EXHIBIT 10.14
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NU HORIZONS ELECTRONICS CORP.
(the "Borrower")
a Delaware corporation
having its principal executive office at
00 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
AND
MELLON BANK, N.A.
("Mellon" as "Agent" and as a "Bank")
a national banking association
having an office at
000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
AND
EUROPEAN AMERICAN BANK
("EAB" and a "Bank")
a New York Bank
having an office at
000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
AND
HSBC BANK USA
("HSBC" and a "Bank")
a New York Bank
having an office at
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
LOAN AGREEMENT
DATED AS OF OCTOBER 28, 1999
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS........................................... 1
1.1 Defined Terms........................................... 1
1.2 Accounting Terms........................................ 9
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
AND SWING LOANS....................................... 9
2.1 Revolving Credit Commitments............................ 9
2.2 Revolving Credit Loans.................................. 10
2.2.1 Swing Loans............................................. 10
2.3 Notes................................................... 11
2.4 Interest................................................ 12
2.5 Procedure for Revolving Credit Borrowing................ 13
2.6 Conversion and Renewals................................. 13
2.7 Suspension of LIBOR Rate Loans.......................... 14
2.8 Applicable Margin; Periods, Etc......................... 14
2.9 Commitment Fee.......................................... 15
2.10 Additional Compensation in Certain Circumstances........ 16
2.11 Termination or Reduction of Commitment.................. 18
2.12 Prepayment.............................................. 18
2.13 Payments................................................ 18
2.14 Pro Rata Treatment...................................... 19
2.15 Sharing of Setoffs...................................... 20
2.16 Use of Proceeds......................................... 21
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2.17 Issuance of Letters of Credit........................... 21
2.18 Actions of Agent........................................ 21
2.19 Indemnity as to Letters of Credit....................... 21
2.20 Letter of Credit Fees................................... 22
2.21 Acceptance Drafts....................................... 22
2.22 Payment in Respect of Letters of Credit and
Acceptances; Reimbursement.............................. 24
2.23 Ineligibility of Acceptance Drafts...................... 27
SECTION 3. REPRESENTATIONS AND WARRANTIES........................ 27
3.1 Financial Condition..................................... 27
3.2 No Change............................................... 27
3.3 Corporate Existence; Compliance with Law; Subsidiaries.. 28
3.4 Corporate Power; Authorization; Enforceable Obligations. 28
3.5 Legal Bar............................................... 28
3.6 No Material Litigation.................................. 29
3.7 No Default.............................................. 29
3.8 No Burdensome Restrictions.............................. 29
3.9 Federal Regulations..................................... 29
3.10 Environmental Regulation................................ 29
3.11 Title to Properties..................................... 30
3.12 Taxes................................................... 30
3.13 ERISA................................................... 30
3.14 Operation of Business................................... 31
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3.15 Year 2000 Risk.......................................... 31
SECTION 4. CONDITIONS PRECEDENT.................................. 31
4.1 Conditions to Initial Revolving Credit Loan............. 31
SECTION 5. AFFIRMATIVE COVENANTS................................. 34
5.1 Information............................................. 34
5.2 Corporate Existence; Continuance of Business............ 36
5.3 Payment of Obligations.................................. 36
5.4 Insurance............................................... 36
5.5 Payment of Indebtedness and Performance of Obligations.. 37
5.6 Condition of Property................................... 37
5.7 Observance of Legal Requirements........................ 37
5.8 Books and Records....................................... 37
5.9 Inspection.............................................. 37
5.10 Compliance with Environmental Laws; Indemnity........... 37
5.11 Agent's Fee............................................. 38
SECTION 6. FINANCIAL COVENANTS................................... 38
6.1 Quick Ratio............................................. 38
6.2 Leverage Ratio.......................................... 38
6.3 Tangible Net Worth...................................... 39
6.4 Liabilities to Tangible Net Worth....................... 39
SECTION 7. NEGATIVE COVENANTS.................................... 39
7.2 Liens................................................... 40
7.3 Loans and Investments................................... 40
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7.4 Fundamental Changes..................................... 40
7.5 Contingent Liabilities.................................. 41
7.6 Sales of Receivables; Sale - Leasebacks................. 41
7.7 Lease Payments.......................................... 41
7.8 Dividends............................................... 41
7.9 Supply and Purchase Contracts........................... 41
7.10 Nature of Business...................................... 41
