the Administrative Agent shall have received for the
account of the Lenders such other agreements, instruments, documents,
certificates, and opinions as the Administrative Agent may reasonably request.
SECTION 8.
COVENANTS.
The Borrower agrees that, so long as any credit is available
to or in use by the Borrower hereunder, except to the extent compliance in any
case or cases is waived in writing pursuant to the terms of Section 12.13
hereof:
Section 8.1 Maintenance of Business.
-----------------------
Each Designated Company shall preserve and maintain its
existence, except (with respect to each Designated Company other than the
Borrower) to the extent such existence is no longer required in connection with
the operations of the business of the Borrower and the Designated Companies in
the ordinary course, taken as a whole, and the dissolution of which could not
reasonably be expected to have a Material Adverse Effect. Each Designated
Company shall preserve and keep in force and effect all licenses, permits,
franchises, approvals, patents, trademarks, trade names, trade styles,
copyrights and other
-50-
proprietary rights necessary to the proper conduct of its business where the
failure to do so could reasonably be expected to have a Material Adverse Effect.
Section 8.2 Maintenance of Properties.
-------------------------
Each Designated Company shall maintain, preserve and keep all
of its material Property, plant and equipment in good repair, working order and
condition (ordinary wear and tear excepted) and shall from time to time make all
needful and proper repairs, renewals, replacements, additions and betterments
thereto so that at all times the efficiency thereof shall be fully preserved and
maintained; provided, that this Section 8.2 shall not restrict any Designated
Company from consummating any disposition of Property permitted pursuant to
Section 8.10.
Section 8.3 Taxes and Assessments.
---------------------
Each Designated Company shall duly pay and discharge all
taxes, rates, assessments, fees and governmental charges upon or against it or
its Property, in each case before the same become delinquent and before
penalties accrue thereon, other than taxes, rates, assessments, fees and charges
in an aggregate amount of less than $100,000 and other than such taxes, rates,
assessments, fees and charges that are being contested in good faith and by
appropriate proceedings which prevent enforcement of the matter under contest
and adequate reserves are provided therefor, so long as such contest would not
be reasonably likely to have a Material Adverse Effect.
Section 8.4 Insurance.
---------
(a) Each Designated Company shall insure and keep insured
with good and responsible insurance companies, all insurable Property owned by
it which is of a character usually insured by Persons similarly situated and
operating like Properties against loss or damage from such hazards and risks,
and in such amounts, as are insured by Persons similarly situated and operating
like Properties; and each Designated Company shall insure such other hazards and
risks (including, without limitation, employers' and public liability risks)
with good and responsible insurance companies as and to the extent usually
insured by Persons similarly situated and conducting similar businesses. Each
Designated Company shall in any event maintain insurance on the Collateral to
the extent required by the Collateral Documents including, without limitation,
naming the Administrative Agent as additional insured and/or loss payee on all
such insurance policies, as applicable, under lender loss payable endorsements
satisfactory to the Administrative Agent. The Borrower shall, upon the request
of the Administrative Agent, furnish to the Administrative Agent and the Lenders
a certificate setting forth in summary form the nature and extent of the
insurance maintained pursuant to this Section.
(b) The Borrower hereby directs all insurers under such
policies of insurance to pay all proceeds of insurance policies directly to the
Administrative Agent for application against the Obligations. The Borrower
irrevocably makes, constitutes and appoints the Administrative Agent (and all
officers, employees or agents designated by the
-51-
Administrative Agent), as the Borrower's true and lawful attorney-in-fact for
the purpose of (a) making, settling and adjusting claims under all such policies
of insurance and for making all determinations and decisions with respect to
such policies of insurance; provided, that if no Event of Default or Default is
in existence, the Borrower shall be permitted to take such actions with respect
to each claim of less than Two Million Five Hundred Thousand Dollars
($2,500,000); and (b) endorsing the name of the Borrower on any check, draft,
instrument or other item of payment received by the Borrower or the
Administrative Agent pursuant to any such policies of insurance.
(c) Unless the Borrower provides the Administrative Agent
with evidence of the insurance coverage required by this Agreement, the
Administrative Agent may purchase insurance at the Borrower's expense, to
protect the Administrative Agent's interests in the Collateral. This insurance
may, but need not, protect the interests of the Designated Companies. The
coverage that the Administrative Agent purchases may not pay any claim that any
Designated Company may make or any claim that is made against any Designated
Company in connection with the Collateral. The Borrower may later cancel any
insurance purchased by the Administrative Agent, but only after providing the
Administrative Agent with evidence that the Borrower has obtained insurance as
required by this Agreement. If the Administrative Agent purchases insurance for
the Collateral, the Borrower will be responsible for the costs of that
insurance, including interest and any other charges that may be imposed in
connection with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance. The costs of the insurance may be
added to the Revolving Loans. The costs of the insurance may be more than the
cost of insurance that the Designated Companies may be able to obtain on their
own.
Section 8.5 Financial Reports.
-----------------
The Borrower shall, and shall cause each Designated Company
to, maintain a standard system of accounting in accordance with GAAP and shall
furnish to the Administrative Agent, and in the case of clauses (c), (d) and (g)
below, each Lender:
(a) as soon as available, and in any event no later than
4 Business Days after the end of each calendar week, a consolidated Borrowing
Base Certificate in the form attached hereto as Exhibit C showing the
computation of the Borrowing Base in reasonable detail as of the close of
business on the last day of the immediately preceding week (with the Inventory
component of the Borrowing Base updated not less often than once per month),
together with such other information as is therein required, in each case
prepared by the Borrower and certified to by the Borrower's chief financial
officer or such other officer of the Borrower reasonably acceptable to the
Administrative Agent;
(b) as soon as available, and in any event within 20 days
after the last day of each calendar month, a consolidated Receivables and
accounts payable aging and a consolidated Inventory stock status report (by
major category of Inventory and by location of the relevant Inventory) and an
aging of Franchise Inventory for the Designated Companies (separately listing
the aggregate value of Franchise Inventory that is aged (i) less than or equal
to 18 months from the date of last receipt, (ii) more than 18 months, but less
than or
-52-
equal to 36 months from the date of last receipt, and (iii) more than 36 months
from the date of last receipt), each in form and scope reasonably satisfactory
to the Administrative Agent and prepared by the Borrower and certified to by its
chief financial officer or another officer of the Borrower reasonably acceptable
to the Administrative Agent;
(c) as soon as available, and in any event within 45 days
after the last day of each calendar month that is the last month of a calendar
quarter and within 30 days after the last day of each other calendar month, a
copy of the consolidated balance sheets of the Designated Companies as of the
last day of such month and the consolidated statements of income and cash flows
of the Designated Companies for the month and for the fiscal year-to-date period
then ended, each in reasonable detail showing in comparative form the figures
for the corresponding date and period in the previous fiscal year as well as in
comparative form against the Borrower's business plan for the current fiscal
year, prepared by the Borrower in accordance with GAAP (subject to the absence
of footnotes required to be included in conformity with GAAP and year-end audit
adjustments) and certified to by its chief financial officer or another officer
of the Borrower reasonably acceptable to the Administrative Agent;
(d) as soon as available, and in any event within 90 days
after the close of each fiscal year of the Borrower, a copy of the consolidated
balance sheet of the Designated Companies as of the last day of the fiscal year
then ended and the consolidated statements of income and cash flows of the
Designated Companies for the fiscal year then ended, and accompanying notes
thereto, each in reasonable detail showing in comparative form the figures for
the previous fiscal year as well as in comparative form against the Borrower's
business plan for such fiscal year, accompanied in the case of the consolidated
financial statements by an unqualified opinion of Lazar Levine & Felix LLP or
another firm of independent public accountants of recognized national standing,
selected by the Borrower and reasonably satisfactory to the Administrative
Agent, to the effect that the consolidated financial statements have been
prepared in accordance with GAAP and present fairly in accordance with GAAP the
consolidated financial condition of the Designated Companies as of the close of
such fiscal year and the results of their operations and cash flows for the
fiscal year then ended and that an examination of such accounts in connection
with such financial statements has been made in accordance with generally
accepted auditing standards and, accordingly, such examination included such
tests of the accounting records and such other auditing procedures as were
considered necessary in the circumstances;
(e) promptly after receipt thereof, any additional
written reports, management letters or other detailed information contained in
writing concerning significant aspects of any Designated Company's operations
and financial affairs given to it by its independent public accountants;
(f) promptly after the sending or filing thereof, copies
of each financial statement, report, notice or proxy statement sent by any
Designated Company to its stockholders or other equity holders, and copies of
each regular, periodic or special report, registration statement or prospectus
(including all Form 10-K, Form 10-Q and Form 8-K reports) filed by any
Designated Company with any securities exchange or the Securities and Exchange
Commission or any successor agency;
-53-
(g) as soon as available, and in any event within 45 days
after the end of each fiscal year of the Borrower, a copy of a consolidated
business plan of the Designated Companies for the following fiscal year, such
business plan to show the projected consolidated revenues, expenses and balance
sheet of the Designated Companies on an annual basis and on a fiscal
month-by-month basis; in each case such business plans shall be in reasonable
detail prepared by the Borrower and in form and scope reasonably satisfactory to
the Administrative Agent and shall include a summary of all assumptions and
qualifications made in preparing such business plans;
(h) prompt notice if any Designated Company is enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all of or any material part
of its business affairs;
(i) promptly after knowledge thereof shall have come to
the attention of any executive officer of the Borrower, written notice of any
threatened or pending litigation or governmental or arbitration proceeding or
labor controversy against any Designated Company which, if adversely determined,
could reasonably be expected to have a Material Adverse Effect or of the
occurrence of any Default or Event of Default hereunder;
(j) promptly after knowledge thereof shall have come to
the attention of any executive officer of the Borrower, written notice of any
proposed additional tax assessments in an aggregate amount in excess of $100,000
against any Designated Company;
(k) with reasonable promptness, such other business or
financial data in the Borrower's possession, that the Borrower normally prepares
or that the Borrower can prepare with reasonable efforts, as the Administrative
Agent or any Lender may reasonably request; and
(l) with each of the financial statements furnished to
the Administrative Agent pursuant to subsections (c) and (d) above, a written
certificate in the form attached hereto as Exhibit D signed by the chief
financial officer of the Borrower, or another officer of the Borrower reasonably
acceptable to the Administrative Agent, to the effect that to the best of such
officer's knowledge and belief no Default or Event of Default has occurred
during the period covered by such statements or, if any such Default or Event of
Default has occurred during such period, setting forth a description of such
Default or Event of Default and specifying the action, if any, taken by any
Designated Company to remedy the same. Such certificate shall also set forth the
calculations supporting such statements in respect of Section 8.22 of this
Agreement.
Agent agrees to promptly forward to each Lender any of the foregoing reports or
notices received by Agent under clauses (a), (e), (f), (h), (i) and (j) above or
any other reports or notices described above that are at any time requested by
such Lender.
-54-
Section 8.6 Inspection; Appraisals.
----------------------
Each Designated Company shall permit the Administrative Agent
and each of its duly authorized representatives and agents to visit and inspect
any of its Property, corporate books and financial records, to examine and make
copies of its books of accounts and other financial records, and to discuss its
affairs, finances and accounts with, and to be advised as to the same by, its
officers, employees and independent public accountants (and by this provision
the Borrower hereby authorizes such accountants to discuss with the
Administrative Agent the finances and affairs of the Designated Companies) at
such reasonable times and intervals as the Administrative Agent may designate
and, so long as no Default or Event of Default exists, with reasonable prior
notice to the Borrower (which, in the case of the sales offices of the
Designated Companies shall be at least 24 hours in advance). Each Lender shall
have the right to have an agent or representative accompany the Administrative
Agent during each such visit. Notwithstanding the foregoing, unless an Event of
Default is in existence, the Administrative Agent agrees not to visit any sales
office of any Designated Company without being accompanied by an employee of the
Borrower, unless the Borrower does not supply such a employee within a
reasonable period after request therefor by the Administrative Agent. The
Administrative Agent agrees to make reasonable efforts to insure that all
inspections under this Section 8.6 do not unduly interfere with the business
conducted at such place of business. The Administrative Agent may obtain (or
direct the Borrower to obtain and provide to the Administrative Agent) updated
appraisals on any material fixed assets (including its equipment and/or real
property) and Inventory, or material portion thereof, of any Designated Company
from time to time as the Administrative Agent may designate, which appraisal
reports shall in each case be prepared by an appraiser reasonably acceptable to
the Administrative Agent and be in such format and contain such detail as the
Administrative Agent may reasonably request. The reasonable costs and expenses
incurred in obtaining any such appraisal shall in each case be borne by the
Borrower (whether obtained by the Administrative Agent or the Borrower),
provided that prior to the occurrence of an Event of Default, the Borrower shall
not be required to pay for more than one appraisal of the equipment of the
Designated Companies per calendar year, one appraisal of real property of the
Designated Companies per calendar year, and one appraisal of the Inventory of
the Designated Companies per calendar year. The Borrower shall, at the
Administrative Agent's reasonable request, provide, at the Borrower's expense,
updated environmental questionnaires concerning activities and conditions
affecting the real property owned, leased or operated by any Designated Company
and, in the event that an environmental questionnaire indicates a material
environmental problem, as determined by the Administrative Agent, environmental
reports prepared for the Administrative Agent by an environmental consultant or
an environmental engineering firm reasonably acceptable to the Administrative
Agent concerning any real property owned, leased or operated by any Designated
Company.
Section 8.7 Borrowings and Guaranties.
