EXHIBIT 4(i)
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CREDIT AGREEMENT
Dated as of August 29, 1996
among
MILGRAY ELECTRONICS, INC.,
THE GUARANTORS NAMED HEREIN,
FLEET BANK, N.A.,
(as "Agent" and as a "Lender")
FIRST UNION NATIONAL BANK
and
EUROPEAN AMERICAN BANK
(as "Lenders")
and
THE OTHER LENDERS NAMED HEREIN
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TABLE OF CONTENTS
I. DEFINITIONS ........................................................ -1-
II. THE LOANS .......................................................... -17-
SECTION 2.01. Revolving Credit Commitments ............................ -17-
SECTION 2.02. Loans ................................................... -17-
SECTION 2.03. Notice of Loans ......................................... -19-
SECTION 2.04. Note; Repayment of Loans ................................ -20-
SECTION 2.05. Interest on Loans ....................................... -20-
SECTION 2.06. Rate Adjustments ........................................ -21-
SECTION 2.07. Commitment and Other Fees ............................... -22-
SECTION 2.08. Termination and Reduction of Revolving Credit Commitments -22-
SECTION 2.09. Interest on Overdue Amounts; Alternate Rate of Interest . -23-
SECTION 2.10. Prepayment of Loans ..................................... -24-
SECTION 2.11. Reserve Requirements; Change in Circumstances ........... -25-
SECTION 2.12. Change in Legality ...................................... -27-
SECTION 2.13. Indemnity ............................................... -28-
SECTION 2.14. Pro Rata Treatment ...................................... -28-
SECTION 2.15. Sharing of Setoffs ...................................... -29-
SECTION 2.16. Taxes ................................................... -30-
SECTION 2.17. Payments and Computations ............................... -33-
III. LETTERS OF CREDIT AND ACCEPTANCES .................................. -33-
SECTION 3.01. Issuance of Letters of Credit ........................... -33-
SECTION 3.02. Payment in Respect of Letters of Credit; Reimbursement .. -33-
SECTION 3.03. Actions of Agent ........................................ -36-
SECTION 3.04. Payments in Respect of Increased Costs .................. -36-
SECTION 3.05. Indemnity as to Letters of Credit ....................... -38-
SECTION 3.06. Letter of Credit Fees ................................... -39-
SECTION 3.07. Acceptance Drafts ....................................... -39-
SECTION 3.08. Payment of Acceptances .................................. -40-
SECTION 3.09. Ineligibility of Acceptance Drafts ...................... -43-
SECTION 3.10. Customary Fees .......................................... -43-
SECTION 3.11. Forms of Drafts ......................................... -43
IV. REPRESENTATIONS AND WARRANTIES ..................................... -44-
SECTION 4.01. Organization, Legal Existence ........................... -44-
SECTION 4.02. Authorization ........................................... -44-
SECTION 4.03. Governmental Approvals .................................. -44-
SECTION 4.04. Binding Effect .......................................... -45-
(i)
SECTION 4.05. No Default; Material Adverse Change ..................... -45-
SECTION 4.06. Litigation; Compliance with Laws; Etc. .................. -45-
SECTION 4.07. Financial Statements .................................... -45-
SECTION 4.08. Federal Reserve Regulations ............................. -46-
SECTION 4.09. Taxes ................................................... -47-
SECTION 4.10. Employee Benefit Plans .................................. -47-
SECTION 4.11. No Material Misstatements ............................... -49-
SECTION 4.12. Investment Company Act; Public Utility Holding
Company Act ........................................... -49-
SECTION 4.13. Use of Proceeds ......................................... -49-
SECTION 4.14. Subsidiaries and Affiliates ............................. -50-
SECTION 4.15. Tide to Properties; Possession Under Leases; Trademarks . -50-
SECTION 4.16. Permits, Etc. ........................................... -51-
SECTION 4.17. Compliance with Environmental Laws ...................... -51-
SECTION 4.18. No Change in Credit Criteria or Collection Policies ..... -52-
SECTION 4.19. Franchise Agreements .................................... -52-
SECTION 4.20. Financing Agreements .................................... -52-
SECTION 4.21. No Overdue Obligations .................................. -52-
V. CONDITIONS OF CREDIT EVENTS ........................................ -53-
SECTION 5.01. All Credit Events ....................................... -53-
SECTION 5.02. First Borrowing ......................................... -53-
SECTION 5.03. Puerto Rican Securities Borrowing ....................... -56-
VI. AFFIRMATIVE COVENANTS .............................................. -56-
SECTION 6.01. Legal Existence ......................................... -56-
SECTION 6.02. Businesses and Properties ............................... -56-
SECTION 6.03. Insurance ............................................... -57-
SECTION 6.04. Taxes ................................................... -57-
SECTION 6.05. Financial Statements, Reports, Etc. ..................... -58-
SECTION 6.06. Litigation and Other Notices ............................ -60-
SECTION 6.07. ERISA ................................................... -61-
SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit ........................... -62-
SECTION 6.09. Use of Proceeds ......................................... -62-
SECTION 6.10. Fiscal Year-End ......................................... -63-
SECTION 6.11. Additional Guarantors ................................... -63-
SECTION 6.12. Environmental Laws ...................................... -63-
SECTION 6.13. Pay Obligations to Lenders and Perform Other Covenants .. -65-
(ii)
VII. NEGATIVE COVENANTS ................................................. -65-
SECTION 7.01. Liens ................................................... -65-
SECTION 7.02. Indebtedness ............................................ -67-
SECTION 7.03. Dividends, Distributions and Payments ................... -69-
SECTION 7.04. Consolidations, Mergers and Sales of Assets ............. -70-
SECTION 7.05. Investments ............................................. -70-
SECTION 7.06. Capital Expenditures .................................... -71-
SECTION 7.07. Net Worth ............................................... -71-
SECTION 7.08. Total Unsubordinated Liabilities to Net Worth Ratio ..... -72-
SECTION 7.09. Rental Obligations ...................................... -72-
SECTION 7.10. Consolidated Inventory Ratio ............................ -72-
SECTION 7.11. Consolidated Current Ratio .............................. -72-
SECTION 7.12. Interest Coverage Ratio ................................. -72-
SECTION 7.13. Net Income .............................................. -72-
SECTION 7.14. Business ................................................ -72-
SECTION 7.15. Sales of Receivables .................................... -72-
SECTION 7.16. Use of Proceeds ......................................... -73-
SECTION 7.17. ERISA ................................................... -73-
SECTION 7.18. Accounting Changes ...................................... -73-
SECTION 7.19. Modification of Indebtedness ............................ -73-
SECTION 7.20. Transactions with Affiliates ............................ -73-
VIII. EVENTS OF DEFAULT ................................................. -74-
IX. AGENT .............................................................. -78-
X. GUARANTEES ......................................................... -81-
XI. MISCELLANEOUS ...................................................... -83-
SECTION 11.01. Notices ................................................. -83-
SECTION 11.02. Survival of Agreement ................................... -83-
SECTION 11.03. Successors and Assigns: Participations .................. -84-
SECTION 11.04. Expenses: Indemnity ..................................... -87-
SECTION 11.05. Applicable Law .......................................... -88-
SECTION 11.06. Right of Setoff ......................................... -88-
SECTION 11.07. Payments on Business Days ............................... -88-
SECTION 11.08. Waivers; Amendments ..................................... -88-
SECTION 11.09. Severability ............................................ -90-
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, Etc. ............ -90-
SECTION 11.11. Confidentiality ......................................... -91-
SECTION 11.12. Submission to Jurisdiction .............................. -91-
SECTION 11.13. Counterparts: Facsimile Signature ....................... -92-
(iii)
SECTION 11.14. Headings ................................................. -92-
EXHIBIT A
Form of Revolving Credit Note ........................................... -95-
EXHIBIT B ............................................................... -98-
EXHIBIT C
Form of Assignment and Acceptance ....................................... -101-
EXHIBIT D
Form of Acceptance Draft ................................................ -104-
EXHIBIT E
Aged Trial Balance ...................................................... -105-
EXHIBIT F
Inventory Turns ......................................................... -106-
EXHIBIT G
Draft of Legal Opinion/Puerto Rico Counsel to Milgray
Electronics/P.R., Inc. ................................................ -107-
EXHIBIT H
Form of Notice Regarding Domestic Shipment Financing .................... -109-
EXHIBIT I
Form of Certificate of Compliance ....................................... -110-
SCHEDULE 2.01.
Revolving Credit Commitments ............................................ -112-
SCHEDULE 2.02
Lending Offices ......................................................... -113-
SCHEDULE 3.01
Outstanding Letters of Credit ........................................... -114-
SCHEDULE 4.01
Qualified Jurisdictions ................................................. -115-
SCHEDULE 4.05
Material Adverse Change ................................................. -116-
(iv)
SCHEDULE 4.06(a)
Litigation .............................................................. -117-
SCHEDULE 4.06(b)
Compliance with Laws, Etc. .............................................. -118-
SCHEDULE 4.09
Taxes ................................................................... -119-
SCHEDULE 4.10
ERISA ................................................................... -120-
SCHEDULE 4.14
Subsidiaries and Affiliates ............................................. -122-
SCHEDULE 4.17
Environmental Compliance ................................................ -123-
SCHEDULE 4.20
Milgray Electronics, Inc. Financing Agreements .......................... -124-
SCHEDULE 6.12
Hazardous Materials ..................................................... -126-
SCHEDULE 7.01
Existing Liens .......................................................... -127-
SCHEDULE 7.02
Milgray Electronics, Inc. Indebtedness .................................. -128-
(v)
CREDIT AGREEMENT dated as of August 29, 1996, among MILGRAY ELECTRONICS,
INC., a New York corporation (the "Borrower"), the Guarantors named herein and
signatories hereto, FLEETBANK, N.A., a national banking association, FIRST UNION
NATIONAL BANK, a national banking association ("First Union"), EUROPEAN AMERICAN
BANK, a New York bank ("EAB"), and the other lenders named in Schedule 2.01
annexed hereto (collectively, the "Lenders"), and FLEETBANK, N.A., as agent for
the Lenders (in such capacity, the "Agent").
The Borrower has applied to the Lenders for Credits (such term and all
other capitalized terms used in this paragraph having the respective meanings
ascribed to such terms above or hereinafter) in the form of Credits to the
Borrower at any time and from time to time prior to the Revolving Credit
Termination Date in an aggregate principal amount not in excess of $70,000,000
at any time outstanding. The proceeds of the Credits shall be used to repay all
obligations under the Prior Credit Agreement, advances by the Borrower to
Milgray Electronics/P.R., Inc. in an aggregate amount of up to $5,000,000 to
enable such entity to purchase Puerto Rican Securities and for the general
working capital requirements of the Borrower and the Guarantors. The Guarantors
are guaranteeing (or in the case of Guarantors not in existence on the date
hereof, will guarantee) the Credits in accordance with the provisions of this
Agreement. The Lenders are severally, and not jointly, willing to extend such
Credits to the Borrower subject to the terms and conditions hereinafter set
forth. Accordingly, the Borrower, the Guarantors, the Lenders and the Agent
hereby agree as follows:
I. DEFINITIONS.
For purposes hereof, the following terms shall have the meanings specified
below:
"Acceptance Date" shall have the meaning set forth in Section 3.07(b)
hereof.
"Acceptance Draft", "Acceptance Drafts" shall have the meanings set forth
in Section 3.07(a) hereof.
"Acceptance Draft Commission" shall have the meaning set forth in Section
3.08 hereof.
"Acceptance Draft Exposure" shall mean at any time the sum of (a) the
aggregate face amount of Acceptance Drafts outstanding and (b) the aggregate
amount of all payments in respect of Acceptance Drafts for which the Lenders
shall not have been reimbursed as provided in Section 3.08 hereof.
"Adjusted Eurodollar Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the product of (i) the
Eurodollar Rate in effect for such Interest Period and (ii) Eurodollar Reserves.
For purposes hereof, the term "Eurodollar Reserves" means a fraction (expressed
as a decimal), the numerator of which is the number one and the denominator of
which is the number one minus the applicable statutory reserve requirements
(expressed as a decimal) for the Agent (without duplication, but including,
without limitation, basic, supplemental, marginal and emergency reserves), from
time to time in effect under Regulation D of the Board of Governors of the
Federal Reserve System ("Regulation D") with respect to Eurocurrency funding
currently referred to as "Eurocurrency liabilities" in Regulation D. It is
agreed that for purposes hereof each Eurodollar Loan shall be deemed to
constitute a "Eurocurrency liability" as defined in Regulation D, and to be
subject to the reserve requirements of Regulation D, without benefit of credit
or proration, exemptions or offsets which might otherwise be available to the
Agent from time to time under Regulation D.
"Affiliate" of any person shall mean any other person other than a natural
person which, directly or indirectly, controls or is controlled by or is under
common control with such person. For the purposes of this definition, X.X.
Xxxxxxxx Associates, Inc. shall not be deemed an Affiliate and the term
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any applicable person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities or by contract or otherwise.
"Agreement" shall mean this Credit Agreement, together with all schedules
and exhibits hereto, as the same may be supplemented, modified, amended or
restated from time to time in the manner provided herein.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Prime Rate Loan and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Loan.
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an assignee, consented to and accepted by the Agent, in
substantially the form of Exhibit C hereto.
"Availability" shall mean at any time (i) the lesser at such time of (x)
the Total Revolving Credit Commitment (as such amount may be reduced or
increased in accordance with the provisions of this Agreement) and (y) the
Borrowing Base, minus (ii) the sum at such time of (u) the aggregate principal
amount of the Revolving Credit
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Loans outstanding, (v) the Letter of Credit Exposure and (w) the Acceptance
Draft Exposure.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"Borrower" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Borrowing Base" shall mean an amount equal to the sum of (i) up to 90% of
the Net Amount of Eligible Receivables plus (ii) the lesser of (x) 50% of the
Net Amount of Eligible Inventory or (y) $30,000,000.
"Business Day" shall mean any day, other than a Saturday, Sunday or legal
holiday in the State of New York, on which banks are open for substantially all
their banking business in New York City.
"Capitalized Lease Obligation" shall mean an obligation to pay rent or
other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with generally accepted accounting principles, and for purposes hereof the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with such principles.
"Closing Date" shall mean the date on which the Credit Parties, the Lenders
and the Agent shall have executed and delivered this Agreement, which date shall
not in any event be later than August 31, 1996.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder.
"Consolidated" shall mean, in respect of any person, as applied to any
financial or accounting term, such term determined on a consolidated basis in
accordance with generally accepted accounting principles (except as otherwise
required herein) for the person and all consolidated subsidiaries thereof.
"Contaminant" shall mean all Hazardous Materials and all those substances
which are regulated by or form the basis of liability under Federal, state or
local environmental, health and safety statutes or regulations including,
without limitation, asbestos, polychlorinated biphenyls ("PCBs"), and
radioactive substances, or any other material or substance which constitutes a
material health, safety or environmental hazard to any person or property.
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"Credit Event" shall mean each extension of Credits hereunder.
"Credit Parties" shall mean, collectively, the Borrower and the Guarantors.
"Credits" shall mean Loans, Letters of Credit or Acceptance Drafts, as the
case may be.
"Current Assets" shall mean, with respect to any person at any date, the
aggregate amount of all assets of such person which would be classified as
current assets at such date, computed and calculated in accordance with
generally accepted accounting principles.
"Current Liabilities" shall mean, with respect to any person at any date,
the aggregate amount of all liabilities of such person (including tax and other
proper accruals) which would be classified as current liabilities at such date,
computed and calculated in accordance with generally accepted accounting
principles consistently applied, but in any event shall include all Credits
(other than Letters of Credit) and the indebtedness allowed pursuant to Section
7.02 (xviii) hereof.
"Current Ratio" shall mean the ratio of Current Assets to Current
Liabilities.
"Customer" shall mean and include the account debtor or obligor with
respect to any of the Receivables.
"Default" shall mean any condition, act or event which, with notice or
lapse of time or both, would constitute an Event of Default.
"Discount Rate" shall mean a fluctuating annual rate of interest in effect
from time to time equal to the then current rate established by the Agent for
banker's acceptances of equal face amount and duration eligible for discount
with the Federal Reserve Banks of the United States.
"Dollars" or the symbol "$" shall mean dollars in lawful currency of the
United States of America.
"Domestic Lending Office" means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office, opposite its name in
Schedule 2.02 hereto, or such other office of such Lender as such Lender may
from time to time specify to the Borrower and the Agent.
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"Eligible Inventory" shall mean Inventory of the Borrower and its
Consolidated subsidiaries (to the extent such subsidiaries have become
Guarantors) consisting of electronic components, semiconductors,
electromechanical devices, passive components, computer products and other
related products of the type currently being distributed by Borrower and the
Guarantors; provided, that Eligible Inventory shall not include (x) work in
process or (y) any raw materials or finished inventory which (i) is not located
in the United States or Canada, (ii) which has been held more than 15 months
unless there exists open Customer sales orders with respect thereto, (iii) which
is damaged, unsalable or otherwise unfit for use or (iv) is the subject of a
purchase money security interest or similar arrangements.
"Eligible Receivables" shall mean at the time of any determination thereof
all Receivables which meet the following criteria at the time of creation and
continue to meet the same at all times relevant to such determination: (a) all
payments due on the Receivable have been invoiced; (b) the payment due on the
Receivable is not more than 120 days past the invoice date; (c) the payments due
on more than 50% of all Receivables from the same Customer are less than 120
days past the invoice date; (d) the Receivable arose from a completed, outright
and lawful sale of goods, to which title has passed to the Customer, by or on
behalf of the Borrower or any of the Guarantors; (e) the Receivable is free and
clear of all security interests, liens, charges and encumbrances of any nature
whatsoever; (f) the Receivable constitutes (i) an "account" or "chattel paper"
within the meaning of the Uniform Commercial Code of the state in which the
Receivable is located or (ii) an "instrument" within the meaning of the Uniform
Commercial Code of the state in which the Receivable is located, but only to the
extent that such instrument was received as payment in respect of an "account"
and is payable in full within 120 days past the invoice date relating to such
"account", (g) the Customer has not asserted that the Receivable, and neither
the Borrower nor any Guarantor is aware that the Receivable, is subject to any
setoff, net-out contract, offset, deduction, dispute, credit, counterclaim or
other defense arising out of the transactions represented by the Receivables or
independently thereof other than any of same arising in the ordinary course of
business and for which adequate reserves have been established in accordance
with generally accepted accounting principles, and the Customer has finally
accepted the goods from the sale out of which the Receivable arose and has not
objected to its liability thereon or returned, rejected or repossessed any of
such goods, except for complaints made or goods returned in the ordinary course
of business for which, in the case of goods returned, goods of equal or greater
value have been shipped in return; (h) the Receivable arose in the ordinary
course of business of the Borrower or any of the Guarantors; (i) the Customer is
not (x) the United States government or the government of any state or political
subdivision
-5-
thereof or therein, or any agency or department of any thereof or (y) an
Affiliate of the Borrower or any subsidiary of any thereof; (j) the Customer is
a United States, Puerto Rican or Canadian person or an obligor in the United
States, Puerto Rico or Canada; (k) the Receivable complies with all material
requirements of all applicable laws and regulations, whether Federal, state or
local (including, without limitation, usury laws and laws, rules and regulations
relating to truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy); (1) to the
knowledge of the Borrower or any Guarantor after reasonable investigation, the
Receivable is in full force and effect and constitutes a legal, valid and
binding obligation of the Customer enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors, rights
generally and by general equity principles; (m) the Receivable is denominated in
and provides for payment by the Customer in United States (or in the case of a
Receivable where the applicable Customer is a Canadian person, Canadian or
United States) dollars; and (n) the Receivable has not been and is not required
to be charged off or written off as uncollectible in accordance with generally
accepted accounting principles or the customary business practice of the
Borrower or any Guarantor unless adequate reserves have been established
therefor in accordance with generally accepted accounting principles.
Notwithstanding the foregoing, all Receivables of any single Customer which, in
the aggregate, exceed 10% of the total Eligible Receivables at the time of any
such determination shall be deemed not to be Eligible Receivables to the extent
of such excess.
"Environmental Claim" shall mean any written notice of violation, claim,
demand, abatement or other order by any governmental authority or any person for
personal injury (including sickness, disease or death), tangible or intangible
property damage, damage to the environment, nuisance, pollution, contamination
or other adverse effects on the environment, or for fines, penalties or deed or
use restrictions, resulting from or based upon (i) the existence, or the
continuation of the existence, of a Release (including, without limitation,
sudden or non-sudden, accidental or nonaccidental Releases), of, or exposure to,
any substance, chemical, material, pollutant, contaminant, odor or audible noise
or other release or emission in, into or onto the environment (including,
without limitation, the air, ground, water or any surface) at, in, by or from
any of the properties of the Borrower, any Guarantor or any of their respective
subsidiaries, (ii) the environmental aspects of the transportation, storage,
treatment or disposal of materials in connection with the operation of any of
the properties of the Borrower, any Guarantor or any of their respective
subsidiaries or (iii) the violation, or alleged violation by the Borrower, any
Guarantor or any of their respective
-6-
subsidiaries, of any statutes, ordinances, orders, rules, regulations, Permits
or licenses of or from any governmental authority, agency or court relating to
environmental matters connected with any of the properties of the Borrower, any
Guarantor or any of their respective subsidiaries, under any applicable
Environmental Law.
"Environmental Laws" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss.9601 et seq.), the Hazardous
Material Transportation Act (49 U.S.C. ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss.6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss.1251 et seq.), the Oil Pollution Act of 1990
(P.L. 101-380), the Safe Drinking Water Act (42 U.S.C. ss.300(f), et seq.), the
Clear Air Act (42 U.S.C. ss.7401 et seq.), the Toxic Substances Control Act, as
amended (15 U.S.C. ss.2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. ss.136 et. seq.), and the Occupational Safety and
Health Act (29 U.S.C. ss.651 et seq.), as such laws have been and hereafter may
be amended or supplemented, and any related or analogous present or future
Federal, state, local or foreign statutes, rules, regulations, ordinances,
licenses, permits and interpretations and orders of regulatory and
administrative bodies.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder, as in effect from
time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which together with the Borrower or any of its subsidiaries would
be treated as a single employer under the provisions of Title I or Title IV of
ERISA.
"Eurodollar Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Eurodollar Lending Office" opposite its name in
Schedule 2.02 hereto (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
"Eurodollar Loan" shall mean a Loan bearing interest based on the Adjusted
Eurodollar Rate in accordance with Article II hereof.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the rate at which United States dollar deposits
approximately equal in principal amount to the Eurodollar Loan and for a
maturity equal to the applicable Interest Period are offered in the London
interbank market and that (a) appears on the Telerate Page 3750 as of 11:00
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a.m. London time, two Business Days prior to the first day of such Interest
Period or (b) if no such rate appears on the Telerate page 3750, the rate of
interest determined by the Agent to be the average of up to four interest rates
per annum which appear on the Xxxxxx'x Screen LIBO page as of 11:00 a.m. London
time two Business Days prior to the first day of such Interest Period if at
least two such offered rates so appear on the Xxxxxx'x Screen LIBO Page or (c)
if no such rate appears on the Telerate Page 3750 and fewer than two offered
rates appear on the Xxxxxx'x Screen LIBO Page, the rate of interest at which
U.S. Dollar deposits are offered to the Agent by first class banks in the London
interbank market for delivery in immediately available funds at the Eurodollar
Office of the Agent on the first day of such Interest Period as determined by
the Agent at approximately 10:00 a.m. (New York time) two Business Days prior to
the date upon which such Interest Period is to commence (which determination by
the Agent shall, in the absence of manifest error, be conclusive)
"Event of Default" shall have the meaning assigned such term in Article
VIII hereof.
"Financial Officer" shall mean, with respect to any person, the chief
financial officer, Vice President - Finance, Treasurer or Assistant Treasurer of
such person.
"Fiscal Year" shall mean the fiscal year of the Borrower for accounting
purposes which ends on September 30 of each year.
"Foreign Subsidiaries" shall mean Milgray/Toronto, Inc., a corporation
organized and existing under the laws of Ontario, Canada and all other direct or
indirect subsidiaries or Affiliates of the Borrower or the Guarantors now or
hereafter existing that are incorporated or organized in a jurisdiction outside
of the United States of America.
"Guarantee" shall mean any obligation, contingent or otherwise, of any
person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or obligation of any other person in any manner, whether directly
or indirectly, and including, without limitation, any obligation of such person,
direct or indirect, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such
Indebtedness, (ii) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness,
or (iii) to maintain working capital, equity capital, available cash or other
financial statement condition of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that the term Guarantee
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business.
-8-
"Guarantor" shall mean each subsidiary and Affiliate of a Credit Party
executing and delivering this Agreement or which becomes a Guarantor after the
date hereof pursuant to Section 6.11 hereof.
"Hazardous Material" shall mean any pollutant, contaminant, chemical, or
industrial or hazardous, toxic or dangerous waste, substance or material,
defined or regulated as such in (or for purposes of) any Environmental Law and
any other toxic, reactive, or flammable chemicals, including (without
limitation) any asbestos, any petroleum (including crude oil or any fraction),
any radioactive substance and any polychlorinated biphenyls; provided, in the
event that any Environmental Law is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment; and provided, further, to the extent that the
applicable laws of any state establish a meaning for "hazardous material",
"hazardous substance", "hazardous waste", "solid waste" or "toxic substance"
which is broader than that specified in any Environmental Law, such broader
meaning shall apply.
"Indebtedness" shall mean, with respect to any person, (a) all obligations
of such person for borrowed money, or with respect to deposits or advances of
any kind, (b) all obligations of such person evidenced by bonds, debentures,
notes or other similar instruments, (c) all obligations of such person for the
deferred purchase price of property or services, except current accounts payable
arising in the ordinary course of business and not overdue, (d) all obligations
of such person under conditional sale or other title retention agreements
relating to property purchased by such person, (e) all payment obligations of
such person with respect to interest rate or currency protection agreements, (f)
all obligations of such person as an account party under any letter of credit or
in respect of bankers, acceptances, (g) all Indebtedness of any third party
secured by property or assets of such person (regardless of whether or not such
person is liable for repayment of such Indebtedness), (h) all Capitalized Lease
Obligations, (i) all Guarantees of such person and (j) the redemption price of
all redeemable preferred stock issued after the date hereof of such person, but
only to the extent that such stock is redeemable at the option of the holder or
requires sinking fund or similar payments at any time prior to the Revolving
Credit Termination Date.
"Information" shall have the meaning assigned to such term in Section 11.11
hereof.
"Interest Coverage Ratio" shall mean, with respect to any person for any
period, the ratio of (i) EBIT for such period, to (ii) the Interest Expense of
such person for such period. For purposes hereof, EBIT shall mean with respect
to any person for any period the sum of (i) Net Income, (ii) Interest Expense
and (iii) federal,
-9-
state, local and foreign income taxes, in each case of such person on a
Consolidated basis for such period, computed and calculated in accordance with
generally accepted accounting principles applied on a consistent basis.
"Interest Expense" shall mean, with respect to any person for any period,
the interest expense of such person during such period determined on a
Consolidated basis in accordance with generally accepted accounting principles
consistently applied, and shall in any event include, without limitation, (i)
the amortization of debt discounts, (ii) the amortization of all fees payable in
connection with the incurrence of Indebtedness to the extent included in
interest expense, (iii) the portion of any Capitalized Lease Obligation
allocable to interest expense, (iv) all fixed or calculable dividend payments on
preferred stock and (v) payments of interest expense in kind.
"Interest Payment Date" shall mean (i) in the case of any Loan, the last
Business Day of each month commencing August 31, 1996, and (ii) with respect to
any Eurodollar Loan, the last day of the Interest Period applicable thereto and,
in the case of an Interest Period greater than three months, at three month
intervals after the first day of such Interest Period.
"Interest Period" shall mean as to any Eurodollar Loan, the period (subject
to availability) commencing on the date of commencement of such Eurodollar Loan
and ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6
months thereafter, as the Borrower may elect with respect to its Eurodollar
Loans; provided, however, that (w) if an Interest Period would end on a day that
is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, with respect to Eurodollar Loans, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, (x) no
Interest Period with respect to any Revolving Credit Loan shall end later than
the Revolving Credit Termination Date and (y) interest shall accrue from and
including the first day of an Interest Period to but excluding the last day of
such Interest Period.
"Inventory" shall mean raw materials, work in process and finished goods,
whether now owned or hereafter acquired.
"Lender" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Letter of Credit" shall have the meaning assigned to such term in Section
3.01 hereof.
-10-
"Letter of Credit Exposure" shall mean at any time the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit and (b) the
aggregate amount of all drawings under Letters of Credit for which the Lenders
shall not have been reimbursed as provided in Section 3.02 hereof.
"Leverage Ratio" with respect to the Borrower and its subsidiaries at the
end of any fiscal quarter shall mean the ratio of Total Unsubordinated
Liabilities to Tangible Net Worth.
"Leverage Ratio Level" shall have the meaning assigned to such term in
Section 2.06 hereof.
"LIBOR Margin" shall have the meaning assigned to such term in Section 2.06
hereof.
"Lien" shall mean, with respect to any asset, (i) any mortgage, lien,
pledge, encumbrance, charge or security interest in or on such asset, (ii) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset, (iii) in the
case of securities, any purchase option, call or similar right of a third party
with respect to such securities or (iv) any other right of or arrangement with
any creditor to have his claim satisfied out of such assets, or the proceeds
therefrom, prior to the general creditors of the owner thereof.
"Loan" shall mean any Revolving Credit Loan.
"Loan Documents" shall mean, collectively, this Agreement, the Notes, any
pledge agreements executed and delivered pursuant to Section 6.11 hereof, any
Letter of Credit, any application for any Letter of Credit, any Acceptance
Draft, the Agent's fee letter, and any documents, agreements or instruments
executed and delivered in connection with any thereof, as each may be
supplemented, modified, amended or restated from time to time in the manner
provided herein or therein.
"Margin Stock" shall have the meaning assigned such term in Regulation U.
"Material Adverse Effect" shall mean any material adverse effect,
individually or in the aggregate, on (i) the business, assets, prospects,
operations or financial or other condition of the Borrower and its subsidiaries,
taken as a whole, (ii) the ability of the Borrower and its subsidiaries, taken
as a whole, to perform or pay the Obligations in accordance with the terms
hereof or (iii) the ability of the Borrower and its subsidiaries, taken as a
whole, to conduct business substantially as conducted on the Closing Date.
