JOINDER, CONSENT AND AMENDMENT NO. 2
TO
REVOLVING CREDIT, TERM LOAN, GUARANTY
AND SECURITY AGREEMENT
THIS JOINDER, CONSENT AND AMENDMENT NO. 2 ("Amendment") is entered into
as of April __, 2000 by and among SUNSOURCE INC., a corporation organized under
the laws of the State of Delaware ("SunSource"), SUNSOURCE TECHNOLOGY SERVICES
INC., a corporation organized under the laws of the State of Delaware ("STSI"),
THE XXXXXXX GROUP, INC., a corporation organized under the laws of the State of
Delaware ("Xxxxxxx"), XXXXXXX GLASS, INC., a corporation organized under the
laws of the State of Delaware ("Xxxxxxx"), AXXESS TECHNOLOGIES, INC., a
corporation organized under the laws of the State of Delaware ("Axxess
Technologies") (SunSource, STSI, Xxxxxxx, Xxxxxxx and Axxess Technologies, each
a "Borrower" and collectively "Borrowers"), the other Credit Parties (as defined
in the Loan Agreement (as defined herein)) named in the Loan Agreement or which
hereafter become a party thereto, the financial institutions which are now or
which hereafter become a party thereto (collectively, the "Lenders" and
individually a "Lender") and PNC BANK, NATIONAL ASSOCIATION, a national banking
association ("PNC"), as Agent for Lenders (PNC, in such capacity, the "Agent").
BACKGROUND
Borrowers, the other Credit Parties, Lenders and Agent are parties to
that certain Revolving Credit, Term Loan, Guaranty and Security Agreement dated
as of December 15, 1999 (as amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement") pursuant to which Agent and
Lenders provide Borrowers with certain financial accommodations.
Borrowers have requested that Agent and Lenders permit the merger of
Axxess Technologies and THE XXXXXXX GROUP ACQUISITION CORP., a corporation
organized under the laws of the State of Delaware ("Acquisition Corp.") pursuant
to the Amended and Restated Agreement and Plan of Merger dated as of April __,
2000 by and among SunSource, Xxxxxxx, Acquisition Corp., Axxess Technologies and
the Persons listed on the signature page of such agreement ("Stockholders") (as
amended, restated, supplemented or otherwise modified from time to time, the
"Merger Agreement") and amend the Loan Agreement to, inter alia, join Axxess
Technologies as a Borrower and permit certain subordinated indebtedness issued
by Axxess in connection with Merger Agreement; Agent and Lenders are willing to
do so on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrowers by Agent
and Lenders, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. Joinder Agreement.
(a) Axxess Technologies is hereby added as an additional Borrower
under the Loan Agreement, and all references to "Borrower" or "Borrowers"
thereunder and under all of the Other Documents shall hereafter be deemed to
include Axxess Technologies
(b) Axxess Technologies hereby adopts the Loan Agreement and each of
the Other Documents and assumes in full, and acknowledges that it is jointly and
severally liable for, the payment, discharge, satisfaction and performance of
all Obligations under the Loan Agreement and the Other Documents. Axxess
Technologies hereby acknowledges and confirms that Axxess Technologies hereby
grants to Agent for its benefit and for the ratable benefit of Lenders a
continuing lien and security interest in all presently existing and hereafter
arising Collateral which Axxess Technologies now or hereafter owns or has an
interest in, wherever located, to secure prompt repayment of any and all
Obligations owed to Agent and Lenders and to secure prompt performance by
Borrowers of each and all of their covenants and obligations under the Loan
Agreement, this Amendment and the Other Documents. Agent's lien and security
interest in the Collateral shall attach to all Collateral without further act on
the part of Agent or Axxess Technologies.
3. Consent. Subject to satisfaction of the conditions precedent set
forth in Section 5 below, Agent and Lenders hereby consent to the transactions
contemplated by the Merger Agreement entered into by and among SunSource,
Xxxxxxx, Acquisition Corp., Axxess Technologies and Stockholders.
4. Amendment to Loan Agreement. Subject to satisfaction of the
conditions precedent set forth in Section 5 below, the Loan Agreement is hereby
amended as follows:
(a) Section 1.2 is amended as follows:
(i) by adding the following defined terms in their appropriate
alphabetical order:
"Acquisition Corp." shall mean The Xxxxxxx Group Acquisition Corp.,
a corporation organized under the laws of the State of Delaware.