-------------------------
No Designated Company shall issue, incur, assume, create or
have outstanding any indebtedness or obligations, any Indebtedness for Borrowed
Money, or be or become liable as endorser, guarantor or surety for any debt,
obligation or undertaking of any other
-55-
Person, or otherwise agree to provide funds for payment of the obligations of
another, or advance funds thereto or otherwise assure a creditor of another
against loss, or apply for or become liable to the issuer of a letter of credit
which supports an obligation of another, or subordinate any material claim or
demand it may have to the material claim or demand of any other Person;
provided, however, that the foregoing shall not restrict nor operate to prevent:
(a) the Obligations;
(b) purchase money indebtedness and Capitalized Lease
Obligations for the purchase or financing of real estate, machinery and
equipment of the Designated Companies in the ordinary course of business in an
aggregate amount not to exceed $6,000,000 in the aggregate at any one time
outstanding, plus any such amounts outstanding on the Closing Date and described
on Schedule 8.7;
(c) Indebtedness listed on Schedule 8.7;
(d) obligations of the Borrower arising out of interest
rate, foreign currency, and commodity hedging agreements entered into for its
own account with one or more Lenders or their Affiliates in the ordinary course
of business;
(e) endorsement of items for deposit or collection of
commercial paper received in the ordinary course of business;
(f) unsecured Indebtedness for Borrowed Money (including
without limitation loans and advances) owing to the Borrower by any other
Designated Company or by the Borrower to any other Designated Company;
(g) Indebtedness for Borrowed Money owing to the Borrower
by AASI UK, as permitted pursuant to Section 8.9(g), owing to the Borrower by
AASI Mexico, as permitted pursuant to Section 8.9(i), owing to the Borrower by
AASI Korea, as permitted pursuant to Section 8.9(n) or owing to the Borrower by
any other Foreign Subsidiary, as permitted pursuant to Section 8.9(o);
(h) the Junior Debt and other Subordinated Debt;
(i) guaranties by the Borrower of the obligations
(including real estate leases) of another Designated Company or by a Designated
Company of the obligations of the Borrower;
(j) trade payables, accruals and other obligations
(including without limitation, with respect to real estate and other operating
leases and other contractual obligations) in the ordinary course of business not
more than 30 days' past due and payable, or with respect to which such
Designated Company is contesting in good faith the amount or validity thereof by
appropriate proceedings or actions, and then only to the extent that such
Designated Company has set aside on its books adequate reserves therefor in
accordance with GAAP;
-56-
(k) up to $5,000,000 of Indebtedness for Borrowed Money
of a Designated Company in respect of Permitted Lease Financing;
(l) an unsecured guaranty by the Borrower of up to
$1,000,000 of obligations of ParView relating to the financing by ParView of
some or all of the ParView Leases, which guaranty shall have terms and
conditions, and be evidenced by documents and agreements, that are reasonably
satisfactory to the Required Lenders (it being acknowledged that the Required
Lenders have previously approved the documents evidencing the existing unsecured
guaranty by the Borrower); and
(m) other unsecured indebtedness of the Designated
Companies not otherwise permitted by this Section in an amount not to exceed
$250,000 in the aggregate at any one time outstanding.
Notwithstanding the foregoing, no individual Designated Company other than the
Borrower shall incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any obligations or indebtedness (including
without limitation trade payables and accounts), including all types of
indebtedness and obligations otherwise permitted under this Section 8.7, which
in the aggregate exceed $100,000, exclusive of (i) indebtedness and obligations
incurred under or with respect to Sections 8.7(f), 8.7(i) and 8.7(k), (ii)
indebtedness and obligations under real Property leases, which will not be
limited, (iii) employee compensation payable in the ordinary course of business,
which will not be limited, and (iv) up to $3,500,000 of trade payables of AVED
Industries Inc. outstanding from time to time, $2,000,000 of trade payables of
All American A.V.E.D., Inc. outstanding from time to time and up to $100,000 of
trade payables of each other Designated Company (other than the Borrower)
outstanding from time to time, which may be owed to third Persons. No Designated
Company shall incur any indebtedness to any other Designated Company other than
the Borrower.
Section 8.8 Liens.
-----
No Designated Company shall create, incur or permit to exist
any Lien of any kind on any Property owned by any such Person; provided,
however, that the foregoing shall not apply to nor operate to prevent:
(a) Liens listed on Schedule 8.8 hereto;
(b) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar charges
(other than Liens arising under ERISA), good faith cash deposits in connection
with tenders, bids, contracts or leases to which any Designated Company is a
party or other cash deposits required to be made in the ordinary course of
business, or Liens to secure surety, appeal or other bonds, provided in each
case that the obligation is not for borrowed money and that the obligation
secured is not overdue or, if so overdue, is being contested in good faith by
appropriate proceedings or actions
-57-
which prevent enforcement of the matter under contest and adequate reserves have
been established therefor;
(c) mechanics', workmen's, materialmen's, landlords',
carriers', statutory or other similar Liens arising in the ordinary course of
business that secure amounts that are not due or which are being contested in
good faith by appropriate proceedings or actions which prevent enforcement of
the matter under contest, and in any case which could not reasonably be expected
to have a Material Adverse Effect;
(d) judgment liens and judicial attachment liens not
constituting an Event of Default under Section 9.1(g) hereof and the pledge of
assets for the purpose of securing an appeal, stay or discharge in the course of
any legal proceeding, provided that the aggregate amount of such judgment liens
and attachments and liabilities of the Borrower and its Subsidiaries secured by
a pledge of assets permitted under this subsection, including interest and
penalties thereon, if any, shall not be in excess of $1,000,000 at any one time
outstanding;
(e) Liens on property of a Designated Company created
solely for the purpose of securing indebtedness permitted by Section 8.7(b)
hereof, representing or incurred to finance, refinance or refund the purchase
price of Property, provided that no such Lien shall extend to or cover other
Property of the Borrower or such Subsidiary other than the respective Property
so acquired, and the principal amount of indebtedness secured by any such Lien
shall at no time exceed the original purchase price of such Property, as reduced
by repayments of principal thereon;
(f) any interest or title of a lessor under any operating
lease, including without limitation any real Property operating lease;
(g) easements, rights-of-way, restrictions and other
similar encumbrances against real property which, in the aggregate, are not
substantial in amount and which do not materially detract from the value of the
Property subject thereto or materially interfere with the ordinary conduct of
the business of any Designated Company;
(h) Liens on a Designated Company's rights in respect of
any ParView Leases and the products subject to such ParView Leases, granted in
favor of a Lease Lender to secured the Permitted Lease Financing;
(i) Liens arising in the ordinary course of business to
secure amounts (other than Indebtedness for Borrowed Money) that are not yet due
and payable and could not be reasonably expected to have a Material Adverse
Effect; and
(j) the Liens granted in favor of the Administrative
Agent pursuant to the Collateral Documents securing the Obligations.
-58-
Section 8.9 Investments, Acquisitions, Loans and
------------------------------------
Advances.
- --------
No Designated Company shall directly or indirectly, make,
retain or have outstanding any investments (whether through purchase of stock or
obligations or otherwise) in, or loans or advances to, any other Person, or
acquire all or any substantial part of the assets, stock or business of any
other Person or division thereof; provided, however, that the foregoing shall
not apply to nor operate to prevent:
(a) investments listed on Schedule 8.9;
-------------
(b) the Borrower's investments in its Subsidiaries
existing on the Closing Date; and nominal (not to exceed $100,000 each)
investments by the Borrower made to initially or further capitalize new
Designated Companies;
(c) investments in direct obligations of the United
States of America or of any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of America,
provided that any such obligations shall mature within one year of the date of
issuance thereof;
(d) investments in commercial paper rated at least P-1 by
Moody's and at least A-1 by S&P maturing within one year of the date of issuance
thereof;
(e) investments in certificates of deposit issued by any
Lender or by any United States commercial bank having capital and surplus of not
less than $100,000,000 which have a maturity of one year or less;
(f) intercompany advances made from time to time by the
Borrower to any one or more Designated Companies or to the Borrower by any one
or more Designated Companies;
(g) intercompany advances and capital contributions made
from time to time by the Borrower to AASI UK, at a time when no Event of Default
is in existence (unless otherwise agreed by the Required Lenders), in an
aggregate amount not to exceed $1,000,000 at any time outstanding;
(h) an investment by the Borrower of up to $60,000 in a
third party;
(i) intercompany advances, capital contributions and
other investments made from time to time by the Borrower to AASI Mexico, at a
time when no Event of Default is in existence (unless otherwise agreed by the
Required Lenders), in an aggregate amount not to exceed $2,500,000 at any time
outstanding;
(j) investments by one or more Designated Companies
consisting of capital stock of ParView acquired by such Designated Companies in
non-cash transactions in settlement of outstanding Receivables of such
Designated Companies owing by ParView;
-59-
(k) advances for travel and expenses to officers,
directors and employees in the ordinary course of business;
(l) loans to officers, directors, employees and
shareholders, at a time when no Event of Default is in existence (unless
otherwise agreed by the Required Lenders), in an aggregate amount not in excess
of $500,000 at any time outstanding;
(m) trade accounts payable arising in the ordinary course
of business between the Borrower and the other Designated Companies or other
Subsidiaries of the Designated Companies, but only to the extent the same
represent payment for goods sold and delivered in an arm's length transaction on
ordinary trade terms and are paid to the Borrower;
(n) intercompany advances, capital contributions and
other investments made from time to time by the Borrower to AASI Korea, at a
time when no Event of Default is in existence (unless otherwise agreed by the
Required Lenders), in an aggregate amount not to exceed $1,000,000 at any time
outstanding; and
(o) intercompany advances, capital contributions and
other investments made from time to time by the Borrower to a Foreign Subsidiary
other than AASI UK, AASI Mexico or AASI Korea at a time when no Event of Default
is in existence (unless otherwise agreed by the Required Lenders), in an
aggregate amount not to exceed $2,500,000 at any time outstanding.
In determining the amount of investments, acquisitions, loans, and advances
permitted under this Section, investments and acquisitions shall always be taken
at the original cost thereof (regardless of any subsequent appreciation or
depreciation therein), and loans and advances shall be taken at the principal
amount thereof then remaining unpaid.
Section 8.10 Mergers, Consolidations and Sales.
---------------------------------
No Designated Company shall be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any part
of its Property, including any disposition of Property as part of a sale and
leaseback transaction, or in any event sell or dispose of (with or without
recourse) any of its notes, Receivables, chattel paper or instruments; provided,
however, that this Section shall not apply to nor operate to prevent:
(a) the sale or lease of Inventory in the ordinary course
of business;
(b) the merger of any Designated Company with and into
another Designated Company; provided that, in the case of any such merger
involved in Borrower, the Borrower is the Person surviving such merger;
(c) the sale, transfer, or other disposition of equipment
and other tangible personal property other than Inventory (i) being replaced in
the ordinary course of business with other equipment or other tangible personal
property other than Inventory with a fair market value equal to or greater than
that of the equipment or other tangible personal property being replaced, so
long as such replacement is completed within 180 days of such
-60-
sale, transfer or other disposition or (ii) no longer required in the operation
of such Designated Company's business with an aggregate fair market value for
all of the Designated Companies not in excess of $500,000 in any fiscal year;
and
(d) subject to the other terms and conditions hereof, the
sale, transfer, lease, or other disposition of equipment and other tangible
personal property other than Inventory (including any disposition of equipment
as part of a sale and leaseback transaction) made in an arms-length transaction
for an aggregate appraised market value for the Designated Companies not in
excess of $500,000 during any fiscal year.
So long as no Default or Event of Default has occurred and is continuing or
would arise as a result thereof, upon the written request of the Borrower, the
Administrative Agent shall release its Lien on any Property sold pursuant to the
foregoing clauses (a), (c) and (d).
Section 8.11 Maintenance of Subsidiaries.
---------------------------
The Borrower shall not assign, sell or transfer, nor shall it
permit any Designated Company to issue, assign, sell or transfer, any shares of
capital stock of a Designated Company; provided, however, that the foregoing
shall not operate to prevent (a) Liens on the capital stock of Designated
Companies granted to the Administrative Agent pursuant to the Collateral
Documents, (b) the issuance, sale and transfer to any person of any shares of
capital stock of the Borrower solely for the purpose of qualifying, and to the
extent legally necessary to qualify, such person as a director of the Borrower
and (c) any transaction permitted by Section 8.10(b) above.
Section 8.12 Dividends and Certain Other Restricted
--------------------------------------
Payments.
- --------
No Designated Company shall (a) declare or pay any dividends
on or make any other distributions in respect of any class or series of its
capital stock or other equity interests (including, without limitation, any
payments in respect of stock appreciation rights and common stock equivalents),
(b) directly or indirectly purchase, redeem, or otherwise acquire or retire any
of its capital stock or other equity interests or any warrants or options to
acquire the same, other than the retirement of the stock by a Designated Company
(other than the Borrower) in connection with its liquidation and dissolution or
other termination to the extent permitted by or consistent with Section 8.1 in a
cashless transaction, or (c) pay consulting, management, or other similar fees
to their Affiliates (collectively, "Restricted Payments"); provided, however,
that the foregoing shall not operate to prevent (i) the making of dividends or
distributions by any Subsidiary of a Designated Company to such Designated
Company or (ii) so long as no Default or Event of Default then exists or would
arise after giving effect thereto, purchases by the Borrower on the open market
of common stock of the Borrower from Persons not affiliated with the Borrower or
constituting officers or directors of any Designated Company, so long as the
aggregate cost of such purchases does not exceed $2,000,000 during the term of
this Agreement.
-61-
Section 8.13 ERISA.
-----
Each Designated Company shall promptly pay and discharge all
obligations and liabilities arising under ERISA of a character which if unpaid
or unperformed could reasonably be expected to result in the imposition of a
Lien against any of its Property. Each Designated Company shall promptly notify
the Administrative Agent and each Lender of: (a) the occurrence of any
reportable event (as defined in ERISA) with respect to a Plan, (b) receipt of
any written notice from the PBGC of its intention to seek termination of any
Plan or appointment of a trustee therefor, (c) its intention to terminate or
withdraw from any Plan, and (d) the occurrence of any event with respect to any
Plan which would result in the incurrence by any Designated Company of any
material liability, fine or penalty, or any material increase in the contingent
liability of any Designated Company with respect to any post-retirement Welfare
Plan benefit.
Section 8.14 Compliance with Laws.
--------------------
Each Designated Company shall comply in all respects with the
requirements of all federal, state, and local laws, rules, regulations,
ordinances and orders applicable to or pertaining to its Property or business
operations, where any such non-compliance, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect or result in a
Lien upon any of its Property which is not permitted under Section 8.8 hereof.
Section 8.15 Burdensome Contracts With Affiliates.
------------------------------------
No Designated Company shall enter into any contract, agreement
or business arrangement with any of its Affiliates involving consideration in
excess of $100,000 on terms and conditions which are less favorable to the
Borrower or such Designated Company than would be usual and customary in similar
contracts, agreements or business arrangements between Persons not affiliated
with each other, or pay any consulting, management or similar fees to any
officer, stockholder, director or Affiliate of any Designated Company, except
that (a) the Borrower or any other Designated Company may transfer Inventory at
cost to any Designated Company at the time of shipment thereof to a customer of
such Designated Company and (b) the Borrower may pay consulting, management or
similar fees to affiliated Persons not in excess of $250,000 in the aggregate in
any fiscal year, inclusive of amounts described on Schedule 8.15.
Section 8.16 No Changes in Fiscal Year.
-------------------------
Each Designated Company's fiscal year ends on the last day of
December of each year, and no Designated Company shall change its fiscal year
from its present basis without the approval of the Required Lenders, which
approval will not be unreasonably withheld.
-62-
Section 8.17 Formation of Subsidiaries.