7.11 Stock of Subsidiaries................................... 41
7.12 Liabilities of Subsidiaries............................. 42
7.13 Transactions with Affiliates............................ 42
7.14 ERISA................................................... 42
7.15 Change of Management.................................... 42
SECTION 8. EVENTS OF DEFAULT..................................... 42
SECTION 9. AGENT................................................. 45
SECTION 10. MISCELLANEOUS......................................... 48
10.1 Notices................................................. 48
10.2 Survival of Agreement................................... 49
10.3 Successors and Assigns: Participations.................. 49
10.4 Expenses: Indemnity..................................... 52
10.5 Applicable Law.......................................... 53
10.6 Right of Setoff......................................... 53
10.7 Payments on Business Days............................... 53
iv
10.8 Waivers; Amendments..................................... 53
10.9 Severability............................................ 54
10.10 Entire Agreement; Waiver of Jury Trial, Etc............. 54
10.11 Confidentiality......................................... 55
10.12 Submission to Jurisdiction.............................. 55
10.13 Further Assurances...................................... 56
10.14. Counterparts............................................ 56
10.15. Headings................................................ 56
SCHEDULE I
Revolving Credit Commitments (Section 2.1)........................ 59
LIENS (SECTION 7.2)............................................... 60
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LOAN AGREEMENT dated as of October 28, 1999, by and among NU HORIZONS
ELECTRONICS CORP., a Delaware corporation, having its principal executive office
at 00 Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx (the "Borrower"), MELLON BANK, N.A., a
national banking association having an office at 000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 ("Mellon"), EUROPEAN AMERICAN BANK, a New York
Bank, having an office at 000 Xxxxxxxx Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxx Xxxx
00000 ("EAB"), HSBC BANK USA, a New York Bank, having an office at 000 Xxxxx
Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("HSBC") (Mellon, EAB and HSBC,
collectively, the "Banks") and MELLON BANK, N.A., as agent for the Banks (the
"Agent").
W I T N E S S E T H :
WHEREAS, the Borrower has requested that the Banks lend to the Borrower,
from time to time, during the term of this Agreement, various sums of money as
revolving credit loans and swing loans, and
WHEREAS, the Banks are willing to extend such credit and make such loans
upon the terms and conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth and for other good and valuable consideration, the parties
hereto agree as follows:
SECTION 1. DEFINITIONS
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1.1 Defined Terms. As used herein, the following terms shall have the
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following meanings:
"Acceptance Drafts" shall have the meaning set forth in Section 2.21
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hereof.
"Acceptance Draft Exposure" shall mean at any time the sum of (a) the
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aggregate face amount of Acceptance Drafts outstanding and (b) the aggregate
amount of all payments in respect of Acceptance Drafts for which the Agent or
the Banks shall not have been reimbursed as provided in Section 2.22 hereof.
"Business Day" shall mean a day other than a Saturday, Sunday or other
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day on which commercial banks in New York, New York or Philadelphia,
Pennsylvania, are required or permitted by law to close.
"CERCLA" shall mean the Comprehensive Environmental Response,
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Compensation and Liability Act of 1980 (or any successor statute) and the rules
and regulations thereunder, all as from time to time in effect.
"CERCLIS" shall mean the Comprehensive Environmental Response
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Compensation Liability Information System List.
"Commitment Period" shall mean the period from and including the date
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hereof to, but not including, the Termination Date or such earlier date as the
Revolving Credit Commitments shall terminate as provided herein.
"Contractual Obligations" shall mean as to any Person, any provision
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of any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default" shall mean any of the events specified in Section 8 hereof,
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whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied or given, as the case may be.
"Dollars" and "$" shall mean dollars in lawful currency of the United
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States of America.
"Environmental Laws" shall mean all applicable federal, state or local
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statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, and all rules and regulations promulgated pursuant thereto, as the same
may from time to time be supplemented or amended.
"ERISA Affiliate" shall mean any trade or business (whether or not
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incorporated) which together with the Borrower
2
or its Subsidiaries would be treated as a single employer under Section 4001 of
ERISA.