"Applicable Percentage" shall mean 3.00% initially; provided, such
percentage may be reduced by .25% upon the timely receipt by Agent of the
financial statements referred to in Section 9.7 hereof evidencing a Fixed Charge
Coverage Ratio not less than 1.35 to 1.00 for the fiscal year ended (x) December
31, 2000 and/or (y) December 31, 2001.
"Axxess Merger" shall mean the merger of Acquisition Corp. with and
into Axxess Technologies.
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"Axxess Long Term Subordinated Note" shall have the meaning given to
the term "Long Term Subordinated Note" in the Axxess Subordination Agreement.
"Axxess Subordination Agreement" shall mean that certain
Subordination Agreement dated as of the Joinder, Consent and Amendment No. 2
Effective Date by and among Agent and the Axxess Subordinated Lenders
"Axxess Subordinated Lenders" shall mean, collectively, (a) Warburg,
Xxxxxx Investors, L.P., (b) Xxxxxxx Xxxxxx, (c) Xxxxxx Xxxxxxx, (d) Xxxxx
Xxxxxxxx, (e) Xxxx Lines, (f) Xxxx Xxxxxxx, (g) Xxxx Xxxxx, (h) Xxxxx Polodniak,
(i) Xxxxxxx Xxxxxx, (j) Xxx Xxxxxxx, (k) Xxxx Xxxxx, (l) Xxxx Xxxxxxx, (m) Xxxxx
Xxxx, and (n) Xxxxxx Xxxxx.
"Axxess Subordinated Notes" shall have the meaning given to the term
"Subordinated Note" in the Axxess Subordination Agreement.
"Joinder, Consent and Amendment No. 2 Effective Date" shall mean
April ___, 2000.
"SunSource Long Term Subordinated Guaranty" shall have the meaning
given to the term "Long Term Subordinated Guaranty" in the Axxess Subordination
Agreement.
"SunSource Subordinated Guaranties" shall have the meaning given to
the term "Subordinated Guaranty" in the Axxess Subordination Agreement.
(ii) the following defined terms are amended in their entirety
to provide as follows:
"Earnings Before Interest and Taxes" shall mean for any period the
sum of (i) net income (or loss) of Borrowers on a consolidated basis for such
period (excluding extraordinary gains), plus (ii) all interest expense of
Borrowers on a consolidated basis for such period, plus (iii) all charges
against income of Borrowers on a consolidated basis for such period for federal,
provincial, state and local taxes expensed, plus (iv) loss on the Xxxxxxx
Divestiture net of any tax benefit from such loss minus (v) all credits to
income of Borrowers on a consolidated basis for such period for federal, state
and local taxes credited and minus (vi) gain on contribution of Kar and A & H
Bolt.
"EBITDA" shall mean for any period the sum of (i) Earnings Before
Interest and Taxes for such period plus (ii) depreciation expenses for such
period, plus (iii) amortization expenses for such period plus (iv) non cash
charges for such period related to the write-off of inventory step-up as a
result of the application of Accounting Principles Board #16, Accounting for
Business Combinations, to the acquisition of Axxess Technologies and the
contribution of Kar and A & H Bolt.
"Xxxxxxx Division" shall mean Xxxxxxx and Axxess Technologies.
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"Individual Maximum Revolving Advance Amount" shall mean $20,000,000
with respect to the Xxxxxxx Division, $50,000,000 with respect to the Xxxxxxx
Division and $50,000,000 with respect to the SunSource Division, it being
understood and agreed that no Advances shall be made by Agent or Lenders to X.
X. Xxxxxx; rather X. X. Xxxxxx is part of the SunSource Division for purposes of
calculating Advances which can be made solely to SunSource Technology.
"LIBOR Margin" shall mean the Applicable Percentage.
"Maximum Loan Amount" shall mean $136,500,000 (subject to adjustment
pursuant to Section 2.14(c)) less repayments of the Term Loan.
"Maximum Revolving Advance Amount" shall mean $115,000,000 (subject
to adjustment pursuant to Section 2.14(c)).
"Note" shall mean collectively, the Term Note and the Revolving
Credit Note.
"Pledge Agreement" shall mean, collectively, (a) the Pledge
Agreements each dated as of the Closing Date made by each of SunSource,
SunSource Investment, SunSub A and SunSource Industrial in favor of Agent, (b)
the Pledge Agreements each dated as of the Joinder, Consent and Amendment No. 1
Effective Date made by each of SunSource Industrial, A&H Holding and Ontario
Inc. in favor of Agent and (c) the Pledge Agreement dated as of the Joinder,
Consent and Amendment No. 2 Effective Date made by Xxxxxxx in favor of Agent, as
each of the foregoing may be amended, restated, modified and/or supplemented
from time to time.