-------------------------
Except for (a) Subsidiaries existing on the Closing Date and
disclosed on Schedule 6.2 hereof and (b) Subsidiaries created in connection with
the opening of any new sales or other office, no Designated Company shall form
or acquire any other Subsidiary.
Section 8.18 Change in the Nature of Business.
--------------------------------
No Designated Company shall engage in any business or activity
if as a result the general nature of the business of such Designated Company
would be changed in any material respect from the general nature of the business
engaged in by it or, if a new Designated Company, any other Designated Company
as of the Closing Date.
Section 8.19 Use of Loan Proceeds.
--------------------
The Borrower shall use the credit extended under this
Agreement solely for the purposes set forth in, or otherwise permitted by,
Section 6.4 hereof.
Section 8.20 No Restrictions.
---------------
Except as provided herein, no Designated Company shall
directly or indirectly create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of such Designated Company to: (a) pay dividends or make any other distribution
on any Designated Company's capital stock or other equity interests owned by any
Designated Company, (b) pay any indebtedness owed to any Designated Company, (c)
make loans or advances to any Designated Company, (d) transfer any of its
Property to any Designated Company, or (e) guarantee the Obligations and/grant
Liens on its assets to the Administrative Agent as required by the Loan
Documents.
Section 8.21 Subordinated Debt.
-----------------
No Designated Company shall amend or modify any of the terms
or conditions relating to Subordinated Debt or make any voluntary repayment
thereof or effect any voluntary redemption thereof or make any payment on
account of Subordinated Debt which is prohibited under the terms of any
instrument or agreement subordinating the same to the Obligations; provided
that, notwithstanding the foregoing, the Borrower may repay up to $5,150,000 of
the 1994 Debt within 15 days prior to or after its maturity on June 14, 2004, so
long as (a) no Event of Default or Default is then in existence or would be
caused after giving affect thereto and (b) average Excess Availability for the
three (3) month period immediately preceding the consummation of such repayment
is equal to at least $15,000,000 and Excess Availability immediately after such
repayment is equal to at least $10,000,000.
Section 8.22 Financial Covenants.
-------------------
(a) Tangible Net Worth. Tangible Net Worth shall not, on
the last day of any calendar quarter in any period set forth below, be less then
the amount set forth below opposite such period:
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Period Amount
------ ------
March 31, 2003 through and including $17,700,000
February 29, 2004
March 31, 2004 through and including $19,300,000
February 28, 2005
March 31, 2005 through and including $21,000,000
February 28, 2006
March 31, 2006 and thereafter $22,800,000
(b) Capital Expenditures. No Designated Company shall
expend or incur Capital Expenditures (determined exclusive of Capital
Expenditures with the Net Cash Proceeds of an Event of Loss in order to replace
the Property subject to such Event of Loss) in an amount in excess of $1,000,000
in any fiscal year, exclusive of up to $3,000,000 of Capital Expenditures
expended as ERP systems costs.
(c) Debt Service Coverage Ratio. The Debt Service
Coverage Ratio shall not, on the last day of any calendar quarter in any period
set forth below, for the 12 month period ending on such date, be less than the
ratio set forth below opposite such period:
Period Ratio
------ -----
March 31, 2003 through and including 1.00 to 1.0
December 31, 2003
March 31, 2004 through and including 1.15 to 1.0
December 31, 2004
March 31, 2005 through and including 1.20 to 1.0
December 31, 2005
March 31, 2006 and thereafter 1.25 to 1.0
(d) Inventory Turnover. Inventory Turnover shall not on
the last day of any calendar quarter hereafter, for the calendar quarter ending
on such date, be less than 3.0.
Section 8.23 Executive Compensation/Bonuses.
------------------------------
No Designated Company shall pay aggregate annual compensation,
including salary, benefits and bonuses, to its chief executive officer, chief
financial officer and chief operating officer in excess of amounts that are
consistent with general industry practices, in light of the current and
projected financial condition of such Designated Company.
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Section 8.24 Amendment of Certificate of Incorporation or
--------------------------------------------
By-Laws.
- -------
No Designated Company shall amend its Certificate or Articles
of Incorporation, as applicable, or By-Laws, in any case in any manner that
would be reasonably likely to have a Material Adverse Effect. The Borrower
agrees to provide the Administrative Agent with a copy of any amendment of any
Designated Company's Certificate or Articles of Incorporation or By-Laws or any
other organizational documents on or before its effective date.
Section 8.25 Inventory Purchases.
-------------------
No Designated Company (other than the Borrower) shall at any
time purchase or otherwise acquire any Inventory from any Person other than the
Borrower except that Inventory may be purchased by the Designated Companies from
third Persons so long as the outstanding payable in respect thereof does not at
any time exceed $3,500,000 for purchases by AVED Industries Inc., $2,000,000 for
purchases by All American A.V.E.D., Inc. or $100,000 for purchases by any other
Designated Company (other than the Borrower).
Section 8.26 Operating Accounts.
------------------
Each Designated Company shall maintain all of its lockbox
accounts, blocked accounts, disbursement accounts and other operating accounts
(other than petty cash disbursement accounts and payroll accounts) with Harris
Trust and Savings Bank.
Section 8.27 Intellectual Property.
---------------------
The Borrower shall promptly notify the Administrative Agent if
it acquires or acquires rights to any patents, trademarks, tradenames or
copyrights in which its does not have such rights as of the Closing Date.
SECTION 9.
EVENTS OF DEFAULT AND REMEDIES.
Section 9.1 Events of Default.
-----------------
Any one or more of the following shall constitute an "Event of
Default" hereunder:
(a) default in the payment when due of all or any part of
the principal of or interest on any Revolving Note (whether at the stated
maturity thereof or at any other time provided for in this Agreement) or of any
Reimbursement Obligation or of any fee or other Obligation payable hereunder or
under any other Loan Document;
(b) default in the observance or performance of any
covenant set forth in Sections 4.5, 8.1, 8.4, 8.6-8.12 (inclusive), 8.21, 8.22
(inclusive), 8.25 or 8.26 hereof or of any provision in this Agreement dealing
with the use, disposition or remittance of the proceeds of Collateral or
requiring the maintenance of insurance thereon;
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(c) default in the observance or performance of any
covenant set forth in (i) Section 8.5(a) hereof, which failure continues for 2
days after the occurrence thereof; (ii) Section 8.5(b) hereof, which failure
continues for 3 days after the occurrence thereof; (iii) Section 8.5(c), (d),
(e) or (f) hereof, which failure continues for 5 days after the occurrence
thereof; or (iv) any provision hereof other than as set forth in clause (b)
above or subclauses (i), (ii) or (iii) of this clause (c), which is not remedied
within 15 days after the occurrence thereof;
(d) any material representation or warranty made herein
or in any other Loan Document or in any certificate furnished to the
Administrative Agent or the Lenders pursuant hereto or thereto or in connection
with any transaction contemplated hereby or thereby proves untrue in any
material respect as of the date of the issuance or making or deemed making
thereof;
(e) any event occurs or condition exists (other than
those described in subsections (a) through (d) above) which is specified as an
event of default under any of the other Loan Documents, which continues beyond
any cure or grace period set forth therein, or any of the Loan Documents shall
for any reason not be or shall cease to be in full force and effect or is
declared to be null and void, or any of the Collateral Documents shall for any
reason fail to create a valid and perfected first priority Lien in favor of the
Administrative Agent in the Collateral or any material part thereof except as
expressly permitted by the terms thereof, or any Subsidiary takes any action for
the purpose of terminating, repudiating or rescinding any Loan Document executed
by it or any of its obligations thereunder;
(f) default shall occur and be continuing as otherwise
not waived under any Indebtedness for Borrowed Money issued, assumed or
guaranteed by any Designated Company aggregating in excess of $1,000,000, or
under any indenture, agreement or other instrument under which the same may be
issued, and such default shall continue for a period of time sufficient to
permit the acceleration of the maturity of any such Indebtedness for Borrowed
Money (whether or not such maturity is in fact accelerated), or any such
Indebtedness for Borrowed Money shall not be paid when due (whether by demand,
lapse of time, acceleration or otherwise);
(g) any judgment or judgments, writ or writs or warrant
or warrants of attachment, or any similar process or processes shall be entered
or filed against any Designated Company, or against any of its Property, in an
aggregate amount in excess of $1,000,000 (except to the extent fully covered by
insurance pursuant to which the insurer has accepted liability therefor in
writing), and which remains undischarged, unvacated, unbonded or unstayed for a
period of 60 days;
(h) any Designated Company, or any member of its
Controlled Group, shall fail to pay when due an amount or amounts aggregating in
excess of $500,000 which it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans
having aggregate Unfunded Vested Liabilities in excess of $1,000,000
(collectively, a "Material Plan") shall be filed under Title IV of ERISA by any
Designated Company, or any other member of its Controlled Group, any plan
administrator
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or any combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a fiduciary
of any Material Plan against any Designated Company, or any member of its
Controlled Group, to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated;
(i) any default shall occur in the observance of
performance of any covenant set forth in any Loan Document other than this
Agreement, that continues after the expiration of any applicable grace or cure
period contained therein;
(j) any Designated Company (other than an Immaterial
Designated Company) shall (i) have entered involuntarily against it an order for
relief under the United States Bankruptcy Code, as amended, (ii) not pay, or
admit in writing its inability to pay, its debts generally as they become due,
(iii) make an assignment for the benefit of creditors, (iv) apply for, seek,
consent to, or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part of its
Property, (v) institute any proceeding seeking to have entered against it an
order for relief under the United States Bankruptcy Code, as amended, to
adjudicate it insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (vi) take any corporate
action in furtherance of any matter described in parts (i) through (v) above, or
(vii) fail to contest in good faith any appointment or proceeding described in
Section 9.1(k) hereof;
(k) a custodian, receiver, trustee, examiner, liquidator
or similar official shall be appointed for any Designated Company (other than an
Immaterial Designated Company), or any substantial part of any of its Property,
or a proceeding described in Section 9.1(j)(v) shall be instituted against any
Designated Company (other than an Immaterial Designated Company), and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of 60 days;
(l) the Borrower voluntarily or involuntarily dissolves
or is dissolved or any other Designated Company (other than an Immaterial
Designated Company) voluntarily or involuntarily dissolves or is dissolved,
except as permitted under Section 8.1;
(m) any Designated Company is enjoined, restrained or in
any way prevented by the order of any court or any administrative or regulatory
agency from conducting all or a material part of its business affairs and such
event could be reasonably likely to have a Material Adverse Effect;
(n) a breach shall occur under any intercreditor or
subordination agreement or any subordination provisions of any agreement, in
each case evidencing or relating to any Subordinated Debt;
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(o) any loss, theft, substantial damage or destruction of
any item or items of Collateral shall occur if (i) the amount of such loss with
respect to which the insurer has not within 45 days accepted liability exceeds
$1,000,000 in the aggregate or (ii) such loss results in an interruption of the
business of any Designated Company which would reasonably be expected to have a
Material Adverse Effect;
(p) there shall be instituted in any court criminal
proceedings against any Designated Company or any Designated Company shall be
indicted for any crime, in either case for which forfeiture of a material amount
of its Property is a potential penalty;
(q) Bruce Goldberg shall cease to function as a senior
management officer of the Borrower, unless he is replaced within 120 days with a
Person satisfactory to the Administrative Agent, in its reasonable judgment; or
(r) an event shall occur which has a Material Adverse
Effect.
Section 9.2 Non-Bankruptcy Defaults.
-----------------------
When any Event of Default other than those described in
subsection (j) or (k) of Section 9.1 hereof has occurred and is continuing, the
Administrative Agent shall, by written notice to the Borrower: (a) if so
directed by the Required Lenders, terminate the remaining Commitments and all
other obligations of the Lenders hereunder on the date stated in such notice
(which may be the date thereof); (b) if so directed by the Required Lenders,
declare the principal of and the accrued interest on all outstanding Revolving
Notes to be forthwith due and payable and thereupon all outstanding Revolving
Notes, including both principal and interest thereon, shall be and become
immediately due and payable together with all other amounts payable under the
Loan Documents without further demand, presentment, protest or notice of any
kind; and (c) if so directed by the Required Lenders, demand that the Borrower
immediately pay to the Administrative Agent 105% of the full amount then
available for drawing under each or any Letter of Credit, and the Borrower
agrees to immediately make such payment and acknowledges and agrees that the
Lenders would not have an adequate remedy at law for failure by the Borrower to
honor any such demand and that the Administrative Agent, for the benefit of the
Lenders, shall have the right to require the Borrower to specifically perform
such undertaking whether or not any drawings or other demands for payment have
been made under any Letter of Credit. The Administrative Agent, after giving
notice to the Borrower pursuant to Section 9.1(c) or this Section 9.2, shall
also promptly send a copy of such notice to the other Lenders, but the failure
to do so shall not impair or annul the effect of such notice.
Section 9.3 Bankruptcy Defaults.
-------------------
When any Event of Default described in subsections (j) or (k)
of Section 9.1 hereof has occurred and is continuing, then all outstanding
Revolving Notes shall immediately become due and payable together with all other
amounts payable under the Loan Documents without presentment, demand, protest or
notice of any kind, the obligation of the Lenders to extend further credit
pursuant to any of the terms hereof shall immediately
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terminate and the Borrower shall immediately pay to the Administrative Agent
105% of the full amount then available for drawing under all outstanding Letters
of Credit, the Borrower acknowledging and agreeing that the Lenders would not
have an adequate remedy at law for failure by the Borrower to honor any such
demand and that the Lenders, and the Administrative Agent on their behalf, shall
have the right to require the Borrower to specifically perform such undertaking
whether or not any draws or other demands for payment have been made under any
of the Letters of Credit.
Section 9.4 Collateral for Undrawn Letters of Credit.
----------------------------------------
(a) If the prepayment of the amount available for drawing
under any or all outstanding Letters of Credit is required under Section 1.9(b)
or under Section 9.2 or 9.3 above, the Borrower shall forthwith pay the amount
required to be so prepaid, to be held by the Administrative Agent as provided in
subsection (b) below.
(b) All amounts prepaid pursuant to subsection (a) above
shall be held by the Administrative Agent in one or more separate collateral
accounts (each such account, and the credit balances, properties and any
investments from time to time held therein, and any substitutions for such
account, any certificate of deposit or other instrument evidencing any of the
foregoing and all proceeds of and earnings on any of the foregoing being
collectively called the "Collateral Account") as security for, and for
application by the Administrative Agent (to the extent available) to, the
reimbursement of any payment under any Letter of Credit then or thereafter made
by the Administrative Agent, and to the payment of the unpaid balance of any
Revolving Loans and all other Obligations secured by the Collateral Documents.
The Collateral Account shall be held in the name of and subject to the exclusive
dominion and control of the Administrative Agent for the benefit of the
Administrative Agent, the Lenders and the L/C Issuer.