-11-
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"Net Amount of Eligible Inventory" shall mean, at any time, (i) the
aggregate value, computed at the lower of cost (on a moving average cost method,
which approximates the FIFO basis) and current market value, of Eligible
Inventory, less (ii) $500,000.
"Net Amount of Eligible Receivables" shall mean and include the gross
amount of Eligible Receivables less (i) sales, excise or similar taxes and (ii)
returns, discounts, claims, credits and allowances of any nature at any time
issued, owing, granted, outstanding, available or claimed.
"Net Income" shall mean, with respect to any person for any period, the
aggregate Consolidated income (or loss) of such person for such period equal to
net revenues and other proper income less the aggregate for such person of any
and all items that are treated as expenses under generally accepted accounting
principles, and less Federal, state and local income taxes, but excluding any
extraordinary gains or any gains from the sale or disposition of assets other
than in the ordinary course of business, all computed and calculated in
accordance with generally accepted accounting principles applied on a consistent
basis.
"Net Worth" shall mean, at any time, the sum of (i) Tangible Net Worth plus
(ii) Consolidated Subordinated Indebtedness of the Borrower, in each case at
such time.
"Notes" shall mean the Revolving Credit Notes of the Borrower, executed and
delivered as provided in Section 2.04 hereof.
"Obligations" shall mean all obligations, liabilities and indebtedness of
the Borrower and the Guarantors to the Lenders and the Agent, whether now
existing or hereafter created, direct or indirect, due or not, whether created
directly or acquired by assignment, participation or otherwise, with respect to
the Loan Documents, the principal of and interest on the Revolving Credit Loans,
reimbursement obligations with respect to and drawings under any Letter of
Credit and any Acceptance Draft, and the payment or performance of all other
obligations, liabilities, and indebtedness owed by any of them to any Lender or
any Agent under this Agreement or any other Loan Document including, without
limitation, all fees, costs, expenses and indemnity obligations hereunder and
thereunder.
"Other Indebtedness" shall have the meaning assigned to such term in
Section 7.02(xxi) hereof.
"Other Taxes" shall have the meaning assigned to such term in Section
2.16(b) hereof.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any Plan which is subject to the provisions of
Title IV of ERISA.
"Permits" shall have the meaning assigned to such term in Section 4.16
hereof.
"Person" or "Person" shall mean any natural person, corporation, business
trust, association, company, joint venture, partnership or government or any
agency or political subdivision thereof.
"Plan" shall mean any employee plan within the meaning of Section 3(3) of
ERISA and which is maintained (in whole or in part) for employees of the
Borrower, any subsidiary or any ERISA Affiliate.
"Pricing Grid" shall have the meaning set forth in Section 2.06 hereof.
"Prime Rate Loan" shall mean a Loan bearing interest based at the Prime
Rate in accordance with Article II hereof.
"Prime Rate" shall mean and refer to the floating rate of interest per
annum announced by the Agent from time to time as being the so-called prime rate
of interest charged by the Agent. Any change in the Prime Rate shall be
effective on the effective date of such change in the Prime Rate.
"Prior Credit Agreement" shall mean the Amended and Restated Credit
Agreement dated as of November 7, 1995 among the Borrower, the Guarantors named
therein, Chemical Bank, as agent, and the Lenders named therein, as amended from
time to time prior to the Closing Date.
"Puerto Rican Banks" shall have the meaning set forth in Section 7.02
hereof.
"Puerto Rican Indebtedness Conditions" shall mean the following conditions
precedent to the incurrence of Indebtedness pursuant to Section 7.02(xviii) from
Puerto Rican Banks: (i) the Agent and the Lenders shall have given their written
consent indicating that the terms and conditions of all documentation creating,
evidencing or governing such Indebtedness are reasonably satisfactory to the
Agent and the Lenders (it being understood that provisions granting the Puerto
Rican Banks a contractual right of setoff against deposits of the Borrower with
such Banks are acceptable to the Agent and the Lenders), (ii) no intercompany
transactions (other than investments in capital stock and loans and advances
permitted under this Agreement) between the Borrower and Milgray
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Electronics/P.R., Inc. shall remain outstanding, (iii) the Agent and the Lenders
shall have received an opinion of counsel to the Borrower and Milgray
Electronics/P.R., Inc. (which counsel may be special counsel to such Persons in
connection with the subject matter covered thereby) in form and substance
satisfactory to the Agent and the Lenders, to the effect that no Lien exists
with respect to any of the cash, cash equivalents or Puerto Rican Securities of
the Borrower or Milgray Electronics/P.R., Inc. that are on deposit with any of
the Puerto Rican Banks (it being understood that an opinion of Xxxxxx, Xxxxx &
Xxxxxx in the form of Exhibit G hereto shall be acceptable to the Agent and the
Lenders) and (iv) the Agent and the Lenders shall have received a certificate in
form and substance satisfactory to the Agent and the Lenders from a duly
authorized officer of each of the Puerto Rican Banks stating that to the best of
his or her knowledge, such deposits are not subject to any Lien.
"Puerto Rican Securities" shall have the meaning set forth in Section 7.02
hereof.
"Receivables" shall mean and include all of the Borrower's and its
Consolidated subsidiaries, (to the extent such subsidiaries have become
Guarantors) accounts, instruments, documents, chattel paper and general
intangibles, whether secured or unsecured, whether now existing or hereafter
created or arising.
"Register" shall have the meaning assigned to such term in Section 11.03(e)
hereof.
"Regulation D" shall mean Regulation D of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation G" shall mean Regulation G of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation T" shall mean Regulation T of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation U" shall mean Regulation U of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation X" shall mean Regulation X of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
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"Release" shall mean any releasing, spilling, leaking, seepage, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping, in each case as defined in any Environmental Law.
"Remedial Work" shall mean any investigation, site monitoring, containment,
cleanup, removal, restoration or other remedial work of any kind or nature with
respect to any property of the Borrower or its subsidiaries (whether such
property is owned, leased, subleased or used), including, without limitation,
with respect to Contaminants and the Release thereof.
"Reportable Event" shall mean a Reportable Event as defined in Section
4043(c) of ERISA.
"Required Lenders" shall mean Lenders having 66 2/3% of the Total Revolving
Credit Commitment or, if the Revolving Credit Commitments have been terminated,
Lenders having 66 2/3% of the outstanding Obligation.
"Responsible Officer" shall mean, with respect to any person, any vice
president or president, or the chief financial officer or controller, of such
person.
"Revolving Credit Commitment" shall mean, with respect to any Lender, the
Revolving Credit Commitment of such Lender as set forth in Schedule 2.01, as the
same may be reduced from time to time pursuant to Section 2.08 hereof.
"Revolving Credit Commitment Fee" shall have the meaning set forth in
Section 2.07(a).
"Revolving Credit Loan" shall mean a Revolving Credit Loan made pursuant to
Sections 2.01 and 2.02 hereof.
"Revolving Credit Notes" shall mean the Revolving Credit Notes of the
Borrower, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit A hereto.
"Revolving Credit Termination Date" shall mean August 29, 2001.
"Standby Letter of Credit Commission" shall have the meaning assigned to
such term in Section 3.06 hereof.
"Subordinated Indebtedness" shall mean, with respect to the Borrower or any
Guarantor, Indebtedness subordinated in right of payment to such person's
monetary obligations under this Agreement, which by its terms shall not mature
or be subject to any mandatory prepayment or amortization of principal prior to
the Revolving
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Credit Termination Date and all of whose terms and provisions shall be
satisfactory to the Required Lenders as evidenced by their prior written consent
to the creation of such Indebtedness.
"Subsidiary" shall mean, with respect to any person (the "parent"), any
corporation, association or other business entity of which securities or other
ownership interests representing more than 50% of the ordinary voting power
are, at the time as of which any determination is being made, owned or
controlled by the parent or one or more subsidiaries of the parent.
"Swiss Volksbank Guarantee" shall have the meaning assigned such term in
Section 7.02(xx) hereof.
"Tangible Net Worth" shall mean the total of all assets appearing on the
Consolidated balance sheet of the Borrower prepared in accordance with generally
accepted accounting principles, after deducting therefrom (without duplication
of deductions):
(i) the total of all items which would properly be included as liabilities
on a balance sheet, determined in accordance with generally accepted accounting
principles (including, without limitation, Subordinated Indebtedness, reserves
for liabilities, fixed or contingent, deferred income taxes, obsolescence,
depletion, insurance, and inventory valuation and all other reserves of any
kind); and
(ii) the book value of all assets appearing on such balance sheet which
would be treated as intangibles under generally accepted accounting principles,
including, without limitation, goodwill, long term deferred taxes, trademarks,
trade names, patents, copyrights and licenses.
"Total Revolving Credit Commitment" shall mean the sum of the Lenders'
Revolving Credit Commitments, as the same may be reduced from time to time
pursuant to Section 2.08 hereof.
"Total Unsubordinated Liabilities" shall mean, with respect to any person,
the total of all items which would properly be included as liabilities on a
Consolidated balance sheet, determined in accordance with generally accepted
accounting principles consistently applied, excluding Subordinated Indebtedness,
capital stock, additional paid in capital, capital surplus, retained earnings,
minority interests and contingency reserves.
"Transactions" shall have the meaning assigned such term in Section 4.02.
Unless otherwise expressly provided herein, each accounting term used
herein shall have the meaning given it under generally accepted accounting
principles in effect from time to time in the
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United States applied on a basis consistent with those used in preparing the
financial statements referred to in Section 6.05 hereof; provided, however, that
each reference in Article VII hereof, or in the definition of any term used in
Article VII hereof, to generally accepted accounting principles shall mean
generally accepted accounting principles as in effect on the date hereof.
II. THE LOANS.
SECTION 2.01. Revolving Credit Commitments. Subject to the terms and
conditions and relying upon the representations and warranties herein set forth,
each Lender, severally and not jointly, agrees to make Revolving Credit Loans to
the Borrower, at any time and from time to time from the date hereof to the
Revolving Credit Termination Date, or until the earlier termination of its
Revolving Credit Commitment in accordance with the terms hereof, in an aggregate
principal amount at any time outstanding not to exceed the amount of such
Lender's Revolving Credit Commitment set forth opposite its name in Schedule
2.01 hereto, as such Revolving Credit Commitment may be reduced from time to
time in accordance with the provisions of this Agreement. Notwithstanding the
foregoing, the sum of (i) the aggregate principal amount of Revolving Credit
Loans outstanding at any time to Borrower, (ii) the Letter of Credit Exposure
and (iii) the Acceptance Draft Exposure, shall not exceed the lesser of the
amount of Borrowing Base and the Total Revolving Credit Commitment. The
Revolving Credit Commitment of each Lender shall automatically and permanently
terminate on the Revolving Credit Termination Date
Within the foregoing limits, Borrower may borrow, repay (or, subject to the
provisions of Section 2.10 hereof, prepay) and reborrow, on and after the date
hereof and prior to the Revolving Credit Termination Date, subject to the terms,
provisions and limitations set forth herein, including, without limitation, the
requirement that no Revolving Credit Loan shall be made hereunder if the amount
thereof exceeds the Availability outstanding at such time.
SECTION 2.02. Loans. (a) The Revolving Credit Loans made by the Lenders on
any date shall be in minimum aggregate principal amounts of $400,000 and in
integral multiples of $100,000 in excess thereof; provided, however, that,
unless otherwise agreed in writing by all of the Lenders, the Eurodollar Loans
made on any date must be in a minimum aggregate principal amount of $1,500,000.
(b) Loans shall be made ratably by the Lenders in accordance with their
respective Revolving Credit Commitments; provided, however, that the failure of
any Lender to make any Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder.
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(c) Each Loan shall be either a Prime Rate Loan or a Eurodollar Loan as the
Borrower may request pursuant to Section 2.03 hereof. Each Lender may fulfill
its obligations under this Agreement by causing its Applicable Lending Office to
make such Loan; provided that the exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
the applicable Note. Loans of more than one type and Interest Period may be
outstanding at the same time.
(d) Subject to the provisions of paragraph (e) below, each Lender shall
make its Revolving Credit Loans on the proposed dates thereof by paying the
amount required to the Agent in Melville, New York in immediately available
funds not later than 12:00 noon (or one hour after First Union and EAB are both
notified of the request for such Loan, whichever is later), New York City time,
and the Agent shall as soon as practicable, but in no event later than 3:00
p.m., New York City time, credit the amounts so received to the general deposit
account of the Borrower with the Agent in immediately available funds or, if
Loans are not to be made on such date because any condition precedent to a
borrowing herein specified is not met, return the amounts so received to the
respective Lenders.
(e) The Borrower shall, with respect to any Loan, have the right at any
time upon prior irrevocable written, telex or facsimile notice to the Agent
given in the manner and at the times specified in Section 2.03 hereof with
respect to the Loans into which conversion or continuation is to be made, to
convert all or any portion of Eurodollar Loans into Prime Rate Loans, to convert
all or any portion of Prime Rate Loans into Eurodollar Loans (specifying the
Interest Period to be applicable thereto), to convert the Interest Period with
respect to all or any portion of any Eurodollar Loan to be continued as such to
another permissible Interest Period on the last day of such Interest Period
(effective the following day), and to continue all or any portion of any Loans
into a subsequent Interest Period of the same duration, subject to the terms and
conditions of this Agreement and to the following:
(i) in the case of a conversion or continuation of fewer than all the
Loans, the aggregate principal amount of (x) any portion of a Eurodollar Loan
converted into an Prime Rate Loan shall not be less than $400,000 and in
integral multiples of $100,000 in excess thereof; provided, however, that the
remaining portion of such Eurodollar Loan shall not be less than $1,500,000, (y)
any portion of a Eurodollar Loan continued shall not be less than $1,500,000 and
(z) all or any portion of an Prime Rate Loan converted into a Eurodollar Loan
shall not be less than $1,500,000 and in integral multiples of $100,000 in
excess thereof;
(ii) each conversion shall be effected by each Lender by applying the
proceeds of the new Loan to the Loan (or portion
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thereof) being converted; accrued interest on a Eurodollar Loan (or portion
thereof) being converted or continued shall be paid by the Borrower at the time
of conversion or continuation;
(iii) if any Eurodollar Loan is converted at any time other than the
end of an Interest Period applicable thereto, the Borrower shall make such
payments associated therewith as are required pursuant to Section 2.13 hereof;
(iv) any portion of the Revolving Credit Loan which is subject to an
Interest Period ending on a date that is less than one month prior to the
Revolving Credit Termination Date may not be converted into, or continued as, a
Eurodollar Loan and shall be automatically converted at the end of such Interest
Period into an Prime Rate Loan; and
(v) no Default or Event of Default shall have occurred and be
continuing.
The Interest Period applicable to any Eurodollar Loan resulting from a
conversion shall be specified by the Borrower in the irrevocable notice of
conversion delivered pursuant to this Section; provided, however, that if no
such Interest Period shall be specified, the Borrower shall be deemed to have
selected an Interest Period of three months' duration. If the Borrower shall not
have given timely notice to continue any Eurodollar Loan into a subsequent
Interest Period (and shall not otherwise have given notice to convert such
Loan), such Loan (unless repaid or required to be repaid pursuant to the terms
hereof) shall, subject to (iv) and (v) above, automatically be continued into a
new Interest Period of three months, duration. The Agent shall promptly advise
the Lenders of any notice given pursuant to this Section and of each Lender's
portion of the continuation or conversion hereunder.
SECTION 2.03. Notice of loans. The Borrower will give the Agent irrevocable
telephonic notice (immediately confirmed in writing) of each borrowing
(including, without limitation, a refinancing or conversion as permitted by
Section 2.02(e) hereof) not later than (i) in the case of Eurodollar Loans,
12:00 noon (New York City time) two Business Days before a proposed borrowing
and (ii) in the case of Prime Rate Loans, 12:00 noon (New York City time) on the
Business Day of the proposed borrowing or conversion. Such notice shall specify
(w) whether the Loans then being requested are to be Prime Rate Loans or
Eurodollar Loans, (x) the date of such borrowing (which shall be a Business Day)
and the amount thereof and (y) if such Loans are to be Eurodollar Loans, the
Interest Period with respect thereto. If no election as to the type of Loan is
specified in any such notice, all such Loans shall be Prime Rate Loans. If no
Interest Period with respect to any Eurodollar Loan is specified in any such
notice, then an Interest Period of three months, duration shall be deemed to
have been selected. The Agent
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shall promptly advise (but in any event, by 2:00 p.m., New York City time, two
Business Days before a Eurodollar Loan or by 12:30 p.m., New York City time, on
the same Business Day in the case of an Prime Rate Loan) the Lenders of any
notice given pursuant to this Section 2.03 and of each Lender's portion of the
requested borrowing.
SECTION 2.04. Note; Repayment of Loans (a) All Revolving Credit Loans made
by a Lender shall be evidenced by a single Revolving Credit Note, duly executed
on behalf of Borrower, dated the Closing Date, in substantially the form of
Exhibit A hereto, delivered and payable to such Lender in a principal amount
equal to its Revolving Credit Commitment in respect of the Borrower on such
date.
(b) The outstanding principal balance of each Revolving Credit Loan, as
evidenced by any such Revolving Credit Note, shall mature and be due and payable
on the Revolving Credit Termination Date. Each Revolving Credit Note shall bear
interest from its date on the outstanding principal balance thereof, as provided
in Section 2.05 hereof.
(c) Each Lender shall, and is hereby authorized by Borrower to, endorse on
the schedule attached to the Revolving Credit Note of such Lender (or on a
continuation of such schedule attached to such Note and made a part thereof) an
appropriate notation evidencing the date and amount of each Loan to Borrower
from such Lender, as well as the date and amount of each payment and prepayment
with respect thereto; provided, however, that the failure of any person to make
such a notation on a Note shall not affect any obligations of Borrower under
such Note. All advances and payments made pursuant to this Agreement and the
other Loan Documents may be recorded by each Lender on its books and records,
and such books and records shall be conclusive as to the existence and amounts
thereof absent manifest error.
SECTION 2.05. Interest on Loans. (a) Interest on each Loan shall be payable
in arrears on each applicable Interest Payment Date, on the Revolving Credit
Termination Date and on demand, after maturity by acceleration or otherwise.
Interest on each Prime Rate Loan and Eurodollar Loan shall be computed based on
the number of days elapsed in a year of 360 days. The Agent shall determine each
interest rate applicable to the Loans and shall promptly advise the Borrower and
the Lenders of the interest rate so determined.
(b) It is the intention of the Lenders and the Borrower that the interest
(as defined under applicable law) on the Loans, Letter of Credit advances and
Acceptance Drafts that may be charged to, collected from or received from the
Borrower shall not exceed the maximum rate permissible under applicable law.
Accordingly, anything in this Agreement, any Note or any other Loan Document to
the contrary notwithstanding, in the event any interest (as so
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defined) is charged to, collected from or received from the Borrower by the
Lenders pursuant hereto or thereto in excess of such maximum lawful rate, then
the excess of such payment over that maximum shall be applied to the reduction
of the outstanding principal balance of the Loans and the other obligations
(without any prepayment premium or penalty), and any portion of such excess
payment remaining after payment and satisfaction in full of the Obligations
shall be returned by the Lenders to the Borrower.
SECTION 2.06. Rate Adjustments The (a) LIBOR Margin as determined pursuant
to the grid below (the "LIBOR Margin") for Revolving Credit Loans, (b) Standby
Letter of Credit Commission (as defined in Section 3.06) for standby Letters of
Credit and (c) Acceptance Draft Commission (as defined in Section 3.08) for
Acceptance Drafts shall be adjusted on a quarterly basis based upon the Leverage
Ratio of the Borrower and its subsidiaries on a Consolidated basis. On the
Closing Date, the applicable LIBOR Margin, Standby Letter of Credit Commission
and Acceptance Draft Commission shall be .75%, .875%, and .75%, respectively,
and thereafter for each fiscal quarter commencing with the fiscal quarter ending
June 30, 1996 shall be determined pursuant to the grid below (the "Pricing
Grid") for the periods and at the Leverage Ratio Levels (the "Leverage Ratio
Levels") indicated on the Pricing Grid.
==================================================================================================
Leverage Ratio Leverage Ratio Leverage Ratio
Xxxxx 0 Xxxxx 0 Xxxxx 0
--------------------------------------------------------------------------------------------------
LIBOR Margin .75% 1.00% 1.25%
--------------------------------------------------------------------------------------------------
Standby Letter of .875% 1.125% 1.375%
Credit
--------------------------------------------------------------------------------------------------
Acceptance Draft .75% 1.00% 1.25%
Commission
==================================================================================================
==================================================================================================
Leverage Ratio Leverage Ratio Leverage Ratio
Xxxxx 0 Xxxxx 0 Xxxxx 0
--------------------------------------------------------------------------------------------------
Closing Date - 9/29/97 Leverage Ratio is less Leverage Ratio is Leverage Ratio is equal
than or equal to 1.75:1 greater than 1.75:1 to or greater than
but less than l.90:1 1.90:1
--------------------------------------------------------------------------------------------------
9/30/97 and thereafter Leverage Ratio is less Leverage Ratio is Leverage Ratio is equal
than or equal to 1.65:1 greater than 1.65:1 to or greater than
but less than 1.80:1 1.80:1
==================================================================================================
-21-
Provided that no Event of Default shall have occurred and be continuing, such
adjustments, if applicable, (i) shall become effective (and shall pertain, as
appropriate, to each new Eurodollar Loan funded, each new standby Letter of
Credit issued and each new Acceptance Draft created thereafter) five (5)
Business Days after the receipt by the Agent and the Lenders of the financial
statements and certificates required to be delivered pursuant to Sections
6.05(a), (b) and (d) hereof, as applicable, together with a certificate signed
by a Financial Officer of the Borrower demonstrating the calculation of the
Leverage Ratio, all such statements and certificates to be in form and substance
satisfactory to the Agent and the Lenders, and (ii) shall remain in effect until
five (5) Business Days after the receipt by the Agent and the Lenders of the
applicable financial statements and certificates for the succeeding fiscal
period; provided, however, that if such financial statements together with such
certificates are not submitted to the Agent and the Lenders pursuant to this
Section 2.06 and Section 6.05 hereof, the applicable LIBOR Margin, Standby
Letter of Credit Commission and Acceptance Draft Commission shall be those
provided for at Leverage Ratio Level 3 above.
The LIBOR Margin, Standby Letter of Credit Commission and Acceptance Draft
Commission shall be calculated on the basis of the actual number of days elapsed
in a year of 360 days.
SECTION 2.07. Commitment and Other Fees. (a) The Borrower shall pay each
Lender, through the Agent, on each January 1, April 1, July 1 and October 1, and
on the Revolving Credit Termination Date, in immediately available funds, a
commitment fee (the "Revolving Credit Commitment Fee") of .1875% per annum on
the daily unused amount of the Revolving Credit Commitment of such Lender (it
being understood that for purposes of calculating such unused amount, the unused
amount of such Lender's Revolving Credit Commitment shall be reduced by an
amount equal to such Lender's pro rata share of the Letter of Credit Exposure
and Acceptance Draft Exposure), during the quarter (or shorter period commencing
with the date hereof or ending with the Revolving Credit Termination Date)
ending on such date. The commitment fees due to each Lender under this Section
2.07(a) shall commence to accrue on the date hereof and cease to accrue on the
earlier of (i) the Revolving Credit Termination Date and (ii) the termination of
the Revolving Credit Commitment of such Lender pursuant to Section 2.08 hereof.
(b) All fees under this Section 2.07 shall be calculated on the basis of
the actual number of days elapsed in a year of 360 days.
SECTION 2.08. Termination and Reduction of Revolving Credit Commitments.
(a) Upon at least three Business Days prior irrevocable written, telex or
facsimile notice to the Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part
-22-
permanently reduce, the Total Revolving Credit Commitment, ratably among the
Lenders in accordance with the amounts of their respective Revolving Credit
Commitments. Each partial reduction of the Total Revolving Credit Commitment
shall be in a minimum of $1,000,000 and an integral multiple of $1,000,000.
(b) Simultaneously with any termination or reduction of the Total Revolving
Credit Commitment pursuant to paragraph (a) of this Section 2.08, the Borrower
shall pay to each Lender, through the Agent, the Revolving Credit Commitment Fee
on the amount of the Revolving Credit Commitment of such Lender so terminated or
reduced owed to the date of such termination or reduction.
SECTION 2.09. Interest on Overdue Amounts; Alternate Rate of Interest. (a)
If Borrower shall default in the payment of the principal of or interest on any
Loan or any other amount becoming due hereunder, by acceleration or otherwise,
Borrower shall on demand from time to time pay interest, to the extent permitted
by law, on such defaulted amount up to the date of actual payment (after as well
as before judgment) at a rate per annum equal to the Prime Rate plus 3%.
(b) In the event, and on each occasion, that on the day two Business Days
prior to the commencement of any Interest Period for a Eurodollar Loan the Agent
shall have determined that dollar deposits in the amount of each Eurodollar Loan
are not generally available in the London interbank market, or that the rate at
which dollar deposits are being offered will not adequately and fairly reflect
the cost to any Lender of making or maintaining such Eurodollar Loan during such
Interest Period, or that reasonable means do not exist for ascertaining the
Eurodollar Rate, the Agent shall as soon as practicable thereafter give written,
telex or facsimile notice of such determination to the Borrower and the Lenders,
and any request by Borrower for the making of a Eurodollar Loan pursuant to
Section 2.03 hereof or conversion or continuation of any Loan into a Eurodollar
Loan pursuant to Section 2.02(e) hereof shall, until the circumstances giving
rise to such notice no longer exist, be deemed to be a request for an Prime Rate
Loan except to the extent that the Borrower shall have notified the Agent in
writing that it does not desire such notice to be deemed as a request for an
Prime Rate Loan (in which case such notice shall be deemed to be cancelled).
Each determination by the Agent made hereunder shall be conclusive absent
manifest error.
(c) After notice from the Lenders during the continuance of any Event of
Default prior to maturity, and at all times on or after maturity, the Borrower
shall pay to the Lenders additional fees respecting the Letters of Credit and
Acceptance Drafts (in each case computed on the basis of the actual number of
days elapsed and a year of 360 days) outstanding from time to time during such
period(s) at a rate equal to 3.00% per annum, which
-23-
amounts shall be payable by the Borrower in addition to the regular interest
payments, Letter of Credit fees and Acceptance Draft discounts required under
this Agreement, and shall be paid at the same times as the regular interest
payments on the Loan required pursuant to this Agreement, subject, however, to
the maximum rate permissible by applicable law as provided in Section 2.05(d).
SECTION 2.10. Prepayment of Loans. (a) subject to the terms and conditions
contained in this Section 2.10 and elsewhere in this Agreement, Borrower shall
have the right to prepay any Loan at any time in whole or from time to time in
part; provided, however, that each such partial prepayment of a Loan shall be in
an integral multiple of $250,000 and in the case of a Eurodollar Loan shall
occur only on the last day of an Interest Period.
(b) Without limiting the generality of the first sentence of paragraph (c)
below, on the date of any termination or reduction of the Total Revolving Credit
Commitment pursuant to Section 2.08(a) hereof, Borrower shall pay or prepay so
much of the Revolving Credit Loans as shall be necessary in order that the
Availability equals or exceeds zero following such termination or reduction. Any
prepayments required by this paragraph (b) shall be applied to outstanding Prime
Rate Loans up to the full amount thereof before they are applied to outstanding
Eurodollar Loans.
(c) Borrower shall make prepayments of the Revolving Credit Loans from time
to time such that the Availability equals or exceeds zero at all times. Any
prepayments required by this paragraph (c) shall be applied to outstanding Prime
Rate Loans up to the full amount thereof, to outstanding Eurodollar Loans
(provided that no such prepayment shall be required until the last day of the
Interest Period with respect thereto so long as an amount equal to such
prepayment is deposited by the Borrower into a cash collateral account with the
Agent to be held in such account pursuant to terms satisfactory to the Required
Lenders) and then as cash collateral for outstanding Letters of Credit and
Acceptance Drafts up to the full amount of the Letter of Credit Exposure and
Acceptance Draft Exposure then existing, such cash collateral to be held by the
Agent on terms and pursuant to documents satisfactory in all respects to the
Required Lenders.
(d) When making a prepayment, whether mandatory or otherwise, pursuant to
paragraph (a) or (b) above, the Borrower shall furnish to the Agent, not later
than 12:00 noon (New York City time) on the day of such prepayment (or in the
case of Eurodollar Loans five Business Days prior to the date of such
prepayment), a written, telex or facsimile (or telephonic, promptly confirmed in
writing) notice of prepayment which shall specify the prepayment date and the
principal amount of each Loan (or portion thereof) to be prepaid, which notice
shall be irrevocable and shall commit the Borrower to prepay such Loan by the
amount stated therein on the
-24-
date stated therein. All prepayments shall be accompanied by accrued interest on
the principal amount being prepaid to the date of prepayment.
(e) All prepayments and other payments made pursuant to this Agreement
shall be subject to Section 2.13 hereof, whether as a result of the provisions
of this Agreement, miscalculation, consent of the Lenders, change in
circumstance, acceleration of the obligations or otherwise.
(f) Except as otherwise expressly provided in this Section 2.10, payments
with respect to any paragraph of this Section 2.10 are in addition to payments
made or required to be made under any other paragraph of this Section 2.10 or
any provision of this Agreement or any other Loan Document.
SECTION 2.11. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
(or in the case of any assignee, the date of assignment) any change in
applicable law or regulation or in the interpretation or administration thereof
by any governmental authority charged with the interpretation or administration
thereof (whether or not having the force of law) shall: (i) subject the Agent or
any Lender (which shall for the purpose of this Section include any assignee or
lending office of the Agent or any Lender) to any tax with respect to any amount
paid or to be paid by either the Agent or any Lender with respect to any
Eurodollar Loans made by a Lender to Borrower (other than (x) taxes imposed on
the overall net income of the Agent or such Lender and (y) franchise taxes
imposed on the Agent or such Lender, in either case by the jurisdiction in which
such Lender or the Agent has its principal office or its lending office with
respect to such Eurodollar Loan or any political subdivision or taxing authority
of either thereof); (ii) change the basis of taxation of payments to any Lender
or the Agent of the principal of or interest on any Eurodollar Loan or any other
fees or amounts payable hereunder (other than taxes imposed on the overall net
income of such Lender or the Agent by the jurisdiction in which such Lender or
the Agent has its principal office or by any political subdivision or taxing
authority therein); (iii) impose, modify or deem applicable any reserve, special
deposit or similar requirement (other than any change by way of imposition or
increase of reserve requirements, in the case of Eurodollar Loans, included in
the Eurodollar Reserves used to calculate any then applicable Adjusted
Eurodollar Rate) against assets of, deposits with or for the account of, or
loans or loan commitments extended by, such Lender; or (iv) impose on any Lender
or the London interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender; and the result of any of the foregoing
shall be to increase the cost to any such Lender of making or maintaining any
Eurodollar Loan, or to reduce the amount of any payment (whether of principal,
interest or
-25-
otherwise) receivable by such Lender or to require such Lender to make any
payment in respect of any Eurodollar Loan, then Borrower shall pay to such
Lender or the Agent, as the case may be, upon such Lender's or the Agent's
demand, such additional amount or amounts as will compensate such Lender or the
Agent for such additional costs or reduction. The Agent and each Lender agree to
give notice to the Borrower and the Agent of any such change in law, regulation,
interpretation or administration with reasonable promptness after becoming
actually aware thereof and of the applicability thereof to the Transactions.