"Subordinated Debt Payments" shall mean and include all cash
actually expended to make payments of principal and interest on the Junior
Subordinated Debentures, the Axxess Subordinated Notes, Axxess Long Term
Subordinated Note, SunSource Long Term Subordinated Guaranty and the SunSource
Subordinated Guaranties.
"Tax Refund" shall mean any federal income tax refund received by
SunSource or any of its Subsidiaries.
"Undrawn Availability" at a particular date shall mean an amount
equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving
Advance Amount, minus (b) the sum of (i) the outstanding amount of Advances
(other than the Term Loan) plus (ii) all amounts due and owing to Borrowers'
trade creditors which are outstanding beyond normal trade terms, plus (iii) fees
and expenses for which Borrowers are liable but which have not been paid or
charged to Borrowers' Account.
(b) Sections 2.4, 6.7, 6.8, 6.12, 7.3, 7.6, 7.8, 7.11, 7.18, 7.19,
9.5, 9.7, 9.10 and 10.12 are hereby amended in their entirety to provide as
follows:
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"2.4 On December 15, 1999, Lenders, severally and
jointly, made a term loan to Borrowers in the original principal
amount of $25,000,000 (the "Original Term Loan") of which
$20,250,000 is outstanding as of the Joinder, Consent and Amendment
No.2 Effective Date. Subject to the terms and conditions set forth
herein, on the Joinder, Consent and Amendment No. 2 Effective Date,
Lender shall make an additional term loan to Borrowers in the
original principal amount of the product of such Lender's Commitment
Percentage of $1,250,000 (the "Additional Term Loan"). On the
Joinder, Consent and Amendment No. 2 Effective Date, the Additional
Term Loan shall be consolidated into the Original Term Loan,
constituting an aggregate consolidated term loan in the principal
amount of $21,500,000 (as so consolidated, the "Term Loan"). The
Term Loan shall be, with respect to principal, payable as follows,
subject to acceleration upon the occurrence of an Event of Default
under this Agreement or termination of this Agreement: equal
quarterly installments of $1,250,000 each commencing on July 1, 2000
and on the first day of each July, October, January and April
thereafter until December 14, 2004 when the entire unpaid principal
balance of the Term Loan shall be due and payable. The Term Loan
shall be evidenced by one or more secured promissory notes
(collectively, the "Term Note") in substantially the form attached
hereto as Exhibit 2.4."
6.7 Undrawn Availability. Maintain, with respect to
Borrowers on a consolidated basis, at all times at least $5,000,000
of Undrawn Availability (as calculated under Section 2.1(a)(y))
including, without limitation, after giving effect to any payments
made under the Junior Subordinated Debentures, the Axxess
Subordinated Notes, Axxess Long Term Subordinated Note, SunSource
Long Term Subordinated Guaranty and the SunSource Subordinated
Guaranties.
6.8 Deferred Interest. In the event (a) at the end
of any calendar month, Undrawn Availability with respect to
Borrowers on a consolidated basis is less than $8,000,000 or (b) the
Fixed Charge Coverage Ratio for the (i) three (3) month period
ending on June 30, 2000 is less than 1.10 to 1.00, (ii) six (6)
month period ending on September 30, 2000 is less than 1.10 to 1.00,
(iii) nine (9) month period ending on December 31, 2000 is less than
1.10 to 1.00, (iv) four (4) fiscal quarter period ending on March
31, 2001 is less than 1.15 to 1.00, (v) four (4) fiscal quarter
period ending June 30, 2001 is less than 1.20 to 1.00 or (vi) four
(4) fiscal quarter period ending on September 30, 2001 or on the
last day of each fiscal quarter thereafter, tested on a rolling four
(4) quarter basis, is less than 1.25 to 1.00, Credit Parties shall
exercise their right to defer interest due under the Junior
Subordinated Debentures and prior to paying any such deferred
interest under the Junior Subordinated Debentures prior to the end
of such deferral period, Credit Parties shall obtain the written
consent of Required Lenders to make such payment.
6.12 Xxxxxxx Mortgages. If the Xxxxxxx Divestiture
is not consummated on or before April 30, 2000, Xxxxxxx shall, at
the request of Agent, execute and deliver to Agent a Mortgage, in
form and substance satisfactory to Agent, on each of its owned Real
Property having a fair market value of $100,000 or more along with
such other instruments, agreements or documents reasonably requested
by Agent in connection therewith including, without limitation,
title commitments, surveys and environmental reports, all of which
shall be in form and substance satisfactory to Agent.