Section 9.5 Expenses.
--------
The Borrower agrees to pay to the Administrative Agent and
each Lender, and any other holder of any Revolving Note outstanding hereunder,
all expenses reasonably incurred or paid by the Administrative Agent and such
Lender or any such holder, including reasonable attorneys' fees and court costs,
in connection with any Default or Event of Default or in connection with the
enforcement of any of the Loan Documents (including all such costs and expenses
incurred in connection with a proceeding under the United States Bankruptcy
Code, as amended).
SECTION 10.
CHANGE IN CIRCUMSTANCES.
Section 10.1 Change of Law.
-------------
Notwithstanding any other provisions of this Agreement or any
Revolving Note, if at any time any change in applicable law or regulation or in
the interpretation thereof makes it unlawful for any Lender to make or continue
to maintain any Eurodollar Loans or to
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perform its obligations as contemplated hereby, such Lender shall promptly give
notice thereof to the Borrower and such Lender's obligations to make or maintain
Eurodollar Loans under this Agreement shall be suspended until it is no longer
unlawful for such Lender to make or maintain Eurodollar Loans. The Borrower
shall prepay on demand the outstanding principal amount of any such affected
Eurodollar Loans, together with all interest accrued thereon and all other
amounts then due and payable to such Lender under this Agreement; provided,
however, subject to all of the terms and conditions of this Agreement, the
Borrower may then elect to borrow the principal amount of the affected
Eurodollar Loans from such Lender by means of Base Rate Loans from such Lender,
which Base Rate Loans shall not be made ratably by the Lenders but only from
such affected Lender.
Section 10.2 Unavailability of Deposits or Inability to
------------------------------------------
Ascertain, or Inadequacy of, LIBOR.
- ----------------------------------
If on or prior to the first day of any Interest Period for any
Borrowing of Eurodollar Loans:
(a) the Administrative Agent determines that deposits in
U.S. Dollars (in the applicable amounts) are not being offered to it in the
interbank eurodollar market for such Interest Period, or that by reason of
circumstances affecting the interbank eurodollar market adequate and reasonable
means do not exist for ascertaining the applicable LIBOR, or
(b) the Required Lenders advise the Administrative Agent
that (i) LIBOR as determined by the Administrative Agent will not adequately and
fairly reflect the cost to such Lenders of funding their Eurodollar Loans for
such Interest Period or (ii) that the making or funding of Eurodollar Loans
become impracticable,
then the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Lenders, whereupon, until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
the obligations of the Lenders to make Eurodollar Loans shall be suspended;
provided, however, subject to all of the terms and conditions of this Agreement,
the Borrower may then elect to borrow the principal amount of the affected
Eurodollar Loans from such Lender by means of Base Rate Loans from such Lender,
which Base Rate Loans shall not be made ratably by the Lenders but only from
such affected Lender.
Section 10.3 Increased Cost and Reduced Return.
---------------------------------
(a) If, on or after the date hereof, in the reasonable
interpretation of the Administrative Agent or any Lender, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:
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(i) shall subject any Lender (or its Lending
Office) to any tax, duty or other charge with respect to its Eurodollar
Loans, its Revolving Notes, its Letter(s) of Credit, or its
participation in any thereof, any Reimbursement Obligations owed to it
or its obligation to make Eurodollar Loans, issue a Letter of Credit,
or to participate therein, or shall change the basis of taxation of
payments to any Lender (or its Lending Office) of the principal of or
interest on its Eurodollar Loans, Letter(s) of Credit, or
participations therein or any other amounts due under this Agreement or
any other Loan Document in respect of its Eurodollar Loans, Letter(s)
of Credit, any participation therein, any Reimbursement Obligations
owed to it, or its obligation to make Eurodollar Loans, or issue a
Letter of Credit, or acquire participations therein (except for changes
in the rate of tax on the overall net income of such Lender or its
Lending Office imposed by the jurisdiction in which such Lender's
principal executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System, but excluding with respect to any
Eurodollar Loans any such requirement included in an applicable
Eurodollar Reserve Percentage) against assets of, deposits with or for
the account of, or credit extended by, any Lender (or its Lending
Office) or shall impose on any Lender (or its Lending Office) or on the
interbank market any other condition affecting its Eurodollar Loans,
its Revolving Notes, its Letter(s) of Credit, or its participation in
any thereof, any Reimbursement Obligation owed to it, or its obligation
to make Eurodollar Loans, or to issue a Letter of Credit, or to
participate therein;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of making or maintaining any Eurodollar Loan, issuing or
maintaining a Letter of Credit, or participating therein, or to reduce the
amount of any sum received or receivable by such Lender (or its Lending Office)
under this Agreement or under any other Loan Document with respect thereto, by
an amount deemed by such Lender to be material, then, within 15 days after
demand by such Lender (with a copy to the Administrative Agent), the Borrower
shall be obligated to pay to such Lender such additional amount or amounts as
will compensate such Lender for such increased cost or reduction. Upon receipt
by the Borrower of such demand, the Borrower shall have the option to
immediately repay such Eurodollar Loan or convert such Eurodollar Loan to a Base
Rate Loan (in each case, subject to Section 1.11), or terminate such Letter of
Credit, in each case in order to minimize or eliminate such increased cost or
reduction.
(b) If, after the date hereof, any Lender or the
Administrative Agent shall have determined that the adoption of any applicable
law, rule or regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Lending Office) or
any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or
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comparable agency, has had the effect of reducing the rate of return on such
Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time,
within 15 days after demand by such Lender (with a copy to the Administrative
Agent), the Borrower shall pay to such Lender such additional amount or amounts
as will compensate such Lender for such reduction. Upon receipt by the Borrower
of such demand, the Borrower shall have the option to immediately repay such
Eurodollar Loan or convert such Eurodollar Loan to a Base Rate Loan (in each
case subject to Section 1.11), or terminate such Letter of Credit, in each case
in order to minimize or eliminate such increased cost or amount.
(c) A certificate of a Lender claiming compensation under
this Section 10.3 and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive if reasonably determined. In determining
such amount, such Lender may use any reasonable averaging and attribution
methods.
Section 10.4 Lending Offices.
---------------
Each Lender may, at its option, elect to make its Revolving
Loans hereunder at the branch, office or affiliate specified on the appropriate
signature page hereof (each a "Lending Office") for each type of Revolving Loan
available hereunder or at such other of its branches, offices or affiliates as
it may from time to time elect and designate in a written notice to the Borrower
and the Administrative Agent.
Section 10.5 Discretion of Lender as to Manner of
------------------------------------
Funding.
- -------
Notwithstanding any other provision of this Agreement, each
Lender shall be entitled to fund and maintain its funding of all or any part of
its Revolving Loans in any manner it sees fit, it being understood, however,
that for the purposes of this Agreement all determinations hereunder with
respect to Eurodollar Loans shall be made as if each Lender had actually funded
and maintained each Eurodollar Loan through the purchase of deposits in the
interbank eurodollar market having a maturity corresponding to such Eurodollar
Loan's Interest Period, and bearing an interest rate equal to LIBOR for such
Interest Period.
SECTION 11.
THE ADMINISTRATIVE AGENT.
Section 11.1 Appointment and Authorization of
--------------------------------
Administrative Agent.
- --------------------
Each Lender hereby appoints Harris Trust and Savings Bank as
the Administrative Agent under the Loan Documents and hereby authorizes the
Administrative Agent to take such action as Administrative Agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto. The Lenders
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expressly agree that the Administrative Agent is not acting as a fiduciary of
the Lenders in respect of the Loan Documents, the Borrower or otherwise, and
nothing herein or in any of the other Loan Documents shall result in any duties
or obligations on the Administrative Agent or any of the Lenders except as
expressly set forth herein.
Section 11.2 Administrative Agent and its Affiliates.
---------------------------------------
The Administrative Agent shall have the same rights and powers
under this Agreement and the other Loan Documents as any other Lender and may
exercise or refrain from exercising such rights and power as though it were not
the Administrative Agent, and the Administrative Agent and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Affiliate of the Borrower as if it were not
the Administrative Agent under the Loan Documents. The term "Lender" as used
herein and in all other Loan Documents, unless the context otherwise clearly
requires, includes the Administrative Agent in its individual capacity as a
Lender. References in Section 1 hereof to the Administrative Agent's Revolving
Loans, or to the amount owing to the Administrative Agent for which an interest
rate is being determined, refer to the Administrative Agent in its individual
capacity as a Lender.
Section 11.3 Action by Administrative Agent.
------------------------------
If the Administrative Agent receives from the Borrower a
written notice of an Event of Default pursuant to Section 8.5(i) or (k) hereof,
the Administrative Agent shall promptly give each of the Lenders written notice
thereof. The obligations of the Administrative Agent under the Loan Documents
are only those expressly set forth therein. Without limiting the generality of
the foregoing, the Administrative Agent shall not be required to take any action
hereunder with respect to any Default or Event of Default, except as expressly
provided in Section 9.2. Upon the occurrence of an Event of Default, the
Administrative Agent shall take such action to enforce its Lien on the
Collateral and to preserve and protect the Collateral as may be directed by the
Required Lenders. Unless and until the Required Lenders give such direction, the
Administrative Agent may (but shall not be obligated to) take or refrain from
taking such actions as it deems appropriate and in the best interest of all the
Lenders. In no event, however, shall the Administrative Agent be required to
take any action in violation of applicable law or of any provision of any Loan
Document, and the Administrative Agent shall in all cases be fully justified in
failing or refusing to act hereunder or under any other Loan Document unless it
first receives any further assurances of its indemnification from the Lenders
that it may require, including prepayment of any related expenses and any other
protection it requires against any and all costs, expense and liability which
may be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall be entitled to assume that no Default or Event of
Default exists unless notified in writing to the contrary by a Lender or the
Borrower. In all cases in which the Loan Documents do not require the
Administrative Agent to take specific action, the Administrative Agent shall be
fully justified in using its discretion in failing to take or in taking any
action thereunder. Any instructions, consents, approvals or waivers of the
Required Lenders, or of any other group of Lenders called for
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under the specific provisions of the Loan Documents, shall be binding upon all
the Lenders and the holders of the Obligations.
Section 11.4 Consultation with Experts.
-------------------------
The Administrative Agent may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
Section 11.5 Liability of Administrative Agent; Credit
-----------------------------------------
Decision.
- --------
Neither the Administrative Agent nor any of its directors,
officers, agents, or employees shall be liable for any action taken or not taken
by it in connection with the Loan Documents: (i) with the consent or at the
request of the Required Lenders or (ii) in the absence of its own gross
negligence or willful misconduct. Neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify: (i) any statement, warranty or
representation made in connection with this Agreement, any other Loan Document
or any Credit Event; (ii) the performance or observance of any of the covenants
or agreements of any Designated Company contained herein or in any other Loan
Document; (iii) the satisfaction of any condition specified in Section 7 hereof,
except receipt of items required to be delivered to the Administrative Agent; or
(iv) the validity, effectiveness, genuineness, enforceability, perfection,
value, worth or collectibility hereof or of any other Loan Document or of any
other documents or writing furnished in connection with any Loan Document or of
any Collateral; and the Administrative Agent makes no representation of any kind
or character with respect to any such matter mentioned in this sentence. The
Administrative Agent may execute any of its duties under any of the Loan
Documents by or through employees, agents, and attorneys-in-fact and shall not
be answerable to the Lenders, the Borrower, or any other Person for the default
or misconduct of any such agents or attorneys-in-fact selected with reasonable
care. The Administrative Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, other document or statement
(whether written or oral) believed by it to be genuine or to be sent by the
proper party or parties. In particular and without limiting any of the
foregoing, the Administrative Agent shall have no responsibility for confirming
the accuracy of any compliance certificate or other document or instrument
received by it under the Loan Documents. The Administrative Agent may treat the
payee of any Revolving Note as the holder thereof until written notice of
transfer shall have been filed with the Administrative Agent signed by such
payee in form satisfactory to the Administrative Agent. Each Lender acknowledges
that it has independently and without reliance on the Administrative Agent or
any other Lender, and based upon such information, investigations and inquiries
as it deems appropriate, made its own credit analysis and decision to extend
credit to the Borrower in the manner set forth in the Loan Documents. It shall
be the responsibility of each Lender to keep itself informed as to the
creditworthiness of the Borrower and its Subsidiaries, and the Administrative
Agent shall have no liability to any Lender with respect thereto.
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Section 11.6 Indemnity.
---------
The Lenders shall ratably, in accordance with their respective
Revolver Percentages, indemnify and hold the Administrative Agent, and its
directors, officers, employees, agents and representatives harmless from and
against any liabilities, losses, costs or expenses suffered or incurred by it
under any Loan Document or in connection with the transactions contemplated
thereby, regardless of when asserted or arising, except to the extent they are
promptly reimbursed for the same by the Borrower or except to the extent that
any event giving rise to a claim was caused by the gross negligence or willful
misconduct of the party seeking to be indemnified. The obligations of the
Lenders under this Section shall survive termination of this Agreement. The
Administrative Agent shall be entitled to offset amounts received for the
account of a Lender under this Agreement against unpaid amounts due from such
Lender to the Administrative Agent hereunder (whether as fundings of
participations, indemnities or otherwise), but shall not be entitled to offset
against amounts owed to the Administrative Agent by any Lender arising outside
of this Agreement.
Section 11.7 Resignation of Administrative Agent and
---------------------------------------
Successor Administrative Agent.
- ------------------------------
The Administrative Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower. Upon any such
resignation of the Administrative Agent, the Required Lenders shall have the
right to appoint a successor Administrative Agent and, so long as no Event of
Default has occurred and is continuing, with the prior written consent of the
Borrower. If no successor Administrative Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment, within 60 days
after the retiring Administrative Agent's giving of notice of resignation then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent and, so long as no Event of Default has occurred
and is continuing, with the prior written consent of the Borrower, which shall
be any Lender hereunder or any commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $200,000,000. Upon the acceptance of its appointment as
the Administrative Agent hereunder, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Administrative Agent under the Loan Documents, and the retiring
Administrative Agent shall be discharged from its duties and obligations
thereunder. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Section 11 and all protective
provisions of the other Loan Documents shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent,
but no successor Administrative Agent shall in any event be liable or
responsible for any actions of its predecessor. If the Administrative Agent
resigns and no successor is appointed, the rights and obligations of such
Administrative Agent shall be automatically assumed by the Required Lenders and
(i) the Borrower shall be directed to make all payments due each Lender
hereunder directly to such Lender and (ii) the Administrative Agent's rights in
the Collateral Documents shall be assigned without representation, recourse or
warranty to the Lenders as their interests may appear.
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Section 11.8 L/C Issuer.