Notwithstanding anything contained herein to the contrary, nothing in clauses
(i) or (ii) of this Section 2.11(a) shall be deemed to (x) permit the Agent or
any Lender to recover any amount thereunder which would not be recoverable under
Section 2.16 hereof or (y) require the Borrower to make any payment of any
amount to the extent that such payment would duplicate any payment made by the
Borrower pursuant to Section 2.16 hereof.
(b) If, after the date of this Agreement, any Lender shall have determined
that the adoption of any applicable law, rule, regulation or guideline 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) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or will have the effect of reducing the
rate of return on such Lender's capital as a consequence of its obligations
hereunder to a level below that which such Lender could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) then from time to time, Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction. Each Lender agrees to give notice to Borrower
and the Agent of any adoption of, change in, or change in interpretation or
administration of, any such law, rule, regulation or guideline with reasonable
promptness after becoming actually aware thereof and of the applicability
thereof to the Transactions.
(c) A statement of each Lender or the Agent setting forth such amount or
amounts, supported by calculations in reasonable detail, as shall be necessary
to compensate such Lender (or the Agent) as specified in paragraphs (a) and (b)
above shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay each Lender or the Agent the amount shown as due
on any such statement within 10 days after its receipt of the same.
(d) Failure on the part of any Lender or the Agent to demand compensation
for any increased costs, reduction in amounts received or receivable with
respect to any Interest Period or reduction in
-26-
the rate of return earned on such Lender's capital, shall not constitute a
waiver of such Lender's or the Agent's rights to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
rate of return in such Interest Period or in any other Interest Period. The
protection under this Section 2.11 shall be available to each Lender and the
Agent regardless of any possible contention of the invalidity or inapplicability
of any law, regulation or other condition which shall give rise to any demand by
such Lender or the Agent for compensation.
(e) Any Lender claiming any additional amounts payable pursuant to this
Section 2.11 agrees to use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, any such additional amounts and would not, in the reasonable judgment of
such Lender, be otherwise disadvantageous to such Lender.
SECTION 2.12. Change in Lega1ity. (a) Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations to
make Eurodollar Loans as contemplated hereby, then, by written notice to
Borrower and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon the Borrower shall be prohibited from requesting
Eurodollar Loans from such Lender hereunder unless such declaration is
subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans, as the case may
be, made by it be converted to Prime Rate Loans, in which event (A) all such
Eurodollar Loans shall be automatically converted to Prime Rate Loans as of the
effective date of such notice as provided in paragraph (b) below and (B) all
payments of principal which would otherwise have been applied to repay the
converted Eurodollar Loans shall instead be applied to repay the Prime Rate
Loans resulting from the conversion of such Eurodollar Loans.
(b) For purposes of section 2.12(a) hereof, a notice to the Borrower by any
Lender shall be effective, if lawful, on the last day of the then current
Interest Period or, if there are then two or more current Interest Periods, on
the last day of each such Interest Period, respectively; otherwise, such notice
shall be effective with respect to Borrower on the date of receipt by Borrower.
-27-
SECTION 2.13. Indemnity. Borrower shall indemnify each Lender against any
loss or reasonable expense sustained or incurred or to be sustained or incurred
in liquidating or employing deposits from third parties acquired to effect or
maintain any Loan or part thereof as a Eurodollar Loan or maintain any
Acceptance Draft which such Lender may sustain or incur as a consequence of the
following events (regardless of whether such events occur as a result of the
provisions of this Agreement, the consent of the Lenders, the occurrence of an
Event of Default or the exercise of any right or remedy of the Agent or the
Lenders under this Agreement, any other Loan Document or applicable law): any
failure of Borrower to fulfill on the date of any borrowing hereunder the
applicable conditions set forth in Article V applicable to it, any failure of
Borrower to borrow hereunder after irrevocable notice of borrowing pursuant to
Section 2.03 hereof has been given, any payment, prepayment or conversion of a
Eurodollar Loan on a date other than the last day of the relevant Interest
Period, any repayment of an Acceptance Draft on a date prior to its maturity,
any default in payment or prepayment of the principal amount of any Eurodollar
Loan or Acceptance Draft or any part thereof or interest accrued thereon, as and
when due and payable (at the due date thereof, by irrevocable notice of
prepayment or otherwise). Such loss or reasonable expense respecting Eurodollar
Loans shall include, without limitation, an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
so paid, prepaid or converted or not borrowed for the period from the date of
such payment, prepayment or conversion or failure to borrow to the last day of
the Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the date of such
failure to borrow), at the applicable rate of interest for such Loan provided
for herein over (ii) the redeployment rate (bid side) of the Agent for
Eurodollar Loans with comparable maturities for comparable periods. Any such
Lender shall provide to Borrower and the Agent a statement, signed by an officer
of such Lender, explaining any loss or expense and setting forth, if applicable,
the computation pursuant to the preceding sentence, and such statement shall be
conclusive absent manifest error. Borrower shall pay such Lender the amount
shown as due on any such statement within 10 days after the receipt of the same.
SECTION 2.14. Pro Rata Treatment. (a) Except as permitted under Section
2.12 hereof, and except for any payment, reimbursement or other indemnity to any
Lender or other indemnified person under Section 2.11, 2.12, 2.13, 2.16, 3.04,
3.05, or 11.04 hereof, each borrowing, each payment or prepayment of principal
of the Notes, each payment of interest on the Notes, each payment of any fee or
other amount payable hereunder and each reduction of the Total Revolving Credit
Commitment shall be made pro rata among the Lenders in the proportions that
their Revolving Credit Commitments bear to the Total Revolving Credit
Commitment.
-28-
(b) Unless the Agent shall have been notified in writing by any Lender
prior to the time the Lender is required to fund any proposed borrowing that
such Lender will not make the amount that would constitute its pro rata share of
the borrowing on such date available to the Agent, the Agent may (assuming that
the Agent has furnished such Lender with notice of the proposed borrowing as
required under Section 2.03 hereof) assume that such Lender has made such amount
available to the Agent on such date, and the Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
amount is made available by such Lender to the Agent on a date after such
borrowing date, such Lender shall pay to the Agent on demand an amount equal to
the product of (i) the daily average Federal funds rate during such period as
quoted by the Agent, times (ii) the amount of such Lender's pro rata share of
such borrowing, times (iii) a fraction the numerator of which is the number of
days that elapse from and including such borrowing date to the date on which
such Lender's pro rata share of such borrowing shall have become immediately
available to the Agent and the denominator of which is 360. A certificate of the
Agent submitted to any Lender with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error. If such
Lender's pro rata share of such borrowing is not in fact made available to the
Agent by such Lender within three Business Days of such borrowing date, the
Agent shall be entitled to recover such amount with interest thereon at the rate
per annum applicable to the relevant Loans hereunder, on demand, from the
Borrower.
SECTION 2.15. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
Borrower or Guarantor, including, but not limited to, a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, obtain
payment (voluntary or involuntary) in respect of a Note held by it as a result
of which the unpaid principal portion of the Notes held by it shall be
proportionately less than the unpaid principal portion of the Notes held by any
other Lender, it shall be deemed to have simultaneously purchased from such
other Lender a participation in the Notes held by such other Lender with the
purchase price payable in cash upon demand by such other Lender, so that the
aggregate unpaid principal amount of the Notes and participations in Notes held
by it shall be in the same proportion to the aggregate unpaid principal amount
of all Notes then outstanding as the principal amount of the Notes held by it
prior to such exercise of banker's lien, setoff or counterclaim was to the
principal amount of all Notes outstanding prior to such exercise of banker's
lien, setoff or counterclaim; provided, however, that if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.15 and such
other Lender shall
-29-
thereafter receive or recover from or respecting the Borrower or any Guarantor
any amount in respect of a Note proportionally greater than that received by the
first Lender, such purchase or purchases or adjustments shall be repurchased and
rescinded to the extent of such receipt or recovery and the purchase price or
prices paid or adjustments made shall be repaid or restored, as applicable,
without interest; provided, that, if such disproportionate amount received or
recovered by such other Lender exceeds the amount necessary to restore the
Lenders, respective pro rata shares, then this section shall apply to such
excess. The Borrower expressly consents to the foregoing arrangements and agrees
that any Lender holding a participation in a Note deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by Borrower to such Lender
as fully as if such Lender held a Note in the amount of such participation.
SECTION 2.16. Taxes. (a) Any and all payments by Borrower or any Guarantor
hereunder shall be made, in accordance with Section 2.17 hereof, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings in any such case imposed by the
United States or any political subdivision thereof, excluding:
(i) in the case of the Agent and each Lender, taxes imposed or based
on its net income, and franchise or capital taxes imposed on it, (A) if the
Agent or such Lender is organized under the laws of the United States or any
political subdivision thereof and (B) if the Agent or such Lender is not
organized under the laws of the United States or any political subdivision
thereof, and its principal office or Applicable Lending Office is located in the
United States, and in the case of both (A) and (B), withholding taxes payable
with respect to payments to the Agent or such Lender, in either case by any
jurisdiction in which it has at its principal office or Applicable Lending
Office under laws (including, without limitation, any treaty, ruling,
determination or regulation) in effect on the date hereof (or in the case of any
assignee, on the date of its assignment), but not any increase in withholding
tax resulting from any subsequent change in such laws (other than withholding
with respect to taxes imposed or based on its net income or with respect to
franchise or capital taxes),
(ii) taxes (including withholding taxes) imposed by reason of the
failure of the Agent or any Lender, in either case that is organized outside the
United States, to comply with Section 2.16(f) hereof (or the inaccuracy at any
time of the certificates, documents and other evidence delivered thereunder),
and
(iii) taxes (including withholding taxes) that would not have been
imposed on the Agent or any Lender but for a connection between such Agent or
Lender and the jurisdiction imposing such
-30-
taxes (except to the extent that the liability for such taxes arises as a result
of the fact that such person is a party to this Agreement)
(all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If Borrower or any
Guarantor shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to the Lenders or the Agent, (x) the sum payable shall be
increased by the amount necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.16) such Lender or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (y) Borrower or
such Guarantor shall make such deductions and (z) Borrower or such Guarantor
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, Borrower and the Guarantors agree to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement (hereinafter referred to as "Other Taxes").
(c) Borrower and the Guarantors will indemnify each Lender and the Agent
for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction (except as specified in clause
(a) (i), (ii) and (iii)) on amounts payable under this Section 2.16) paid by
such Lender or the Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be made within 30 days from the date such Lender or
the Agent (as the case may be) makes written demand therefor. If any Lender
receives a refund in respect of any Taxes or Other Taxes for which such Lender
has received payment from Borrower hereunder, such Lender shall promptly notify
Borrower of such refund and such Lender shall, within 30 days of receipt of a
request by Borrower, repay such refund to Borrower, provided that Borrower, upon
the request of such Lender, agrees to return such refund (plus any penalties,
interest or other charges) to such Lender in the event such Lender is required
to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other Taxes
withheld by a Borrower or Guarantor in respect of any payment to any Lender, the
Borrower will furnish to the Agent, at its address referred to in Section 11.01
hereof, such certificates, receipts and other documents as may be reasonably
required to evidence payment thereof.
-31-
(e) without prejudice to the survival of any other agreement hereunder, the
agreements and obligations contained in this Section 2.16 shall survive the
payment in full of principal and interest hereunder.
(f) Each Lender that is organized outside of the United States shall
deliver to Borrower on the date hereof (or, in the case of an assignee, on the
date of the assignment) and from time to time as required for renewal under
applicable law duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 (or any successor or additional forms), as appropriate,
indicating in each case that such Lender is entitled to receive payments under
this Agreement without any deduction or withholding of any United States federal
income taxes. The Agent (if the Agent is an entity organized outside the United
States) and each Lender that is organized outside the United States shall
promptly notify Borrower and the Agent of any change in its Applicable Lending
office and upon written request of Borrower such Lender shall, prior to the
immediately following due date of any payment by Borrower or any Guarantor
hereunder, deliver to Borrower or such Guarantor, as the case may be (with
copies to the Agent), such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
without limitation Internal Revenue Service Form 4224, Form 1001 and any other
certificate or statement of exemption required by Treasury Regulation Section
1.1441-4(a) or Section 1.1441-6(c) or any subsequent version thereof, properly
completed and duly executed by such Lender establishing that such payment is (i)
not subject to withholding under the Code because such payment is effectively
connected with the conduct by such Lender of a trade or business in the United
States or (ii) totally exempt from United States tax under a provision of an
applicable tax treaty. The Borrower shall be entitled to rely on such forms in
their possession until receipt of any revised or successor form pursuant to this
Section 2.16(f). If the Agent or a Lender fails to provide a certificate,
document or other evidence required pursuant to this Section 2.16(f), then (i)
the Borrower shall be entitled to deduct or withhold on payments to the Agent or
such Lender as a result of such failure, as required by law, and (ii) the
Borrower shall not be required to make payments of additional amounts with
respect to such withheld Taxes pursuant to clause (x) of Section 2.16(a) hereof
to the extent such withholding is required solely by reason of the failure of
the Agent or such Lender to provide the necessary certificate, document or other
evidence.
(g) Each Lender and Agent shall use reasonable efforts to avoid or minimize
any amounts which might otherwise be payable pursuant to this Section 2.16
(including seeking refunds of any amounts that are reasonably believed not to
have been correctly or legally asserted); provided, however, that such efforts
shall not include the taking of any actions by such Lender or Agent that
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would result in any tax, costs or other expense to such Lender or Agent (other
than a tax, cost or other expense for which such Lender or Agent shall have been
reimbursed or indemnified by the Borrower pursuant to this Agreement or
otherwise) or any action which would or might in the reasonable opinion of such
Lender or Agent have an adverse effect upon its business, operations or
financial condition or otherwise be disadvantageous to such Lender or Agent.
SECTION 2.17. Payments and Computations. Except as otherwise provided
herein, the Borrower shall make each payment under this Agreement or any other
Loan Document no later than 1:00 p.m. (New York City time) on the day when due
in lawful money of the United States (in freely transferable dollars) to the
Agent at its offices at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 for the
account of the Lenders, in immediately available funds. The Agent will
distribute promptly, and in any event no later than 5:00 p.m. (New York City
time) on the same day, to each Lender such Lender's share (computed in
accordance with the provisions of this Agreement) of each payment received by
the Agent.
III. LETTERS OF CREDIT AND ACCEPTANCES.
SECTION 3.01. Issuance of Letters of Credit. Upon the request of the
Borrower, and subject to the conditions set forth in Article V hereof and such
other conditions to the opening of Letters of Credit as the Agent requires of
its customers generally, the Agent shall from time to time issue documentary or
standby letters of credit (each, together with the letters of credit outstanding
on the date hereof and set forth on Schedule 3.01 annexed hereto, a "Letter of
Credit") for the account of the Borrower, provided that the face amount of any
Letter of Credit that the Borrower may request the Agent to open shall not
exceed the Availability outstanding at such time. The issuance of each Letter of
Credit shall be made on at least one (1) Business Day's prior written notice
from the Borrower to the Agent, at its Domestic Lending Office, which written
notice shall be an application for a Letter of Credit on the Agent's customary
form. The expiration date of any Letter of Credit shall not be later than one
(1) year from the date of issuance thereof nor, in any event, later than the
Revolving Credit Termination Date. The Letters of Credit shall be issued in
respect of any transactions occurring in the Borrower's ordinary course of
business.
SECTION 3.02. Payment in Respect of Letters of Credit; Reimbursement. Upon
the issuance of any Letter of Credit, the Agent shall notify each Lender of the
principal amount, the number, and the expiration date thereof and the amount of
such Lender's participation therein. By the issuance of a Letter of Credit
hereunder and without further action on the part of the Agent or the Lenders,
each Lender hereby accepts from the Agent a participation (which participation
shall
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be nonrecourse to the Agent) in such Letter of Credit equal to such Lender's pro
rata (based on its Revolving Credit Commitment) share of such Letter of Credit,
effective upon the issuance of such Letter of Credit. Each Lender hereby
absolutely and unconditionally assumes, as primary obligor and not as a surety,
and agrees to pay and discharge, and to indemnify and hold the Agent harmless
from liability in respect of, such Lender's pro rata share of the amount of any
drawing under a Letter of Credit. Each Lender acknowledges and agrees that its
obligation to acquire participation in each Letter of Credit issued by the Agent
and its obligation to make the payments specified herein, and the right of the
Agent to receive the same, in the manner specified herein, are absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the occurrence and continuance of an Event of
Default hereunder, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever. The Agent shall review, on
behalf of the Lenders, each draft presented under a Letter of Credit and shall
notify each Lender of any such presentment. Promptly after it shall have
ascertained that any draft presented under such Letter of Credit appears on its
face to be in substantial conformity with the terms and conditions of the Letter
of Credit, the Agent shall give telephonic or facsimile notice to the Lenders
and the Borrower of the receipt and amount of such draft and the date on which
payment thereon will be made. The Borrower shall reimburse the Agent for the
amount specified in such notice by no later than 11:00 a.m. (New York City time)
on the date such payment is scheduled to be made. If the Borrower has not so
discharged such reimbursement obligations and the Agent is unable to recover the
required amount by debiting the Borrower's account (as hereinafter provided),
the Agent shall give each Lender notice of any amount that remains unreimbursed,
and each Lender shall promptly, but in any event within two hours of the receipt
of such notice, pay the amounts required to the Agent in Melville, New York in
immediately available funds, and the Agent, not later than 3:00 p.m. (New York
City time) on such day, shall make the appropriate payment to the beneficiary.
If the Lenders shall pay any draft presented under a Letter of Credit, then the
Agent, on behalf of the Lenders, shall charge the general deposit account of the
Borrower with the Agent for the amount thereof, together with the Agent's
customary overdraft or similar fee in the event the funds available in such
account shall not be sufficient to reimburse the Lenders for such payment. If
the Lenders have not been reimbursed with respect to such drawing as provided
above, the Borrower shall pay to, the Agent, for the account of the Lenders, the
amount of the drawing together with interest on such amount at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the Prime Rate plus 3% payable on demand. The obligations of the
Borrower under this Section 3.02 to reimburse the Lenders and the Agent for all
drawings under Letters of Credit shall be absolute, unconditional and
irrevocable and
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shall be satisfied strictly in accordance with their terms, irrespective of:
(a) any lack of validity or enforceability of any Letter of Credit;
(b) the existence of any claim, setoff, defense or other right which the
Borrower or any other person may at any time have against the beneficiary under
the Letter of Credit, the Agent or any Lender (other than the defense of payment
in accordance with the terms of this Agreement or a defense not otherwise waived
hereunder based on the gross negligence or willful misconduct of the Agent or
any Lender) or any other person in connection with this Agreement or any other
transaction;
(c) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; provided that
payment by the Agent or any Lender under such Letter of Credit against
presentation of such draft or document shall not have constituted gross
negligence or willful misconduct;
(d) payment by the Agent or any Lender under any Letter of Credit against
presentation of a draft or other document which does not comply with the terms
of such Letter of Credit; provided that such payment shall not have constituted
gross negligence or willful misconduct;
(e) the existence, character, quantity, quality, condition, packing, value
or delivery of any goods or other property relating to any Letter of Credit;
(f) the time, place, manner or order in which shipment is made;
(g) the provisions of any insurance policy or any act or omission of any
insurer, shipper, warehouseman, carrier, correspondent or other person;
(h) any other circumstance or event whatsoever, whether or not similar to
any of the foregoing; provided that such other circumstance or event shall not
have been the result of gross negligence or willful misconduct of the Agent or
any Lender.
It is understood that in making any payment under any Letter of Credit (x)
the Agent's and any Lender's exclusive reliance on the documents presented to it
under such Letter of Credit as to any and all matters set forth therein,
including, without limitation, good faith reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary
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equals the amount of such draft and whether or not any document presented
pursuant to such Letter of Credit proves to be insufficient in any respect, if
such document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever and (y) any noncompliance in any immaterial
respect of the documents presented under such Letter of Credit with the terms
thereof shall, in each case, not be deemed willful misconduct or gross
negligence of the Agent or any Lender.
SECTION 3.03. Actions of Agent. Any Letter of Credit may, in the discretion
of the Agent or its correspondents, be interpreted by them (to the extent not
inconsistent with such Letter of Credit) in accordance with the Uniform Customs
and Practice for Documentary Credits of the International chamber of Commerce,
as adopted or amended from time to time, or any other rules, regulations and
customs prevailing at the place where any Letter of Credit is available or the
drafts are drawn or negotiated. The Agent and its correspondents may in good
faith accept and act upon the name, signature, or act of any party purporting to
be the executor, administrator, receiver, trustee in bankruptcy, or other legal
representative of any party designated in any Letter of Credit in the place of
the name, signature, or act of such party.
SECTION 3.04. Payments in Respect of Increased Costs. (a) Notwithstanding
any other provision herein, if after the date of this Agreement any change in
applicable law or regulation or in the interpretation or administration thereof
by any governmental authority charged with the interpretation or administration
thereof (whether or not having the force of law), or any change in generally
accepted accounting principles or regulatory accounting principles applicable to
the Agent or any Lender, shall (i) impose, modify or make applicable to the
Agent or any Lender any reserve, special deposit or similar requirement with
respect to its obligations under this Article III or any Letter of Credit or
Acceptance Draft, (ii) impose on the Agent or any Lender any other condition
with respect to its obligations under this Article III or any Letter of Credit
or Acceptance Draft, or (iii) subject the Agent or any Lender to any tax (other
than (x) taxes imposed an the overall net income of the Agent or such Lender and
(y) franchise taxes imposed on the Agent or such Lender, in either case by the
jurisdiction in which the Agent or such Lender has its principal office or
lending office or any political subdivision or taxing authority of any such
jurisdiction), charge, fee, deduction or withholding of any kind whatsoever, and
the result of any of the foregoing shall be to increase the cost to the Agent or
such Lender of maintaining such Letter of Credit or Acceptance Draft or making
any payment under such Letter of Credit or Acceptance Draft or this Article III
or to reduce the amount of principal, interest or any fee or compensation
receivable by the Agent or such Lender in
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respect of this Article III or such Letter of Credit or Acceptance Draft, then
such additional amount or amounts as will compensate the Agent or such Lender
for such additional costs or reduction shall be paid to the Agent or such Lender
by the Borrower. Each Lender agrees to give notice to the Borrower and the Agent
of any such change in law, regulation, interpretation or administration with
reasonable promptness after becoming actually aware thereof and of the
applicability thereof to the transactions contemplated in this Article III.
(b) If, after the date of this Agreement, any Lender shall have determined
reasonably and in good faith that the adoption of any applicable law, rule,
regulation or guideline 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) with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's capital as
a consequence of its obligations under this Article III to a level below that
which such Lender could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's policies with respect to
capital adequacy) then from time to time, the Borrower shall pay to such Lender
such additional amount or amounts as will compensate the Agent or such Lender
for such reduction. Each Lender agrees to give notice to the Borrower and the
Agent of any adoption of, change in, or change in interpretation or
administration of, any such law, rule, regulation or guideline with reasonable
promptness after becoming actually aware thereof and of the applicability
thereof to the transactions contemplated hereby.
(c) A certificate of the Agent or a Lender setting forth such amount or
amounts, supported by calculations in reasonable detail, as shall be necessary
to compensate the Agent or such Lender as specified in paragraphs (a) and (b)
above shall be delivered to the Borrower and shall be conclusive and binding
upon the Borrower absent manifest error. The Borrower shall pay the Agent or
such Lender the amount shown as due on any such certificate within five (5)
Business Days after its receipt of the same. In the event that such Lender or
the Agent, as the case may be, determines that the Borrower has made a payment
pursuant to a statement that contains a manifest error, and further determines
that as a result thereof the Borrower has paid more than the amount necessary to
compensate such Lender or the Agent as specified in paragraphs (a) and (b)
above, such Lender or the Agent, as the case may be, shall promptly refund such
excess amount to the Borrower. In the event that such Lender or the Agent, as
the case may be, determines that it has received a refund of any additional
costs of the type described in paragraph (a) above, such Lender or the Agent, as
the case may be,
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shall promptly refund to the Borrower an amount (not to exceed the amount of the
refund received by such Lender or the Agent) equal to the amount of compensation
payments made by the Borrower pursuant to paragraph (a) above in respect of such
additional costs.
(d) Failure on the part of any Lender or the Agent to demand compensation
for any increased costs, reduction in amounts received or receivable with
respect to this Article III or any Letter of Credit or Acceptance Draft or
reduction in the rate of return earned on such Lender's capital, in each case
pursuant to paragraph (a) or (b) above, shall not constitute a waiver of the
Agent's or such Lender's rights to demand compensation for any increased costs
or reduction in amounts received or receivable or reduction in rate of return
pursuant to paragraph (a) or (b) above. The protection under this Section 3.04
shall be available to each Lender and the Agent regardless of any possible
contention of the invalidity or inapplicability of any law, regulation or other
condition which shall give rise to any demand by such Lender or the Agent for
compensation (but if such law, regulation or other condition is finally
determined to be invalid or inapplicable, the Agent or Lenders shall promptly
refund (without interest) all amounts paid under this Section 3.04 arising from
such invalid or inapplicable law, regulation or other condition).
SECTION 3.05. Indemnity as to Letters of Credit. The Borrower hereby agrees
to indemnify and hold harmless the Agent and the Lenders from and against any
and all claims, damages, losses, liabilities, costs or expenses whatsoever which
the Agent or the Lenders may incur or suffer by reason of or in connection with
the execution and delivery or assignment of, or payment under, any Letter of
Credit, except only if and to the extent that any such claim, damage, loss,
liability, cost or expense shall be caused by the willful misconduct or gross
negligence of the Agent or any Lender performing its obligations respecting such
Letter of Credit under this Agreement. Without limiting the foregoing, the
Borrower further agrees to indemnify and hold harmless the Agent, its officers
and directors, each person who controls the Agent within the meaning of Section
15 of the Securities Act of 1933 or any applicable state securities law and
their respective successors and assigns from and against any and all claims,
damages, losses, liabilities, costs or expenses, joint or several, to which they
or any of them may become subject under any federal or state securities law,
rule or regulation, at common law or otherwise, insofar as such claims, damages,
losses, liabilities, costs or expenses arise out of or are based upon the
execution and delivery by the Agent of any Letters of Credit or the execution
and delivery of any other document in connection therewith (but not including
any claims, damages, losses, liabilities, costs or expenses arising from the
gross negligence or willful misconduct of the Agent). The Borrower upon demand
by the Agent at any time, shall reimburse the Agent for any reasonable legal or
other expenses incurred in
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connection with investigating or defending against any of the foregoing. The
indemnities contained herein shall survive the expiration or termination of the
Letters of Credit and this Agreement.
SECTION 3.06. Letter of Credit Fees. The Borrower agrees to pay to the
Agent for the ratable benefit of the Lenders a letter of credit fee with respect
to (i) standby Letters of Credit, equal to the product of (A) the Standby Letter
of Credit Commission determined pursuant to the Pricing Grid contained in
Section 2.06 hereof (the "Standby Letter of Credit Commission") and (B) the face
amount of such standby Letter of Credit, which fee shall be paid at the time of
issuance of such standby Letter of Credit, and (ii) documentary Letters of
Credit, equal to 3/8% of the face amount thereof, which fee shall be paid at the
time such documentary Letter of Credit is negotiated or cancelled.
SECTION 3.07. Acceptance Drafts. (a) Upon the terms and conditions hereof,
the Borrower may, from time to time from the date hereof until the Revolving
Credit Termination Date, request the Lenders to accept drafts in the form of
Exhibit D (each an "Acceptance Draft" and, collectively, the "Acceptance
Drafts"), at the Borrower's election, provided that the face amount of any
Acceptance Draft that the Borrower may request the Agent to create shall not
exceed the Availability outstanding at such time.
(b) The Borrower shall give the Agent telephonic notice (immediately
confirmed in writing) of its request that the Agent accept such Acceptance Draft
no later than 1:00 p.m. (New York City time) on the same day of such request
(the "Acceptance Date"). Such notice shall contain the aggregate face amount
(which shall be in minimum aggregate principal amounts of $1,000,000 and in
integral multiples of $100,000 in excess thereof) and maturity date of such
Acceptance Draft, which maturity date shall not be later than the earlier of (a)
30, 60, 90 or 120 days after the Acceptance Date of such Acceptance Draft, as
Borrower shall designate, and (b) the Revolving Credit Termination Date. Such
notices also shall describe the underlying goods and indicate their origin and
destination points or provide other evidence of the underlying transaction in
form and substance as may be acceptable to the Agent (it being understood that
the form of notice attached hereto as Exhibit H is acceptable to the Agent) to
permit it to accurately complete the appropriate eligibility legend (i.e.,
"eligibility certificate") on the face of the Acceptance Draft. The Borrower
shall promptly confirm such telephonic notices by telecopy and mailing an
original signed notice. Each draft shall mature on a Business Day, which shall
be at least 30 days after the Acceptance Date. No Acceptance Draft shall be
dated or accepted more than 30 days before or more than 30 days after the date
of the shipment of goods to which it relates. The Borrower hereby irrevocably
authorizes the Agent to
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complete its Acceptance Draft in accordance with the instructions given pursuant
to this Section 3.07. Any pre-signed drafts held by the Agent for completion
shall not be affected by the departure of the signer as an authorized signatory
of the Borrower, which drafts shall nevertheless remain valid and binding upon
the Borrower for all purposes as if the signer's authority had continued in
effect. (Such completion and presentment, however, shall not obligate the Agent
to accept any such Acceptance Draft.)