"Event of Default" shall mean any of the events specified in Section 8
----------------
hereof, provided that any requirement for the giving of notice, the lapse of
time, or both, of any other condition, has been satisfied.
"Funded Debt" means, on a consolidated basis with respect to the
-----------
Borrower and the Guarantors, without duplication, (i) indebtedness for borrowed
money, (ii) obligations to pay the deferred purchase price of property or
services (other than trade payables arising in the ordinary course of business
which are not overdue), (iii) obligations as lessee under leases which shall
have been or should be, in accordance with GAAP, recorded as capital leases,
(iv) obligations evidenced by bonds, debentures, notes or equivalent instruments
and (v) reimbursement obligations in respect of drawings made under letters of
credit.
"GAAP" shall mean generally accepted accounting principles applied in
----
a manner consistent with that employed in the preparation of the Borrower's
certified annual consolidated financial statements for the fiscal year ending
February 28, 1996.
"Governmental Authority" shall mean any nation or government, any
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state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled (through stock or capital ownership or otherwise) by any of the
foregoing.
"Guarantee" shall mean a Guarantee on the Agent's standard form
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executed by a Guarantor (collectively, "Guarantees").
"Guarantors" shall mean NIC Components Corp., Nu Horizons
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International Corp., Nu Visions Manufacturing, Inc, NIC Eurotech Limited and Nu
Horizons Eurotech Limited and Titan Logistics Corp. and each other Subsidiary of
the Borrower or of a Guarantor whether now existing or hereafter formed or
acquired.
3
"Hazardous Materials" shall mean: (a) any "hazardous substance" as
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defined by CERCLA; (b) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act; (c) any petroleum product; or (d) any pollutant
or contaminant or hazardous, dangerous or toxic chemical, material or substance
within the meaning of any other applicable federal, state or local law,
regulation, ordinance or requirement (including consent decrees and
administrative orders) relating to or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or material, all
as amended or hereafter amended.
"Interest Period" shall mean with respect to any LIBOR Rate Loan, the
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period commencing on the date such loan is made and ending, as the Borrower may
select, pursuant to Section 2.5 hereof on the numerically corresponding day in
the first, second, third, sixth, ninth or twelfth calendar month thereafter,
except that each such Interest Period that commences on the last Business Day of
a calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month; provided that: (a) no Interest
Period may extend beyond the Termination Date; and (b) if an Interest Period
would end on a day that is not a Business Day, such Interest Period shall be
extended to the next Business Day unless such Business Day would fall in the
next calendar month, in which event such Interest Period shall end on the
immediately preceding Business Day.
"Liabilities to Tangible Net Worth Ratio" shall mean with respect to
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the Borrower and its Subsidiaries on a consolidated basis the ratio of total
senior liabilities to the sum of Tangible Net Worth plus long term portion of
Subordinated Indebtedness.
"Letter of Credit" or "Letters of Credit" shall mean letters of credit
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issued by the Agent pursuant to Section 2.17 hereof for the accounts of the
Borrower.
"Letter of Credit Exposure" shall mean at any time the sum of (a) the
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aggregate undrawn amount of all outstanding Letters of Credit and (b) the
aggregate amount of all drawings under Letters of Credit for which the Agent or
the Banks shall not have been reimbursed as provided in Section 2.22 hereof.
4
"Leverage Ratio" shall mean with respect to the Borrower and its
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Subsidiaries on a consolidated basis the ratio of Funded Debt (including
Subordinated Debt) to EBITDA (earnings before income, taxes, depreciation and
amortization) on a rolling four quarters basis.
"LIBOR Rate" shall mean for any day for each proposed or existing
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Interest Period the rate per annum determined by the Agent by dividing (the
resulting quotient to be rounded upward to the nearest 1/100 of 1%) (A) the rate
of interest (which shall be the same for each day of such Interest Period)
determined in good faith by the Agent in accordance with its usual procedures
(which determination shall be conclusive) to be the average of the rates per
annum for deposits in Dollars offered to major money center banks in the London
interbank market at approximately 11:00 o'clock a.m., London time, two London
Business Days prior to the first day of such Interest Period for delivery on the
first day of such Interest Period in amounts comparable to such LIBOR Rate Loan
and having maturities comparable to such Interest Period by (B) a number equal
to 1.00 minus the LIBOR Rate Reserve Percentage.