----------
The L/C Issuer shall act on behalf of the Lenders with respect
to any Letters of Credit issued by it and the documents associated therewith.
The L/C Issuer shall have all of the benefits and immunities (i) provided to the
Administrative Agent in this Section 11 with respect to any acts taken or
omissions suffered by the L/C Issuer in connection with Letters of Credit issued
by it or proposed to be issued by it and the Applications pertaining to such
Letters of Credit as fully as if the term "Administrative Agent", as used in
this Section 11, included L/C Issuer with respect to such acts or omissions and
(ii) as additionally provided in this Agreement with respect to such L/C Issuer.
Section 11.9 Hedging Liability and Funds Transfer and
----------------------------------------
Deposit Account Liability.
- -------------------------
By virtue of a Lender's execution of this Agreement or an
assignment agreement pursuant to Section 12.12 hereof, as the case may be, any
Affiliate of such Lender with whom the Borrower has entered into an agreement
creating Hedging Liability or Funds Transfer and Deposit Account Liability shall
be deemed a Lender party hereto for purposes of any reference in a Loan Document
to the parties for whom the Administrative Agent is acting, it being understood
and agreed that the rights and benefits of such Affiliate under the Loan
Documents consist exclusively of such Affiliate's right to share in payments and
collections out of the Collateral and the Guaranties as more fully set forth in
Section 3.1 hereof. At the Administrative Agent's request, each Lender shall
deliver to the Administrative Agent a report on the amount and nature of Hedging
Liability and Funds Transfer and Deposit Account Liability owing to such Lender
and its Affiliates. In connection with any such distribution of payments and
collections, the Administrative Agent shall be entitled to assume no amounts are
due to any Lender or its Affiliate with respect to Hedging Liability or Funds
Transfer and Deposit Account Liability unless such Lender or its Affiliate has
notified the Agent in writing of the amount of any such liability owed to it
prior to such distribution.
Section 11.10 Authorization to Release Liens and Limit
----------------------------------------
Amount of Certain Claims.
- ------------------------
The Administrative Agent is hereby irrevocably authorized by
each of the Lenders to release any Lien covering any Property of the Borrower or
any Subsidiaries that is the subject of a sale or other disposition which is
permitted by this Agreement or which has been consented to in accordance with
Section 12.13. The Administrative Agent is further irrevocably authorized by
each of the Lenders to reduce or limit the amount of the obligations secured by
any particular item of Collateral to an amount not less than the estimated value
thereof to the extent necessary to reduce mortgage registry, filing and similar
taxes.
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Section 11.11 Proportionate Interest of Lenders under the
-------------------------------------------
Loan Documents.
- --------------
In the event any remedy is exercised with respect to the Loan
Documents or the Collateral, the Administrative Agent shall pursue remedies
designated by the Required Lenders. Each Lender agrees that no Lender shall have
any right individually to realize upon the security created by the Loan
Documents or otherwise enforce any provision thereof, or make demand thereunder,
it being understood and agreed that such rights and remedies may be exercised by
the Administrative Agent for the ratable benefit of the Lenders, under the terms
of this Agreement and the Loan Documents. Nothing set forth in the previous
sentence shall confer any rights or benefit on the Borrower or on any other
Person except the Lenders.
Section 11.12 Co-Agents.
---------
U.S. Bank National Association is hereby appointed as a
Co-Agent for the Lenders hereunder. Co-Agent, in its capacity as such, shall
have no rights, powers, duties or responsibilities and no rights, powers, duties
or responsibilities shall be read into this Agreement or any other Loan Document
or otherwise exist on behalf of or against U.S. Bank National Association in
such capacity as a Co-Agent. If Co-Agent resigns as such, no successor co-agent
shall be appointed.
SECTION 12.
MISCELLANEOUS.
Section 12.1 Withholding Taxes.
-----------------
(a) Payments Free of Withholding. Except as otherwise
required by law and subject to Section 12.1(b) hereof, each payment by the
Borrower under this Agreement or the other Loan Documents shall be made without
withholding for or on account of any present or future taxes (other than overall
net income taxes on the recipient) imposed by or within the jurisdiction in
which the Borrower is domiciled, any jurisdiction from which the Borrower makes
any payment, or (in each case) any political subdivision or taxing authority
thereof or therein. If any such withholding is so required, the Borrower shall
make the withholding, pay the amount withheld to the appropriate governmental
authority before penalties attach thereto or interest accrues thereon and
forthwith pay such additional amount as may be necessary to ensure that the net
amount actually received by each Lender and the Administrative Agent free and
clear of such taxes (including such taxes on such additional amount) is equal to
the amount which that Lender or the Administrative Agent (as the case may be)
would have received had such withholding not been made. If the Administrative
Agent or any Lender pays any amount in respect of any such taxes, penalties or
interest, the Borrower shall reimburse the Administrative Agent or such Lender
for that payment on demand in the currency in which such payment was made. If
the Borrower pays any such taxes, penalties or interest, it shall deliver
official tax receipts evidencing that payment or certified copies thereof to the
Lender or Administrative Agent on whose account such withholding was made (with
a copy to the Administrative Agent if not the recipient of the original) on or
before the thirtieth day after payment.
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(b) U.S. Withholding Tax Exemptions. Each Lender that is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) shall submit to the Borrower and the Administrative Agent on or before
the date the initial Credit Event is made hereunder or, if later, the date such
financial institution becomes a Lender hereunder, two duly completed and signed
copies of (i) either Form W-8 BEN (relating to such Lender and entitling it to a
complete exemption from withholding under the Code on all amounts to be received
by such Lender, including fees, pursuant to the Loan Documents and the
Obligations) or Form W-8 ECI (relating to all amounts to be received by such
Lender, including fees, pursuant to the Loan Documents and the Obligations) of
the United States Internal Revenue Service or (ii) solely if such Lender is
claiming exemption from United States withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a Form W-8
BEN, or any successor form prescribed by the Internal Revenue Service, and a
certificate representing that such Lender is not a bank for purposes of Section
881(c) of the Code, is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code). Thereafter and from time to time, each Lender shall
submit to the Borrower and the Administrative Agent such additional duly
completed and signed copies of one or the other of such Forms (or such successor
forms as shall be adopted from time to time by the relevant United States taxing
authorities) and such other certificates as may be (i) requested by the Borrower
in a written notice, directly or through the Administrative Agent, to such
Lender and (ii) required under then-current United States law or regulations to
avoid or reduce United States withholding taxes on payments in respect of all
amounts to be received by such Lender, including fees, pursuant to the Loan
Documents or the Obligations. Upon the request of the Borrower or the
Administrative Agent, each Lender that is a United States person (as such term
is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and
the Administrative Agent a certificate to the effect that it is such a United
States person.
(c) Inability of Lender to Submit Forms. If any Lender
determines, as a result of any change in applicable law, regulation or treaty,
or in any official application or interpretation thereof or otherwise, that it
is unable to submit to the Borrower or the Administrative Agent any form or
certificate that such Lender is obligated to submit pursuant to subsection (b)
of this Section 12.1 or that such Lender is required to withdraw or cancel any
such form or certificate previously submitted or any such form or certificate
otherwise becomes ineffective or inaccurate, such Lender shall promptly notify
the Borrower and Administrative Agent of such fact and the Lender shall to that
extent not be obligated to provide any such form or certificate and will be
entitled to withdraw or cancel any affected form or certificate, as applicable;
in such event, the Borrower shall withhold the required taxes as provided by
applicable law and in compliance with Section 12.1(a).
Section 12.2 No Waiver, Cumulative Remedies.
------------------------------
No delay or failure on the part of the Administrative Agent or
any Lender or on the part of the holder or holders of any of the Obligations in
the exercise of any power or right under any Loan Document shall operate as a
waiver thereof or as an acquiescence in any default, nor shall any single or
partial exercise of any power or right preclude any other
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or further exercise thereof or the exercise of any other power or right. The
rights and remedies hereunder of the Administrative Agent, the Lenders and of
the holder or holders of any of the Obligations are cumulative to, and not
exclusive of, any rights or remedies which any of them would otherwise have.
Section 12.3 Non-Business Days.
-----------------
If any payment hereunder becomes due and payable on a day
which is not a Business Day, the due date of such payment shall be extended to
the next succeeding Business Day on which date such payment shall be due and
payable. In the case of any payment of principal falling due on a day which is
not a Business Day, interest on such principal amount shall continue to accrue
during such extension at the rate per annum then in effect, which accrued amount
shall be due and payable on the next scheduled date for the payment of interest.
Section 12.4 Documentary Taxes.
-----------------
The Borrower agrees to pay on demand any documentary, stamp or
similar taxes payable in respect of this Agreement or any other Loan Document,
including interest and penalties, in the event any such taxes are assessed,
irrespective of when such assessment is made and whether or not any credit is
then in use or available hereunder.
Section 12.5 Survival of Representations.
---------------------------
All representations and warranties made herein or in any other
Loan Document or in certificates given pursuant hereto or thereto shall survive
the execution and delivery of this Agreement and the other Loan Documents, and
shall continue in full force and effect with respect to the date as of which
they were made as long as any credit is in use or available hereunder.
Section 12.6 Survival of Indemnities.
-----------------------
All indemnities and other provisions relative to reimbursement
to the Lenders of amounts sufficient to protect the yield of the Lenders with
respect to the Loans and Letters of Credit, including, but not limited to,
Sections 1.11, 10.3 and 12.15 hereof, shall survive the termination of this
Agreement and the other Loan Documents and the payment of the Obligations.
Section 12.7 Sharing of Set-Off.
------------------
Each Lender agrees with each other Lender a party hereto that
if such Lender shall receive and retain any payment, whether by set-off or
application of deposit balances or otherwise, on any of the Loans or
Reimbursement Obligations in excess of its ratable share of payments on all such
Obligations then outstanding to the Lenders, then such Lender shall purchase for
cash at face value, but without recourse, ratably from each of the other Lenders
such amount of the Loans or Reimbursement Obligations, or participations
therein, held by each such other Lenders (or interest therein) as shall be
necessary to cause such Lender to
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share such excess payment ratably with all the other Lenders; provided, however,
that if any such purchase is made by any Lender, and if such excess payment or
part thereof is thereafter recovered from such purchasing Lender, the related
purchases from the other Lenders shall be rescinded ratably and the purchase
price restored as to the portion of such excess payment so recovered, but
without interest. For purposes of this Section, amounts owed to or recovered by
the L/C Issuer in connection with Reimbursement Obligations in which Lenders
have been required to fund their participation shall be treated as amounts owed
to or recovered by the L/C Issuer as a Lender hereunder.
Section 12.8 Notices.
-------
Except as otherwise specified herein, all notices hereunder
and under the other Loan Documents shall be in writing (including, without
limitation, notice by telecopy) and shall be given to the relevant party at its
address or telecopier number set forth below, or such other address or
telecopier number as such party may hereafter specify by notice to the
Administrative Agent and the Borrower given by courier, by United States
certified or registered mail, by telecopy or by other telecommunication device
capable of creating a written record of such notice and its receipt. Notices
under the Loan Documents to the Lenders and the Administrative Agent shall be
addressed to their respective addresses or telecopier numbers set forth on the
signature pages hereof, and to the Borrower to:
All American Semiconductor, Inc.
16115 N.W. 52nd Avenue
Miami, Florida 33014
Attention: Chief Financial Officer
Telephone: (305) 626-4149
Telecopy: (305) 624-5258
with a copy to:
Bilzin Sumberg Baena Price & Axelrod LLP
Wachovia Financial Center
200 South Biscayne Boulevard, Suite 2500
Miami, Florida 33131
Attention: Alan D. Axelrod, Esq.
Telephone: (305) 350-2369
Telecopy: (305) 374-7593
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section or on the signature pages hereof and a confirmation of
such telecopy has been received by the sender, (ii) if given by mail, 3 Business
Days after such communication is deposited in the mail, certified or registered
with return receipt requested, addressed as aforesaid or (iii) if given by any
other means, when delivered at the addresses specified in this Section or on the
signature pages hereof; provided that any notice given pursuant to Section 1
hereof shall be effective only upon receipt.
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Section 12.9 Counterparts.
------------
This Agreement may be executed in any number of counterparts,
and by the different parties hereto on separate counterpart signature pages, and
all such counterparts taken together shall be deemed to constitute one and the
same instrument.
Section 12.10 Successors and Assigns.
----------------------
This Agreement shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Administrative
Agent and each of the Lenders and the benefit of their respective successors and
permitted assigns, including any subsequent holder of any of the Obligations.
The Borrower may not assign any of its rights or obligations under any Loan
Document without the written consent of all of the Lenders.
Section 12.11 Participants.
------------
Each Lender shall have the right at its own cost to grant
participations (to be evidenced by one or more agreements or certificates of
participation) in the Revolving Loans made and Reimbursement Obligations and/or
Revolving Credit Commitments held by such Lender at any time and from time to
time to one or more other Persons; provided that no such participation shall
relieve any Lender of any of its obligations under this Agreement, and,
provided, further that no such participant shall have any rights under this
Agreement except as provided in this Section, and the Administrative Agent shall
have no obligation or responsibility to such participant. Any agreement pursuant
to which such participation is granted shall provide that the granting Lender
shall retain the sole right and responsibility to enforce the obligations of the
Borrower under this Agreement and the other Loan Documents including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of the Loan Documents, except that such agreement may provide that
such Lender will not agree to any modification, amendment or waiver of the Loan
Documents that would reduce the amount of or postpone any fixed date for payment
of any Obligation in which such participant has an interest. Any party to which
such a participation has been granted shall have the benefits of Section 1.11
and Section 10.3 hereof. The Borrower authorizes each Lender to disclose to any
participant or prospective participant under this Section any financial or other
information pertaining to any Designated Company, subject to, and after, such
participant has executed a confidentiality agreement in favor of the Borrower in
the same form and with the same content as the confidentiality agreement
executed by the Administrative Agent prior to the Closing Date.
Section 12.12 Assignments.