(c) Upon receipt of such notices from the Borrower, the Agent shall
promptly notify each Lender of (i) its pro rata (based on its Revolving Credit
Commitment) share of such Acceptance Draft, (ii) the maturity date of such
Acceptance Draft and (iii) the Discount Rate and commission applicable to such
Acceptance Draft, which shall be computed in accordance with Section 3.08
hereof. The Agent may decline to create any such Acceptance Draft if the Agent
is not then providing such financing to its middle market customers with credit
standings similar to Borrower's.
(d) The Agent in its discretion at any time or from time to time may sell,
rediscount or otherwise dispose of any Acceptance Draft without any notice or
credit to or consent from the Borrower or any other Lender.
(e) Each Acceptance Draft shall relate to one or more specific transactions
involving the importation or exportation of goods or the domestic shipment of
goods within the United States. The goods relating to each Acceptance Draft
shall have a c.i.f. value equaling or exceeding the amount of the Acceptance
Draft, shall be of good and merchantable quality, shall be fully insured in
accordance with prudent industry practice and shall not be the subject of any
security interest granted by the Borrower or any subsidiary. No other source
shall have financed the transaction underlying the Acceptance Draft. The
Borrower shall have procured all import, export and other licenses essential to
the underlying transaction and shall have complied with all applicable laws
pertaining to the underlying goods and transaction. Each Acceptance Draft shall
qualify (upon acceptance) in all respects with the requirements for eligibility
for discount of the Federal Reserve Banks of the United States. With regard to
each Acceptance Draft presented, the Borrower represents and warrants to the
Agent and the Lenders that, as of the date of presentment, the Acceptance Draft
and underlying goods and transaction. conform to the requirements of this
subsection, and the Borrower covenants and agrees that they will continue to
conform to those requirements for so long as the. Acceptance Draft is
outstanding.
SECTION 3.08. Payment of Acceptances. The Agent shall notify each Lender of
the presentment to the Agent of any draft for acceptance hereunder, which notice
shall include the amount of such draft and the maturity date thereof. Upon the
acceptance of any Acceptance
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Draft, the Agent shall: (i) notify each Lender of the net proceeds thereof and
the amount of such Lender's participation therein (acquired pursuant to the
terms hereof) and (ii) credit the net proceeds thereof to the Borrower's account
maintained with the Agent for such purpose. Such net proceeds shall be in an
amount equal to the face amount of such Acceptance Draft less the applicable
discount and commission. Such discount and commission shall be calculated as the
product of (i) the face amount of such Acceptance Draft and (ii) the sum of (A)
the Discount Rate per annum of the Agent in effect on the Acceptance Date of
such Acceptance Draft, and (B) a commission rate per annum equal to the
applicable Acceptance Draft Commission determined pursuant to the Pricing Grid
contained in Section 2.06 hereof (the "Acceptance Draft Commission"). The
Discount Rate and applicable commission shall be calculated for each Acceptance
Draft on the basis of the actual number of days from the Acceptance Date to
maturity divided by 360. The funds, net of such discounts and commissions, so
credited to the Borrower's account shall be immediately available to the
Borrower, and the Agent shall promptly notify the Borrower as to the amount of
the net funds so credited. By acceptance of an Acceptance Draft and without
further action on the part of the Agent or the Lenders, each Lender hereby
accepts from the Agent a participation (which participation shall be nonrecourse
to the Agent) in such Acceptance Draft equal to such Lender's pro rata (based on
its Revolving Credit Commitment) share of such Acceptance Draft, effective upon
the issuance of such Acceptance Draft. Each Lender hereby absolutely and
unconditionally assumes, as primary obligor and not as a surety, and agrees to
pay and discharge, and to indemnify and hold the Agent harmless from liability
in respect of, such Lender's pro rata share of the amount of any payment of an
Acceptance Draft. Each Lender acknowledges and agrees that its obligation to
acquire participations in each Acceptance Draft accepted by the Agent and its
obligation to make the payments specified herein, and the right of the Agent to
receive the same, in the manner specified herein, are absolute and unconditional
and shall not be affected by any circumstance whatsoever, including, without
limitation, the occurrence and continuance of an Event of Default hereunder, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. The Borrower shall reimburse the Agent for the amount
to be paid on such Draft no later than 11:00 a.m. (New York City time) on the
date such payment is scheduled to be made. If the Borrower has not so discharged
such reimbursement obligation and the Agent is unable to recover the required
amount by debiting the Borrower's account (as hereinafter provided), the Agent
shall give each Lender notice of any amount that remains unreimbursed, and each
Lender shall promptly, but in any event within two hours of receipt of such
notice, pay the amounts required to the Agent in Melville, New York in
immediately available funds. If the Lenders shall make any such payment upon the
maturity of an Acceptance Draft, then the Agent, on behalf of the Lenders, shall
charge the general deposit account
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of the Borrower with the Agent for the amount thereof, together with the Agent's
customary overdraft or similar fee in the event the funds available in such
account shall not be sufficient to reimburse the Lenders for such payment. If
the Lenders have not been reimbursed with respect to such payment as provided
above, the Borrower shall pay to the Agent, for the account of the Lenders, the
amount of the payment together with interest on such amount at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the Prime Rate plus 3% payable on demand. The obligations of the
Borrower under this Section 3.08 to reimburse the Lenders and the Agent for all
payments made in respect of Acceptance Drafts shall be absolute, unconditional
and irrevocable and shall be satisfied strictly in accordance with their terms,
irrespective of:
(a) any lack of validity or enforceability of any Acceptance Draft;
(b) the existence of any claim, setoff, defense or other right which the
Borrower or any other person may at any time have against the beneficiary under
the Acceptance Draft, the Agent or any Lender (other than the defense of payment
in accordance with the terms of this Agreement or a defense not otherwise waived
hereunder based on the gross negligence or willful misconduct of the Agent or
any Lender) or any other person in connection with this Agreement or any other
transaction;
(c) any draft or other document presented in connection with any Acceptance
Draft proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; provided
that acceptance of or payment by the Agent or any Lender of such Acceptance
Draft shall not have constituted gross negligence or willful misconduct;
(d) the existence, character, quantity, quality, condition, packing, value
or delivery of any goods or other property relating to any Acceptance Draft;
(e) the time, place, manner or order in which shipment is made;
(f) the provisions of any insurance policy or any act or omission of any
insurer, shipper, warehouseman, carrier, correspondent or other person;
(g) any other circumstance or event whatsoever, whether or not similar to
any of the foregoing; provided that such other circumstance or event shall not
have been the result of gross negligence or willful misconduct of any Agent or
any Lender.
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It is understood that in making any payment in respect of any Acceptance
Draft (x) the Agent's and any Lender's exclusive reliance on the documents
presented to it in connection with such Acceptance Draft as to any and all
matters set forth therein, including, without limitation, whether or not any
document presented pursuant to such Acceptance Draft proves to be insufficient
in any respect, if such document on its face appears to be in order, and whether
or not any other statement or any other document presented pursuant to such
Acceptance Draft proves to be forged or invalid or any statement therein proves
to be inaccurate or untrue in any respect whatsoever and (y) any noncompliance
in any immaterial respect of the documents presented in connection with such
Acceptance Draft with the terms thereof shall, in each case, not be deemed
willful misconduct or gross negligence of the Agent or any Lender.
SECTION 3.09. Ineligibility of Acceptance Drafts. In the event that any
Acceptance Draft accepted pursuant to this Agreement does not, for reasons
beyond the control of the Agent, comply at the time of its acceptance with
applicable regulations of the Board governing bankers' acceptances and would not
be eligible under such regulations for discount with a Federal Reserve lender or
if for any other reason any Acceptance Draft is deemed by the Agent not eligible
for discount, the Borrower will, upon receipt of written notice from the Agent,
forthwith pay to the Agent any additional cost or costs, as determined by the
Agent, incurred by the Agent (including, without limitation, any costs resulting
from a higher discount rate upon disposition of such Acceptance Draft by the
Agent, any funding costs resulting from a higher discount rate upon disposition
of such Acceptance Draft by the Agent, reserve requirements or additional
premium liability to the Federal Deposit insurance Corporation) in connection
with such Acceptance Draft on account of such noncompliance or ineligibility.
SECTION 3.10. Customary Fees. The Borrower agrees to pay to the Agent,
solely for the Agent's own account, upon demand, its customary fees, from time
to time in effect, in respect of Letters of Credit issued by the Agent. Such
fees shall include all amendment fees, fees in respect of the examination of
documents and fees for other administrative matters.
SECTION 3.11. Forms of Drafts. Prior to the first presentation of drafts
for acceptance hereunder the Borrower shall provide the Agent with a supply of
Acceptance Drafts, in the form of Exhibit D each signed and endorsed, where
appropriate, by a duly authorized officer of the Borrower. Upon request, the
Borrower shall furnish a further supply of such Acceptance Drafts to the Agent.
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IV. REPRESENTATIONS AND WARRANTIES.
Each of the Credit Parties represents and warrants to each of the Lenders
that:
SECTION 4.01. Organization, Legal Existence. Each Credit Party and each of
their subsidiaries are legal entities duly organized, validly existing and in
good standing under the laws of the jurisdiction of their respective
organization, have the requisite power and authority to own their property and
assets and to carry on their business as now conducted and as currently proposed
to be conducted and are qualified to do business in every jurisdiction where
such qualification is required (all such jurisdictions being listed in Schedule
4.01 hereto). Each of the Credit Parties has the corporate power to execute,
deliver and perform its obligations under this Agreement and the other Loan
Documents to which it is a party, and, in the case of the Borrower, to borrow
hereunder and to execute and deliver the Notes.
SECTION 4.02. Authorization. The execution, delivery and performance by
each of the Credit Parties of this Agreement and each of the other Loan
Documents to which it is a party, the borrowings hereunder by the Borrower and
the execution and delivery by the Borrower of the Notes (collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate and, if
required, stockholder action and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation or the certificate or articles of incorporation
or other applicable constitutive documents or the by-laws of the Credit Parties,
or their subsidiaries, as the case may be, (B) any order of any court, or any
rule, regulation or order of any other agency of government binding upon the
Credit Parties, or their subsidiaries, or (C) any provisions of any material
indenture, agreement or other instrument to which the Credit Parties, or their
subsidiaries, or any of their respective properties or assets are or may be
bound, (ii) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any material indenture,
agreement or other instrument referred to in (b) (i) (c) above or (iii) result
in the creation or imposition of any Lien of any nature whatsoever upon any
property or assets of the Credit Parties, or their subsidiaries.
SECTION 4.03. Governmental Approvals. No registration or filing with
consent or approval of, or other action by, any Federal, state or other
governmental agency, authority or regulatory body is or will be required in
connection with the Transactions, other than any which have been made or
obtained.
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SECTION 4.04. Binding Effect. This Agreement and each of the other Loan
Documents to which it is a party constitutes a legal, valid and binding
obligation of such Credit Party enforceable in accordance with its terms. Each
of the Notes, when duly executed and delivered, will constitute a legal, valid
and binding obligation of the Borrower enforceable in accordance with its terms
SECTION 4.05. No Default: Material Adverse Change. No Default or Event of
Default has occurred and is continuing. Except as set forth in Schedule 4.05
hereto, no event has occurred since September 30, 1995 that, individually or
when taken together with any other event(s), has had or could reasonably be
expected to have a Material Adverse Effect.
SECTION 4.06. Litigation; Compliance with Laws: Etc. (a) Except as set
forth in Schedule4.06(a) hereto, there are not any actions, suits or proceedings
at law or in equity or by or before any governmental instrumentality or other
agency or regulatory authority now pending or, to the knowledge of any
Responsible Officer of any Credit Party, threatened against or affecting the
Credit Parties or any of their subsidiaries or the businesses, assets or rights
of the Credit Parties or any of their subsidiaries (i) which involve any of the
Transactions or (ii) as to which it is probable (within the meaning of Statement
of Financial Accounting Standards No. 5) that there will be an adverse
determination and which, if adversely determined, could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.06(1,) hereto, neither the Credit
Parties nor any of their subsidiaries is in violation of any law, or in default
with respect to any judgment, writ, injunction, decree, rule or regulation of
any court or governmental agency or instrumentality which violation and/or
default could reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect.
SECTION 4.07. Financial Statements. (a) The Borrower has heretofore
furnished to the Agent Consolidated balance sheets and statements of income and
cash flows of the Borrower and its subsidiaries dated as of September 30, 1995
and for the Fiscal Year then ended audited by and accompanied by the opinion of
independent public accountants. Such Consolidated balance sheets and statements
of income and cash flows present fairly the Consolidated financial condition and
results of operations of the Borrower and its subsidiaries as of the date and
for the period indicated, and such balance sheets and the notes thereto disclose
all material liabilities, direct or contingent, of the Borrower and its
subsidiaries, as of the date thereof. The financial statements referred to in
this Section 4.07(a) have been prepared in
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accordance with generally accepted accounting principles consistently applied.
(b) The Borrower has heretofore furnished to the Agent Consolidated balance
sheets and statements of income and cash flows of the Borrower and its
subsidiaries dated as of June 30, 1996 and for the nine (9) month period then
ended prepared by management of the Borrower. Such balance sheets and statements
of income and cash flows present fairly the Consolidated financial condition and
results of operations of Borrower and its subsidiaries as of the date and for
the period indicated, and such balance sheets and the notes thereto (if any)
disclose all material liabilities direct or contingent to the extent required to
be disclosed in accordance with generally accepted accounting principles, of the
Borrower and its subsidiaries, as of the date thereof. The financial statements
referred to in this Section 4.07(b) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
that they do not include all the footnote disclosure required by generally
accepted accounting principles for complete financial statements), subject to
normal year-end audit adjustments.
(c) The Borrower has heretofore furnished to the Agent comparative
consolidating balance sheets and statements of income of the Borrower and its
subsidiaries dated as of September 30, 1995 and for the Fiscal Year then ended
prepared by management of the Borrower and reported on by the independent public
accountants that audited the financial statements referred to in Section 4.07(a)
hereof in the Report of Independent Certified Public Accountants on
Supplementary Information accompanying the audited financial statements referred
to in Section 4.07(a) hereof. Such consolidating balance sheets and statements
of income present fairly the consolidating financial condition and results of
operations of the Borrower and its subsidiaries as of the date and for the
period indicated, and such balance sheets disclose all direct, material
liabilities of the Borrower and its subsidiaries, as of the date thereof. The
financial statements referred to in this Section 4.07(c) have been prepared in
accordance with generally accepted accounting principles consistently applied
(except that they do not include any of the footnote disclosure required by
generally accepted accounting principles for complete financial statements)
SECTION 4.08. Federal Reserve Regulations. (a) Neither the Credit Parties
nor any of their subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (i) to purchase
or carry Margin Stock
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or to extend credit to others for the purpose of purchasing or carrying Margin
Stock or to refund indebtedness originally incurred for such purpose, or (ii)
for any purpose which entails a violation of, or which is inconsistent with, the
provisions of the Regulations of the Board, including, without limitation,
Regulation G, T, U or X thereof. If requested by any Lender, the Credit Parties
or any of their subsidiaries shall furnish to such Lender a statement on Federal
Reserve Form U-1 referred to in said Regulation U.
SECTION 4.09. Taxes. Except as set forth in Schedule 4.09 hereto, the
Credit Parties and each of their subsidiaries have filed or caused to be filed
all Federal, state, local and foreign tax returns which are required to be filed
by them, on or prior to the date hereof, other than tax returns in respect of
taxes that (x) are not franchise, capital or income taxes, (y) in the aggregate
are not material and (z) would not, if unpaid, result in the imposition of any
material Lien on any property or assets of the Credit Parties or any of their
subsidiaries. Except as set forth in Schedule 4.09 hereto, the Credit Parties
and their subsidiaries have paid or caused to be paid all taxes shown to be due
and payable on such filed returns or on any assessments received by them, other
than (i) any taxes or assessments the validity of which such Credit Party or
such subsidiary is diligently contesting in good faith by appropriate
proceedings, and with respect to which such Credit Party or such subsidiary
shall, to the extent required by generally accepted accounting principles
consistently applied have set aside on its books adequate reserves and (ii)
taxes other than income, capital or franchise taxes that in the aggregate are
not material and which would not, if unpaid, result in the imposition of any
material Lien on any property or assets of the Credit Parties or any of their
subsidiaries. Except as set forth in Schedule 4.09 hereto, no Federal income tax
returns of the Credit Parties or any of their subsidiaries have been audited by
the United States Internal Revenue Service for any Fiscal Year since the Fiscal
Year ended September 30, 1994, and neither the Credit Parties nor any of their
subsidiaries has as of the date hereof requested or been granted any extension
of time to file any Federal, state, local or foreign tax return. Neither the
Borrower nor any of its subsidiaries is party to or has any obligation under any
tax sharing agreement.
SECTION 4.10. Employee Benefit Plans. (a) With respect to the provisions of
ERISA as to any Plan other than a multiemployer Plan and with respect to the
representations and warranties herein as made on the Closing Date solely for the
eight year period preceding the Closing Date:
(i) Except as disclosed in Schedule 4.10 hereto, no Reportable Event
has occurred or is continuing with respect to any Pension Plan.
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(ii) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) has occurred with respect to any Plan subject
to Part 4 of Subtitle B of Title I of ERISA.
(iii) Neither the Credit Parties nor any ERISA Affiliate is now, or
has been during the preceding five years, obligated to contribute to a Pension
Plan. Neither the Credit Parties nor any ERISA Affiliate has (A) ceased
operations at a facility so as to become subject to the provisions of Section
4062(e) of ERISA, (B) withdrawn as a substantial employer so as to become
subject to the provisions of Section 4063 of ERISA, (C) ceased making
contributions to any Pension Plan subject to the provisions of Section 4064(a)
of ERISA to which the Credit Parties, any subsidiary thereof or any ERISA
Affiliate made contributions or (D) been a party to any transaction or agreement
under which the provisions of Section 4204 of ERISA were applicable.
(iv) No notice of intent to terminate a Pension Plan has been filed,
nor has any Plan been terminated pursuant to the provisions of Section 4041(e)
of ERISA.
(v) The PBGC has not instituted proceedings to terminate (or appoint a
trustee to administer) a Pension Plan and no event has occurred or condition
exists which might constitute grounds under the provisions of Section 4042 of
ERISA for the termination of (or the appointment of a trustee to administer) any
such Plan.
(vi) With respect to each Pension Plan that is subject to the
provisions of Title I, Subtitle B, Part 3 of ERISA, the funding method used in
connection with such Plan is acceptable under ERISA, and the actuarial
assumptions and methods used in connection with funding such Pension Plan
satisfy the requirements of Section 302 of ERISA. The assets of each such
Pension Plan are at least equal to the present value of the greater of (i)
accrued benefits (both vested and non-vested) under such Plan, or (ii) "benefit
liabilities" (within the meaning of Section 4001(a) (16) of ERISA) under such
Plan, in each case as of the latest actuarial valuation date for such Plan
(determined in accordance with the same actuarial assumptions and methods as
those used by the Plan's actuary in its valuation of such Plan as of such
valuation date). No such Pension Plan has incurred any "accumulated funding
deficiency" (as defined in Section 412 of the Code), whether or not waived.
(vii) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of the Credit Parties or any
ERISA Affiliate, which could reasonably be expected to be asserted, against any
Plan or the assets of any such Plan which could reasonably be expected to have a
Material Adverse Effect. No civil or criminal action brought pursuant to
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the provisions of Title I, Subtitle B, Part 5 of ERISA is pending or threatened
against any fiduciary or any Plan. Except as disclosed in Schedule 4.10 hereto,
none of the Plans or any fiduciary thereof (in its capacity as such) has been
the direct or indirect subject of any audit or investigation by any governmental
or quasi-governmental agency.
(viii) All of the Plans comply currently, and have complied in the
past, both as to form and operation, with their terms and with the provisions of
ERISA and the Code, and all other applicable laws, rules and regulations; all
necessary governmental approvals for the Plans have been obtained and a
favorable determination as to the qualification under Section 401(a) of the Code
of each of the Plans which is an employee pension benefit plan (within the
meaning of Section 3(2) of ERISA) has been made by the Internal Revenue Service
and a recognition of exemption from federal income taxation under Section 501(a)
of the Code of each of the funded employee welfare benefit plans (within the
meaning of Section 3(1) of ERISA) has been made by the Internal Revenue Service,
and nothing has occurred since the date of each such determination or
recognition letter that would materially adversely affect such qualification.
(b) Except as set forth in Schedule 4.10, as at the Closing Date the Credit
Parties have not incurred or caused to occur a complete or partial withdrawal
from a Multiemployer Plan.
SECTION 4.11. No Material Misstatements. No information, report, financial
statement, exhibit or schedule prepared or furnished by or on behalf of any
Credit Party to the Agent or any Lender in connection with any of the
Transactions or this Agreement, the Notes or any other Loan Documents or
included therein contained or contains any material misstatement of fact or
omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 4.12. Investment Company Act; Public Utility Holding Company Act.
Neither the Credit Parties nor any of their subsidiaries is an "investment
company" as defined in, or is otherwise subject to regulation under, the
Investment Company Act of 1940. Neither the Credit Parties nor any of their
subsidiaries is a "holding company" as that term is defined in or is otherwise
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 4.13. Use of proceeds. (a) All proceeds of the Credits to be
extended on the Closing Date shall be used first to refinance existing
Indebtedness under the Prior Credit Agreement and next, if requested by the
Borrower, to provide for the general working capital requirements of the Credit
Parties.
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(b) All proceeds of each Credit extended subsequent to the Closing Date
shall be used to provide for the general working capital requirements of the
Credit Parties, provided, however, up to $5,000,000 may be advanced by the
Borrower to Milgray Electronics/P.R., Inc. to enable such entity to purchase
Puerto Rican Securities.
SECTION 4.14. Subsidiaries and Affiliates. As of the Closing Date, Schedule
4.14 hereto sets forth each direct and indirect subsidiary and each Affiliate of
the Borrower and the other Credit Parties, its jurisdiction of incorporation,
its capitalization and each beneficial and record holder of capital stock of
each such subsidiary and Affiliate.
SECTION 4.15. Title to Properties; Possession Under Leases; Trademarks. (a)
The Credit Parties and each of their subsidiaries have good and marketable title
to, or valid leasehold interest in, all of their respective properties and
assets shown on the most recent balance sheet referred to in Section 4.07(a)
hereof and all assets and properties acquired since the date of such balance
sheet, except for such properties as are no longer used or useful in the conduct
of its business or as have been disposed of in the ordinary course of business,
and except for minor defects in title that do not interfere with the ability of
the Credit Parties or any of their subsidiaries to conduct its business as now
conducted. All such assets and properties are free and clear of all Liens other
than those permitted by Section 7.01 hereof.
(b) The Credit Parties and each of their subsidiaries have complied with
all obligations under all leases to which they are a party and under which they
are in occupancy, and all such leases are in full force and effect and the
Credit Parties and each of their subsidiaries enjoy peaceful and undisturbed
possession under all such leases.
(c) The Credit Parties and each of their subsidiaries own or control all
material trademarks, trademark rights, trade names, trade name rights,
copyrights, patents, patent rights and licenses which are necessary for the
conduct of the business of the Credit Parties and each of their subsidiaries.
Neither the Credit Parties nor any of their subsidiaries is infringing upon or
otherwise acting adversely to any of such trademarks, trademark rights, trade
names, trade name rights, copyrights, patent rights or licenses owned by any
other person or persons. There is no claim or action by any such other person
pending, or to the knowledge of any Responsible officer of the Credit Parties or
any subsidiary thereof, threatened, against the Credit Parties or any of their
subsidiaries with respect to any of the rights or property referred to in this
Section 4.15(c).
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SECTION 4.16. Permits, Etc. The Credit Parties and each of their
subsidiaries possess all licenses, permits, approvals and consents, including,
without limitation, all environmental, health and safety licenses, permits,
approvals and consents (collectively, "Permits") of all Federal, state, local
and foreign governmental authorities as required to conduct properly their
business, each such Permit is and will be in full force and effect, the Credit
Parties and each of their subsidiaries are in compliance in all material
respects with all such Permits, and no event (including, without limitation, any
violation of any law, rule or regulation) has occurred which allows the
revocation or termination of any such Permit or any restriction thereon.
SECTION 4.17. Compliance with Environmental Laws. Except as disclosed in
Schedule 4.17 hereto: (i) the operations of the Credit Parties and their
subsidiaries comply in all material respects with all applicable Environmental
Laws; (ii) the Credit Parties and their subsidiaries and all of their present
facilities or operations, as well as to the knowledge of the Credit Parties and
their subsidiaries their past facilities or operations, are not subject to any
judicial proceeding or administrative proceeding or any outstanding written
order or agreement with any governmental authority or private party respecting
(a) any Environmental Law, (b) any Remedial Work, or (c) any Environmental
Claims arising from the Release of a Contaminant into the environment; (iii) to
the best of the knowledge of the Credit Parties and their subsidiaries, none of
their operations is the subject of any Federal or state investigation evaluating
whether any Remedial Work is needed to respond to a Release of any Contaminant
into the environment in violation of any Environmental Law; (iv) neither the
Credit Parties nor any of their subsidiaries nor any predecessor of the Credit
Parties or any of their subsidiaries has filed any notice under any
Environmental Law indicating past or present treatment, storage, or disposal of
a Hazardous Material or reporting a spill or Release of a Contaminant into the
environment in violation of any Environmental Law; (v) to the best of the
knowledge of the Credit Parties and their subsidiaries, neither the Credit
Parties nor any of their subsidiaries has any contingent liability in connection
with any Release of any Contaminant into the environment; (vi) none of the
operations of the Credit Parties or any of their subsidiaries involves the
generation, transportation, treatment or disposal of Hazardous Materials; (vii)
neither the Credit Parties nor any of their subsidiaries has disposed of any
Contaminant by placing it in or on the ground or waters of any premises owned,
leased or used by any of them and to the knowledge of the Credit Parties and
their subsidiaries neither has any lessee, prior owner, or other person; (viii)
no underground storage tanks or surface impoundments are on any property of the
Credit Parties and their subsidiaries; and (ix) no Lien in favor of any
governmental authority for (A) any liability under any Environmental Law or
regulation, or (B) damages arising from or costs incurred by such
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governmental authority in response to a Release of a Contaminant into the
environment, has been filed or attached to the property of the Credit Parties
and their subsidiaries.
SECTION 4.18. No Change in Credit Criteria or Collection Policies. There
has been no material change in credit criteria or collection policies concerning
account receivables of the Credit Parties since September 30, 1995. All Eligible
Receivables of the Credit Parties are valid, binding and enforceable obligations
of Customers and are not subject to any claims, defenses or setoffs, except to
the extent same arise in the ordinary course of business and adequate reserves
have been established therefor in accordance with generally accepted accounting
principles.
SECTION 4.19. Franchise Agreements. Neither the Credit Parties nor any of
their subsidiaries or, to the knowledge of the Credit Parties, any other person
is in default under any material provision of any franchise agreement or any
other material agreement to which it is a party except, (x) in the case of any
franchise agreement, a default resulting from payments to a supplier by a Credit
Party beyond (but not later than 60 days beyond) the terms specified in such
franchise agreement and (y) in the case of contracts with its customers which
constitute material agreements, defaults the results of which when taken in the
aggregate would not materially adversely effect the ability of the Borrower and
its subsidiaries, taken as a whole, to conduct business substantially as
conducted prior to the occurrence of such defaults.
SECTION 4.20. Financing Agreements. Schedule 4.20 hereto sets forth all
promissory notes, debentures and similar instruments and all credit, loan and
similar financing agreements evidencing, creating or governing Indebtedness for
borrowed money to which the Credit Parties or any of their subsidiaries is a
party, and the Credit Parties have furnished to the Agent true and complete
copies of all such instruments and agreements.
SECTION 4.21. No Overdue Obligations. There exists no unpaid and overdue
Indebtedness of the Credit Parties or any of their subsidiaries other than:
Indebtedness (A) the payment of which the Credit Parties or such subsidiary is
diligently contesting in good faith by appropriate proceedings and with respect
to which the Credit Parties or such subsidiary shall, to the extent required by
generally accepted accounting principles consistently applied, have set aside on
its books adequate reserves and (B) which, if unpaid, could not reasonably be
expected to have a Material Adverse Effect.
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V. CONDITIONS OF CREDIT EVENTS
The obligation of each Lender to extend Credits hereunder shall be subject
to the following conditions precedent:
SECTION 5.01. All Credit Events On each date on which a Credit Event is to
occur:
(a) The Agent shall have received a notice of borrowing required by Section
2.03 hereof, application for a Letter of Credit required by Section 3.01 hereof
or a notice of Borrower's request that Agent accept an Acceptance Draft required
by Section 3.07 hereof.
(b) The representations and warranties set forth in Article IV hereof and
in any documents delivered herewith, including, without limitation, the Loan
Documents, shall be true and correct in all material respects with the same
effect as though made on and as of such date (except insofar as such
representations and warranties relate expressly to an earlier date).
(c) The Borrower shall be in compliance with all the terms and provisions
contained herein on its part to be observed or performed, and at the time of and
immediately after such Credit Event no Default or Event of Default shall have
occurred and be continuing.
(d) The Agent and the Lenders shall have received a certificate signed by
the Financial Officer of the Borrower as to the compliance with (b) and (c)
above.
SECTION 5.02. First Borrowing. The obligations of the Lenders in respect of
the first Credit Event hereunder is subject to the following additional
conditions precedent:
(a) Each Lender shall have received the favorable written opinion of
counsel for each Credit Party, substantially in the form of Exhibit B hereto,
dated the Closing Date, addressed to the Lenders and satisfactory to the Agent.
(b) The Agent shall have received (i) a certificate as to the good standing
of each Credit Party from the Secretary of State or other appropriate official
of the state or county of its organization or location, as appropriate, in each
case dated as of a recent date; (ii) a certificate of the Secretary, Assistant
Secretary or a Financial Officer of each Credit Party, dated as of the date
hereof and certifying (A) that its certificate or articles of incorporation and
its By-laws have not been amended since November 7, 1995 or, in the case of
Credit Parties incorporated after November 7, 1995, since the date of
incorporation thereof (or if there has been any such amendment, attaching a
certified copy
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thereof), (B) that attached thereto is a true and complete copy of a resolution
adopted by such person's Board of Directors authorizing the execution, delivery
and performance of this Agreement, the Notes, the other Loan Documents and the
Credit Events hereunder, as applicable, and that such resolution has not been
modified, rescinded or amended and is in full force and effect and (C) as to the
incumbency and specimen signature of each of such person's officers executing
this Agreement, the Notes, or any other Loan Document delivered in connection
herewith or therewith, as applicable; (iii) a certificate of another of such
person 5 officers as to incumbency and signature of its Secretary, Assistant
Secretary or Financial Officer, as applicable; and (iv) such other documents as
the Agent or any Lender may reasonably request.