"LIBOR Rate Loan" shall mean any Revolving Credit Loan when and to the
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extent that the interest rate therefor is determined by reference to the LIBOR
Rate.
"LIBOR Rate Reserve Percentage" shall mean for any day the maximum
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effective percentage (expressed as a decimal fraction, rounded upward to the
nearest 1/100 of 1%), as determined in good faith by the Agent (which
determination shall be conclusive), which is in effect on such day as prescribed
by the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, without limitation,
supplemental, marginal and emergency reserve requirements) with respect to
eurocurrency funding (currently referred to as "Eurocurrency liabilities") of a
member bank in such System. The LIBOR Rate shall be adjusted automatically as
of the effective date of each change in the LIBOR Rate Reserve Percentage.
"Lien" shall mean any mortgage, pledge, security interest,
----
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including,
5
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction pursuant to any of the
types of security interests referred to herein).
"Loan" or "Loans" shall mean, collectively, the Swing Loans and the
---- -----
Revolving Credit Loans.
"Loan Documents" shall mean, collectively, this Agreement, the
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Revolving Credit Notes, Swing Loan Note, documents executed in connection with a
Letter of Credit or an Acceptance Draft, the Guarantees, and any other documents
executed by the Borrower or the Guarantors in connection herewith.
"London Business Day" shall mean a day for dealing in deposits in
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Dollars by and among banks in the London interbank market which is also a
Business Day.
"Margin" means the number of basis points per annum as determined by
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reference to the grid set forth below. For purposes of such calculation the
Leverage Ratio and Liabilities to Tangible Net Worth Ratio shall be as reflected
in the financial statements delivered pursuant to Section 5.1 hereof, provided,
however, if the Borrower fails to provide the relevant financial statements by
the beginning of the corresponding Margin periods set forth in Section 2.8
hereof, the Margin shall be deemed to be 118.75 basis points per annum until the
delivery of the relevant financial statements:
6
Liabilities to Tangible Net Worth Ratio
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Equal to or greater Equal to or greater
than .55 but less than .90 but less Equal to or
greater
Leverage Ratio Less than .55 than .85 than 1.15 than 1.15
=======================================================================================================
equal to or greater 87.5 100.0 118.75 130.0
than 2.50
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equal to or greater 75.0 87.5 112.5 118.75
than 1.85 but less
than 2.50
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less than 1.85 57.5 75.0 87.5 112.5
=======================================================================================================
"Multiemployer Plan" shall mean any Plan described in Section
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4001(a)(3) of ERISA.
"Note" or "Notes" shall mean, collectively, the Revolving Credit Notes
---- -----
and the Swing Loan Notes.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Permitted Acquisition" shall mean an acquisition by the Borrower or
---------------------
any Subsidiary by merger, consolidation or by purchase of a voting majority of
the stock of another Person or the purchase of all or substantially all of the
assets of another Person (or of a division or other operating component of
another Person) (an "Acquisition") if all of the following conditions are met:
(i) the purchase price for such Acquisition inclusive of any
indebtedness incurred or assumed in connection therewith does not exceed ten
(10%) percent of the Borrower's consolidated tangible net worth as reflected
either in the most recent audited fiscal financial statements delivered pursuant
to Section 5.1(1) or the most recent management prepared quarterly financial
statements delivered pursuant to Section 5.1(2), whichever is less;
(ii) The Agent and the Banks shall have received at least three (3)
years of historical financial
7
statements of such Person (or, if such Person has been in business for less than
three (3) years, financial statements for such lesser number of years) and a set
of projections setting forth in reasonable detail (with those stated assumptions
set forth below) the pro forma effect of the Acquisition and showing compliance
by the Borrower with all covenants set forth in this Agreement for the next
succeeding three (3) years. The projections to be delivered hereunder shall
include and specify the assumptions used to prepare such projections regarding
growth of sales, margins on sales and cost savings resulting from the
Acquisition; and
(iii) The Agent and the Banks shall have received a certificate
signed by the chief financial officer of the Borrower to the effect that (and
including calculations indicating that) on a pro forma basis after giving effect
to the Acquisition: (a) all representations and warranties contained in the
Loan Documents will remain true and correct except those, if any, made as of a
specific time which shall have been true and correct when made, (b) the Borrower
will remain in compliance with all covenants contained in the Loan Documents,
and (c) no Default or Event of Default has occurred and is continuing or will
occur as a result of the consummation of the Acquisition.