-----------
(a) Each Lender shall have the right at any time, with
the prior consent of the Administrative Agent and, so long as no Event of
Default then exists and except for assignments to Affiliates of the relevant
Lender for which the consent of the Borrower shall not be required, the Borrower
(which consent of the Borrower shall not be unreasonably withheld) to sell,
assign, transfer or negotiate all or any part of its rights and obligations
under the Loan Documents (including, without limitation, the indebtedness
evidenced by the
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Revolving Notes then held by such assigning Lender, together with an equivalent
percentage of its obligation to make Revolving Loans and participate in Letters
of Credit) to one or more commercial banks or other financial institutions or
investors, provided that, unless otherwise agreed to by the Administrative
Agent, such assignment shall be of a fixed percentage (and not by its terms of
varying percentage) of the assigning Lender's rights and obligations under the
Loan Documents; provided, however, that in order to make any such assignment (i)
unless the assigning Lender is assigning all of its Revolving Credit
Commitments, outstanding Revolving Loans and interests in Letters of Credit
Obligations, the assigning Lender shall retain at least $5,000,000 in unused
Revolving Credit Commitments, outstanding Revolving Loans and interests in
Letters of Credit, (ii) the assignee Lender shall have Revolving Credit
Commitments, outstanding Revolving Loans and interests in Letters of Credit of
at least $5,000,000, (iii) each such assignment shall be evidenced by a written
agreement (substantially in the form attached hereto as Exhibit E or in such
other form acceptable to the Administrative Agent) executed by such assigning
Lender, such assignee Lender or Lenders, the Administrative Agent and, if
required as provided above, the Borrower, which agreement shall specify in each
instance the portion of the Obligations which are to be assigned to the assignee
Lender and the portion of the Revolving Credit Commitments of the assigning
Lender to be assumed by the assignee Lender, and (iv) the assigning Lender shall
pay to the Administrative Agent a processing fee of $3,500 and any out-of-pocket
attorneys' fees and expenses incurred by the Administrative Agent in connection
with any such assignment agreement. Any such assignee shall become a Lender for
all purposes hereunder to the extent of the rights and obligations under the
Loan Documents it assumes and the assigning Lender shall be released from its
obligations, and will have released its rights, under the Loan Documents to the
extent of such assignment. The address for notices to such assignee Lender shall
be as specified in the assignment agreement executed by it. Promptly upon the
effectiveness of any such assignment agreement, the Borrower shall execute and
deliver replacement Revolving Notes to the assignee Lender and the assigning
Lender in the respective amounts of their Revolving Credit Commitments (or
assigned principal amounts, as applicable) after giving effect to the reduction
occasioned by such assignment (all such Revolving Notes to constitute "Revolving
Notes" for all purposes of the Loan Documents), and the assignee Lender shall
thereafter surrender to the Borrower its old Revolving Notes. The Borrower
authorizes each Lender to disclose to any purchaser or prospective purchaser of
an interest in the Revolving Loans and interest in Letters of Credit owed to it
or its Revolving Credit Commitments under this Section any financial or other
information pertaining to any Designated Company, subject to, and after, such
purchaser has executed a confidentiality agreement in favor of the Borrower in
the same form and with the same content as the confidentiality agreement
executed by the Administrative Agent prior to the Closing Date.
(b) Any Lender may at any time pledge or grant a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any such pledge or grant to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or grant of a
security interest; provided that no such pledge or grant of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or secured party for such Lender as a party hereto; provided
further, however, the
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right of any such pledgee or grantee (other than any Federal Reserve Bank) to
further transfer all or any portion of the rights pledged or granted to it,
whether by means of foreclosure or otherwise, shall be at all times subject to
the terms of this Agreement.
Section 12.13 Amendments.
----------
Any provision of this Agreement or the other Loan Documents
may be amended or waived, or any action requiring consent may be consented to,
as applicable, if, but only if, such amendment, waiver or consent is in writing
and is signed by (a) the Borrower, (b) the Required Lenders, and (c) if the
rights or duties of the Administrative Agent are affected thereby, the
Administrative Agent; provided that:
(i) no amendment or waiver pursuant to this
Section 12.13 shall (A) increase any Revolving Credit Commitment of any
Lender without the consent of such Lender or (B) reduce the amount of
or postpone the date for any scheduled payment of any principal of or
interest on any Revolving Loan or of any Reimbursement Obligation or of
any fee payable hereunder without the consent of the Lender to which
such payment is owing or which has committed to make such Revolving
Loan or Letter of Credit (or participate therein) hereunder (it being
understood and agreed that Revolving Credit Commitment reductions and
principal prepayments called for by Section 1.9(b) may be amended or
modified with the written consent of the Required Lenders); and
(ii) no amendment or waiver pursuant to this
Section 12.13 shall, unless signed by each Lender, increase the
aggregate Revolving Credit Commitments, change the definitions of
Termination Date or Required Lenders or Permitted Overadvance, increase
the advance rates provided for in the definition of Borrowing Base,
change the provisions of this Section 12.13, release any material
guarantor or all or any substantial part of the Collateral (except as
otherwise provided for in the Loan Documents), or affect the number of
Lenders required to take any action hereunder or under any other Loan
Document.
Section 12.14 Headings.
--------
Section headings used in this Agreement are for reference only
and shall not affect the construction of this Agreement.
Section 12.15 Costs and Expenses; Indemnification.
-----------------------------------
(a) The Borrower agrees to pay all costs and expenses of
the Administrative Agent in connection with the preparation, negotiation, and
administration of the Loan Documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, in
connection with the preparation and execution of the Loan Documents, and any
amendment, waiver or consent related thereto, whether or not the transactions
contemplated herein are consummated, together with any fees and charges suffered
or incurred by the Administrative Agent in connection with periodic collateral
filing
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fees and lien searches. The Borrower further agrees to indemnify the
Administrative Agent, each Lender, and their respective directors, officers,
employees, agents, professional and financial advisors, attorneys and
consultants against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all reasonable expenses
of litigation or preparation therefor, whether or not the indemnified Person is
a party thereto, or any settlement arrangement arising from or relating to any
such litigation) which any of them may pay or incur arising out of or relating
to any Loan Document or any of the transactions contemplated thereby or the
direct or indirect application or proposed application of the proceeds of any
Revolving Loan or Letter of Credit, other than to the extent of those which
arise, in whole or in part, from the gross negligence or willful misconduct of
the party claiming indemnification. The Borrower, upon demand by the
Administrative Agent or a Lender at any time, shall reimburse the Administrative
Agent or such Lender for any legal or other fees and expenses incurred in
connection with investigating or defending against any of the foregoing
(including any settlement costs relating to the foregoing) except if the same is
directly due to the gross negligence or willful misconduct of the party to be
indemnified. The obligations of the Borrower under this Section shall survive
the termination of this Agreement.
(b) The Borrower unconditionally agrees to forever
indemnify, defend and hold harmless, and covenants not to sue for any claim for
contribution against, the Administrative Agent and the Lenders for any damages,
costs, loss or expense, including without limitation, response, remedial or
removal costs, arising out of any of the following: (i) any presence, release,
threatened release or disposal of any hazardous or toxic substance or petroleum
by any Designated Company or otherwise occurring on or with respect to its
Property (whether owned or leased), (ii) the operation or violation of any
environmental law, whether federal, state, or local, and any regulations
promulgated thereunder, by any Designated Company or otherwise occurring on or
with respect to its Property (whether owned or leased), (iii) any claim for
personal injury or property damage in connection with any Designated Company or
otherwise occurring on or with respect to its Property (whether owned or
leased), and (iv) the inaccuracy or breach of any environmental representation,
warranty or covenant by any Designated Company made herein or in any other Loan
Document evidencing or securing any Obligations or setting forth terms and
conditions applicable thereto or otherwise relating thereto, except for damages
to the extent arising from the willful misconduct or gross negligence of the
party claiming indemnification. This indemnification shall survive the payment
and satisfaction of all Obligations and the termination of this Agreement, and
shall remain in force beyond the expiration of any applicable statute of
limitations and payment or satisfaction in full of any single claim under this
indemnification. This indemnification shall be binding upon the successors and
assigns of the Borrower and shall inure to the benefit of Administrative Agent
and the Lenders directors, officers, employees, agents, and collateral trustees,
and their successors and assigns.
Section 12.16 Set-off.
-------
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, during the
existence of any Event of Default, each
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Lender and each subsequent holder of any Obligation is hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set-off and
to appropriate and to apply any and all deposits (general or special, including,
but not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts, and in whatever currency
denominated) and any other indebtedness at any time held or owing by that Lender
or that subsequent holder to or for the credit or the account of the Borrower,
whether or not matured, against and on account of the Obligations of the
Borrower to that Lender or that subsequent holder under the Loan Documents,
including, but not limited to, all claims of any nature or description arising
out of or connected with the Loan Documents, irrespective of whether or not (a)
that Lender or that subsequent holder shall have made any demand hereunder or
(b) the principal of or the interest on the Revolving Loans or Revolving Notes
and other amounts due hereunder shall have become due and payable pursuant to
Section 9 and although said obligations and liabilities, or any of them, may be
contingent or unmatured.
Section 12.17 Entire Agreement.
----------------
The Loan Documents constitute the entire understanding of the
parties thereto with respect to the subject matter thereof and any prior
agreements, whether written or oral, with respect thereto are superseded hereby.
Section 12.18 Governing Law.
-------------
This Agreement and the other Loan Documents, and the rights
and duties of the parties hereto, shall be construed and determined in
accordance with the internal laws of the State of Illinois.
Section 12.19 Severability of Provisions.
--------------------------
Any provision of any Loan Document which is unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. All rights, remedies and powers provided in this Agreement and the
other Loan Documents may be exercised only to the extent that the exercise
thereof does not violate any applicable mandatory provisions of law, and all the
provisions of this Agreement and other Loan Documents are intended to be subject
to all applicable mandatory provisions of law which may be controlling and to be
limited to the extent necessary so that they will not render this Agreement or
the other Loan Documents invalid or unenforceable.
Section 12.20 Excess Interest.
---------------
Notwithstanding any provision to the contrary contained herein
or in any other Loan Document, no such provision shall require the payment or
permit the collection of any amount of interest in excess of the maximum amount
of interest permitted by applicable law
-85-
to be charged for the use or detention, or the forbearance in the collection, of
all or any portion of the Revolving Loans or other Obligations outstanding under
this Agreement or any other Loan Document ("Excess Interest"). If any Excess
Interest is provided for, or is adjudicated to be provided for, herein or in any
other Loan Document, then in such event (a) the provisions of this Section shall
govern and control, (b) neither the Borrower nor any guarantor or endorser shall
be obligated to pay any Excess Interest, (c) any Excess Interest that the
Administrative Agent or any Lender may have received hereunder shall, at the
option of the Administrative Agent, be (i) applied as a credit against the then
outstanding principal amount of Obligations hereunder and accrued and unpaid
interest thereon (not to exceed the maximum amount permitted by applicable law),
(ii) refunded to the Borrower, or (iii) any combination of the foregoing, (d)
the interest rate payable hereunder or under any other Loan Document shall be
automatically subject to reduction to the maximum lawful contract rate allowed
under applicable usury laws (the "Maximum Rate"), and this Agreement and the
other Loan Documents shall be deemed to have been, and shall be, reformed and
modified to reflect such reduction in the relevant interest rate, and (e)
neither the Borrower nor any guarantor or endorser shall have any action against
the Administrative Agent or any Lender for any damages whatsoever arising out of
the payment or collection of any Excess Interest. Notwithstanding the foregoing,
but subject to applicable law, if for any period of time interest on any of
Borrower's Obligations is calculated at the Maximum Rate rather than the
applicable rate under this Agreement, and thereafter such applicable rate
becomes less than the Maximum Rate, the rate of interest payable on the
Borrower's Obligations shall remain at the Maximum Rate until the Lenders have
received the amount of interest which such Lenders would have received during
such period on the Borrower's Obligations had the rate of interest not been
limited to the Maximum Rate during such period.
Section 12.21 Construction.
------------
Nothing contained herein shall be deemed or construed to
permit any act or omission which is prohibited by the terms of any Collateral
Document, the covenants and agreements contained herein being in addition to and
not in substitution for the covenants and agreements contained in the Collateral
Documents; provided, however, that to the extent of any conflict between the
provisions of this Agreement and the provisions of any Collateral Documents, the
provisions of this Agreement shall govern and control for all purposes.
Section 12.22 Lenders' Obligations Several.
----------------------------
The obligations of the Lenders hereunder are several and not
joint. Nothing contained in this Agreement and no action taken by the Lenders
pursuant hereto shall be deemed to constitute the Lenders a partnership,
association, joint venture or other entity.
Section 12.23 Submission to Jurisdiction; Waiver of Jury
------------------------------------------
Trial.
- -----
The Borrower hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Northern District of Illinois and of
any Illinois State court sitting in the City of Chicago for purposes of all
legal proceedings arising out of or relating to this Agreement, the other Loan
Documents or the transactions contemplated hereby or thereby.
-86-
The Borrower irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. THE BORROWER,
THE ADMINISTRATIVE AGENT, AND THE LENDERS HEREBY IRREVOCABLY WAIVE ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.
Section 12.24 Confidentiality Agreements.
--------------------------
Each of the Lenders hereby acknowledges that it has executed
and delivered to and in favor of the Borrower a confidentiality agreement, which
confidentiality agreement shall remain in full force and effect after the date
hereof and through the term of this Agreement.
-87-
This Agreement is entered into between us for the uses and
purposes hereinabove set forth as of the date first above written.
ALL AMERICAN SEMICONDUCTOR, INC.
By: /s/ Howard L. Flanders
-------------------------------------
Name: Howard L. Flanders
-----------------------------------
Title: EVP & CFO
----------------------------------
-88-
HARRIS TRUST AND SAVINGS BANK,
in its individual capacity as a Lender,
as L/C Issuer and as Administrative
Agent
By: /s/ William Kane
-------------------------------------
Name: William Kane
-----------------------------------
Title: Vice President
----------------------------------
Address:
111 West Monroe Street
Chicago, Illinois 60603
Attention: Asset Based Lending
Telecopy: (312) 765-1641
Telephone: (312) 461-2116
-89-
U.S. BANK NATIONAL ASSOCIATION,
in its capacity as a Lender and as
Co-Agent
By: /s/ Robin Van Meter
-------------------------------------
Name: Robin Van Meter
-----------------------------------
Title: Vice President
----------------------------------
Address:
7th & Washington, 5th Floor
St. Louis, Missouri 63101
Attention: Ms. Robin L. Van Meter
Telecopy: (314) 418-8341
Telephone: (314) 418-8556
-90-
GMAC COMMERCIAL CREDIT, LLC
By: /s/ Edward Hill
-------------------------------------
Name: Edward Hill
-----------------------------------
Title: Senior Vice President
----------------------------------
Address:
2810 Interstate Tower
121 West Trade Street
Charlotte, North Carolina 28202-5399
Attention: Mr. Edward Hill
Telecopy: (704) 342-5353
Telephone: (704) 342-5365
with copies to:
Hunton & Williams LLP
Bank of America Plaza, Suite 3500
Charlotte, NC 28280
Attention: Haywood Barnes, Esq.