(c) The Agent shall have received a certificate, dated the Closing Date and
signed by a Financial Officer of the Borrower, confirming compliance with the
conditions precedent set forth in paragraphs (b) and (c) of Section 5.01 hereof,
the conditions set forth in this Section 5.02 and that no Event of Default
presently exists and no event (including, without limitation, any Credit Event
hereunder) has occurred and is continuing which would constitute a Default.
(d) Each Lender shall have received its Revolving Credit Note duly executed
by the Borrower, payable to its order and otherwise complying with the
provisions of Section 2.04 hereof and the Agent shall have received each other
applicable Loan Document, each duly executed by the parties thereto.
(e) The Agent shall have received for the benefit of the Lenders, and each
Lender shall have had the opportunity to review and determined to be in form and
substance satisfactory to them:
(i) the aging of accounts of each Credit Party and a consolidated
schedule of Inventory of the Credit Parties listed by manufacturer, each dated
within 40 days of the Closing Date;
(ii) evidence of the compliance by the Borrower with Section 6.03
hereof;
(iii) the financial statements described in section 4.07(b) hereof
(each certified by a Financial Officer of the Borrower) and each of the
agreements and instruments listed in Schedule 4.20 hereto and Schedule 7.02
hereto;
(iv) all shareholder agreements to which the Borrower or any other
Credit Party is a party to the extent such agreements relate to such
shareholder's interests in the Borrower or any other Credit Party;
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(v) the three largest (based on sales revenues) franchise agreements
to which the Borrower is a party, and any other franchise agreements that the
Agent may in its reasonable discretion designate;
(vi) a schedule listing all franchise agreements to which the Borrower
or any of its subsidiaries is a party; and
(vii) if requested by the Agent or any Lender, copies of the most
recent annual reports that were filed with the Internal Revenue Service on
Treasury Form 5500 with respect to any Plan, together with certified financial
statements (if any) for the Plan and any actuarial statements on Schedule B to
such Form 5500.
(f) Intentionally Omitted
(g) Messrs. Xxxxx & Xxxx-Xxxxx, counsel to the Agent, shall have received
payment in full for all legal fees charged, and all costs and expenses incurred,
by such counsel through the Closing Date in connection with the transactions
contemplated under this Agreement and the other Loan Documents and instruments
in connection herewith and therewith.
(h) All legal and other matters in connection with the Transactions shall
be satisfactory to the Agent, the Lenders and their respective counsel in their
sole discretion. Without limiting the generality of the foregoing, the Agent,
the Lenders and their respective counsel shall be satisfied that:
(i) the Transactions are in compliance with all applicable laws and
regulations;
(ii) all requisite third party consents (including, without
limitation, consents with respect to the Credit Parties) to the Transactions
have been received;
(iii) there has been no material adverse change in the business,
assets, operations, prospects or financial condition of the Credit Parties and
their subsidiaries since September 30, 1995; and
(iv) there are no actions, suits or proceedings at law or in equity or
by or before any governmental instrumentality or other agency or regulatory
authority now pending or threatened against or affecting the Borrower or any of
its subsidiaries or any of their respective businesses, assets or rights which
involve any of the Transactions.
(i) The Borrower shall have executed and delivered to the Agent a
disbursement authorization letter with respect to the disbursement of the
proceeds of any Credits extended on the Closing Date, in form and substance
satisfactory to the Agent.
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(j) The Lenders shall have received a certificate demonstrating compliance
as of July 26, 1996 with the Borrowing Base in form satisfactory to the Lenders.
(k) The Agent shall have received such other documents as the Lenders or
the Agent or their respective counsel shall reasonably deem necessary.
(l) The Agent and the Lenders shall have received evidence of payment or
provision for payment of all outstanding Indebtedness under the Prior Credit
Agreement and the termination of same.
(m) The Agent and the Lenders shall have received payment of all fees owed
to them by the Credit Parties under the Prior Credit Agreement, this Agreement
or otherwise.
SECTION 5.03. Puerto Rican Securities Borrowing. The obligations of the
Lenders in respect of the use of any Credit to purchase Puerto Rican Securities
shall be subject to the Agent and the Lenders having received a certificate from
the Borrower and Milgray Electronics/P.R. Inc. certifying compliance with
subsections (ii) through (iv) of the Puerto Rican Indebtedness Conditions.
VI. AFFIRMATIVE COVENANTS
Each Credit Party covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Note, any amount under any Letter of Credit or Acceptance Draft or any fee,
expense or amount payable hereunder or in connection with any of the
Transactions shall be unpaid, it will, and will cause each of its subsidiaries
and, with respect to Section 6.07 hereof, each ERISA Affiliate, to:
SECTION 6.01. Legal Existence. Do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence,
provided, however, nothing contained in this Section 6.01 shall prohibit or
limit any transaction permitted under Section 7.04 hereof.
SECTION 6.02. Businesses and Properties. At all times do or cause to be
done all things necessary to: preserve, renew and keep in full force and effect
the rights, licenses, Permits, franchises, patents, copyrights, trademarks and
trade names material to the conduct of its businesses; maintain and operate such
businesses in the same general manner in which they are presently conducted and
operated; comply with all laws, rules, regulations and governmental orders
(whether Federal, state or local) applicable to the operation of such businesses
whether now in effect or hereafter enacted (including, without limitation, all
applicable laws, rules, regulations and governmental orders relating to public
and employee
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health and safety and all Environmental Laws) and with any and all other
applicable laws, rules, regulations and governmental orders the lack of
compliance with which could reasonably be expected to have a Material Adverse
Effect, except to the extent that such Credit Party is diligently contesting the
applicability or content thereof in good faith by appropriate proceedings and
has established adequate reserves therefor to the extent required in accordance
with generally accepted accounting principles; take all actions which may be
required to obtain, preserve, renew and extend all Permits and other
authorizations which are material to the operation of such businesses; and at
all times maintain, preserve and protect all property material to the conduct of
such businesses and keep such property in good repair, working order and
condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 6.03. Insurance. (a) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers, (b) maintain
such other insurance, to such extent and against such risks, including fire,
business interruption and other risks insured against by extended coverage, as
is customary with companies similarly situated and in the same or similar
businesses, provided, however, that such insurance shall insure the property of
the Borrower and its subsidiaries against all risk of physical damage,
including, without limitation, loss by fire, explosion, theft, business
interruption, fraud and such other casualties as may be reasonably satisfactory
to the Agent and the Required Lenders, but in no event at any time in an amount
less than replacement value, (c) maintain in full force and effect public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by the Borrower or any of its subsidiaries, in
such amount as the Agent and the Required Lenders shall reasonably deem
necessary, and (d) maintain such other insurance as may be required by law or as
may be reasonably requested by the Agent for purposes of assuring compliance
with this Section 6.03, including, without limitation, insurance against risk of
casualties caused by any Release of any Hazardous Materials to the extent
required by law. All insurance covering tangible personal property of the
Borrower or any subsidiary thereof shall provide that the Agent and each of the
Lenders is an additional insured.
SECTION 6.04. Taxes. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might give rise to Liens upon such
properties or
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any part thereof, except to the extent that such taxes, assessments,
governmental charges, levies or claims are being diligently contested in good
faith by appropriate proceedings and as to which adequate reserves have been
established in accordance with generally accepted accounting principles.
SECTION 6.05. Financial Statements, Reports, Etc. Furnish to the Agent and
each of the Lenders:
(a) within 90 days after the end of each Fiscal Year, (i) a comparative
Consolidated balance sheet and comparative Consolidated income statement showing
the financial condition of the Borrower and its subsidiaries as of the close of
such Fiscal Year and the results of their operations during such year, and (ii)
a comparative Consolidated statement of shareholders, equity (with respect only
to a Fiscal Year in which there is a change in shareholders' equity resulting
from any reason other than earnings) and a comparative Consolidated statement of
cash flow for the year then ended, all the foregoing financial statements to be
audited by independent public accountants of nationally recognized standing
acceptable to the Agent and the Lenders (which report shall not contain any
qualification except with respect to new accounting principles mandated by the
Financial Accounting Standards Board), and to be in form and substance
acceptable to the Agent; and comparative consolidating balance sheets and
consolidating income statements showing the financial condition of the Borrower
and its subsidiaries as of the close of such Fiscal Year and the results of
their operations during such year prepared by management of the Borrower and
reported on by the independent public accountants referred to above;
(b) within 45 days after the end of each of the first three (3) fiscal
quarters of the Borrower, an unaudited condensed consolidated balance sheet and
an unaudited condensed consolidated income statement showing the financial
condition and results of operations of the Borrower and its subsidiaries as of
the end of each such quarter, an unaudited condensed Consolidated statement of
shareholders' equity (such statement of shareholders, equity shall only be
required to be submitted to the Agent and each of the Lenders to the extent
there is a change in shareholders' equity from the prior fiscal quarter end
arising as a result of any reason other than the addition of the earnings or
substraction of the losses of the Borrower and its subsidiaries) and an
unaudited condensed Consolidated statement of cash flow for such fiscal quarter,
in each case prepared by management of the Borrower under the supervision and
direction of the chief financial officer of the Borrower and accompanied by a
letter stating that such financial statements were prepared under the
supervision and direction of the chief financial officer of the Borrower and
confirming that such financial statements present fairly the financial condition
and the results of operations of the Borrower and its subsidiaries in
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accordance with generally accepted accounting principles, consistently applied,
except that they do not include all of the information and footnote disclosure
required by generally accepted accounting principles for complete financial
statements, in each case subject to normal year-end audit adjustments;
(c) promptly after the same become publicly available, copies of such
registration statements, annual, periodic and other reports, and such proxy
statements and other information, if any, as shall be filed by the Borrower or
any subsidiaries with the Securities and Exchange Commission pursuant to the
requirements of the Securities Act of 1933 or the Securities Exchange Act of
1934;
(d) concurrently with any delivery under (a) or (b) above, a certificate of
the chief financial officer (in the form of the certificate attached hereto as
Exhibit T or another form acceptable to the Agent) certifying that to the best
of his or her knowledge no Default or Event of Default has occurred (including
calculations demonstrating compliance, as of the dates of the financial
statements being furnished at such time, with the covenants set forth in
Sections 7.06, 7.07, 7.08, 7.09, 7.10, 7.11, 7.12 and 7.13 hereof and, if such a
Default or Event of Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with respect
thereto;
(e) as soon as available and in any event within 15 days after receipt by
the Borrower or any subsidiary thereof, each management letter prepared by the
independent public accountants who reported on the financial statements
delivered under (a) above;
(f) within 30 days of the end of each month, an aging schedule of the
Receivables of each Credit Party in the form of Exhibit E hereto, and a schedule
of Inventory of each Credit Party in the form of Exhibit F hereto;
(g) no later than December 31 of each calendar year, financial projections
(including, without limitation, with respect to capital expenditures) for the
Borrower and its subsidiaries for the then current Fiscal Year (including
quarterly Consolidated balance sheets, statements of income and of cash flow),
in form, substance and detail (including, without limitation, principal
assumptions) satisfactory to the Agent, prepared by management of the Borrower
under the supervision and direction of the chief financial officer of the
Borrower and accompanied by a letter from the chief financial officer of the
Borrower stating that such projections were prepared under the supervision and
direction of the chief financial officer of the Borrower;
(h) as soon as practicable, copies of all reports, forms, filings, loan
documents and financial information submitted to its
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shareholders generally and/or the Securities and Exchange Commission;
(i) within 30 days after the end of each month, a certificate, in form,
substance and detail satisfactory to the Agent, of the chief financial officer
of each Credit Party demonstrating compliance as at the end of such month with
the Borrowing Base;
(j) within ten (10) days after a request made by the Agent or any Lender to
receive (a) a copy of any franchise agreement to which the Borrower or any of
its subsidiaries is a party, a true and complete executed copy of such franchise
agreement and (b) a schedule of all franchise agreements to which the Borrower
or any of its subsidiaries is a party, a true and complete listing of all
franchise agreements to which the Borrower or any of its subsidiaries is a
party;
(k) immediately upon becoming aware thereof, notice of(i) with respect to
material agreements to which any Credit Party is a party that are not franchise
agreements, the material breach by any party of any such agreement and (ii) with
respect to franchise agreements to which any Credit Party is a party, the
termination of any such agreement should the sales pursuant to such franchise
agreement be equal to or greater than 5% of consolidated sales of the Borrower
and its subsidiaries over the immediately prior twelve (12) months, on a rolling
twelve (12) month basis; and as soon as practicable, such other information and
documents regarding the operations and affairs of the Borrower or any of its
subsidiaries as the Agent or any Lender may reasonably request.
(1) as soon as practicable, such other information and documents regarding
the operations and affairs of the Borrower or any of its subsidiaries as the
Agent or any Lender may reasonably request.
SECTION 6.06. Litigation and Other Notices. Give the Agent and each Lender
prompt written notice of the following:
(a) the issuance by any court or governmental agency or authority of any
injunction, order, decision or other restraint prohibiting, or having the effect
of prohibiting, the making of the Loans or occurrence of other Credit Events, or
invalidating, or having the effect of invalidating, any provision of this
Agreement, the Notes or the other Loan Documents, or the initiation of any
litigation or similar proceeding seeking any such injunction, order, decision or
other restraint;
(b) the filing or commencement of any action, suit or proceeding against
the Borrower or any of its subsidiaries, whether at law or in equity or by or
before any court or any Federal,
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state, municipal or other governmental agency or authority, (i) which is brought
by or on behalf of any governmental agency or authority, or in which injunctive
or other equitable relief is sought, and which if adversely determined could
reasonably be expected to have a Material Adverse Effect or (ii) as to which it
is probable (within the meaning of Statement of Financial Accounting Standards
No. 5) that there will be an adverse determination and which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect;
(c) any Default or Event of Default, specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with respect
thereto; and
(d) any development in the business or affairs of the Borrower or any of
its subsidiaries or any other event of which such Credit Party becomes aware
which has had, or could reasonably be expected to have, a Material Adverse
Effect.
SECTION 6.07. ERISA. (a) other than with respect to a Multiemployer Plan,
pay and discharge promptly any liability imposed upon it pursuant to the
provisions of Title IV of ERISA, provided, however, that neither the Borrower
nor any ERISA Affiliate shall be required to pay any such liability if (1) the
amount, applicability or validity thereof shall be diligently contested in good
faith by appropriate proceedings, and (2) to the extent required under generally
accepted accounting principles, such person shall have set aside on its books
,reserves which, in the opinion of the chief financial officer of such person,
are adequate with respect thereto; and maintain and administer each Pension Plan
and continue its qualifications under and in compliance with ERISA and the Code,
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(b) other than with respect to a Multiemployer Plan, deliver to the Agent,
promptly, and in any event within 30 days, after: (i) the occurrence of any
Reportable Event, a copy of the materials that are filed with the PBGC, or the
materials that would have been required to be filed if the 30-day notice
requirement to the PBGC was not waived; (ii) the Borrower or any ERISA Affiliate
or an administrator of any Pension Plan files with participants, beneficiaries
or the PBGC a notice of intent to terminate any such Plan, a copy of any such
notice; (iii) the receipt of notice by the Borrower or any ERISA Affiliate or an
administrator of any Pension Plan from the PBGC of the PBGC's intention to
terminate any Pension Plan or to appoint a trustee to administer any such Plan,
a copy of such notice; (iv) if requested by the Agent or any Lender, the filing
thereof with the Internal Revenue Service, copies of each annual report that is
filed on Treasury Form 5500 with respect to any Plan, together with certified
financial statements (if any) for the Plan and any actuarial statements on
Schedule B to such Form
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5500; (v) the Borrower or any ERISA Affiliate knows or has reason to know of any
event or condition which might constitute grounds under the provisions of
Section 4042 of ERISA for the termination of (or the appointment of a trustee to
administer) any Pension Plan, an explanation of such event or condition; (vi)
the Borrower or any ERISA Affiliate knows or has reason to know of any event or
condition which might cause any one of them to incur a liability under Section
4062, 4063, 4064 or 4069 of ERISA or Section 412(n) or 4971 of the Code, an
explanation of such event or condition; and (vii) the Borrower or any ERISA
Affiliate knows or has reason to know that an application is to be, or has been,
made to the Secretary of the Treasury for a waiver of the minimum funding
standard under the provisions of Section 412 of the Code, a copy of such
application; and in each case described in clauses (i) through (iii) and (v)
through (vi) together with a statement signed by the Financial Officer setting
forth details as to such Reportable Event, notice, event or condition and the
action which the Borrower or such ERISA Affiliate proposes to take with respect
thereto.
(c) With respect to a Multiemployer Plan, deliver to the Agent, promptly,
and in any event within 30 days after the receipt by the Borrower or any ERISA
Affiliate of an assessment of withdrawal liability under Section 4201 of ERISA
from a Multiemployer Plan, a copy of such assessment.
SECTION 6.08. Maintaining Records: Access to Properties and Inspections:
Right to Audit. Maintain financial records in accordance with accepted financial
practices and, upon reasonable notice (which may be telephonic), at all
reasonable times and as often as any Lender may reasonably request, permit any
authorized representative designated by such Lender to visit and inspect the
properties and financial records of the Borrower and its subsidiaries and to
make extracts from such financial records at such Lender's expense, and permit
any authorized representative designated by such Lender to discuss the affairs,
finances and condition of the Borrower and its subsidiaries with the appropriate
Financial Officer and such other officers as the Borrower shall deem appropriate
and the Borrower's independent public accountants, as applicable. The Agent
agrees that it shall schedule any meeting with any such independent public
accountant through the Borrower and a Responsible Officer of the Borrower shall
have the right to be present at any such meeting. Each of the Agent and each
Lender shall have the right to audit, as often as it may request, the existence
and condition of the Receivables, Inventory, books and records of the Borrower
and its subsidiaries and to review their compliance with the terms and
conditions of this Agreement and the other Loan Documents.
SECTION 6.09. Use of Proceeds. Use the proceeds of the Credits only for the
purposes set forth in Section 4.13 hereof.
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SECTION 6.10. Fiscal Year-End. Cause its Fiscal Year to end on September 30
in each year.
SECTION 6.11. Additional Guarantors. Promptly inform the Agent and each
Lender of the creation or acquisition by it of any direct or indirect subsidiary
or Affiliate (subject to the provisions of Section 7.04 hereof) and (i) with
respect-to any such subsidiary or Affiliate that is not a Foreign Subsidiary,
cause such person to execute this Agreement as a Guarantor and (ii) with respect
to any such subsidiary or Affiliate that is a Foreign Subsidiary, at the
Borrower's option, (A) cause the direct parent of such person to pledge and
deliver in form satisfactory to the Agent at least 65% of the capital stock of
such person to the Agent (for the ratable benefit of itself and the Lenders)
pursuant to such agreements and instruments as the Agent deems reasonably
necessary or advisable or (B) cause such person to execute this Agreement as a
Guarantor.
SECTION 6.12. Environmental Laws. (a) Comply, and cause each of its
subsidiaries to comply, in all material respects with the provisions of all
Environmental Laws, and shall keep its properties and the properties of its
subsidiaries free of any Lien imposed pursuant to any Environmental Law; not
cause or suffer or permit, the property of the Borrower or its subsidiaries to
be used for the generation, production, processing, handling, storage,
transporting or disposal of any Hazardous Material, except for Hazardous
Materials used in the ordinary course of business of the Borrower or its
subsidiaries and disclosed in Schedule 6.12 hereto, in which case such Hazardous
Materials shall be used, stored, generated, treated and disposed of only in
compliance with Environmental Law, and except for Remedial Work in response to
Hazardous Materials on or about the properties owned, operated, leased or
occupied by the Borrower or any of its subsidiaries.
(b) At the request of the Agent or any Lender, supply to the Agent and each
Lender copies of all submissions by the Borrower or any of its subsidiaries to
any governmental body and of the reports of all environmental audits and of all
other environmental tests, studies or assessments (including the data derived
from any sampling or survey of asbestos, soil, or subsurface or other materials
or conditions) that may be conducted or performed (by or on behalf of the
Borrower or any of its subsidiaries) on or regarding the properties owned,
operated, leased or occupied by the Borrower or any of its subsidiaries or
regarding any conditions that might have been affected by Hazardous Materials on
or Released or removed from such properties; permit and authorize the
consultants, attorneys or other persons that prepare such submissions or reports
or perform such audits, tests, studies or assessments to discuss such
submissions, reports or audits with the Agent and the Lenders.
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(c) Promptly (and in no event more than two Business Days after the
Borrower becomes aware or is otherwise informed of such event) provide oral and
written notice to the Agent and each Lender upon the happening of any of the
following:
(i) the Borrower, any subsidiary of the Borrower, or any tenant or
other occupant of any property of the Borrower or such subsidiary receives
notice of any claim, complaint, charge or notice of a violation or potential
violation of any Environmental Law;
(ii) there has been a spill or other Release of Hazardous Materials
upon, under or about or affecting any of the properties owned, operated, leased
or occupied by the Borrower or any of its subsidiaries, or Hazardous Materials
at levels or in amounts that may have to be reported, remedied or responded to
under Environmental Law are detected on or in the soil or groundwater;
(iii) the Borrower or any of its subsidiaries is or may be liable for
any costs of cleaning up or otherwise responding to a Release of Hazardous
Materials;
(iv) any part of the properties owned, operated, leased or occupied by
the Borrower or any of its subsidiaries is or may be subject to a Lien under any
Environmental Law; or
(v) the Borrower or any of its subsidiaries undertakes any Remedial
Work with respect to any Hazardous Materials.
(d) Timely undertake and complete any Remedial Work required by any
Environmental Law.
(e) Without in any way limiting the scope of Section 11.04 hereof and in
addition to any obligations thereunder, the Borrower hereby indemnifies and
agrees to hold the Agent and the Lenders harmless from and against any
liability, loss, damage, suit, action or proceeding arising out of its business
or the business of its subsidiaries pertaining to Hazardous Materials,
including, but not limited to, claims of any governmental body or any third
person arising under any Environmental Law or under tort, contract or common
law. To the extent laws of the United States or any applicable state or local
law in which property owned, operated, leased or occupied by the Borrower or any
of its subsidiaries is located provide that a Lien upon such property of the
Borrower or such subsidiary may be obtained for the removal of Hazardous
Materials which have been or may be Released, no later than sixty days after
notice is given by the Agent to the Borrower or such subsidiary, the Borrower or
such subsidiary shall deliver to the Agent a report issued by a qualified third
party engineer certifying as to the existence of any Hazardous Materials located
upon or beneath the specified property. To the extent any
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Hazardous Materials located therein or thereunder either subject the property to
Lien or require removal to safeguard the health of any persons, the removal
thereof shall be an affirmative covenant of the Borrower hereunder.
(f) In the event that any Remedial Work is required to be performed by the
Borrower or any of its subsidiaries under any applicable Environmental Law, any
judicial order, or by any governmental entity, commence all such Remedial Work
at or prior to the time required therefor under such Environmental Law or
applicable judicial orders and thereafter diligently prosecute to completion all
such Remedial Work in accordance with and within the time allowed under such
applicable Environmental Laws or judicial orders.
SECTION 6.13. Pay Obligations to Lenders and Perform Other Covenants (a)
Make full and timely payment of the Obligations whether now existing or
hereafter arising and (b) duly comply with all the terms and covenants contained
in this Agreement (including, without limitation, the borrowing limitations and
mandatory prepayments in accordance with Article II hereof) and in each of the
other Loan Documents, all at the times and places and in the manner set forth
therein.
VII. NEGATIVE COVENANTS
Each Credit Party covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Note, any amount under any Letter of Credit or any Acceptance Draft, or any fee,
expense or amount payable hereunder or in connection with any of the
Transactions shall be unpaid, it will not and will not cause or permit any of
its subsidiaries and, in the case of Section 7.17 hereof, any ERISA Affiliate
to, either directly or indirectly:
SECTION 7.01. Liens. Incur, create, assume or permit to exist any Lien on
any of its property or assets (including the stock of any direct or indirect
subsidiary or Affiliate), whether owned at the date hereof or hereafter
acquired, or assign or convey any rights to or security interests in any future
revenues, except:
(a) Liens incurred and pledges and deposits made in the ordinary course of
business in connection with workers, compensation, unemployment insurance,
old-age pensions and other social security benefits (not including any Lien
described in Section 412 (m) of the Code);
(b) Liens imposed by law, such as carriers , warehousemen's, mechanics',
materialmen's and vendors, Liens and other similar Liens, incurred in good faith
in the ordinary course of business
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and securing obligations which are not overdue for a period of more than 15 days
or which are being contested in good faith by appropriate proceedings as to
which the Borrower or any of its subsidiaries, as the case may be, shall, to the
extent required by generally accepted accounting principles consistently
applied, have set aside on its books adequate reserves;
(c) Liens securing the payment of taxes, assessments and governmental
charges or levies, that are not delinquent or are being diligently contested in
good faith by appropriate proceedings and as to which adequate reserves have
been established in accordance with generally accepted accounting principles;
(d) zoning restrictions, easements, licenses, reservations, provisions,
covenants, conditions, waivers, restrictions on the use of property or minor
irregularities of title (and with respect to leasehold interests, mortgages,
obligations, Liens and other encumbrances incurred, created, assumed or
permitted to exist and arising by, through or under a landlord or owner of the
leased property, with or without consent of the lessee) which do not in the
aggregate materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;
(e) Liens upon any equipment acquired through the purchase or lease by the
Borrower or any of its subsidiaries which are created or incurred
contemporaneously with such acquisition to secure or provide for-the payment of
any part of the purchase price of, or lease payments on, such equipment (but no
other amounts and not in excess of 90% the purchase price or aggregate lease
payments); provided, however, that any such Lien shall not apply to any other
property of the Borrower or any of its subsidiaries; and provided, further, that
the same may be incurred only so long as no Event of Default or Default then
exists or would result therefrom, with the various financial measurements and
covenants set forth in Sections 7.06 through 7.12 of this Agreement being
recalculated on a pro forma basis (from the then most recent quarterly or
subsequent pro forma calculations) to include the effects of the proposed
Indebtedness and Capitalized Leases;
(f) Liens existing on the date of this Agreement and set forth in Schedule
7.01 hereto but not the extension, renewal or refunding of the Indebtedness
secured thereby;
(g) Liens created in favor of the Agent for the benefit of the Lenders;
(h) Liens securing the performance of bids, tenders, leases, contracts
(other than for the repayment of borrowed money), statutory obligations, surety,
customs and appeal bonds and other
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obligations of like nature, incurred as an incident to and in the ordinary
course of business;
(i) Liens constituting statutory landlord's Liens;
(j) the Lien imposed under a Special Deed of Pledge (a copy of such
executed Special Deed of Trust having been previously provided to the Agent) by
Milgray/International, Inc. in favor of Swiss Volksbank with respect to the SFR
35,000 held in an account or accounts in the name of Milgray/International, Inc.
at Swiss Volksbank;
(k) Liens securing Other Indebtedness; or
(1) Liens securing or attaching in connection with judgments which
individually and in the aggregate do not constitute an Event of Default under
paragraph (j) of Article VIII hereof.
SECTION 7.02. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness other than:
(i) Indebtedness (including, without limitation, Guarantees) existing
on the date hereof and listed in Schedule 7.02 hereto, but not the extension,
renewal or refunding thereof subject to compliance with clauses (xiii) through
(xxi);
(ii) Indebtedness incurred under this Agreement or any other Loan
Document;
(iii) Guarantees of the Borrower of Indebtedness or rental obligations
of any Guarantor permitted hereunder and Guarantees of any Guarantor of
Indebtedness or rental obligations of the Borrower permitted hereunder;
(iv) Indebtedness to trade creditors incurred in the ordinary course
of business;
(v) Guarantees constituting the endorsement of negotiable instruments
for deposit or collection in the ordinary course of business;
(vi) Guarantees of the Obligations;
(vii) purchase money Indebtedness and Capitalized Lease obligations to
the extent permitted by Sections 7.01(e) and 7.06 hereof;
(viii) Subordinated Indebtedness;
(ix) Guarantees existing on the date hereof, and set forth in Schedule
7.02 hereof, of Indebtedness existing on the date
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hereof, but not Guarantees of any extension, renewal or refunding of any such
Indebtedness;
(x) progress payments made in the ordinary course of business by the
Borrower or any of its subsidiaries;
(xi) Indebtedness of the Borrower owing to any of its subsidiaries;
(xii) (A) Indebtedness of any Guarantor other than Milgray
Electronics/P.R., Inc. and Milgray/Toronto, Inc. owing to the Borrower or any
other Guarantor and (B) Indebtedness of Milgray Electronics/P.R., Inc. owing to
the Borrower, provided that the aggregate outstanding amount of such
Indebtedness shall not at any time exceed $10,000,000;
(xiii) Indebtedness of Milgray/Toronto, Inc. owing to the Borrower,
provided that the aggregate outstanding amount of such Indebtedness shall not at
any time exceed $5,000,000;
(xiv) INTENTIONALLY OMITTED;
(xv) Indebtedness of Milgray/International, Inc. and Milgray/Toronto,
Inc. owing under overdraft lines of credit, provided that the aggregate
outstanding amount of such Indebtedness shall not at any time exceed $1,000,000
and $1,000,000, respectively;
(xvi) Indebtedness of Mugray/International, Inc. owing under customs
guarantee lines of credit, provided that the aggregate outstanding amount of
such Indebtedness shall not at any time exceed $75,000;
(xvii) Indebtedness of Milgray Electronics, Inc.,
Milgray/International, Inc. and Mugray/Toronto, Inc. owing under foreign
exchange lines of credit, provided that the aggregate outstanding amount of such
Indebtedness shall not at any time exceed $4,000,000 in the aggregate for
Milgray Electronics, Inc. and Milgray/International, Inc. and (Canadian)
$10,000,000 in the case of Milgray/Toronto, Inc.,
(xviii) if the Revolving Credit Commitment has not been utilized to
acquire Puerto Rican Securities, unsecured Indebtedness of the Borrower owing to
commercial banks that are located in the United States or Puerto Rico (such
banks in Puerto Rico referred to herein as the "Puerto Rican Xxxxx XX), provided
that the aggregate outstanding amount of such Indebtedness shall not exceed
$5,000,000, the proceeds of such Indebtedness are used by Milgray
Electronics/P.R., Inc. to purchase tax exempt Puerto Rican Securities rated A or
better by Standard and Poor's Corporation or Xxxxx'x Investors Service, Inc.