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7.3 Guaranties. Become liable upon the obligations
of any Person by assumption, endorsement or guaranty thereof or
otherwise (other than to Lenders) except (a) as disclosed on
Schedule 7.3, (b) the endorsement of checks in the ordinary course
of business and (c) SunSource may (i) guaranty, in the ordinary
course of business, obligations of any other Credit Party under such
Credit Party's real property leases and (ii) make and deliver to the
Axxess Subordinated Lenders, the SunSource Subordinated Guaranties
and SunSource Long Term Subordinated Guaranty as each is in effect
on the Joinder, Consent and Amendment No. 2 Effective Date.
7.6 Capital Expenditures. Contract for, purchase or
make any expenditure or commitments for fixed or capital assets
(including capitalized leases) in any fiscal year in an aggregate
amount for all Credit Parties in excess of $14,000,000 inclusive of
Xxxxxxx and $13,000,000 excluding Xxxxxxx.
7.8 Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness (exclusive of trade debt) except in respect
of (i) Indebtedness to Agent or to Lenders; (ii) Indebtedness
incurred for capital expenditures permitted under Section 7.6
hereof; (iii) Indebtedness due under the Junior Subordinated
Debentures as in effect on the date hereof, (iv) Indebtedness set
forth in the financial statements delivered pursuant to Section 5.5
hereof and (v) Indebtedness due under the Axxess Subordinated Notes
and Axxess Long Term Subordinated Note as each is in effect on the
Joinder, Consent and Amendment No. 2 Effective Date.
7.11 Leases. Enter as lessee into any lease
arrangement for real or personal property (unless capitalized and
permitted under Section 7.6 hereof) if after giving effect thereto,
aggregate annual rental payments for all leased property would in
any one fiscal year exceed $18,500,000 inclusive of Xxxxxxx and
$14,000,000 excluding Xxxxxxx in the aggregate for all Credit
Parties.
7.18 Junior Subordinated Debentures, the Axxess
Subordinated Notes, Axxess Long Term Subordinated Note, SunSource
Long Term Subordinated Guaranty and the SunSource Subordinated
Guaranties. At any time, directly or indirectly, pay, prepay,
repurchase, redeem, retire or otherwise acquire, or make any payment
on account of any principal of, interest on or premium payable in
connection with the repayment or redemption of the Junior
Subordinated Debentures, the Axxess Subordinated Notes, Axxess Long
Term Subordinated Note, SunSource Long Term Subordinated Guaranty or
the SunSource Subordinated Guaranties, except for (a) payments of
interest (subject to Sections 6.7 and 6.8 hereof) required by the
terms of the Junior Subordinated Debentures as in effect on the
Closing Date and (b) payments expressly permitted by the Axxess
Subordination Agreement on the Axxess Subordinated Notes and the
SunSource Subordinated Guaranties (subject to Section 6.7 hereof).
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7.19 Other Agreements. Enter into any material
amendment, waiver or modification of the Junior Subordinated
Debentures, the Axxess Subordinated Notes, Axxess Long Term
Subordinated Note, SunSource Long Term Subordinated Guaranty or the
SunSource Subordinated Guaranties, or any related agreements.
9.5 Material Occurrences. Promptly notify Agent in
writing upon the occurrence of (a) any Event of Default or Default;
(b) any event of default under the Junior Subordinated Debentures,
the Axxess Subordinated Notes, Axxess Long Term Subordinated Note,
SunSource Long Term Subordinated Guaranty or the SunSource
Subordinated Guaranties; (c) any event which with the giving of
notice or lapse of time, or both, would constitute an event of
default under the Junior Subordinated Debentures, the Axxess
Subordinated Notes, Axxess Long Term Subordinated Note, SunSource
Long Term Subordinated Guaranty or the SunSource Subordinated
Guaranties; (d) any event, development or circumstance whereby any
financial statements or other reports furnished to Agent fail in any
material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results
of any Credit Party as of the date of such statements; (e) any
accumulated retirement plan funding deficiency which, if such
deficiency continued for two plan years and was not corrected as
provided in Section 4971 of the Code, could subject any Credit Party
to a tax imposed by Section 4971 of the Code; (f) each and every
default by any Credit Party which might result in the acceleration
of the maturity of any Indebtedness in excess of $50,000, including
the names and addresses of the holders of such Indebtedness with
respect to which there is a default existing or with respect to
which the maturity has been or could be accelerated, and the amount
of such Indebtedness; and (g) any other development in the business
or affairs of any Credit Party which could reasonably be expected to
have a Material Adverse Effect on such Credit Party; in each case
describing the nature thereof and the action Credit Parties propose
to take with respect thereto.