Telecopy: (704) 378-4890
and
GMAC Commercial Finance, LLC
3000 Town Center, Suite 280
Southfield, Michigan 48075
Attention: Deputy Credit Officer
Telecopy: (248) 350-2733
-91-
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Lee LaBine
-------------------------------------
Name: Lee LaBine
-----------------------------------
Title: Vice President
----------------------------------
Address:
One South Wacker Drive
Suite 2980
Chicago, Illinois 60606
Attention: Mr. Lee LaBine
Telecopy: (312) 338-5612
Telephone: (312) 338-5618
-92-
EXHIBIT A
NOTICE OF PAYMENT REQUEST
[Date]
[Name of Lender]
[Address]
Attention:
Reference is made to the Credit Agreement, dated as of May 14,
2003, among All American Semiconductor, Inc., the Lenders party thereto, Harris
Trust and Savings Bank, as Administrative Agent, and U.S. Bank National
Association, as a Lender and as Co-Agent (the "Credit Agreement"). Capitalized
terms used herein and not defined herein have the meanings assigned to them in
the Credit Agreement. [The Borrower has failed to pay its Reimbursement
Obligation in the amount of $____________. Your Revolver Percentage of the
unpaid Reimbursement Obligation is $_____________] or [_________________________
has been required to return a payment by the Borrower of a Reimbursement
Obligation in the amount of $_______________. Your Revolver Percentage of the
returned Reimbursement Obligation is $_______________.]
Very truly yours,
HARRIS TRUST AND SAVINGS BANK,
as L/C Issuer
By_______________________________________
Name________________________________
Title_______________________________
Exhibit A - Page 1
EXHIBIT B
REVOLVING NOTE
$_____________________________ May 14, 2003
FOR VALUE RECEIVED, the undersigned, ALL AMERICAN
SEMICONDUCTOR, INC., a Delaware corporation (the "Borrower"), hereby promises to
pay to the order of ____________________ (the "Lender") on the Termination Date
of the hereinafter defined Credit Agreement, at the principal office of Harris
Trust and Savings Bank, as Administrative Agent, in Chicago, Illinois, in
immediately available funds, the principal sum of ___________________ Dollars
($__________) or, if less, the aggregate unpaid principal amount of all
Revolving Loans made by the Lender to the Borrower pursuant to the Credit
Agreement, together with interest on the principal amount of each Revolving Loan
from time to time outstanding hereunder at the rates, and payable in the manner
and on the dates, specified in the Credit Agreement.
This Note is one of the Revolving Notes referred to in the
Credit Agreement dated as of May 14, 2003, among the Borrower, Harris Trust and
Savings Bank, as Administrative Agent, and U.S. Bank National Association, as
Co-Agent and the Lenders party thereto (the "Credit Agreement"), and this Note
and the holder hereof are entitled to all the benefits and security provided for
thereby or referred to therein, to which Credit Agreement reference is hereby
made for a statement thereof. All defined terms used in this Note, except terms
otherwise defined herein, shall have the same meaning as in the Credit
Agreement. This Note shall be governed by and construed in accordance with the
internal laws of the State of Illinois.
Voluntary prepayments may be made hereon without penalty or
charge except as provided in the Credit Agreement, certain prepayments are
required to be made hereon, and this Note may be declared due prior to the
expressed maturity hereof, all in the events, on the terms and in the manner as
provided for in the Credit Agreement.
The Borrower hereby waives demand, presentment, protest or
notice of any kind hereunder.
ALL AMERICAN SEMICONDUCTOR, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
Exhibit B - Page 1
EXHIBIT C
BORROWING BASE CERTIFICATE
ALL AMERICAN SEMICONDUCTOR, INC.
Attached
Exhibit C - Page 1
HARRIS TRUST &
SAVINGS BANK BORROWING BASE CERTIFICATE
REPORT NUMBER __________ DATE __________
All American Semiconductor, Inc.
TOTAL APPROVED LINE _________________________ Maximum Inventory Loan ________________________
ACCOUNTS RECEIVABLE UPDATE COLLATERAL STATUS
Period Covered:_______________________________
ADDITIONS:
_______________
As of Date: _______________
(A) New Sales (See Attached) _______________ (1) Previous Coll. Balance _______________
(B) Miscellaneous (+) _______________ (2) Total Additions _______________
Total Gross Additions (2) _______________ (3) Collections/Deductions _______________
DEDUCTIONS: (4) New Collateral Balance _______________
(A) Collections (See Attached) _______________ (5) Less Ineligibles _______________
(B) Discounts Allowed _______________ (6) Eligible Collateral _______________
(C) Credit Memos _______________ (7) Rate of Advance _______________
(D) Miscellaneous (-) Non A/R _______________ (8) Available A/R (A) _______________
Total Gross Collections (3) _______________ (9) Avail Inv. (Per Attached)(B) _______________
LOAN BALANCE UPDATE (10) Other Loan Value (C) _______________
Loan Outstanding as of: (11) Total Loan Value _______________
From Previous Report # _______________ A/R + Inv. + Other:
Less Collections _______________ A + B + C
Additional Advance Requested _______________ (12) Maximum Borrowing Limit ___________________
New Loan Balance This Report _______________ Lessor of Total Loan Value
Plus L/C or Other Reserves _______________ or
Total Approved Rev. Line
(13) Less Total Loans and _______________
Total Loans and Other Other Liabilities
Liabilities _______________ (14) New Availability _______________
(Carry to Line 13)
Pursuant to the Terms of the Credit Agreement dated as of May 14, 2003
between us (the "Credit Agreement), we submit this Borrowing Base to you and
certify that the information set forth above and on any attachments to this
certificate is true, correct and complete as of the date of this certificate.
Borrower: ________________________________
Authorized Signer: ________________________________
Exhibit C - Page 2
EXHIBIT D
ALL AMERICAN SEMICONDUCTOR, INC.
COMPLIANCE CERTIFICATE
To: Harris Trust and Savings Bank, as Administrative
Agent under, and the Lenders party to, the Credit
Agreement described below.
This Compliance Certificate is furnished to the Administrative
Agent and the Lenders pursuant to that certain Credit Agreement dated as of May
14, 2003, among All American Semiconductor, Inc., certain Lenders which are
signatories thereto, Harris Trust and Savings Bank, as Administrative Agent, and
U.S. Bank National Association, as Co-Agent (the "Credit Agreement"). Unless
otherwise defined herein, the terms used in this Compliance Certificate have the
meanings ascribed thereto in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected __________ of ________________;
2. I have reviewed the terms of the Credit Agreement and
I have made, or have caused to be made under my supervision, a detailed review
of the transactions and conditions of the Borrower and its Subsidiaries during
the accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not
disclose, and I have no knowledge of, the existence of any condition or the
occurrence of any event which constitutes a Default or Event of Default during
or at the end of the accounting period covered by the attached financial
statements or as of the date of this Compliance Certificate, except as set forth
below;
4. The financial statements required by Section 8.5 of
the Credit Agreement and being furnished to you concurrently with this
Compliance Certificate are true, correct and complete in all material respects
as of the date and for the periods covered thereby; and
5. The Schedule I hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain covenants of the
Credit Agreement, all of which data and computations are, to the best of my
knowledge, true, complete and correct and have been made in accordance with the
relevant Sections of the Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Borrower has taken, is taking, or
proposes to take with respect to each such condition or event:
Exhibit D - Page 1
__________________________________________________
__________________________________________________
__________________________________________________
The foregoing certifications, together with the computations
set forth in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this ______ day of
__________________ 20___.
ALL AMERICAN SEMICONDUCTOR, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
Exhibit D - Page 2
SCHEDULE I
TO COMPLIANCE CERTIFICATE
ALL AMERICAN SEMICONDUCTOR, INC.
COMPLIANCE CALCULATIONS
FOR CREDIT AGREEMENT
DATED AS OF MAY 14, 2003
CALCULATIONS AS OF _____________, 200__
================================================================================
A. Tangible Net Worth (Section 8.22(a))
------------------------------------
1. Total shareholders' equity $__________
2. Sum of:
(i) intangibles $__________
(ii) write-up of assets $__________
3. Line A1 minus Line A2 $__________
4. Line A3 must be greater or equal to $__________
5. The Borrower is in compliance (circle yes or no) Yes/no
B. Capital Expenditures (Section 8.22(b))
--------------------------------------
1. Year-to-date Capital Expenditures (excluding $__________
those items excluded in Section 8.22(b)
2. Line B1 must be less than or equal to $1,000,000
3. The Borrower is in compliance (circle yes or no) Yes/no
C. Debt Service Coverage Ratio (Section 8.22(c))
---------------------------------------------
1. Net Income (determined without giving effect to the
extraordinary gains or losses incurred in connection
with the sale of assets outside of the ordinary course
of business)
(i) Net Income $__________
(ii) Effect of extraordinary gains/losses $__________
Schedule I to Exhibit D - Page 1
(iii) Nonrecurring charges $__________
2. Interest Expense $__________
3. Income taxes $__________
4. Depreciation and amortization expense $__________
5. Sum of lines C1, C2, C3 and C4 ("EBITDA") $__________
6. Unfinanced Capital Expenditures $__________
7. Cash taxes paid $__________
8. Line 5 minus sum of Lines C6 and C7 $__________
9. Cash Interest Expenses $__________
10. Principal payments $__________
11. Sum of Lines C9 and C10 $__________
12. Ratio of Line C8 to Line C11 _____ : 1.0
13. Line C12 ratio must not be less than _____ : 1.0
14. The Borrower is in compliance (circle yes or no) Yes/no
D. Inventory Turnover (Section 8.22(d))
------------------------------------
1. Aggregate cost of goods sold $__________
2. Line D1 multiplied by 4 $__________
3. Aggregate gross book value of Inventory $__________
4. Line D3 divided by 3 $__________
5. Line D2 divided by D4 $__________
6. Line D5 must not be less than $__________
7. The Borrower is in compliance (circle yes or no) Yes/no
Schedule I to Exhibit D - Page 2
EXHIBIT E
ASSIGNMENT AND ACCEPTANCE
Dated _____________, 20___
Reference is made to the Credit Agreement dated as of May 14,
2003 (the "Credit Agreement") among All American Semiconductor, Inc., the
Lenders (as defined in the Credit Agreement), Harris Trust and Savings Bank, as
Administrative Agent for the Lenders and U.S. Bank National Association, as
Co-Agent. Terms defined in the Credit Agreement are used herein with the same
meaning.
________________________________________ (the "Assignor") and
_________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, a
_______ % interest in and to all of the Assignor's rights and obligations under
the Credit Agreement as of the Effective Date (as defined below), including,
without limitation, such percentage interest in the Assignor's Revolving Credit
Commitments as in effect on the Effective Date and the Revolving Loans, if any,
owing to the Assignor on the Effective Date and the Assignor's Revolver
Percentage of any outstanding L/C Obligations.
2. The Assignor (i) represents and warrants that as of
the date hereof (A) its Revolving Credit Commitment is $_______________, (B) the
aggregate outstanding principal amount of Revolving Loans made by it under the
Credit Agreement that have not been repaid is $___________ and a description of
the interest rates and interest periods of such Revolving Loans is attached as
Annex 1 hereto, and (C) the aggregate principal amount of Assignor's Revolver
Percentage of outstanding L/C Obligations is $___________; (ii) represents and
warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim, lien, or encumbrance of any kind; (iii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; and (iv) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Designated Company
or the performance or observance by any Designated Company of any of their
respective obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy
of the Credit Agreement, together with copies of the most recent financial
statements delivered to the Lenders pursuant to Section 8.5(d) and (e) thereof
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without reliance upon
Exhibit E - Page 1
the Administrative Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) appoints and authorizes the Administrative Agent to take such
action on its behalf and to exercise such powers under the Credit Agreement and
the other Loan Documents as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(iv) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (v) specifies as its lending office (and
address for notices) the offices set forth beneath its name on the signature
pages hereof.
4. As consideration for the assignment and sale
contemplated in Annex 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in Federal funds an amount equal to $____________*. It is
understood that commitment and/or letter of credit fees accrued to the Effective
Date with respect to the interest assigned hereby are for the account of the
Assignor and such fees accruing from and including the date hereof are for the
account of the Assignee. Each of the Assignor and the Assignee hereby agrees
that if it receives any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest therein and shall
promptly pay the same to such other party.
5. The effective date for this Assignment and Acceptance
shall be ____________ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
acceptance and recording by the Administrative Agent and, if required, the
Borrower.
6. Upon such acceptance and recording, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
7. Upon such acceptance and recording, from and after
the Effective Date, the Administrative Agent shall make all payments under the
Credit Agreement in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement for periods prior to the
Effective Date directly between themselves.
8. In accordance with Section 12.12 of the Credit
Agreement, the Assignor and the Assignee request and direct that the
Administrative Agent prepare and cause the relevant Borrower to execute and
deliver to the Assignee the relevant Revolving Notes payable to the Assignee in
the amount of its Revolving Credit Commitments and new Revolving Notes to the
Assignor in the amount of its Revolving Credit Commitments after giving effect
to this assignment.
- -------------------------
* Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee. It may be preferable in
an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
Exhibit E - Page 2
9. This Assignment and Acceptance shall be governed by,
and construed in accordance with, the laws of the State of Illinois.
[Assignor Lender]
By:______________________________________
Name:____________________________________
Title:___________________________________
[Assignee Lender]
By:______________________________________
Name:____________________________________
Title:___________________________________
Lending office (and address for notices):
[Accepted and consented this
______ day of ____________, 200__
ALL AMERICAN SEMICONDUCTOR,
INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Accepted and consented to by the
Administrative Agent this _____ day of
______________, 200__
HARRIS TRUST AND SAVINGS BANK,
as Administrative Agent
By:_________________________________
Name:_______________________________
Title:______________________________
Exhibit E - Page 3
ANNEX I
TO ASSIGNMENT AND ACCEPTANCE
PRINCIPAL AMOUNT TYPE OF LOAN INTEREST RATE MATURITY DATE
Annex I - Page 1
SCHEDULE 1
COMMITMENTS
NAME OF LENDER REVOLVING CREDIT COMMITMENT
Harris Trust and Savings Bank $20,000,000
U.S. Bank National Association $15,000,000
GMAC Commercial Credit, LLC $15,000,000
PNC Bank, National Association $15,000,000
TOTAL $65,000,000
Schedule 1 - Page 1
SCHEDULE 6.2
SUBSIDIARIES
JURISDICTION
NAME OF PERCENTAGE OWNER
ORGANIZATION OWNERSHIP
- ---------------------------------------------------------------------------------------------------
Access Micro Products, Inc. Delaware 100% All American Semiconductor, Inc.
All American Added Value, Inc. California 100% All American Semiconductor, Inc.
All American A.V.E.D., Inc. Colorado 100% All American Semiconductor, Inc.
All American IDT, Inc. California 100% All American Semiconductor, Inc.
All American Semiconductor of Georgia 100% All American Semiconductor, Inc.