(the "Puerto Rican Securities") in
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connection with a transaction entered into for the purpose of reducing the
Borrower's or Milgray Electronics/P.R., Inc.'s tax liability to Puerto Rico and
the terms and conditions of such Indebtedness are reasonably satisfactory to the
Agent and the Lenders in the case of a borrowing from a United States bank or if
such Indebtedness is incurred from Puerto Rican Banks, the Puerto Rican
Indebtedness Conditions have been fulfilled to the satisfaction of the Agent and
the Lenders;
(xix) a Guarantee of Milgray Electronics/P.R., Inc. of the
Indebtedness incurred pursuant to subsection (xviii) above if incurred from
Puerto Rican Banks (or United States banks), provided that the Agent and Lenders
shall have given the Borrower their prior written consent indicating that the
terms and conditions of such Guarantee are reasonably satisfactory to them in
all respects;
(xx) a Guarantee (a copy of such executed Guaranty having been
previously provided to the Agent) of Milgray/International, Inc. in favor of
Swiss Volksbank in the amount of SFR 35,000 (the "Swiss Volksbank Guarantee");
(xxi) Indebtedness of the Borrower to the Agent or an Affiliate of the
Agent and Guarantees of any Guarantors of such Indebtedness in connection with
interest rate swaps with aggregate notational amounts of up to $3,000,000 under
which the Borrower is obligated to pay a fixed rate and is entitled to receive a
floating rate; and
(xxii) (i) other Indebtedness (including, without limitation,
Guarantees) in an aggregate amount not in excess of $250,000 less (ii) the
United States dollar equivalent of the Swiss Volksbank Guarantee plus the
aggregate amounts actually paid thereunder (the "Other Indebtedness").
SECTION 7.03. Dividends. Distributions and Payments Declare or pay,
directly and indirectly, any cash dividends or make any other distribution,
whether in cash, property, securities or a combination thereof, with respect to
(whether by reduction of capital or otherwise) any shares of its capital stock,
or directly or indirectly redeem, purchase, retire or otherwise acquire for
value (or permit any subsidiary to purchase or acquire) any shares of any class
of its capital stock or any options, warrants or other rights with respect
thereto, or set aside any amount for any such purpose, except for (i) the
cancellation or retirement of outstanding treasury stock, (ii) dividends or
other distributions payable by or to the Borrower or any subsidiary thereof
solely in shares of common stock, (iii) cash dividends or distributions by any
subsidiary of the Borrower to the Borrower, (iv) cash dividends payable in lieu
of any issuance of fractional shares of capital stock permitted under clause
(ii) above and (v) the acquisition by the Borrower of shares of its capital
stock from employees of the
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Borrower in exchange for the issuance to such employees of shares of the
Borrower's capital stock in accordance with the provisions of a stock option
plan of the Borrower existing on the Closing Date.
SECTION 7.04. Consolidations. Mergers and Sales of Assets. Consolidate with
or merge into any other person, or sell, lease, transfer or assign to any
persons or otherwise dispose of (whether in one transaction or a series of
transactions) any capital stock of any of its subsidiaries (whether now owned or
hereafter acquired), or any portion of any of its other assets or properties
other than in the ordinary course of business (whether now owned or hereafter
acquired), or any of its inventory other than in the ordinary course of
business, or permit another person to merge into it, or acquire all or
substantially all the capital stock or assets of any other person, except (i)
that upon not less than thirty (30) days' prior written notice to the Agent and
the Lenders, provided no such notice shall be required in the case of the merger
of Milgray/Computer Products, Inc. or U.S. Computer Supply, Inc. into the
Borrower within sixty (60) days of the entry into this Credit Agreement, (A) any
Guarantor or Foreign Subsidiary may merge with and into the Borrower, provided
that the Borrower is the sole surviving entity of such merger, (B) any Guarantor
may merge with and into another Guarantor, (except no domestic Guarantor may
merge into Milgray/Toronto, Inc. or any other Guarantor which is a Foreign
Subsidiary or Milgray Electronics/P.R., Inc.), and (C) any Foreign Subsidiary
(other than Milgray/Toronto, Inc.) may merge with and into another Foreign
Subsidiary, (ii) that any Guarantor may sell, lease, transfer or otherwise
dispose of all or any portion of its business or assets to the Borrower or
another Guarantor (other than a Guarantor which is a Foreign Subsidiary or
Milgray Electronics/P.R., Inc.) and (iii) that any Foreign Subsidiary may sell,
lease, transfer or otherwise dispose of all or any portion of its business or
assets to the Borrower, any Guarantor or another Foreign Subsidiary.
SECTION 7.05. Investments. Own, purchase or acquire any stock, obligations,
assets or securities of, or any interest in, or make any capital contribution or
loan or advance to, any other person, or make any other investments, except:
(a) investments in checking and interest bearing deposit accounts and
certificates of deposit in dollars of any Lender, or any other commercial banks
registered to do business in any state of the United States (i) having capital
and surplus in excess of $1,000,000,000 and (ii) whose long-term debt rating is
at least investment grade as determined by either Standard & Poor's Corporation
or Xxxxx'x Investor Service, Inc.;
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(b) readily marketable direct obligations of the United States government
or any agency thereof which are backed by the full faith and credit of the
United States;
(c) investments in money market mutual funds having assets in excess of
$2,500,000,000;
(d) commercial paper of any Lender or commercial paper, at the time of
acquisition, having the highest rating obtainable from either Standard & Poor's
Corporation or Xxxxx'x Investor Service, Inc.;
(e) federally tax exempt securities rated A or better by either Standard &
Poor's Corporation or Xxxxx'x Investor Service, Inc.;
(f) loans and advances by it to other persons constituting Indebtedness
permitted under clauses (xi), (xii) or (xiii) of Section 7.02 hereof;
(g) investments in interest bearing deposit accounts made in the ordinary
course of business in banks located in Puerto Rico which have been identified in
writing by the Agent and the Lenders as acceptable;
(h) investments, including investments by means of capital contribution, in
the stock of any subsidiary or Affiliate;
(i) loans and advances to employees of any Credit Party so long as the
aggregate outstanding amount of all such loans and advances to employees of all
the Credit Parties does not at any time exceed $300,000; and
(j) Puerto Rican Securities to the extent permitted by Section 7.02 (xviii)
or alternatively, loans or advances from Borrower to Mugray Electronics/P.R.
Inc. to purchase such Puerto Rican Securities; provided that, in each case
mentioned in (a), (b), (d) and (e) above, such obligations shall mature not more
than one year from the date of acquisition thereof.
SECTION 7.06. Capital Expenditures Permit or suffer the aggregate amount of
payments made for capital expenditures, including, without limitation,
Capitalized Lease Obligations and Indebtedness secured by Liens permitted under
Section 7.01(e) hereof, to exceed $2,500,000 in any Fiscal Year.
SECTION 7.07. Net Worth. Permit or suffer Net Worth at any time to be less
than (i) $31,000,000 at any time from the Closing Date through and including
September 29, 1996 and (ii) during each subsequent twelve month period
commencing on September 30 in any year and ending on September 29 of the
subsequent year, the sum of
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(a) the minimum Net Worth required pursuant to this Section 7.07 to be
maintained during the immediately preceding twelve month period plus (b)
$3,000,000.
SECTION 7.08. Total Unsubordinated Liabilities to Net Worth Ratio - Permit
or suffer the ratio of (x) Total Unsubordinated Liabilities of the Borrower and
its subsidiaries to (y) Net Worth, at any time to be greater than (i) from the
Closing Date through and including December 30, 1998, 2.25:1.00 and (ii)
thereafter, 2.00:1.00.
SECTION 7.09. Rental Obligations. Incur, create, assume or permit or suffer
to exist, in respect of leases of real and personal property (other than
Capitalized Lease Obligations), rental obligations or other commitments
thereunder to make any direct or indirect payment, whether as rent or otherwise,
for fixed or minimum rentals, percentage rentals, property taxes, or insurance
premiums, in an aggregate amount for the Borrower and its subsidiaries which
shall exceed: (i) $2,000,000 for the Fiscal Year ending September 30, 1996; and
(ii) for any Fiscal Year ending thereafter, the sum of (A) the maximum amount of
such obligations permitted under this Section 7.09 for the immediately preceding
Fiscal Year plus (B) $500,000.
SECTION 7.10. Consolidated Inventory Ratio. Permit or suffer the ratio of
(x) Inventory of the Borrower on a Consolidated basis to (y) Current Assets of
the Borrower on a Consolidated basis, at any time to exceed 0.65:1.00.
SECTION 7.11. Consolidated Current Ratio. Permit or suffer the Consolidated
Current Ratio of the Borrower at any time to be less than (x) from the Closing
Date through and including December 30, 1998, 1.20:1.00 and (y) thereafter,
1.30:1.00.
SECTION 7.12. Interest Coverage Ratio. Permit or suffer the Interest
Coverage Ratio of the Borrower at the end of any Fiscal Year to be less than (x)
prior to September 29, 1999, 2.00:1.00 and (y) thereafter 2.50:1.00.
SECTION 7.13. Net Income. Permit or suffer Borrower's Net Income to be less
than zero for any Fiscal Year.
SECTION 7.14. Business. Alter the nature of its business as operated on the
date of this Agreement in any material respect.
SECTION 7.15. Sales of Receivables. Sell, assign, discount, transfer, or
otherwise dispose of any accounts receivable, promissory notes, drafts or trade
acceptances or other rights to receive payment held by it, with or without
recourse, except for the purpose of collection or settlement in the ordinary
course of business.
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SECTION 7.16. Use of Proceeds. Permit or suffer the proceeds of any Credit
to be used for any purpose which entails a violation of, or is inconsistent
with, Regulation G, T, U or X of the Board, or for any purpose other than those
set forth in Section 4.13 hereof.
SECTION 7.17. ERISA. (a) Engage in any transaction in connection with which
the Borrower or any ERISA Affiliate could be subject to either a material civil
penalty assessed pursuant to the provisions of Section 502 of ERISA or a
material tax imposed under the provisions of Section 4975 of the Code.
(b) Terminate any Pension Plan in a "distress termination" under Section
4041 of ERISA, or take any other action which could result in a material
liability of the Borrower or any ERISA Affiliate to the PBGC.
(c) Other than with respect to a Multiemployer Plan, fail to make payment
when due of all amounts which, under the provisions of any Plan, the Borrower or
any ERISA Affiliate is required to pay as contributions thereto, or, with
respect to any Pension Plan, permit to exist any material "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA and Section 412 of the
Code), whether or not waived, with respect thereto.
(d) Adopt an amendment to any Pension Plan requiring the provision of
security under Section 307 of ERISA or Section 401(a)(29) of the Code.
(e) With respect to a Multiemployer Plan, incur or cause to occur a
complete or partial withdrawal so as to incur withdrawal liability in an amount
that could reasonably be expected to have a Material Adverse Effect.
SECTION 7.18. Accounting Changes. Make, or permit or suffer any subsidiary
to make any change in their accounting treatment or financial reporting
practices except as required or permitted by generally accepted accounting
principles in effect from time to time.
SECTION 7.19. Modification of Indebtedness. Modify, amend or otherwise
alter the terms and provisions of any Subordinated Indebtedness or prepay or
acquire any Indebtedness outstanding thereunder other than as scheduled
thereunder.
SECTION 7.20. Transactions with Affiliates. Except as otherwise
specifically set forth in this Agreement, directly or indirectly purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or enter into any other transaction with any stockholder, officer, director,
Affiliate or agent of the Borrower or any of its subsidiaries, or X.X. Xxxxxxxx
Associates, Inc., or
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any relative of any thereof, except at prices and on terms not less favorable to
it than that which would have been obtained in an arm's-length transaction with
a non-affiliated third party, provided that this Section 7.20 shall not be
deemed to prohibit any Credit Party from paying performance related bonuses to
any of its employees or from making loans or advances to employees that are
permitted under Section 7.05(i) hereof or entering into a transaction permitted
under Section 7.04 hereof, and further provided that, subject to the provisions
of Article 7 hereof, this Section 7.20 shall not be deemed to prohibit the
Borrower or any domestic Guarantor or Canadian Guarantor (provided that for any
such Canadian Guarantor the Agent shall have received an opinion of counsel in
form and substance satisfactory to the Agent and the Lenders that the Guarantee
of such Guarantor is enforceable against such Guarantor at least to the same
extent as exists with respect to a domestic Guarantor) from directly or
indirectly purchasing, acquiring or leasing any property from, or selling,
transferring or leasing any property to, or entering into any other transaction
with the Borrower or any domestic Guarantor or qualifying Canadian Guarantor
whether or not such transaction is at arm's-length.
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein called
"Events of Default"):
(a) any representation or warranty made or deemed made in or in connection
with this Agreement, the Notes or any other Loan Documents or any Credit Events
hereunder, shall prove to have been incorrect in any material respect when made
or deemed to be made;
(b) default shall be made in the payment of any principal of any Note when
and as the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any Note, any
Revolving Credit Commitment Fee or any fee or any other amount payable
hereunder, or under the Notes, Letters of Credit, Acceptance Drafts or any other
Loan Document, or in connection with any other Credit Event or the Transactions,
when and as the same shall become due and payable;
(d) (i) default shall be made in the due observance or performance of any
covenant, condition or agreement to be observed or performed on the part of the
Borrower or any of its subsidiaries pursuant to the terms of Article II or III,
hereof, Sections 6.05, 6.06, 6.08 and 6.13 hereof, or Articles VII, X or XI
hereof or pursuant to any other Loan Document; or (ii) default shall be made in
the due observance or performance of any other covenant, condition or agreement
to be observed or performed pursuant to the
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terms hereof and such default shall continue unremedied for thirty (30) or more
consecutive days from the date any Credit Party becomes aware or should have
become aware of such default (but in any event from a date that a Credit Party
has been advised by the Agent or any Lender (such person being under no duty to
so advise) of such default);
(e) the Borrower, any Guarantor or any subsidiary of any thereof shall (i)
voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code or any other Federal, state or foreign
bankruptcy, insolvency, liquidation or similar law, (ii) consent to the
institution of, or fail to contravene in a timely and appropriate manner, any
such proceeding or the filing of any such petition, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator or similar
official for the Borrower, such Guarantor or such subsidiary or for a
substantial part of its property or assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) become unable,
admit in writing its inability or fail generally to pay its debts as they become
due or (vii) take corporate action for the purpose of effecting any of the
foregoing;
(f) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of the Borrower, any Guarantor or any subsidiary of any thereof, or of a
substantial part of the property or assets of the Borrower, any Guarantor or any
subsidiary of any thereof, under Title 11 of the United States Code or any other
Federal state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator or similar
official for the Borrower, any Guarantor or any subsidiary of any thereof or for
a substantial part of the property of the Borrower, any Guarantor or any
subsidiary of any thereof or (iii) the winding-up or liquidation of the
Borrower, any Guarantor or any subsidiary of any thereof; and such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall continue unstayed and in effect for 60
days;
(g) default shall be made with respect to any Indebtedness of the Borrower,
any Guarantor or any subsidiary of any thereof in excess of $300,000 (excluding
Indebtedness outstanding hereunder) if the effect of any such default shall be
to accelerate, or to permit the holder or obligee of any such Indebtedness (or
any trustee on behalf of such holder or obligee) at its option to accelerate,
the maturity of such Indebtedness or obligations under a capitalized lease;
(h) (i) a Reportable Event shall have occurred with respect to a Pension
Plan, (ii) the filing by the Borrower, any ERISA
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Affiliate, or an administrator of any Plan of a notice of intent to terminate
such a Plan in a distress termination" under the provisions of Section 4041 of
ERISA, (iii) the receipt of notice by the Borrower, any ERISA Affiliate, or an
administrator of a Plan that the PBGC has instituted proceedings to terminate
(or appoint a trustee to administer) such a Pension Plan, (iv) any other event
or condition exists which might, in the reasonable opinion of the Agent,
constitute grounds under the provisions of Section 4042 of ERISA for the
termination of (or the appointment of a trustee to administer) any Pension Plan
by the PBGC, (v) a Pension Plan shall fail to maintain the minimum funding
standard required by Section 412 of the Code for any plan year or a waiver of
such standard is sought or granted under the provisions of Section 412(d) of the
Code, (vi) the Borrower or any ERISA Affiliate has incurred, or is likely to
incur, a liability under the provisions of Section 4062, 4063, 4064 or 4201 of
ERISA, (vii) the Borrower or any ERISA Affiliate fails to pay the full amount of
an installment required under Section 412(m) of the Code, (viii) the occurrence
of any other event or condition with respect to any Plan which would constitute
an event of default under any other agreement entered into by the Borrower or
any ERISA Affiliate, and in each case in clauses (i) through (viii) of this
subsection (h), such event or condition, together with all other such events or
conditions, if any, could subject the Borrower or any ERISA Affiliate to any
taxes, penalties or other liabilities which, in the reasonable opinion of the
Agent, could have a Material Adverse Effect;
(i) the Borrower or any ERISA Affiliate (i) shall have been notified by the
sponsor of a Multiemployer Plan that it has incurred any withdrawal liability to
such Multiemployer Plan which could reasonably be expected to have a Material
Adverse Effect and (ii) does not have reasonable grounds for contesting such
withdrawal liability and is not in fact contesting such withdrawal liability in
a timely and appropriate manner;
(j) a judgment (to the extent not reimbursed by insurance policies of the
Borrower, any Guarantor or any subsidiary of any thereof) or decree for the
payment of money, a fine or penalty which when taken together with all other
such judgments, decrees, fines and penalties shall exceed $300,000 shall be
rendered by a court or other tribunal against the Borrower, any Guarantor or any
subsidiary of any thereof and (i) shall remain undischarged or unbonded for a
period of 45 consecutive days during which the execution of such judgment,
decree, fine or penalty shall not have been stayed effectively or (ii) any
judgment creditor or other person shall legally be prosecuting an unstayed
action to collect on or enforce such judgment, decree, fine or penalty;
(k) this Agreement, any Note or any other Loan Document shall for any
reason cease to be, or shall be asserted by the Borrower, any Guarantor or any
subsidiary of any thereof not to be, a legal,
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valid and binding obligation of the Borrower, such Guarantor or such subsidiary,
as applicable, enforceable in accordance with its terms, or the security
interest or Lien purported to be created by any Loan Document shall for any
reason cease to be, or be asserted by the Borrower, any Guarantor or any
subsidiary of any thereof not to be, a valid, first priority perfected security
interest in any collateral covered thereby (except to the extent otherwise
permitted under this Agreement; or
(l) any person shall legally commence proceedings to foreclose upon any
Lien (other than any Lien of the type described in Section 7.01(d) or (1)
hereof) on any property of the Borrower or any subsidiary thereof except to the
extent that such proceedings shall have been stayed or a surety bond
satisfactory to the Agent and the Lenders in connection with such proceedings
shall have been obtained by the Borrower or such subsidiary;
then, and in any such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event, the
Agent with the written consent of the Required Lenders may, and upon the written
request of the Required Lenders shall, by written notice (or facsimile notice
promptly confirmed in writing) to the Borrower, take any or all of the following
actions at the same or different times: (i) terminate forthwith all or any
portion of the Revolving Credit Commitment and the obligations of the Lenders to
issue Letters of Credit and accept Acceptance Drafts; (ii) demand that the
Borrower and the Guarantors provide to the Lenders, and the Borrower and the
Guarantors upon such demand agree to provide, cash collateral in an amount equal
to the aggregate Letter of Credit Exposure then existing plus the aggregate
Acceptance Draft Exposure then outstanding, to be held by the Agent for the
ratable benefit of the Lenders on terms and pursuant to documents and agreements
satisfactory in all respects to the Agent; and (iii) declare the Notes and any
amounts then owing to the Lenders on account of drawings under any Letters of
Credit and Acceptance Drafts to be forthwith due and payable, and the Borrower
shall provide such cash collateral to secure the aggregate Letter of Credit
Exposure then existing plus the Acceptance Draft Exposure then existing,
whereupon the principal of such Notes, together with accrued interest and fees
thereon and any amounts then owing to the Lenders on account of drawings under
any Letters of Credit and acceptance of Acceptance Drafts and other liabilities
of the Borrower accrued hereunder, shall become forthwith due and payable both
as to principal and interest, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in the Notes to the contrary notwithstanding;
provided, however, that with respect to a default described in paragraph (e) or
(f) above, the Revolving Credit Commitment and the obligation of the Lenders to
issue Letters of Credit and accept Acceptance Drafts shall automatically
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terminate and the principal of the Notes, together with accrued interest and
fees thereon and any amounts then owing to the Lenders on account of drawings
under any Letters of Credit and Acceptance Drafts and any other liabilities of
the Borrower accrued hereunder shall automatically become due and payable, both
as to principal and interest, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in the Notes to the contrary notwithstanding.
IX. AGENT
In order to expedite the transactions contemplated by this Agreement, Fleet
Bank, N.A. is hereby appointed to act as Agent on behalf of the Lenders. Each of
the Lenders and each subsequent holder of any Note or issuer of any Letter of
Credit or acceptor of any Acceptance Draft by its acceptance thereof,
irrevocably authorizes the Agent to take such action on its behalf and to
exercise such powers hereunder and under the Loan Documents as are specifically
delegated to or required of the Agent by the terms hereof and the terms thereof
together with such powers as are reasonably incidental thereto. Neither the
Agent nor any of its directors, officers, employees or agents shall be liable as
such for any action taken or omitted to be taken by it or them hereunder or
under any of the Loan Documents or in connection herewith or therewith (a) at
the request or with the approval of the Required Lenders (or, if otherwise
specifically required hereunder or thereunder, the consent of all the Lenders)
or (b) in the absence of its or their own gross negligence or willful
misconduct.
The Agent is hereby expressly authorized on behalf of the Lenders, without
hereby limiting any implied authority, (a) to receive on behalf of each of the
Lenders any payment of principal of or interest on the Notes outstanding
hereunder and all other amounts accrued hereunder paid to the Agent, and
promptly to distribute to each Lender its proper share of all payments so
received, (b) to distribute to each Lender copies of all notices, agreements and
other material as provided for in this Agreement or in the other Loan Documents
as received by such Agent and (c) to take all actions with respect to this
Agreement and the other Loan Documents as are specifically delegated to the
Agent.
In the event that (a) the Borrower fails to pay when due the principal of
or interest on any Note, any amount payable under any Letter of Credit or
Acceptance Draft, or any fee payable hereunder or (b) the Agent receives written
notice of the occurrence of a Default or an Event of Default, the Agent within a
reasonable time shall give written notice thereof to the Lenders, and shall take
such action with respect to such Event of Default or other condition or event as
it shall be directed to take by the Required Lenders; provided, however, that,
unless and until the Agent shall have
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received such directions, the Agent may take such action or refrain from taking
such action hereunder or under any other Loan Documents with respect to a
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders.
The Agent shall not be responsible in any manner to any of the Lenders for
the effectiveness, enforceability, perfection, value, genuineness, validity or
due execution of this Agreement, the Notes or any of the other Loan Documents or
any other agreements or certificates, requests, financial statements, notices or
opinions of counsel or for any recitals, statements, warranties or
representations contained herein or in any such instrument or be under any
obligation to ascertain or inquire as to the performance or observance of any of
the terms, provisions, covenants, conditions, agreements or obligations of this
Agreement or any of the other Loan Documents or any other agreements on the part
of the Borrower and, without limiting the generality of the foregoing, the Agent
shall, in the absence of knowledge to the contrary, be entitled to accept in
good faith any certificate furnished pursuant to this Agreement or any of the
other Loan Documents as conclusive evidence of the facts stated therein and
shall be entitled to rely in good faith on any note, notice, consent,
certificate, affidavit, letter, telegram, teletype message, statement, order or
other document which it believes in good faith to be genuine and correct and to
have been signed or sent by the proper person or persons. It is understood and
agreed that the Agent may exercise its rights and powers under other agreements
and instruments to which it is or may be a party, and engage in other
transactions with the Borrower, as though it were not Agent of the Lenders
hereunder.
The Agent shall promptly give notice to the Lenders of the receipt or
sending of any notice, schedule, report, projection, financial statement or
other document or information pursuant to this Agreement or any of the other
Loan Documents and shall promptly forward a copy thereof to each Lender.
Neither the Agent nor any of its directors, officers, employees or agents
shall have any responsibility to the Borrower on account of the failure or delay
in performance or breach by any Lender other than the Agent of any of its
obligations hereunder or to any Lender on account of the failure of or delay in
performance or breach by any other Lender or the Borrower of any of their
respective obligations hereunder or in connection herewith.
The Agent may consult with legal counsel selected by it in connection with
matters arising under this Agreement or any of the other Loan Documents and any
action taken or suffered in good faith by it in accordance with the opinion of
such counsel shall be full justification and protection to it. The Agent may
exercise any of its powers and rights and perform any duty under this Agreement
or any of the other Loan Documents through agents or attorneys.
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The Agent and the Borrower may deem and treat the payee or most recent
assignee pursuant to Section 11.03(e) hereof, as applicable, of any Note as the
holder thereof until written notice of transfer shall have been delivered as
provided in Section 11.03(e) hereof by such payee to the Agent and the Borrower.
With respect to the Loans made hereunder, the Notes issued to it and any
other Credit Event applicable to it, the Agent in its individual capacity and
not as an Agent shall have the same rights, powers and duties hereunder and
under any other Agreement executed in connection herewith as any other Lender
and may exercise the same as though it were not the Agent, and the Agent and its
affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or other affiliate thereof as if it were not
the Agent.
Each Lender agrees (i) to reimburse the Agent in the amount of such
Lender's pro rata share (based on its Revolving Credit Commitment hereunder) of
any expenses incurred for the benefit of the Lenders by the Agent, including
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, not reimbursed by the Borrower and (ii) to indemnify
and hold harmless the Agent and any of its directors, officers, employees or
agents, on demand, in the amount of its pro rata share, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against it in its capacity as the
Agent or any of them in any way relating to or arising out of this Agreement or
any of the other Loan Documents or any action taken or omitted by it or any of
them under this Agreement or any of the other Loan Documents, to the extent not
reimbursed by the Borrower; provided, however, that no Lender shall be liable to
the Agent for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgment, suits, costs, expenses or disbursements resulting
from the gross negligence or willful misconduct of the Agent or any of its
directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and any other Loan Document to which such Lender is party.
Each Lender also acknowledges that it will, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan
Document, any related agreement or any document furnished hereunder.
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Subject to the appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Lenders shall have the right to appoint
a successor Agent. If no successor Agent shall have been so appointed by such
Lenders and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent which shall be a bank with an
office (or an affiliate with an office) in the New York metropolitan area having
a combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor bank, such successor shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent and the retiring Agent shall be discharged from
its duties and obligations hereunder and under each of the other Loan Documents.
After any Agent's resignation hereunder, the provisions of this Article shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent.
The Lenders hereby acknowledge that the Agent shall be under no duty to
take any discretionary action permitted to be taken by the Agent pursuant to the
provisions of this Agreement or any of the other Loan Documents unless it shall
be requested in writing to do so by the Required Lenders.
X. GUARANTEES
Each Guarantor unconditionally guarantees, as a primary obligor and not
merely as a surety, jointly and severally with each other Guarantor, the due and
punctual payment of the principal of and interest on each of the Notes, when and
as due, whether at maturity, by acceleration, by notice of prepayment or
otherwise, and the due and punctual performance of all other Obligations. Each
Guarantor further agrees that the Obligations may be extended and renewed, in
whole or in part, without notice to or further assent from it, and that it will
remain bound upon its guarantee notwithstanding any extension or renewal of any
obligations.
Each Guarantor waives presentment to, demand of payment from and protest to
the Borrowers of any of the Obligations, and also waives notice of acceptance of
its guarantee and notice of protest for nonpayment. The obligations of a
Guarantor hereunder shall not be affected by: (a) the failure of any Lender or
the Agent to assert any claim or demand or to enforce any right or remedy
against the Borrower or any other Guarantor under the provisions of this
Agreement, the Notes, any Letter of Credit, any Acceptance Draft, any Loan
Document or any other document or instrument executed and delivered in
connection herewith or therewith, or otherwise; (b) any rescission, waiver,
amendment or modification of any of the terms or provisions of this Agreement,
the Notes, any
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Letter of Credit, any Acceptance Draft, any Loan Document or any other document
or instrument executed and delivered in connection herewith or therewith; (c)
the release or impairment of any security held by the Agent for the Obligations
or any of them; or (d) the failure of any Lender to exercise any right or remedy
against any other Guarantor of the Obligations.
Each Guarantor further agrees that its guarantee constitutes a guarantee of
payment when due and not of collection, and waives any right to require that any
resort be had by any Lender to any collateral security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
any Lender in favor of any Borrower or any other person.
The obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the Agent
or any Lender to assert any claim or demand or to enforce any remedy under this
Agreement, the Notes, any Letter of Credit, any Acceptance Draft, any other Loan
Document or any other document or instrument executed and delivered in
connection herewith or therewith, by any waiver or modification of any term or
provision thereof, by any default, failure or delay, willful or otherwise, (i)
in the performance of the Obligations, (ii) in the exercise or enforcement of
any right, power, privilege, remedy or interest of the Agent or any Lender under
this Agreement, any other Loan Document or applicable law, or (iii) by any other
act or omission which may or might in any manner or to any extent vary the risk
of such Guarantor or otherwise operate as a discharge of such Guarantor as a
matter of law or equity.
Each Guarantor further agrees that its guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Obligation is rescinded or must
otherwise be returned by the Agent or any Lender upon the bankruptcy or
reorganization of any Borrower or otherwise.
Each Guarantor hereby waives and releases all rights of subrogation against
the Borrower and its property and all rights of indemnification, contribution
and reimbursement from the Borrower and its property, in each case in connection
with this guarantee and any payments made hereunder, and regardless of whether
such rights arise by operation of law, pursuant to contract or otherwise.