9.7 Annual Financial Statements. Furnish Agent and
Lenders within ninety (90) days after the end of each fiscal year of
Borrowers, financial statements of Borrowers on a consolidating and
consolidated basis including, but not limited to, statements of
income and stockholders' equity and cash flow from the beginning of
the current fiscal year to the end of such fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in
accordance with GAAP applied on a basis consistent with prior
practices, and in reasonable detail and reported upon without
qualification by an independent certified public accounting firm
selected by Borrowers and satisfactory to Agent (the "Accountants").
The report of the Accountants shall be accompanied by a statement of
the Accountants certifying that (i) they have caused the Loan
Agreement to be reviewed, (ii) in making the examination upon which
such report was based either no information came to their attention
which to their knowledge constituted an Event of Default or a
Default under this Agreement or any related agreement or, if such
information came to their attention, specifying any such Default or
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Event of Default, its nature, when it occurred and whether it is
continuing, and such report shall contain or have appended thereto
calculations which set forth Credit Parties' compliance with the
requirements or restrictions imposed by Sections 6.5, 6.6, 6.8, 7.6
and 7.11 hereof. In addition, the reports shall be accompanied by a
certificate of the Chief Financial Officer of SunSource, on behalf
of each Credit Party, which shall state that, based on an
examination sufficient to permit him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by the
affected Credit Party with respect to such event, and such
certificate shall have appended thereto calculations which set forth
Credit Party's compliance with the requirements or restrictions
imposed by Sections 6.5, 6.6, 6.8, 7.6 and 7.11 hereof.
9.10 Other Reports. Furnish Agent as soon as
available, but in any event within ten (10) days after the issuance
thereof, (i) with copies of such financial statements, reports and
returns as each Borrower shall send to its stockholders and (ii)
copies of all notices sent pursuant to the Junior Subordinated
Debentures, the Axxess Subordinated Notes, Axxess Long Term
Subordinated Note, SunSource Long Term Subordinated Guaranty and the
SunSource Subordinated Guaranties.
10.12 an event of default has occurred and been
declared under the Junior Subordinated Debentures, the Axxess
Subordinated Notes, Axxess Long Term Subordinated Note, SunSource
Long Term Subordinated Guaranty or the SunSource Subordinated
Guaranties which default shall not have been cured or waived within
any applicable grace period;"
(c) A new Section 2.14(d) is hereby added immediately following
Section 2.14(c) and provides as follows:
" (d) Upon the receipt of the Tax Refund, the Borrowers shall
repay the Advances in an amount equal to the Tax Refund. Such
repayments shall be made within one (1) Business Day of receipt
of such Tax Refund, and until paid, such proceeds shall be held
in trust for Agent. The first $3,000,000 of such repayments
shall be applied to the outstanding principal installments of
the Term Loan in the inverse order of the maturities thereof and
the portion of such repayments in excess of $3,000,000 shall be
applied to the remaining Advances in such order as Agent may
determine, subject to Borrowers' ability to reborrow Revolving
Advances in accordance with the terms hereof."
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(d) A new Section 5.25 is hereby added immediately following Section
5.25 and provides as follows:
"5.25 Delivery of Axxess Subordinated Notes and
SunSource Subordinated Guaranties. Agent has received complete
copies of the Axxess Subordinated Notes, Axxess Long Term
Subordinated Note, SunSource Long Term Subordinated Guaranty and the
SunSource Subordinated Guaranties (including all exhibits, schedules
and disclosure letters referred to therein or delivered pursuant
thereto, if any) and all amendments thereto, waivers relating
thereto and other side letters or agreements affecting the terms
thereof. None of such documents and agreements has been amended or
supplemented, nor have any of the provisions thereof been waived,
except pursuant to a written agreement or instrument which has
heretofore been delivered to Agent."
(e) Sections 6.5 and 6.13 are hereby amended in their entirety to
provide "INTENTIONALLY OMITTED."
(f) All of the Schedules to the Loan Agreement are hereby amended in
their entirety by the Schedules attached hereto.