Atlanta, Inc.
All American Semiconductor of Canada 100% All American Semiconductor, Inc.
Canada, Inc.
All American Semiconductor of Illinois 100% All American Semiconductor, Inc.
Chicago, Inc.
All American Semiconductor of Florida 100% All American Semiconductor, Inc.
Florida, Inc.
All American Semiconductor of Alabama 100% All American Semiconductor, Inc.
Huntsville, Inc
All American Semiconductor of Massachusetts 100% All American Semiconductor, Inc.
Massachusetts, Inc.
All American Semiconductor of Michigan 100% All American Semiconductor, Inc.
Michigan, Inc.
All American Semiconductor of Minnesota 100% All American Semiconductor, Inc.
Minnesota, Inc.
All American Semiconductor of New York 100% All American Semiconductor, Inc.
New York, Inc.
All American Semiconductor of Ohio 100% All American Semiconductor, Inc.
Ohio, Inc.
All American Semiconductor of New Jersey 100% All American Semiconductor, Inc.
Philadelphia, Inc.
All American Semiconductor of Arizona 100% All American Semiconductor, Inc.
Phoenix, Inc.
All American Semiconductor of Oregon 100% All American Semiconductor, Inc.
Portland, Inc.
All American Semiconductor of Rhode Island 100% All American Semiconductor, Inc.
Rhode Island, Inc.
All American Semiconductor of Maryland 100% All American Semiconductor, Inc.
Rockville, Inc.
All American Semiconductor of Utah 100% All American Semiconductor, Inc.
Salt Lake, Inc.
Schedule 6.2 - Page 1
JURISDICTION
NAME OF PERCENTAGE OWNER
ORGANIZATION OWNERSHIP
- ---------------------------------------------------------------------------------------------------
All American Semiconductor of Texas 100% All American Semiconductor, Inc.
Texas, Inc.
All American Semiconductor of Washington 100% All American Semiconductor, Inc.
Washington, Inc.
All American Semiconductor of Wisconsin 100% All American Semiconductor, Inc.
Wisconsin, Inc.
All American Semiconductor- California 100% All American Semiconductor, Inc.
Northern California, Inc.
All American Technologies, Inc. Florida 100% All American Semiconductor, Inc.
All American Transistor of California 100% All American Semiconductor, Inc.
California, Inc.
Aved Industries, Inc. California 100% All American Semiconductor, Inc.
Palm Electronics Manufacturing Florida 100% All American Semiconductor, Inc.
Corp.
AmeriCapital, LLC Nevada 100%* All American Semiconductor,
Inc.**
AGD Electronics Limited*** England and Wales 100% All American Semiconductor, Inc.
AllAmMex Components Mexico 50% All American Transistor of
S. de R. L. de C. V.*** California, Inc.
50% All American Semiconductor-
Northern California, Inc.
AGD Electronics Asia Pacific Korea 100% All American Semiconductor, Inc.
Co., Ltd.***
- ----------------------------
* Limited Liability Company interest percentage
** Sole member
*** Not a Designated Company
Schedule 6.2
Page 2
SCHEDULE 6.8
INTELLECTUAL PROPERTY
1. Trademark registration no. 1,440,294 for the name and logo of "All
American".
2. Internet domain for the name of "ALLAMERICAN.COM".
Internet domain for the name of "AVEDMEMORY.COM".
Internet domain for the name of "AVEDDISPLAY.COM".
Internet domain for the name of "AADSG.COM".
Internet domain for the name of "IKIT2000.COM".
Internet domain for the name of "BUY.ALLAMERICAN.COM".
3. Tradenames:
ALL AMERICAN SEMICONDUCTOR, INC.
--------------------------------
Fictitious Names:
-----------------
All American (FL)
ALL AMERICAN A.V.E.D., INC.
---------------------------
Fictitious Names:
-----------------
Added Value Electronics Distribution, Inc. (CO)
Added Value Electronic Distribution, Inc. (CO)
A.V.E.D. - Rocky Mountain, Inc. (CO)
AMERICAPITAL, LLC
-----------------
Fictitious Names:
-----------------
Americapital (FL)
AVED INDUSTRIES, INC.
---------------------
Trade Names (not registered):
-----------------------------
Aved Memory Products
4. Common law copyrights and trade secrets created or developed by the
Designated Companies in the ordinary course of business with respect to
advertising, promotional and business literature and design,
engineering and other services performed by such companies for
customers.
SCHEDULE 6.22
EMPLOYEE CONTROVERSIES
None
SCHEDULE 6.23
ENVIRONMENTAL MATTERS
None
SCHEDULE 8.7
INDEBTEDNESS
As of March 31, 2003
Line of credit $33,988,000
Subordinated debt:
- ------------------
Public bonds 5,126,000
Drake tenant improvements 672,000
Drake tenant improvements 71,000
Drake tenant improvements 116,000
Drake tenant improvements 20,000
Church Ranch 3,000
Other debt:
- -----------
Retirement obligation 1,171,000
Eileen Levine 9,000
Other obligations:
- ------------------
Employment agreements with executive officers and other non-executive employees
made in the ordinary course of business.
SCHEDULE 8.8
LIENS
NAME OF DEBTOR: All American Semiconductor, Inc.
JURISDICTION: Arizona, Secretary of State
- --------------------------------------------------------------------------------------------
FILING DATE OF TYPE OF UCC SECURED PARTY COLLATERAL
NUMBER FILING CODE
- --------------------------------------------------------------------------------------------
01023441 7/6/98 UCC-1 Sun Financial Group, Leased SE
Inc.
- --------------------------------------------------------------------------------------------
01180024 6/28/01 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
JURISDICTION: California, Secretary of State
- --------------------------------------------------------------------------------------------
FILING DATE OF TYPE OF UCC SECURED PARTY COLLATERAL
NUMBER FILING CODE
- --------------------------------------------------------------------------------------------
9814960072 5/28/99 UCC-1 General Electric AR and PR of
Capital Corporation Allied Signal, Inc.
(Allied Aero)
- --------------------------------------------------------------------------------------------
9900660547 12/29/98 UCC-1 Lucent SE
Technologies, Inc.
- --------------------------------------------------------------------------------------------
9920260027 7/12/99 UCC-1 Mitsubishi Consigned
Electronics America, semiconductor
Inc. (Consignor) and related
products
- --------------------------------------------------------------------------------------------
02093C0622 4/2/02 UCC-3 Assignment to
Mitsubishi
Electric &
Electronics USA,
Inc.
- --------------------------------------------------------------------------------------------
9923260061 8/6/99 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
0118060418 6/28/01 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
AC=Accounts DC=Documents LE=Leases RP=Replacements
AR=Accounts Rec. EQ=Equipment LI=Livestock TO=Tools
AF=After Acq. Prop. FU=Furnishings MA=Machines SA=Sec. Agreements
BL=Blanket Filing FX=Fixtures ME=Merchandise SM=See Microfilm
CH=Chattel Paper GI=Gen. Intangibles NI=Neg. Instrument SE=Specific Equip.
CE=Computer Equip. GO=Goods PR=Proceeds SU=Substitutions
CR=Contract Rights IN=Inventory PD=Products VE=Vehicles
CS=Constr. Equip. INS=Instruments RE=Real Estate
Page 1
JURISDICTION: Delaware, Secretary of State
- --------------------------------------------------------------------------------------------
FILING DATE OF TYPE OF UCC SECURED PARTY COLLATERAL
NUMBER FILING CODE
- --------------------------------------------------------------------------------------------
11086540 9/4/01 UCC-1 GATX Leased SE - In Lieu
Technology of Filing to move
Services original UCC filings
Corporation from NY-SOS and
Suffolk County, NY
- --------------------------------------------------------------------------------------------
11086540 12/19/01 UCC-3 Assignment to
CitiCapital
Commercial
Corporation
- --------------------------------------------------------------------------------------------
20022966 11/29/01 UCC-1 GATX Leased SE
Technology
Services
Corporation
- --------------------------------------------------------------------------------------------
21184880 4/24/02 UCC-1 Mitsubishi Consigned GO - In
Electric & Lieu of UCC to
Electronics USA, move CA-SOS UCC
Inc. filing
- --------------------------------------------------------------------------------------------
JURISDICTION: Florida, Secretary of State
- --------------------------------------------------------------------------------------------
FILING DATE OF TYPE OF UCC SECURED PARTY COLLATERAL
NUMBER FILING CODE
- --------------------------------------------------------------------------------------------
980000119579 6/1/98 UCC-1 Sun Financial Group, Leased SE
Inc.
- --------------------------------------------------------------------------------------------
980000234626 10/20/98 UCC-3 Full Assignment
to Phoenixcor,
Inc.
- --------------------------------------------------------------------------------------------
980000146548 7/6/98 UCC-1 Sun Financial Group, Leased SE
Inc.
- --------------------------------------------------------------------------------------------
990000026664 2/5/99 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
AC=Accounts DC=Documents LE=Leases RP=Replacements
AR=Accounts Rec. EQ=Equipment LI=Livestock TO=Tools
AF=After Acq. Prop. FU=Furnishings MA=Machines SA=Sec. Agreements
BL=Blanket Filing FX=Fixtures ME=Merchandise SM=See Microfilm
CH=Chattel Paper GI=Gen. Intangibles NI=Neg. Instrument SE=Specific Equip.
CE=Computer Equip. GO=Goods PR=Proceeds SU=Substitutions
CR=Contract Rights IN=Inventory PD=Products VE=Vehicles
CS=Constr. Equip. INS=Instruments RE=Real Estate
Page 2
- --------------------------------------------------------------------------------------------
990000167614 7/26/99 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
990000206300 9/9/99 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
200000026154 1/31/00 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
200000026154 1/31/00 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
200100020741 1/29/01 UCC-3 Assignment to
Pullman Bank &
Trust Co.
- --------------------------------------------------------------------------------------------
200000074009 3/30/00 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
200000242045 10/23/00 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
200100081658 4/16/01 UCC-1 Great America Leased SE
Leasing Corporation
- --------------------------------------------------------------------------------------------
200100137772 6/25/01 UCC-1 Great America Leased SE
Leasing Corporation
- --------------------------------------------------------------------------------------------
200100143155 6/28/01 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
200190507622 12/7/01 UCC-1 Benchmark Business Leased EQ
Systems, Inc.
- --------------------------------------------------------------------------------------------
200200258123 1/31/02 UCC-1 Benchmark Business Leased EQ
Systems, Inc.
- --------------------------------------------------------------------------------------------
AC=Accounts DC=Documents LE=Leases RP=Replacements
AR=Accounts Rec. EQ=Equipment LI=Livestock TO=Tools
AF=After Acq. Prop. FU=Furnishings MA=Machines SA=Sec. Agreements
BL=Blanket Filing FX=Fixtures ME=Merchandise SM=See Microfilm
CH=Chattel Paper GI=Gen. Intangibles NI=Neg. Instrument SE=Specific Equip.
CE=Computer Equip. GO=Goods PR=Proceeds SU=Substitutions
CR=Contract Rights IN=Inventory PD=Products VE=Vehicles
CS=Constr. Equip. INS=Instruments RE=Real Estate
Page 3
JURISDICTION: Illinois, Secretary of State
- --------------------------------------------------------------------------------------------
FILING DATE OF TYPE OF UCC SECURED PARTY COLLATERAL
NUMBER FILING CODE
- --------------------------------------------------------------------------------------------
3876196 7/8/98 UCC-1 Sun Financial Group, Leased SE
Inc.
- --------------------------------------------------------------------------------------------
JURISDICTION: Michigan, Secretary of State
- --------------------------------------------------------------------------------------------
FILING DATE OF TYPE OF UCC SECURED PARTY COLLATERAL
NUMBER FILING CODE
- --------------------------------------------------------------------------------------------
D395643 7/7/98 UCC-1 Sun Financial Group, Leased SE
Inc.
- --------------------------------------------------------------------------------------------
JURISDICTION: Minnesota, Secretary of State
- --------------------------------------------------------------------------------------------
FILING DATE OF TYPE OF UCC SECURED PARTY COLLATERAL
NUMBER FILING CODE
- --------------------------------------------------------------------------------------------
2162148 9/14/99 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
AC=Accounts DC=Documents LE=Leases RP=Replacements
AR=Accounts Rec. EQ=Equipment LI=Livestock TO=Tools
AF=After Acq. Prop. FU=Furnishings MA=Machines SA=Sec. Agreements
BL=Blanket Filing FX=Fixtures ME=Merchandise SM=See Microfilm
CH=Chattel Paper GI=Gen. Intangibles NI=Neg. Instrument SE=Specific Equip.
CE=Computer Equip. GO=Goods PR=Proceeds SU=Substitutions
CR=Contract Rights IN=Inventory PD=Products VE=Vehicles
CS=Constr. Equip. INS=Instruments RE=Real Estate
Page 4
JURISDICTION: New York, Secretary of State
- --------------------------------------------------------------------------------------------
FILING DATE OF TYPE OF UCC SECURED PARTY COLLATERAL
NUMBER FILING CODE
- --------------------------------------------------------------------------------------------
060210 3/28/01 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
JURISDICTION: Suffolk County, New York
- --------------------------------------------------------------------------------------------
FILING DATE OF TYPE OF UCC SECURED PARTY COLLATERAL
NUMBER FILING CODE
- --------------------------------------------------------------------------------------------
01-05490 3/28/01 UCC-1 GATX Technology Leased SE
Services Corporation
- --------------------------------------------------------------------------------------------
JURISDICTION: Texas, Secretary of State
- --------------------------------------------------------------------------------------------
FILING DATE OF TYPE OF UCC SECURED PARTY COLLATERAL
NUMBER FILING CODE
- --------------------------------------------------------------------------------------------
98-136002 7/3/98 UCC-1 Sun Financial Group Leased SE
Inc.
- --------------------------------------------------------------------------------------------
AC=Accounts DC=Documents LE=Leases RP=Replacements
AR=Accounts Rec. EQ=Equipment LI=Livestock TO=Tools
AF=After Acq. Prop. FU=Furnishings MA=Machines SA=Sec. Agreements
BL=Blanket Filing FX=Fixtures ME=Merchandise SM=See Microfilm
CH=Chattel Paper GI=Gen. Intangibles NI=Neg. Instrument SE=Specific Equip.
CE=Computer Equip. GO=Goods PR=Proceeds SU=Substitutions
CR=Contract Rights IN=Inventory PD=Products VE=Vehicles
CS=Constr. Equip. INS=Instruments RE=Real Estate
Page 5
SCHEDULE 8.9
INVESTMENTS
$50,000 in Triscend Corporation, an unrelated third party
SCHEDULE 8.15
CONSULTING AND MANAGEMENT FEES
None