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XI. MISCELLANEOUS
SECTION 11.01. Notices. Notices, consents and other communications provided
for herein shall be in writing and shall be delivered or mailed (or in the case
of telex or facsimile communication, delivered by telex, graphic scanning,
telecopier or other telecommunications equipment, with receipt confirmed)
addressed,
(a) if to the Borrower, any Guarantor or any of their respective
subsidiaries at Milgray Electronics, Inc., 00 Xxxxxxx Xxxxxxxxx, Xxxxxxxxxxx,
Xxx Xxxx 00000, Attn: Xxxx Xxxxxxxxx, Vice President - Finance, with a copy to
Xxxxxxxx X. Xxxxxxxx, Esq., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000;
(b) if to the Agent, Fleet Bank, N.A., Corporate Banking Division, Xxxxx
Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000, Attn: Xx. Xxxxxx X. Xxxxxxxxxx, Senior
Vice President; and
(c) if to First Union, at First Union National Bank, Large Corporate Group
NJ1536, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000, Attn: Mr. Xxxxxx
Xxxxxxx, Vice President; and
(d) if to EAB, at European American Bank, 000 Xxxxxxxx Xxxxxxxx Xxxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000, Attn: Mr. Xxxxxxx Xxxxxx, Vice President; and
(e) if to any other Lender, at the address set forth below its name in
Schedule 2.01 hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if hand delivered or three Business Days after being sent by
registered or certified mail, postage prepaid, return receipt requested, if by
mail, or upon receipt during normal business hours on any Business Day (or
otherwise the next Business Day) if by any telex, facsimile or other
telecommunications equipment, in each case addressed to such party as provided
in this Section 11.01 or in accordance with the latest unrevoked direction from
such party.
SECTION 11.02. Survival of Agreement. All covenants, agreements,,
representations and warranties made by the Borrower or any of its subsidiaries
herein and in the certificates or other instruments prepared or delivered in
connection with this Agreement or any other Loan Document, shall be considered
to have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans and the execution and delivery to the Lenders of the Notes
and occurrence of any other Credit Event and shall continue in full force and
effect as long as the principal of or any accrued interest on the Notes or any
other fee or amount payable under the
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Notes or this Agreement or any other Loan Document is outstanding and unpaid and
so long as any Lender's Revolving Credit Commitment has not been terminated.
SECTION 11.03. Successors and Assigns; Participations: (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf the Borrower, any Guarantor, any ERISA
Affiliate, any subsidiary of any thereof, the Agent or the Lenders, that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns. Without limiting the generality of the
foregoing, the Borrower specifically confirms that the Agent and each Lender may
at any time and from time to time assign or pledge or otherwise grant a security
interest in any Loan or any Note or Acceptance Draft (or any part thereof) to
any Federal Reserve Bank. The Borrower may not assign or transfer any of its
rights or obligations hereunder without the written consent of all the Lenders.
(b) Each Lender, without the consent of the Borrower, may sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Revolving Credit Commitment) and the Loans owing to it and
undrawn Letters of Credit and Acceptance Drafts and the Notes held by it);
provided, however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Revolving Credit Commitment) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the banks or other
entities buying participations shall be entitled to the cost protection
provisions contained in Sections 2.11(a) (except to the extent that application
of such Section 2.11(a) to such banks and entities would cause the Borrower to
make duplicate payments thereunder), 2.12 and 2.13 hereof, and (iv) the
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement; provided, further, however, that each Lender
shall retain the sole right and responsibility to enforce the obligations of the
Borrower and the Guarantors relating to the Loans, including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement, other than amendments, modifications or waivers
with respect to any fees payable hereunder or the amount of principal or the
rate of interest payable on, or the dates fixed for any payment of principal of
or interest on, the Loans.
(c) Each Lender may assign by novation as of the date of assignment, to any
one or more banks or other entities without the consent of the Borrower but with
the consent of the Agent
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which will not be unreasonably withheld (except that in the case of an
assignment by a Lender to one of its Affiliates, to another Lender or to any
Federal Reserve Bank no such consent of the Agent shall be required), all or a
portion of its interests, rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all or a portion of its
Revolving Credit Commitment and the same portion of the Loans and undrawn
Letters of Credit and Acceptance Drafts at the time owing to it and the Note or
Notes held by it), provided, however, that (i) each such assignment shall be of
a constant, and not a varying, percentage of all of the assigning Lender's
rights and obligations under this Agreement, which shall include the same
percentage interest in the Loans, Letters of Credit, Acceptance Drafts and
Notes, (ii) the amount of the Revolving Credit Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Agent) shall be in a minimum principal amount of $2,000,000 Revolving
Credit Commitment of such Lender and (iii) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance, together with any
Note subject to such assignment and a processing and recordation fee of $2,000.
Upon such execution, delivery, acceptance and recording and after receipt of the
written consent of the Agent, from and after the effective date specified in
each Assignment and Acceptance, which effective date shall be at least five (5)
Business Days after the execution thereof, (x) the assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and under the other Loan
Documents and (y) the Lender which is assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement and the other Loan Documents (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto and thereto).
(d) By executing and delivering an Assignment and Acceptance, the Lender
which is assignor thereunder and the assignee thereunder confirm to, and agree
with, each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereunder free and clear of any adverse claim, such
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, perfection, genuineness, sufficiency or value of this Agreement,
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; (ii) such Lender makes no representation or warranty and
assumes no
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responsibility with respect to the financial condition of the Borrower, any
Guarantor or any subsidiary of any thereof or the performance or observance by
the Borrower, any Guarantor or any subsidiary of any thereof of any of their
respective obligations under this Agreement or any of the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; (iii)
such assignee confirms that it has received a copy of this Agreement, and the
other Loan Documents, together with copies of financial statements and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
Lender 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 this Agreement; (v) such assignee appoints and
authorizes the Agent to take such action as the Agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(e) The Agent shall maintain at its address referred to in Section 11.01
hereof a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders and the Revolving
Credit Commitment of, and principal amount of the Loans owing to, each Lender
from time to time (the "Register"). The entries in the Register shall be
conclusive, in the absence of manifest error or written notice to the contrary
delivered in accordance with this Agreement, and the Borrower, the Agent and the
Lenders may treat each person whose name is so recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee together with any Note or Notes subject to such
assignment and the written consent to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is substantially in the form of
Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Lenders and the Borrower. Within five (5) Business Days after
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Agent in exchange for each surrendered Note or Notes a new Note
or Notes to the order of such assignee in an amount equal to the Revolving
Credit Commitment assumed by it pursuant to such Assignment and Acceptance and,
if
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the assigning Lender has retained any Revolving Credit Commitment hereunder, a
new Note or Notes to the order of the assigning Lender in an amount equal to the
Revolving Credit Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A hereto. Notes surrendered to the Borrower shall be cancelled by the
Borrower.
(g) Notwithstanding any other provision herein, any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 11.03, disclose to the assignee or
participant or proposed assignee or participant, any information, including,
without limitation, any Information, relating to the Borrower furnished to such
Lender by or on behalf of the Borrower in connection with this Agreement;
provided, however, that prior to any such disclosure, each such assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any confidential information relating to the Borrower
received from such Lender.
(h) Nothing in this Section shall limit or restrict the ability of any
Lender to sell, rediscount or otherwise dispose of any Acceptance Draft.
SECTION 11.04. Expenses: Indemnity. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Agent in connection with the
preparation of this Agreement, the Notes and the other Loan Documents or with
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be consummated) or
incurred by the Agent or any of the Lenders in connection with the enforcement,
adjudication or protection of its rights in connection with this Agreement or
any of the other Loan Documents or with the Loans made or the Notes or Letters
of Credit or Acceptance Drafts issued hereunder, or in connection with any
pending or threatened action, proceeding, or investigation relating to the
foregoing, including but not limited to the reasonable fees and disbursements of
counsel for the Agent and, in connection with such enforcement or protection,
the reasonable fees and disbursements of counsel for the Lenders. The Borrower
further indemnities the Lenders from and agrees to hold them harmless against
any documentary taxes, assessments or charges made by any governmental authority
by reason of the execution and delivery of this Agreement or the Notes.
(b) The provisions of this Section 11.04 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
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Agreement or the Notes, or any investigation made by or on behalf of the Agent
or any Lender. All amounts due under this Section 11.04 shall be payable on
written demand therefor.
SECTION 11.05. Applicable Law. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED) BY THE LAW OF THE STATE OF NEW YORK
(OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
SECTION 11.06. Right of Setoff. If an Event of Default shall have occurred
and be continuing, upon the request of the Required Lenders each Lender shall
and is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower or any Guarantor against any and all of the obligations
of the Borrower now or hereafter existing under this Agreement and the Notes
held by such Lender, irrespective of whether or not such Lender shall have made
any demand under this Agreement or the Notes and although such obligations may
be unmatured. Each Lender agrees to notify promptly the Agent and the Borrower
and any applicable Guarantor after any such setoff and application made by such
Lender, but the failure to give such notice shall not affect the validity of
such setoff and application. The rights of each Lender under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of setoff) which may be available to such Lender.
SECTION 11.07. Payments on Business Days. Should the principal of or
interest on the Notes or any fee or other amount payable hereunder become due
and payable on other than a Business Day, payment in respect thereof may be made
on the next succeeding Business Day (except as otherwise specified in the
definition of "Interest Period"), and such extension of time shall in such case
be included in computing interest, if any, in connection with such payment.
SECTION 11.08. Waivers; Amendments, (a) No failure or delay of any Lender
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such right or power, preclude
any other or further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Lenders hereunder are cumulative and not
exclusive of any rights or remedies which they may otherwise have. No waiver of
any provision of this Agreement or the Notes nor consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be
authorized as provided in paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Borrower in any case
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shall entitle it to any other or further notice or demand in similar or other
circumstances. Each holder of any of the Notes shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not
such Note shall have been marked to indicate such amendment, modification,
waiver or consent.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Borrower and the Required Lenders; provided, however, that no such
agreement shall (i) change the principal amount of, or extend or advance the
maturity of or the dates for the payment of principal of or interest on, any
Note or reduce the rate of interest on any Note, without the consent of each
holder affected thereby, (ii) change the Revolving Credit Commitment of any
Lender or amend or modify the provisions of this Section, Section 2.05, 2.06,
2.07, 2.09, 2.10, 2.12, 2.13 or 2.14, Section 3.02, 3.04, 3.05, 3.06, 3.07 or
3.10, Section 4.13, Article V, Article VIII (except action with respect to
affirmative and negative covenants shall only need be taken by the Required
Lenders) or Section 11.04 hereof or the definition of "Required Lenders", or
(iii) amend or modify any other provision of this Agreement or of any of the
other Loan Documents that would have the effect of reducing the security, if
any, for the Loans, in each case without the prior written consent of each
Lender affected thereby and provided, further, however, that no such agreement
shall amend, modify or otherwise affect the rights or duties of the Agent under
this Agreement or the other Loan Documents without the written consent of the
Agent. Each Lender and holder of any Note shall be bound by any modification or
amendment authorized by this Section regardless of whether its Notes shall be
marked to make reference thereto, and any consent by any Lender or holder of a
Note pursuant to this Section shall bind any person subsequently acquiring a
Note from it, whether or not such Note shall be so marked.
(c) In the event that the Borrower requests, with respect to this Agreement
or any other Loan Document, an amendment, modification or waiver and such
amendment, modification or waiver would require the unanimous consent of all of
the Lenders in accordance with Section 11.08(b) above, and such amendment,
modification or waiver is agreed to in writing by the Borrower and the Required
Lenders but not by all of the Lenders, then notwithstanding anything to the
contrary in Section 11.08(b) above, with the written consent of the Borrower and
such Required Lenders, the Borrower and Required Lenders may, but shall not be
obligated to, amend this Agreement without the consent of the Lender or Lenders
who did not agree to the proposed amendment, modification or waiver (the
"Minority Lenders") solely to provide for each and all of (i) the termination of
the Revolving Credit Commitment of each Minority Lender, (ii) the assignment in
accordance with Section 11.03, hereof to one or more persons of each Minority
Lender's
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interests, rights and obligations under this Agreement (including, without
limitation, all of such Minority Lender's Revolving Credit Commitment as well as
its portion of all outstanding Loans and the Note or Notes held by such Minority
Lender) and the other Loan Documents and/or an increase in the Revolving Credit
Commitment of one or more Required Lenders, in each case so that after giving
effect thereto the Total Revolving Credit Commitment shall be in the same amount
as prior to the events described in this paragraph, (iii) the repayment to the
Minority Lenders in full of all Loans made by such Minority Lenders outstanding
and accrued interest thereon at the time of the assignment and/or increase in
Revolving Credit Commitments described in clause (ii) above with the proceeds of
Loans made by such persons who are to become Lenders by assignment or with the
proceeds of Loans made by Required Lenders who have agreed to increase their
Revolving Credit Commitment, (iv) the payment to the Minority Lenders by the
Borrower of all fees and other compensation due and owing such Minority Lenders
under the terms of this Agreement and the other Loan Documents and (v) such
other modifications as the Required Lenders and Borrower shall deem necessary in
order to effect to changes specified in clauses (i) through (iv) hereof.
SECTION 11.09. Severability. In the event any one or more of the provisions
contained in this Agreement or in the Notes should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, Etc. (a) This
Agreement, the Notes and the other Loan Documents constitute the entire contract
between the parties hereto relative to the subject matter hereof. Any previous
agreement among the parties hereto with respect to the Transactions is
superseded by this Agreement, the Notes and the other Loan Documents. Except as
expressly provided in this Agreement, the Notes or the other Loan Documents,
nothing in this Agreement, the Notes or in the other Loan Documents is intended
to confer upon any party, other than the parties hereto, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, the Notes or
the other Loan Documents.
(b) Except as prohibited by law, each party hereto hereby waives any right
it may have to a trial by jury in respect of any litigation directly or
indirectly arising out of, under or in connection with this Agreement, the
Notes, any of the other Loan Documents or the Transactions.
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(c) Except as prohibited by law, each party hereto hereby waives any right
it may have to claim or recover in any litigation referred to in paragraph (b)
of this Section 11.10 any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages.
(d) Each party hereto (i) certifies that no representative, agent or
attorney of any Lender has represented, expressly or otherwise, that such Lender
would not, in the event of litigation, seek to enforce the foregoing waivers and
(ii) acknowledges that it has been induced to enter into this Agreement, the
Notes or the other Loan Documents, as applicable, by, among other things, the
mutual waivers and certifications herein.
SECTION 11.11. Confidentiality. The Agent and the Lenders agree to keep
confidential (and to cause their respective officers, directors, employees,
agents and representatives to keep confidential) all information, materials and
documents furnished to the Agent or any Lender (the "Information").
Notwithstanding the foregoing, the Agent and each Lender shall be permitted to
disclose Information (i) to such of its officers, directors, employees, agents,
attorneys and representatives as need to know such Information in connection
with its participation in any of the Transactions or the administration of this
Agreement or the other Loan Documents; (ii) to the extent required by applicable
laws and regulations or by any subpoena or similar legal process, or requested
by any governmental agency or authority; (iii) to the extent such Information
(A) becomes publicly available other than as a result of a breach of this
Agreement, (B) becomes available to the Agent or such Lender on a
non-confidential basis from a source other than the Borrower, any Guarantor or
any of their respective subsidiaries or (C) was available to the Agent or such
Lender on a non-confidential basis prior to its disclosure to the Agent or such
Lender by the Borrower, any Guarantor or any of their respective subsidiaries;
(iv) to the extent the Borrower, any Guarantor or any of their respective
subsidiaries shall have consented to such disclosure in writing; (v) in
connection with the sale of any collateral pursuant to the provisions of any of
the other Loan Documents; or (vi) pursuant to Section 11.03(g) hereof.
SECTION 11.12. Submission to Jurisdiction. (a) Any legal action or
proceeding with respect to this Agreement or the Notes or any other Loan
Document may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, the Borrower and each of the Guarantors hereby
accept for themselves and in respect of their property, generally and
unconditionally, the jurisdiction of the aforesaid courts.
(b) The Borrower and each of the Guarantors hereby irrevocably waive, in
connection with any such action or
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proceeding, any objection, including, without limitation, any objection to the
laying of venue or based on the grounds of forum non conveniens, which they may
now or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(c) The Borrower and each of the Guarantors hereby irrevocably consent to
the service of process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to each such person, as the case may be, at its address set
forth in Section 11.01 hereof.
(d) Nothing herein shall affect the right of the Agent or any Lender to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower or any Guarantor in any
other jurisdiction.
SECTION 11.13. Counterparts; Facsimile Signature. This Agreement each of
the other Loan Documents may be executed in counterparts of the entire document,
or of signature pages to the document, each of which shall constitute an
original but all of which when taken together shall constitute but one contract,
and shall become effective when copies which, when taken together, bear the
signatures of each of the parties hereto or thereto shall be delivered to the
Agent and the Borrower. Delivery of an executed counterpart of a signature page
to this Agreement or any other Loan Document by telecopier shall be effective as
delivery of a manually executed signature page hereto or thereto.
SECTION 11.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only and are not to affect
the construction of, or to be taken into consideration in interpreting, this
Agreement.
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IN WITNESS WHEREOF, the Borrower, Guarantors, the Agent and the Lenders
have caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
MILGRAY ELECTRONICS, INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------
Xxxx Xxxxxxxxx
Vice President-Finance
MILGRAY/ARIZONA, INC.
MILGRAY/ATLANTA, INC.
XXXXXXXX COMPANY, INC.
MILGRAY/CALIFORNIA, INC.
MILGRAY/CHICAGO, INC.
MILGRAY/CLEVELAND, INC.
MILGRAY/COLORADO, INC.
MILGRAY/COMPUTER PRODUCTS, INC.
MILGRAY/CONNECTICUT, INC.
MILGRAY/DALLAS, INC.
MILGRAY/DELAWARE VALLEY, INC.
MILGRAY/FLORIDA, INC.
MILGRAY/HOUSTON, INC.
MILGRAY/HUNTSVILLE, INC.
MILGRAY/INDIANA, INC.
MILGRAY/INTERNATIONAL, INC.
a New York corporation
MILGRAY/KANSAS CITY, INC.
MILGRAY LTD.
MILGRAY/NEW ENGLAND, INC.
MILGRAY/NEW JERSEY, INC.
MILGRAY/NEW YORK, INC.
MILGRAY/NORTHERN CALIFORNIA, INC.
MILGRAY/ORANGE COUNTY, INC.
MILGRAY/OREGON, INC.
MILGRAY ELECTRONICS/P.R., INC.
MILGRAY/RALEIGH, INC.
MILGRAY/SAN DIEGO, INC.
MILGRAY/UPSTATE NEW YORK, INC.
U.S. COMPUTER SUPPLY, INC.
MILGRAY/UTAH, INC.
MILGRAY/WASHINGTON, INC.
VIEWTEK, INC.
By: /s/ Xxxx Xxxxxxxxx
--------------------------------------
Xxxx Xxxxxxxxx
as Vice President-Finance of and on
behalf of each of the foregoing
corporations
-93-
MILGRAY/TORONTO, INC.
By: /s/ Xxxx Xxxxxxxxx
---------------------------------
Xxxx Xxxxxxxxx
Secretary
FLEET BANK, N.A.
as Lender
By: /s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxxx
Senior Vice President
FLEET BANK, N.A.
as Agent
By: /s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxxx
Senior Vice President
FIRST UNION NATIONAL BANK
By: /s/ Xxxxx Xxx Xxx
---------------------------------
Xxxxx Xxx Xxx
Assistant Vice President
EUROPEAN AMERICAN BANK
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Xxxxxxx Xxxxxx
Vice President
-94-
EXHIBIT A
Form of Revolving Credit Note
$_________________ Melville, New York
August __, 1996
FOR VALUE RECEIVED, the undersigned, MILGRAY ELECTRONICS, INC., a New York
corporation (the "Maker"), hereby promises to pay to the order of
____________________________________ (the "Lender"), at the office of Fleet
Bank, N.A. (the "Agent"), at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000, on
the Revolving Credit Termination Date as defined in the Credit Agreement dated
as of August __, 1996, among the Maker, the Guarantors named therein, the
Lenders named therein and the Agent (as the same may be amended, modified or
supplemented from time to time in accordance with its terms, the "Credit
Agreement") or earlier as provided for in the Credit Agreement, the lesser of
the principal sum of _______________________________________ ($__________)
Dollars or the aggregate unpaid principal amount of all Revolving Credit Loans
to the Maker from the Lender pursuant to the terms of the Credit Agreement, in
lawful money of the United States of America in immediately available funds, and
to pay interest from the date thereof on the principal amount hereof from time
to time outstanding, in like funds, at said office, at a rate or rates per annum
and payable on such dates as determined pursuant to the terms of the Credit
Agreement.
The Maker promises to pay interest, on demand, on any overdue principal
and, to the extent permitted by law, overdue interest from their due dates at a
rate or rates determined as set forth in the Credit Agreement.
The Maker hereby waives diligence, presentment, demand, protest and notice
of any kind whatsoever. The non-exercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
All borrowings evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof shall
be endorsed by the holder hereof on the schedule attached hereto and made a part
hereof, or on a continuation thereof which shall be attached hereto and made a
part hereof, or otherwise recorded by such holder in its internal records;
provided, however, that the failure of the holder hereof to make such a notation
or any error in such a notation shall not in any manner affect the obligation of
the Maker to make payments of principal and interest in accordance with the
terms of this Note and the Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement which,
among other things, contains provisions for the
-95-
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory prepayment of the principal hereof prior to the maturity
hereof and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. THIS NOTE SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
MILGRAY ELECTRONICS, INC.
By:________________________________
Name:
Title:
-96-
Loans and Payment
Unpaid Name of Person
Amount and Payments Principal Making
Date Type of Loan Principal and Interest Balance of Note Notation
---- ------------ ---------------------- --------------- --------
-97-
EXHIBIT B
August __, 1996
Fleet Bank
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
First Union National Bank
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
European American Bank
000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Dear Sirs:
I have acted as counsel to Milgray Electronics, Inc., a New York
corporation (the "Borrower") and the Guarantors (other than Milgray/Toronto,
Inc.) executing the Agreement dated as of August __, 1996 (the "Agreement")
among the Borrower, the Guarantors named in the Agreement, Fleet Bank, N.A. (the
"Agent"), First Union National Bank and European American Bank in connection
with the execution and delivery of the Agreement. This opinion does not cover
Milgray/Toronto, Inc., which is not included in the term "Guarantors" as
hereinafter used in this opinion.
This opinion is delivered to you pursuant to subsection 5.02 of the
Agreement. Terms used herein which are defined in the Agreement shall have the
respective meanings set forth in the Agreement, unless otherwise defined herein.
In connection with this opinion, I have examined copies of the Agreement,
the Notes, the form of the Acceptance Drafts and such corporate documents and
records of the Borrower and the Guarantors and certificates of public officials
and officers of the Borrower and the Guarantors, and such other documents, as I
have deemed necessary or appropriate for the purposes of this opinion. In
stating my opinion, I have assumed the genuineness of all signatures of, and the
authority of, persons signing the Agreement, the Notes and the Acceptance
Drafts, the authenticity of all documents submitted to me as originals and the
conformity to authentic original documents of all documents submitted to me as
certified, conformed or photostatic copies. The term "knowledge" when used in
stating my opinion herein means actual knowledge on my part.
Based upon the foregoing, I am of the opinion that:
-98-
1. Each of the Borrower and the Guarantors (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (b) has the corporate power to own its assets, to lease the
property it operates under lease and to transact the business in which it is
currently engaged, and (c) based upon representations by its management (upon
which I have relied) as to its ownership, lease and operation of property and
conduct of its business, is not required to be qualified to do business under
the laws of any jurisdiction other than the jurisdiction of its incorporation,
except that the Borrower (in addition to the jurisdiction of its incorporation)
is also required to be, and is, qualified to do business in California.
2. The Borrower has the corporate power and authority and the legal right
to make, deliver and perform the Agreement, the Notes and the Acceptance Drafts
and to borrow thereunder and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of the Agreement, the Notes
and the Acceptance Drafts. Each of the Guarantors has the corporate power and
authority and the legal right to make, deliver and perform its obligations under
the Agreement and has taken all necessary corporate action to authorize the
obligations of such Guarantor contained in the Agreement. No consent of any
other party (including stockholders of the Borrower), except as expressly
contemplated by the Agreement in connection with the performance thereof, and no
consent, license, approval or authorization of, or registration or declaration
with, any governmental authority, bureau or agency is required in connection
with the execution, delivery, performance, validity or enforceability of the
Agreement, the Notes or the Acceptance Drafts.
3. The execution, delivery and performance of the Agreement, the Notes and
the Acceptance Drafts will not violate any provision of any existing law or
regulation or of any order or decree of any court or governmental
instrumentality binding upon the Borrower or any Guarantor or of the Certificate
of Incorporation or Bylaws of the Borrower or any Guarantor or of any mortgage,
indenture, contract or other agreement, of which I have knowledge, to which the
Borrower or any Guarantor is a party or by which the Borrower or any Guarantor
or any of its or their property or assets may be bound, and will not result in
the creation or imposition of any lien, charge or encumbrance on, or security
interest in, any of its or their properties pursuant to the provisions of any
such mortgage, indenture, contract or other agreement of which I have knowledge.
4. To the best of my knowledge (based upon inquiries made of the management
of the Borrower and the Guarantors upon which I have relied) no litigation,
investigation or administrative proceedings of or before any court, tribunal or
governmental body is presently pending or, to the knowledge of the Borrower,
threatened against the Borrower or any Guarantor or any of its or their
properties or
-99-
with respect to the Agreement, the Notes or the Acceptance Drafts, which, if
adversely determined, would, in the opinion of the Borrower, have a Material
Adverse Effect.
5. The execution, delivery and performance by the Borrower and each of the
Guarantors of the Agreement, and by the Borrower of the Notes and the Acceptance
Drafts, have been duly authorized. Upon execution and delivery of the Agreement
and the Notes on behalf of the Borrower by the President or any Vice President
of the Borrower, and upon execution and delivery of the Acceptance Drafts on
behalf of the Borrower by the President, singly, or any two other Responsible
Officers of the Borrower, and upon execution and delivery of the Agreement on
behalf of the Guarantors by the President or any Vice President of each
Guarantor, the Agreement, the Notes and the Acceptance Drafts will constitute
valid obligations of the Borrower legally binding upon the Borrower and
enforceable against the Borrower in accordance with their terms and the
Agreement will constitute a valid obligation of each Guarantor legally binding
upon each Guarantor and enforceable against each Guarantor in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors, rights
generally.
Very truly yours,
-100-
EXHIBIT C
Form of Assignment and Acceptance
Dated: August __, 1996
Reference is made to the Credit Agreement, dated as of August __ 1996 (as
amended, modified or supplemented from time to time in accordance with its
terms, the "Credit Agreement"), among MILGRAY ELECTRONICS, INC. (the
"Borrower"), the guarantors named therein, the lenders named therein
(collectively, the "Lenders") and FLEETBANK, NA., as agent for the Lenders (in
such capacity, the "Agent"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
__________________________________ (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, ____% interest in and to all 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 Revolving Credit Commitment of the Assignor on the Effective Date and/or
such percentage interest in the Revolving Credit Loans owing to the Assignor
outstanding on the Effective Date and/or such percentage interest in the Letters
of Credit and Acceptance Drafts outstanding on the Effective Date, together with
such percentage interest in all unpaid interest and commitment fees accrued to
the Effective Date and such percentage interest in the Notes held by the
Assignor, as defined herein).
2. The Assignor (i) represents that as of the date hereof, its Revolving
Credit Commitment (without giving effect to assignments thereof which have not
yet become effective) is $__________, the outstanding balance of its Revolving
Credit Loans (unreduced by any assignments thereof which have not yet become
effective) is $__________, and the amount of its participation in Letters of
Credit and Acceptance Drafts (unreduced by any assignments thereof which have
not yet become effective) that have been issued and remain undrawn is
$___________, (ii) 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, perfection, genuineness, sufficiency or value of the
Credit Agreement or any other Loan Documents or any other instrument or document
furnished pursuant to any thereof, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and
-101-
clear of any adverse claim; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any Guarantor, or the performance or observance by the Borrower or
any Guarantor, of its obligations under the Credit Agreement or any other Loan
Documents or any other instrument or document furnished pursuant to any thereof;
and (iv) attaches the Notes referred to in paragraph 1 above and requests that
the Agent exchange such Notes for a new Note [payable to Assignee] [payable to
Assignor] in principal amounts equal to _______ and _______, respectively.
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance and the other documents executed
and delivered in connection therewith; (ii) confirms that it has received a copy
of the Credit Agreement and the other Loan Documents, together with copies of
such financial statements 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; (iii) agrees that it will, independently and
without reliance upon the 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; (iv) appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under the Credit Agreement as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (v) 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 (vi) agrees that
it will keep confidential all information with respect to the Borrower furnished
to it by the Borrower or the Assignor (other than information generally
available to the public or otherwise available to the Assignor on a
nonconfidential basis). [; and (vii) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee's
exemption from United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement or such other documents as
are necessary to indicate that all such payments are subject to such tax at a
rate reduced by an applicable tax treaty.](1)
4. The effective date for this Assignment and Acceptance shall be
_________________ (the "Effective Date").(2) Following
----------
(1) If the Assignee is organized under the laws of a jurisdiction outside the
United States.
(2) See Section 11.03. Such date shall be at least five Business Days after the
execution of this Assignment
-102-
the execution of this Assignment and Acceptance, it will be delivered to the
Agent for acceptance and recording by the Agent.
5. Upon such acceptance and recording, from and after 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.
6. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments in respect of the interest assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments for periods prior to the Effective Date by the Agent or with respect to
the making of this assignment directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SAID STATE.
[NAME OF ASSIGNOR]
By:___________________________
Name/Title
[NAME OF ASSIGNEE]
By:___________________________
Name/Title
Accepted this ____ day
of ____________________, 19__
FLEET BANK, NA., as Agent
By:___________________________
Name/Title
----------
and Acceptance and delivery thereof to the Agent.