5. Conditions of Effectiveness. This Amendment shall become effective
upon satisfaction, in a manner reasonably satisfactory to Agent, of the
following conditions precedent:
(i) Agent shall have received ten (10) copies of this Amendment
executed by all Credit Parties and Lenders;
(ii) Agent shall have received (i) Second Amended and Restated
Revolving Credit Notes duly executed and delivered by an authorized officer of
each Borrower in favor of (x) Bank of America, N.A., (y) Firstar Bank, N.A. and
(z) Fifth Third Bank, (ii) Third Amended and Restated Revolving Credit Note duly
executed by an authorized officer of each Borrower in favor of PNC, (iii) Second
Amended and Restated Term Notes duly executed and delivered by an authorized
officer of each Borrower in favor of (x) Bank of America, N.A., (y) Firstar
Bank, N.A. and (z) Fifth Third Bank and (iv) Third Amended and Restated Term
Note duly executed and delivered by an authorized officer of each Borrower in
favor of PNC each of which shall be in form and substance reasonably
satisfactory to Agent;
(iii) Agent shall have received a duly executed Accountant's Access
Letter dated as of the date hereof;
(iv) Each document (including, without limitation, any Uniform
Commercial Code financing statement) required by this Amendment, any related
agreement or under law or reasonably requested by Agent to be filed, registered
or recorded in order to create, in favor of Agent, a perfected security interest
in or lien upon the Collateral shall have been properly filed, registered or
recorded in each jurisdiction in which the filing, registration or recordation
thereof is so required or requested, and Agent shall have received an
acknowledgment copy, or other evidence satisfactory to it, of each such filing,
registration or recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto;
(v) Agent shall have received a copy of the resolutions in
form and substance reasonably satisfactory to Agent, of the Board of Directors
of (1) Axxess Technologies authorizing (i) the execution, delivery and
performance of this Amendment and the Merger Agreement and (ii) the granting by
Axxess Technologies of the continuing security interest upon the Collateral,
certified by the Secretary or an Assistant Secretary of Axxess Technologies, as
of the date of this Amendment and (2) Acquisition Corp. authorizing the
execution, delivery and performance of the Merger Agreement;
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(vi) Agent shall have received (1) a certificate of the Secretary or
an Assistant Secretary of Axxess Technologies, dated the Joinder, Consent and
Amendment No. 2 Effective Date, as to the incumbency and signature of the
officers of Axxess Technologies executing this Amendment, any certificate or
other documents to be delivered by it pursuant hereto, together with evidence of
the incumbency of such Secretary or Assistant Secretary; and (2) a Certificate
of the Secretary or an Assistant Secretary of Acquisition Corp., dated the
Joinder, Consent and Amendment No. 2 Effective Date as of the incumbency and
signature of the officers of Acquisition Corp. executing the Merger Agreement,
any certificate or other documents to be delivered by it pursuant hereto,
together with evidence of the incumbency of such Secretary of Assistant
Secretary;
(vii) Agent shall have received (1) a copy of the Articles or
Certificate of Incorporation of Axxess Technologies, and all amendments thereto,
certified by the Secretary of State or other appropriate official of its
jurisdiction of incorporation together with copies of the By-Laws of Axxess
Technologies and all agreements of Axxess Technologies' shareholders certified
as accurate and complete by the Secretary of Axxess Technologies and (2) a copy
of the Articles or Certificate of Incorporation of Acquisition Corp., and all
amendments thereto, certified by the Secretary of State or other appropriate
official of its jurisdiction of incorporation together with copies of the
By-Laws of Acquisition Corp. and all agreements of Acquisition Corp.'s
shareholders certified as accurate and complete by the Secretary of Acquisition
Corp.;
(viii) Agent shall have received (1) good standing certificates for
Axxess Technologies dated not more than 30 days prior to the Joinder, Consent
and Amendment No. 2 Effective Date, issued by the Secretary of State or other
appropriate official of Axxess Technologies' jurisdiction of incorporation and
each jurisdiction where the conduct of Axxess Technologies' business activities
or the ownership of its properties necessitates qualification and (2) good
standing certificates for Acquisition Corp. dated not more than 30 days prior to
the Joinder, Consent and Amendment No. 2 Effective Date, issued by the Secretary
of State or other appropriate official of Acquisition Corp.'s jurisdiction of
incorporation and each jurisdiction where the conduct of Acquisition Corp.'s
business activities or the ownership of its properties necessitates
qualifications;
(ix) Agent shall have received the executed opinions of counsel from
the law firms of Xxxxxx, Xxxxx & Bockius, Mariscal, Weeks, XxXxxxxx &
Xxxxxxxxxxx, P.A. and Xxxxxxx Xxxx & Xxxxxxxxx in form and substance
satisfactory to Agent, which shall cover such matters incident to the
transactions contemplated by this Amendment and the Merger Agreement;
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(x) Agent shall have received a fully executed Pledge Agreement by
Xxxxxxx in favor of Agent, pledging the stock of Axxess Technologies to Agent in
form and substance satisfactory to Agent;
(xi) Agent shall have received a duly executed Collateral Assignment