"Person" shall mean any individual, corporation, partnership, joint
------
venture, trust, unincorporated organization or any other juridical entity, or a
government or state or any agency or political subdivision thereof.
"Plan" shall mean any plan of a type described in Section 4021(a) of
----
ERISA in respect of which the Borrower or any of its Subsidiaries is an
"employer" as defined in Section 3(5) of ERISA.
"Prime Rate" shall mean and refer to the per annum interest rate
----------
announced from time to time by the Agent as its Prime Rate. The Prime Rate may
be greater or less than other interest rates charged by the Agent and is not
dependent upon the interest rate which the Agent may charge any particular class
of borrower.
8
"Prime Rate Loan" shall mean any Revolving Credit Loan or Swing Loan
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when and to the extent that the interest rate therefor is determined by
reference to the Prime Rate.
"Prior Agreement" shall have the meaning set forth in Section 2.16
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hereof.
"Reportable Event" shall mean any of the events set forth in Section
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4043(b) of ERISA or the regulations thereunder.
"Required Banks" shall mean at any time Banks having at least sixty-
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six and two-thirds (66 2/3%) percent of the aggregate amount of the Revolving
Credit Commitments or, if the Revolving Credit Commitments are no longer in
effect, Banks holding at least sixty-six and two-thirds (66 2/3%) of the
aggregate outstanding principal amount of the sum of the Notes, the Letter of
Credit Exposure and the Acceptance Draft Exposure; provided, however, that such
calculation shall be made without including the Revolving Credit Commitments and
pro rata portion of Acceptance Draft Exposure or Letter of Credit Exposure of
any Bank or principal amount of Revolving Credit Notes or Swing Loan Note held
by such Bank or participation therein which Bank is in default with respect to
any of its obligations to the Agent, the Borrower or any Bank.
"Requirements of Law" shall mean as to any Person, the certificate of
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incorporation and by-laws or other organizational or governing documents of such
Person, and any material law, treaty, rule or regulation, or any determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Revolving Credit Commitment" shall mean, with respect to each Bank,
---------------------------
the obligation of such Bank to make Revolving Credit Loans to the Borrower
during the Commitment Period pursuant to the terms hereof as such Commitment is
described in Section 2.1 hereof.
"Revolving Credit Loan" shall mean a loan made pursuant to the terms
---------------------
of Section 2.2 hereof.
9
"Revolving Credit Note" or "Revolving Credit Notes" shall mean the
--------------------- ----------------------
Revolving Credit Notes referred to in Section 2.3 hereof in the form of Exhibit
"A" hereto.
"Subordinated Indebtedness" shall mean indebtedness of the Borrower
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subordinated in right of payment to the Loans pursuant to documentation
containing maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
reasonably satisfactory to the Agent and the Required Banks.
"Subsidiary" shall mean as to any Person, a corporation of which
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shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation are at the time owned,
or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.
"Swing Bank" shall mean Mellon in its capacity as lender of Swing
----------
Loans.
"Swing Loan Note" shall mean the promissory note evidencing the Swing
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Loans payable to the order of the Swing Bank.
"Swing Loans" shall mean any Loans made to the Borrower by the Swing
-----------
Bank, in its sole discretion, from time to time in accordance with Section 2.2.1
hereof.
"Tangible Net Worth" shall mean, at any date, the excess of total
------------------
assets over total liabilities, total assets and total liabilities each to be
determined in accordance with generally accepted accounting principles
consistently applied, excluding, however, from the determination of total assets
all assets which would be classified as intangible assets under generally
accepted accounting principles, including, without limitation, goodwill,
patents, trademarks, trade names, copyrights and franchises.
"Termination Date" shall mean October 28, 2003 or, if such date is not
----------------
a Business Day, the Business Day next succeeding such date.