-103-
EXHIBIT D
Form of Acceptance Draft
$__________________________ N ______________________ 19_____
_____________________________________________________________________ Pay to the
Order of Fleet Bank, National Association
________________________________________________________________________ Dollars
________________________________________________________________________________
Value receive and charge the same to account of
To
[Logo] Fleet Bank
Fleet Bank, National Association
Trade Services
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000-0000 _________________________
The transaction which gives rise to this instrument is the
of _______________________________________________________
From ______________________ to ___________________________
NO._______________________________________________________
ACCEPTED
__________________________________________________________
Fleet Bank, National Association
New York
__________________________________________________________
Authorized Signature
PRIOR ENDORSEMENTS GUARANTEED
Fleet Bank, National Association
New York
By ______________________________________________
AUTHORIZED SIGNATURE
-104-
EXHIBIT E
Aged Trial Balance
-105-
EXHIBIT E
ATBLT -1xxxxxxx XXXXXXXX XX, INC. AGED TRIAL BALANCE FOR 9/30/95 PAGE 2 10/03/95
CHARGES
C ACCT AND
CUSTOMER D NUM CREDITS CURRENT 31-60 61-90 91-120 OVER 120
------------------------------------------------------------------------------------------------------------------------------------
KELMAR SYSTEMS INC K 0447 837.00 837.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
KSM ELECTRONICS K 1107 179.00 179.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
KABAR MANUFACTURING CORP K 1371 2,491.00 808.00 1,683.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
XXXXX XXXXXXXXX INC L 1769 274.00 274.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
METRO TEL P 0745 2,878.79 0.00 2,878.79 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
XXXXX XX XXXXXX M 1227 314.00 314.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
MOECG M 3287 338.00 179.00 159.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
MID ISLAND INDUSTRIAL M 3495 159.00 159.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
MASTER DISTRIBUTORS M 5997 104.00 104.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
NIAGARA MCHAWK POWER CORP N 3588 106.00 106.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
OLYMPUS CORP. O 1668 87.00 87.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
PRECISION MECHANISMS CORP P 1686 2,602.52 2,602.52 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
PAPTLOW CORP P 2108 4,853.50 1,241.50 3,612.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
PCI CABLE P 2533 234.40 234.40 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
FPCTGK ELEC P 2667 2,583.16 2,479.16 104.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
RFM ELECTRONICS R 1040 1,402.33 682.00 377.50 342.83 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
SIMCCNA ELECTRONICS S 1029 85.50CR 85.50CR 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
STONE CONTAINER CORP S 3966 274.00 274.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXX CO, INC. TRIAL BALANCE DATE 10/03/95
ATBLT -1xxxxxxx XXXXXXXX XX, INC. AGED TRIAL BALANCE FOR 9/30/95 PAGE 3 10/03/95
CHARGES
C ACCT AND
CUSTOMER D NUM CREDITS CURRENT 31-60 61-90 91-120 OVER 120
------------------------------------------------------------------------------------------------------------------------------------
3 E TECHNOLOGY T 4042 325.50 224.00 101.50 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
WHOLESALE RADIO W 1070 238.00 0.00 238.00 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL (EXCLUDES COLLECTION ACCTS) 34,613.84 15,780.09 14030.55 610.83 3,929.43 262.94
------------------------------------------------------------------------------------------------------------------------------------
ATBLT -1xxxxxxx MILGRAY ELECTRONICS, INC. AGED TRIAL BALANCE FOR 9/30/95 PAGE 389 10/03/95
CHARGES
C ACCT AND
CUSTOMER D NUM CREDITS CURRENT 31-60 61-90 91-120 OVER 120
------------------------------------------------------------------------------------------------------------------------------------
**NET LESS INTER-COMPANY 41,178,746.76 24,837,866.09 10,424,407.57 2,487,506.45 851,759.76 2,576909.89
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT F
Inventory Turns
-106-
EXHIBIT F
INVAGERPT INVENTORY TURNS REPORT - AS OF 10/02/95 PAGE 1
BASED ON ORDER BACKLOG + SHPMNTS THRU 10/18/95
------------------- T U R N S --------------------
MFG PART NUMBER BKORD $ INVENT $ TRNS NEW ITEM 0 - .5 .6 - 1 1.1 - 2 2.1 - 3 OVER 3 ITEM #
ALC ADE04 1,941 . 1,941 291886
ALC ADE06 0 319 . 319 297439
ALC ADE08 0 2,978 . 2,978 290012
ALC ADE10 1,203 . 1,203 297450
ALC ADF04 278 . 278 296892
ALC ADF05 0 416 . 416 292695
ALC ADF06S 0 77 . 77 297472
ALC ADF08 0 661 . 661 290544
ALC ADP04 0 1,600 . 1,600 297502
ALC ADP06 55 . 55 335904
ALC ASE22 28 . 28 295176
ALC ASE42G 0 1,680 . 1,680 297910
ALC ASE42RG 0 640 . 640 297915
ALC ASE43RG 0 1,985 1,985 297924
ALC ASE62RG 188 0 188 297931
ALC ASF62 91 . 91 290754
ALC ASF62R 8 8 297962
ALC ASF62RG 775 0 775 297963
XXX XXX0000X 1,173 . 1,173 298087
ALC A101SYCQ 210 . 210 297259
ALC A103-J51ZQ-00 0 253 253 332165
ALC BPM15320 41 162 1 162 291744
ALC BPT15320 91 . 91 298239
ALC BP1900 0 600 . 600 298230
ALC BP5900 106 . 106 298233
XXX X000 00 . 00 000000
XXX XXX0XX 3 . 3 298416
ALC DPS8131AK 5 . 5 296952
ALC DPS81400AKLS 0 1,062 . 1,062 298411
ALC DPS9137AK 0 1,738 . 1,738 294096
ALC DRD10C 16 . 16 291720
ALC DRD10RA 1,131 . 1,131 298440
ALC DRD16C 0 1,783 . 1,783 292170
ALC DRD16CRA 0 1,171 . 1,171 298443
ALC DRD16RA 428 . 428 298445
ALC DRM10 0 973 . 973 298444
ALC DRW16CRA 18 18 298477
ALC DTS4SD 0 1,287 . 1,287 290335
ALC FSM2J 9 . 9 334855
ALC FT105M 0 1,674 . 1,674 298526
ALC GDH04S 1,291 . 1,291 298580
ALC GDH08S 880 . 880 290826
ALC GDP02 25 . 25 298587
ALC GDP04 49 . 49 298590
ALC GDP08 125 . 125 298596
ALC GDP10 92 . 92 298599
ALC GDS02 79 . 79 298616
ALC GDS04 391 . 391 298619
ALC GDS06 558 . 558 298621
ALC GDS06S 0 981 . 981 298622
ALC GDS08 464 . 464 289816
ALC GDS10 227 . 227 298626
ALC G12KA 0 318 . 318 298554
ALC KLN500S1/8 48 . 48 298854
INVAGERPT INVENTIRY TURNS REPORT - AS OF 10/02/95 PAGE 2
BASED ON ORDER BACKLOG + SHPMNTS THRU 10/18/95
------------------- T U R N S --------------------
MFG PART NUMBER BKORD $ INVENT $ TRNS NEW ITEM 0 - .5 .6 - 1 1.1 - 2 2.1 - 3 OVER 3 ITEM #
ALC KLN900S1/4 40 . 40 298860
ALC KU402B1/8 0 3,408 . 3,408 299019
ALC MHS122 0 619 . 619 290658
ALC MHS123 100 . 100 299084
ALC MHS222 606 . 606 299096
ALC MHS223 0 1,254 . 1,254 296979
ALC MHS233RA 255 . 255 299112
ALC MMS12 0 211 . 211 299218
ALC MPA103C 20 . 20 299228
ALC MPA103F 623 . 623 299230
ALC MPA106D 233 . 233 299231
ALC MPB103B 0 1,854 . 1,854 299241
ALC MPE206N 630 1.0- 630 291743
ALC MPG106D 0 1,954 . 1,954 299250
ALC MPG106F 78 . 78 299251
ALC MPS103FPC 568 . 568 299266
ALC MSSA104D1 69 0 69 296818
ALC MSS1200G 0 929 . 929 290436
ALC MSS1200R 103 . 103 299482
ALC MSS2200 144 . 144 299490
ALC MSS4200G 258 . 258 299501
ALC MSS4200R 0 275 . 275 299502
ALC MTA106DPC 0 1,305 . 1,305 299614
ALC MTA106F 66 . 66 299624
ALC MTE106D 0 269 . 269 299681
XXX XXX000X 00 . 00 000000
XXX XXX000X 0 280 . 280 290647
ALC MTF106G 846 . 846 299697
ALC MTF206N 81 . 81 299703
ALC MTF206S 96 . 96 299707
ALC MTG206N 113 . 113 290255
ALC MTL206P 0 2,195 . 2,195 299740
ALC PH13161/4 36 0 36 296886
ALC PICOD131AK 417 . 417 299805
ALC PICOD301AK 443 . 443 299809
XXX XXXXX 00 . 00 000000
XXX PICO131ALULS 0 544 . 544 293985
ALC PKES120B1/4 50 . 50 299878
ALC PK1100B1/8 33 . 33 299833
ALC SE1EGPC 0 0 0 300034
ALC SLS121PC 50 . 50 300226
ALC SLS121RA 155 . 155 300227
ALC SLS131PC 65 0 65 300228
ALC SSA12G 0 1,553 . 1,553 300298
ALC SSB12R 0 811 . 811 300303
ALC SSB12RG 3,547 . 3,547 300304
ALC SSH02 7 . 7 300313
ALC SSJ12R 12 . 12 292091
ALC SSJ22R 69 . 69 300320
ALC SSV04 0 506 . 506 300357
ALC SSV08 0 426 . 426 300359
ALC TPA11FGRAO 2 . 2 296890
ALC TPB11FGRAO 340 . 340 300515
ALC TPC13C2 38 . 38 300562
INVAGERPT INVENTIRY TURNS REPORT - AS OF 10/02/95 PAGE 295
BASED ON ORDER BACKLOG + SHPMNTS THRU 10/18/95
------------------- T U R N S --------------------
MFG PART NUMBER BKORD $ INVENT $ TRNS NEW ITEM 0 - .5 .6 - 1 1.1 - 2 2.1 - 3 OVER 3 ITEM #
3M 923690-14 76 . 76 322080
3M 923690-16 97 . 97 322081
3M 923690-20 155 . 155 322082
3M 924227-32-10-I 0 135 . 135 281464
3M 924227-32-20-I 0 130 . 130 281474
3M 929025-02-20 3 . 3 315339
3M 929400-01-36 9 .0 9 282226
3M 929450-01-36-I 141 . 141 282254
3M 929550-01-36-I 0 365 . 365 282300
3M 929647-01-36-I 69 . 69 294255
3M 929665-01-36I 159 . 159 294062
3M 929715-10-36I 264 . 264 284808
3M 929715-10-36-I 193 . 193 282685
3M 929800-01-36 0 101 . 101 282924
3M 929834-01-03 45 45 4.0 45 282980
3M 929835-01-36 51 . 51 283157
3M 929836-01-08 33 . 33 283236
3M 929836-01-36 41 . 41 283257
3M 929838-01-36 1 . 1 283435
3M 929842-01-14-10 31 . 31 283586
3M 929842-01-30-10 8 . 8 283618
3M 929850-01-18-30 24 . 24 295381
3M 929850-01-23-30 77 . 77 296945
3M 929852-01-15-10 0 38 . 38 283703
3M 929852-01-17-10 0 1,660 . 1,660 283705
3M 929852-01-20-30 0 121 . 121 341112
3M 929950-00-I 0 84 . 84 283802
3M 929953-30 0 525 . 525 294666
3M 929955-06-I 0 81 . 81 294667
3M 929974-01-36 186 . 186 283807
3M 929975-01-10 3 . 3 283963
3M 929975-01-20 0 26 . 26 283977
3M 929975-01-25 0 26 . 26 283986
68 . 68 283991
MFG TOTAL - -> $2,775 $193,421 $188,032 $2,066 $25 $445 $48 $2,805
FINAL TOTAL -> $645,537 $54,380,833 $52,794,956 $767,428 $443,492 $331,906 $4,908 $38,143
EXHIBIT G
Draft of Legal Opinion
Xxxxxx Xxxxx & Xxxxxx
Puerto Rico Counsel to Milgray Electronics/P.R., Inc.
___________________________
___________________________
___________________________
Re: [Opinion Letter)
Milgray Electronics/P.R., Inc.
Gentlemen:
We have acted as Puerto Rico counsel to Milgray Electronics/P.R., Inc.,
and, solely for purposes of this opinion, as Puerto Rico counsel to Milgray
Electronics, Inc. We deliver this opinion to you pursuant to the provisions of
[article, section, paragraph] of that certain Loan Agreement dated __________
199_, by and between [creditor] Milgray Electronics, Inc. and Milgray
Electronics/P.R., Inc.
On __________, 19__, Milgray Electronics/P.R., Inc., provided us with a
certificate signed by its Chief Financial Officer as of _______________, 19__
Milgray Electronics/P.R., Inc., held the cash, cash equivalents and investments
in tax exempt Puerto Rico Securities listed on said certificate which were held
by or were on deposit with the institutions listed on said certificate; and to
the best of his knowledge and belief, these assets were free and clear of all
liens and encumbrances. Further, with regards to Puerto Rico securities on
deposit with _________________________ the Financial Officer has certified that
Milgray Electronics/P.R., Inc. is the sole owner of said securities and does not
hold the same pursuant to a repurchase transaction, or a reverse repurchase
transaction.
On ____________, 19__, we were provided with a Certificate executed by the
Chief Financial Officer of Milgray Electronics, Inc., to the effect that the
cash, cash equivalents and securities listed on the Milgray Electronics/P.R.,
Inc., certificate were, to the best of his knowledge and belief, the sole
property of Milgray Electronics/P.R., Inc., and were not subject to any lien
and/or encumbrance in favor of Milgray Electronics, Inc. or of any third party.
We have also examined the certificates dated _________, 199_ issued by
[those X.X. xxxxx holding cash, cash equivalents and the P.R. securities
belonging to Milgray Electronics/P.R., Inc.) to the effect that said items were,
to the best of their knowledge and belief, held by each of them free and clear
of all liens and encumbrances including but not limited to, in the case
-107-
of a Puerto Rico Bank, the right of a banker's set off or, in the case of
securities, that said securities are not held by the Bank and/or Investment
Banker pursuant to a repurchase or reserve repurchase agreement.
We have examined or caused to be examined the registry of Factors Lines and
Assignment of Accounts Receivable at the Registry of Property of San Xxxx,
Puerto Rico [Milgray Electronics/P.R., Inc.'s legal residence according to the
records of the Department of State] and the Municipality of Canovanas (the site
of the Milgray plant).
Puerto Rico does not have the Uniform Commercial Code and there is no place
where pledges, repurchase agreements, or reverse repurchase agreements can be
registered.
In preparing our opinion we have relied upon the certificates issued by the
Chief Financial Officer of Milgray Electronics/P.R., Inc., the Chief Financial
Officer of Milgray Electronics, Inc., as well as the certificates issued by
__________, ______________, and ___________ the [the banks) all dated
___________, 199_, and on our examination as of even date of the registry of
factors liens and the assignment of account receivable maintained at the San
Xxxx and the Canovanas registries of property; furthermore no opinion is being
given as to the type, existence or amount of the cash, cash equivalents or
securities.
Based on the foregoing we are of the opinion that as of the close of
business on __________, 19__, the cash, cash equivalents and/or securities
listed on the Milgray Electronics/P.R., Inc., certificate are, to the best of
our knowledge and belief, free and clear of liens and encumbrances as of the
close of business on _________, 199_, including liens and encumbrances in favor
of ______________________, [the banks). It is to be understood that the opinion
expressed herein is as of the close of business on _____________, 199_ and is
further subject to Judicial discretion, the exercise of the sovereign police
power of the Commonwealth of Puerto Rico of the constitutional power of the
United States of America and valid bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors rights
generally.
No one other than ___________________________ [the creditor] shall be
entitled to rely on this opinion.
Very truly yours,
Xxxxxx, Xxxxx & Xxxxxx
By:_____________________________
-108-
EXHIBIT H
Form of Notice Regarding Domestic Shipment Financing
**Format of purpose statement letter to be issued by company to meet Federal
Reserve eligibility requirements for specific Bills of Lading
Company Letterhead
Via Fax to: (000) 000-0000
Fleet Bank, N.A.
Trade Services Department
Mail Stop MA ML SFT INT
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Clean Banker's Acceptance Financing
Dear Sir or Madam:
We confirm our request today for the creation of a Banker's Acceptance in the
amount of
$___________ for value ____________ to mature on _____________________.
(Amount) (Date) (Date)
This financing covers the shipment(s) of _________________________
(Goods)
from _______________________________ to _____________________________
(Place) (Place)
We agree to hold available for presentation to you upon request, copies of the
invoices and related transport documents evidencing the transactions being
financed.
In addition, we certify that 1) the tenor of this financing request does not
exceed, from our experience, the average time required to normally collect
payment on the referenced transactions and will not exceed 180 days, 2) there is
no other financing of whatever nature outstanding for this merchandise, and 3)
that the xxxx of lading is not over 30 days old.
The proceeds of this financing should be credited to our account with you. At
maturity of the financing, you are hereby authorized to charge our account for
payment.
Sincerely,
(Authorized Signer)
-109-
EXHIBIT I
Form of Certificate of Compliance
To the best of my knowledge, no Default or Event of Default (such terms and all
other capitalized terms used herein having the respective meanings ascribed to
such terms in the Credit Agreement dated as of August __, 1996 among Milgray
Electronics, Inc., the Guarantors named therein the Lenders named therein and
Fleet Bank, N.A. as Agent for the Lenders) has occurred as of _________________.
Calculations demonstrating compliance with the Covenants set forth in Sections
7.06, 7.07, 7.08, 7.09, 7.10, 7.11, 7.12 and 7.13 as of _________________
follow:
Section 7.06. Capital Expenditures
Capital expenditures incurred $____________
Section 7.07. Net Worth
Tangible Net Worth [A] $____________
Consolidated Subordinated
Indebtedness [B] $____________
Net Worth as of [A+B] $____________
Section 7.08. Total Unsubordinated
Liabilities to Net Worth Ratio.
Total Unsubordinated Liabilities [A] $____________
Net Worth [B] $____________
Total Unsubordinated Liabilities
to Net Worth Ratio [A/B] $____________
Section 7.09. Rental Obligations $____________
Section 7.10. Consolidated Inventory
Ratio Inventory [A] $____________
Current Assets [B] $____________
Consolidated Inventory Ratio [A/B] $____________
Section 7.11 Consolidated Current Ratio
Current Assets [A] $____________
Current Liabilities:
Current Liabilities as per
financial statements
Add: Loans and Acceptance Drafts:
Fleet Bank, N.A., First Union
National Bank and European
American Bank
Add: Indebtedness allowed under
Section 7.02 (xviii)
[B] $____________
Consolidated Current Ratio [A/B] $____________
-110-
Section 7.12. Interest Coverage Ratio
[This ratio is computed annually]
Net Income before income taxes as
per financial statements [A] $____________
Add: Interest Expense [B] $____________
EBIT [A+B] $____________
Interest Expense [D] $____________
Interest Coverage Ratio [C/D) $____________
Section 7.13. Net Income
[This ratio is computed annually]
Consolidated Net Income $____________
IN WITNESS WHEREOF, I have hereunto set my hand this ___________ day of
_____________, 19__.
_____________________________
As Vice President-Finance of
Milgray Electronics, Inc.
-111-
SCHEDULE 2.01.
Revolving Credit Commitments
Approximate Percentage of Total
Revolving Credit Revolving Credit
Lender Commitment Commitment
------ ---------- ----------
Fleet Bank, N.A. $33,600,000 48%
Corporate Banking Division
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxxxxx
Vice President
First Union Bank $19,600,000 28%
Large Corporate Credit
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xx. Xxxxx Xxx Xxx
Assistant Vice President
European American Bank $16,800,000 24%
000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
-112-
SCHEDULE 2.02
Lending Offices
Lender Domestic and Eurodollar Lending Offices
------ ---------------------------------------
Fleet Bank, N.A. Corporate Banking Division
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
First Union Bank Large Corporate Credit
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
European American Bank 000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
-113-
SCHEDULE 3.01
OUTSTANDING LETTERS OF CREDIT
None
-114-
SCHEDULE 4.01
Qualified Jurisdictions
Milgray Electronics, Inc. is qualified in California. Milgray/New York, Inc. is
qualified in Nevada. Milgray Electronics P.R., Inc. is authorized to do business
in Puerto Rico, but has not complied with the filing of Annual Reports for the
years 1987, 1988 and 1995; therefore is not in good standing.
-115-
SCHEDULE 4.05
Material Adverse Change
None
-116-
SCHEDULE 4.06(a)
Litigation
None
-117-
SCHEDULE 4.06(b)
Compliance with Laws, etc.
None
-118-
SCHEDULE 4.09
Taxes
Borrower's Federal income tax returns were audited for Borrower's fiscal
years during the period from October 1, 1991 to September 30, 1994. Total
adjustments in the amount of approximately $40,381 were paid by the Borrower.
Borrower's New York State income tax returns for the period from October 1,
1990 to September 30, 1993 have been audited. Total adjustments in the amount of
approximately $20,569 were paid by Borrower.
-119-
SCHEDULE 4.10
ERISA
1. In 1988, the assets of a frozen trust under Borrower's previously
terminated Pension and Xxxxx Sharing Plans were transferred to Borrower's 1984
Profit Sharing Plan. This event was reported on Borrower's Form 5500 for 1988.
Following said transfer, the aforementioned assets were held within the
Borrower's 1984 Profit Sharing Plan as a segregated self-directed account for
the beneficiary of said frozen trust. In December 1994, in connection with the
amendment of the Borrower's 1984 Profit Sharing Plan, said account was
distributed in full and rolled over to an XXX for such beneficiary.
2. Borrower's Profit Sharing Plan was amended effective as of January 1995
by adopting Fidelity CORPORATEplan for Retirement (the Profit Sharing/401(k)
Plan) and all of the Plan's assets (not distributed to beneficiaries) were
transferred to the newly adopted Plan. This was reported in the annual report
covering the period January 1, 1994 through January 4, 1995 accompanying
Borrower's Form 5500.
-120-
3. In 1988, Borrower's Profit Sharing Plan was the subject of an audit with
respect to its 1985 year. No change resulted from the audit.
4. Borrower and a Guarantor (Xxxxxxxx Company, Inc.) make contributions to
a multiemployer plan pursuant to a collective bargaining agreement. In 1994,
pursuant to a collective bargaining agreement, the Fund to which said
contributions are made by Borrower and said Guarantor was changed.
-121-
Schedule 4.14
Subsidiaries and Affiliates
Outstanding
Shares
----------------
Jurisdiction of No. of Par
Name of Subsidiary Incorporation Shares Value
------------------ ------------- ------ -----
Milgray/Arizona, Inc. Arizona 1,000 $1.00
Milgray/Atlanta, Inc. Georgia 1,000 $1.00
Xxxxxxxx Company, Inc. New York 120 No Par
Milgray/California, Inc. California 1,000 $1.00
Milgray/Chicago, Inc. Illinois 1,000 $1.00
Milgray/Cleveland, Inc. Ohio 100 $1.00
Milgray/Colorado Colorado 1,000 $1.00
Milgray/Computer Products, Inc. Delaware 1,000 $1.00
Milgray/Connecticut, Inc. Connecticut 1,000 $1.00
Milgray/Dallas, Inc. Texas 1,000 $1.00
Milgray/Delaware Valley, Inc. New Jersey 500 No Par
Milgray/Florida, Inc. Florida 500 $1.00
Milgray/Houston, Inc. Texas 1,000 $1.00
Milgray/Huntsville, Inc. Alabama 1,000 $1.00
Milgray/Indiana, Inc. Indiana 100 No Par
Milgray/International, Inc. New York 2,500 $1.00
Milgray/Kansas City, Inc. Kansas 500 $1.00
Milgray Ltd. Xxx Xxxx 000 Xx Xxx
Xxxxxxx/Xxx Xxxxxxx, Inc. Massachusetts 100 $1.00
Milgray/New Jersey, Inc. New Jersey 1,000 $1.00
Milgray/New York, Inc. New York 100 No Par
Milgray/Northern California, Inc. California 1,000 $1.00
Milgray/Orange County, Inc. California 1,000 $1.00
Milgray/Oregon Inc. Oregon 1,000 $1.00
Milgray Electronics/P.R., Inc. Delaware 1,000 $1.00
Milgray/Raleigh, Inc. North Carolina 1,000 $1.00
Milgray/San Diego, Inc. California 1,000 $1.00
Milgray/Toronto, Inc. Ontario 20 $1.00
Milgray/Upstate New York, Inc. New York 1,000 $1.00
U.S. Computer Supply, Inc. New York 1,000 $1.00
Milgray/Utah, Inc., Utah 100 $10.00
Viewtek, Inc. New York 1,000 $1.00
Milgray/Washington, Inc. Maryland 100 $1.00
----------
* Milgray Electronics, Inc. is the record and beneficial owner of all of the
outstanding shares of the Subsidiaries listed below unless otherwise
indicated.
-122-
SCEDULE 4.17
Environmental Compliance
1. See Schedule 6.12 regarding two fuel oil tanks at Xxxxxxx Boulevard,
Farmingdale, New York, and regarding storage, use and disposal of acetone, waste
acetone and toluene by Borrower and regarding storage and use of acetone by
Milgray Electronics/P.R., Inc.
2. In December 1994, a fuel oil spill occurred on Borrower's premises which
was reported to the New York State Department of Environmental Conservation. In
May 1995, Borrower was removed from the active spill list of said Department.
-123-
SCEDULE 4.20
MILGRAY ELECTRONICS, INC.
FINANCING AGREEMENTS
AS OF AUGUST 29, 1996
Chemical Bank loan due December 31, 1998
Eurodollar Loans-[Eurodollar rate plus .70% and .75%] *
Alternate Base Loans [Alternate Base Rate and
Alternate Base Rate less .55%] *
Fleet Bank loan due December 31, 1998
Eurodollar Loans [Eurodollar rate plus .75%] *
Alternate Base Loans [Alternate Base Rate] *
First Union National Bank loan due December 31, 1998
Eurodollar Loans-[Eurodollar rate plus .75%] *
Alternate Base Loans [Alternate Base Rate] *
Swiss Volksbank Special Deed of Pledge [SFR 35,000]
Guarantee by Milgray/International, Inc. in favor
of Swiss Volksbank [SFR 35,000]
Overdraft Line of Credit of Milgray/International, Inc.
[$1,000,000]
Customs Guarantee Line of Credit not to exceed $75,000
Overdraft Line of Credit of Milgray/Toronto, Inc.
[$1,000,000]
Foreign Exchange Line of Credit of Milgray Electronics, Inc.
in the amount of $4,000,000
Foreign Exchange Line of Credit of Milgray/International, Inc.
in the amount of $4,000,000
Foreign Exchange Line of Credit of Milgray/Toronto, Inc.
in the amount of Canadian $10,000,000
-124-
EquipmentLoan, due to CIT Group/Equipment
Financing, collateralized by computer equipment,
payable in 60 monthly installments of $4,167 plus
interest at 3/4% over prime, due November 1996 12,500
4.90% IBM Installment Payment Master Agreement
collateralized by computer equipment, payable
in monthly installments of $2,573, including
interest due October 1998 67,625
* To be repaid from proceeds of Credit Agreement
-125-
SCHEDULE 6.12
Hazardous Materials
1. Borrower, at its premises at 00 Xxxxxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxx
Xxxx, has two fuel oil tanks, i.e., a 10,000 gallon tank and a 5,000 gallon
tank, which had a "Full System Test" in June 1992 and passed the test, which id
required by the Suffolk County Department of Health Services. The permit issued
by said Department for the tanks has an expiration date of August 31, 1997.
2. Borrower stores one drum of acetone at its premises at 00 Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxxx, Xxx Xxxx. The acetone is used in assembky and
value-added operations. The waste acetone and toulene are stored in a drum and
when the drum is full, it is disposed of by a transporter. Reports are filed
with the States of New York and New Jersey at the time of the waste acetone
disposal.
3. Milgray Electronics/P.R., Inc stores acetone on its premises for use in
its manufacturing operations. The acetone is completely used in the
manufacturing process and there is no residue.
-126-
SCHEDULE 7.01
EXISTING LIENS
Lien held by CIT Group Financing, Inc., covering certain computer equipment
of Borrower, securing balance of indebtness [$12,500 as of August 29, 1996] due
in connection with this equipment.*
Liens held by IBM Credit Corp., covering certain computer equipment of
Borrower, securing balance of Indebtness [$67,625 as of August 29, 1996] due in
connection with this equipment.*
Lien under Special Deed of Pledge of Milgray/International, Inc. in favor
of Swiss Volksbank with respect to SPR35,000 held in an account or accounts in
the name of Milgray/International, Inc. at Swiss Volksbank.
Lien arising from judgement by Kressparkasse Goppingen against Milgray,
Ltd. in the amount of DM 82.73280 together with interest thereon at 13.25% per
annum from August 1, 1994 and in the amount of DM 6,852.83 together with
interest thereon at the rate of 4% per annum from July 12, 1995.
* For additional information regarding Indebtness covered by this lien, see
Schedule 7.02.
-127-
SCHEDULE 7.02
MILGRAY ELECTRONICS, INC.
INDEBTEDNESS
AS OF AUGUST 29, 1996
Chemical Bank loan due December 31, 1998
Eurodollar Loans-[Eurodollar rate plus .70% and .75%] $18,120,000 *
Alternate Base Loans [Alternate Base Rate and
Alternate Base Rate less .55%] -0- *
Fleet Bank loan due December 31, 1998
Eurodollar Loans-[Eurodollar rate plus .75%] 10,570,000 *
Alternate Base Loans [Alternate Base Rate] -0- *
First Union National Bank loan due December 31, 1998
Eurodollar Loans-[Eurodollar rate plus .75%] 9,060,000 *
Alternate Base Loans [Alternate Base Rate] -0- *
Swiss Volksbank Special Deed of Pledge [SFR 35,000]
Guarantee of Milgray/International, Inc. in favor
of Swiss Volksbank [SFR 35,000]
Customs Guarantee Line of Credit not to exceed $75,000
EquipmentLoan, due to CIT Group/Equipment Financing,
collateralized by computer equipment, payable in
60 monthly installments of $4,167 plus interest at
3/4% over prime; due November 1996 12,500
4.90% IBM Installment Payment Master Agreement
collateralized by computer equipment, payable in
monthly installments of $2,573
including interest due October 1998 67,625
Irrevocable Standby Letter of Credit in favor of Mosel
Technology, Inc., Taipei, Taiwan in the amount of $100,000
* To be repaid from proceeds of Amended and Restated Credit Agreement
-128-