of the rights of SunSource and Xxxxxxx under the Merger Agreement in form and
substance satisfactory to Agent;
(xii) Agent shall have received all environmental studies and
reports prepared by independent environmental engineering firms with respect to
all real property owned or leased by Axxess Technologies;
(xiii) (i) No litigation, investigation or proceeding before or by
any arbitration or Governmental Body shall be continuing or threatened against
Axxess Technologies or against the officers or directors of Axxess Technologies
(A) in connection with the Other Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and ( ii) no injunction, writ, restructuring order or other
order of any nature materially adverse to Axxess Technologies or the conduct of
its business shall have been issued by any Governmental Body;
(xiv) Agent shall have completed Collateral examinations and
received appraisals, the results of which shall be satisfactory in form and
substance to Lenders, of Receivables, Inventory, General Intangibles, Real
Property and Equipment of Axxess Technologies and all books and records in
connection therewith;
(xv) Agent shall have received duly executed copies of a Trademark
Collateral Security Agreement, Trademark Assignment of Security, Patent
Collateral Security Agreement, Patent Assignment of Security and Copyright
Mortgage, each of which shall be (x) made by Axxess Technologies in favor of
Agent and (y) in form and substance satisfactory to Agent;
(xvi) Agent shall have received (or waived the requirement for)
executed landlord, mortgagee or warehouseman agreements satisfactory to Agent
with respect to all premises leased by Axxess Technologies at which Equipment,
Inventory and/or records of Axxess Technologies is located;
(xvii) Agent shall have received any and all Consents necessary to
permit the effectuation of the transactions contemplated by this Amendment and
the Merger Agreement; and Agent shall have received such Consents and waivers of
such third parties as might assert claims with respect to the Collateral, as
Agent and its counsel shall deem necessary;
(xviii) Agent shall have received a duly executed copies of the
Axxess Subordinated Notes, Axxess Long Term Subordinated Note, SunSource Long
Term Subordinated Guaranty and the SunSource Subordinated Guaranties, each of
which shall be in form and substance satisfactory to Agent;
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(xix) All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the Merger Agreement
shall be satisfactory in form and substance to Agent and its counsel;
(xx) Agent shall have received a duly executed fee letter made by
Credit Parties in favor of Agent which shall be in form and substance
satisfactory to Agent;
(xxi) Agent shall have received a copy of the Pro Forma Financial
Statements which shall be satisfactory in all respects to Agent;
(xxii) Agent shall have received final executed copies of the Merger
Agreement and all related agreements, documents and instruments as in effect on
the Joinder, Consent and Amendment No. 2 Effective Date and the transactions
contemplated by such documentation shall have been consummated including,
without limitation, (a) the receipt by Borrowers of the proceeds of (x) the
Axxess Subordinated Notes in the sum of $12,000,000 and (y) the Axxess Long Term
Subordinated Note in the sum of $11,000,000 and (b) the consummation of the
Axxess Merger in accordance with the laws of the State of Delaware;
(xxiii) Agent shall have entered into the Axxess Subordination
Agreement which shall set forth the basis upon which the Axxess Subordinated
Lenders may receive, and Borrowers may make, payments under the Axxess
Subordinated Notes, Axxess Long Term Subordinated Note, SunSource Long Term
Subordinated Guaranty and the SunSource Subordinated Guaranties, which basis
shall be satisfactory in form and substance to Lenders in their sole discretion;
(xxiv) Agent shall have received in form and substance satisfactory
to Agent, certified copies of Axxess Technologies' casualty insurance policies,
together with loss payable endorsements on Agent's standard form of loss payee
endorsement naming Agent as loss payee, and certified copies of Axxess
Technologies' liability insurance policies, together with endorsements naming
Agent as a co-insured;
(xxv) Agent shall have received duly executed agreements
establishing the Blocked Accounts or Depository Accounts with financial
institutions acceptable to Agent for the collection or servicing of the
Receivables of Axxess Technologies and proceeds of the Collateral;
(xxvi) (i) since September 30, 1999, there shall not have occurred
any event, condition or state of facts which could reasonably be expected to
have a Material Adverse Effect and (ii) no representations made or information
supplied to Lenders shall have been proven to be inaccurate or misleading in any
material respect;
(xxvii) Agent shall have reviewed all material contracts of Axxess
Technologies including, without limitation, leases, union contracts, labor
contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory in all
respects to Agent;
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(xxviii) after giving effect to the transactions contemplated by
this Amendment, Borrowers on a consolidated basis shall have at least
$15,000,000 of Undrawn Availability which will be evidenced by a Borrowing Base
Certificate, in form and substance satisfactory to Agent, delivered by Borrowers
to Agent; and
(xxix) All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Amendment shall be satisfactory in form and substance to
Agent and its counsel.
6. Representations and Warranties. Each Credit Party (including,
without limitation, Axxess Technologies) hereby represents and warrants as
follows:
(a) This Amendment and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of such Credit Party and are
enforceable against such Credit Party in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, such Credit Party
hereby reaffirms all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agrees that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment except (i) to the extent of changes
resulting from transactions contemplated by this Amendment and (ii) to the
extent that such representations or warranties related expressly to an earlier
date.
(c) No Event of Default or Default has occurred and is continuing or
would exist after giving effect to this Amendment.
(d) Such Credit Party has no defense, counterclaim or offset with
respect to the Loan Agreement.
(e) Axxess Technologies has full power, authority and legal right to
enter into this Amendment and to perform all its respective obligations
hereunder. The execution, delivery and performance by Axxess Technologies of
this Amendment (i) is within Axxess Technologies' corporate powers, has been
duly authorized, is not in contravention of law or the terms of Axxess
Technologies' By-Laws, Articles of Incorporation or other applicable documents
relating to Axxess Technologies' formation or to the conduct of Axxess
Technologies' business or of any material agreement or undertaking to which
Axxess Technologies is a party or by which Axxess Technologies is bound, and
(ii) will not conflict with nor result in any breach in any of the provisions of
or constitute a default under or result in the creation of any Lien except
(Permitted Encumbrances) upon any asset of Axxess Technologies under the
provisions of any agreement, charter document, instrument, by-law, of other
instrument to which Axxess Technologies or its property is party or by which it
may be bound.
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(f) Axxess Technologies is duly formed and in good standing under
the laws of the State of Delaware and is qualified to do business and is in good
standing in such jurisdictions which constitute all jurisdictions in which
qualification and good standing are necessary for Axxess Technologies to conduct
its business and own its property and where the failure to so qualify would have
a material adverse effect on Axxess Technologies or its business. Axxess
Technologies has previously delivered to Agent true and complete copies of its
Articles of Incorporation, By-Laws and for all other documents relating to
Axxess Technologies' formation, and will promptly notify Agent of any amendments
or changes thereto.
7. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 5 hereof, each reference in
the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words
of like import shall mean and be a reference to the Loan Agreement as amended
hereby.
(b) Except as specifically amended herein, the Loan Agreement, and
all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) Except as expressly provided herein, the execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of Agent, nor constitute a waiver of any provision of the Loan
Agreement, or any other documents, instruments or agreements executed and/or
delivered under or in connection therewith.
8. Governing Law. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and
shall be governed by and construed in accordance with the laws of the State of
New York.
9. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
10. Counterparts. This Amendment may be executed by the parties hereto
in one or more counterparts, each of which shall be deemed an original and all
of which when taken together shall constitute one and the same agreement. Any
signature delivered by a party via facsimile shall be deemed an original
signature hereto.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURES TO FOLLOW]
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(Signature Page to Joinder)
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
SUNSOURCE INC., as a Borrower
SUNSOURCE TECHNOLOGY SERVICES INC., as a Borrower
THE XXXXXXX GROUP, INC., as a Borrower
XXXXXXX GLASS, INC., as a Borrower
AXXESS TECHNOLOGIES, INC., as a Borrower
A & H HOLDING COMPANY, INC., as a Guarantor
SUNSOURCE CORPORATE GROUP, INC., as a Guarantor
SUNSOURCE INDUSTRIAL SERVICES COMPANY, INC., as a Guarantor
SUNSOURCE INVENTORY MANAGEMENT COMPANY, INC., as a Guarantor
SUNSOURCE INVESTMENT COMPANY, INC., as a Guarantor
SUNSUB A INC., as a Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President of each of the foregoing corporations
1394066 ONTARIO INC., as a
Guarantor
X. X. XXXXXX (CANADA) LIMITED, as a Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: President of each of the foregoing corporations
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
(Signature Page to Joinder)
PNC BANK, NATIONAL ASSOCIATION, as
Agent and as Lender
By: /s/ Xxxx Peak
----------------------------
Name: Xxxx Peak
Title: Vice President
BANK OF AMERICA, N.A., as
Co-Agent and Lender
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Senior Vice President
FIRSTAR BANK, N.A., as
Co-Agent and Lender
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
FIFTH THIRD BANK, as Lender
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
Schedules
(See Attached)