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"Total Revolving Credit Commitment" shall mean the sum of the Banks'
---------------------------------
Revolving Credit Commitments, as the same may be reduced from time to time in
accordance with Section 2.11 hereof.
1.2 Accounting Terms. As used herein and in any certificate or other
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documents made or delivered pursuant hereto, accounting terms not specifically
defined herein shall have the respective meanings given to them under GAAP.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS AND SWING LOANS
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2.1 Revolving Credit Commitments. Subject to the terms and conditions
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and relying upon the representations and warranties herein set forth, each Bank,
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
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 Bank's Revolving Credit
Commitment set forth opposite its name in Schedule I 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
the Borrower, (ii) the Letter of Credit Exposure and (iii) the Acceptance Draft
Exposure shall not exceed the Total Revolving Credit Commitment. The Revolving
Credit Commitment of each Bank shall automatically and permanently terminate on
the Termination Date.
Within the foregoing limits, the 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 Termination Date, subject to the terms, provisions
and limitations set forth herein.
2.2 Revolving Credit Loans. (a) The Revolving Credit Loans made by
----------------------
a Bank on any date shall be in a minimum amount of $500,000 and in integral
multiples of $100,000 in excess thereof in the case of a LIBOR Rate Loan or
$100,000 and in integral multiples of $250,000 in the case of a Prime Rate Loan.
11
(b) Revolving Credit Loans shall be made ratably by the Banks in
accordance with their respective Revolving Credit Commitments; provided,
however, that the failure of any Bank to make any Revolving Credit Loan shall
not in itself relieve any other Bank of its obligation to lend hereunder.
(c) Each Revolving Credit Loan shall be either a Prime Rate Loan or
a LIBOR Rate Loan as the Borrower may request pursuant to Section 2.5 hereof.
Loans of more than one type and Interest Period may be outstanding at the same
time.
(d) Each Bank shall make its Revolving Credit Loans on the proposed
dates thereof by paying the amount required to the Agent in Philadelphia,
Pennsylvania in immediately available funds not later than 12:00 noon,
Philadelphia time, and the Agent shall as soon as practicable, but in no event
later than 3:00 p.m., Philadelphia time, credit the amounts so received to the
general deposit account of the Borrower with the Agent in immediately available
funds or, if Revolving Credit 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 Banks.
2.2.1 Swing Loans. (a) Subject to the terms and conditions set forth
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herein, the Swing Bank agrees to make Swing Loans to the Borrower, in the Swing
Bank's sole discretion, from time to time during the Commitment Period, in an
aggregate principal amount at any time outstanding that will not result in the
aggregate principal amount of outstanding Swing Loans exceeding $2,000,000.00.
Within the foregoing limit and subject to the Swing Bank's discretion and the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow the Swing Loans. Each Swing Loan shall be made as a Prime Rate Loan.
(b) To request a Swing Loan, the Borrower shall notify the Swing
Bank (which shall promptly notify the Agent) of such request by telephone
(confirmed by telecopy), not later than 1:00 p.m., Philadelphia time, on the
day of a proposed Swing Loan. Each such notice shall be irrevocable and shall
specify the requested date (which shall be a Business Day) of the requested
Swing Loan and the amount of the requested Swing Loan. The Swing Bank shall make
each Swing Loan available to the Borrower, in its discretion, by means of a
credit to the general deposit
12
account of the Borrower with the Agent by 3:00 p.m., Philadelphia time, on the
requested date of such Swing Loan.
(c) The Swing Bank may by written notice given to the Agent not
later than 12:00 noon, Philadelphia Time, on any Business Day require the Banks
to acquire participations on such Business Day in all or a portion of the Swing
Loans outstanding, together with interest accrued thereon. Such notice shall
specify the aggregate amount of Swing Loans in which Banks will participate.
Promptly upon receipt of such notice, the Agent will give notice thereof to each
Bank, specifying in such notice such Bank's pro rata share of such Swing Loan or
Loans, together with interest accrued thereon. Each Bank hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
Agent, for the account of the Swing Bank, such Bank's pro rata share of such
Swing Loan or Loans. Each Bank acknowledges and agrees that its obligation to
acquire participations in Swing Loans pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or Event of Default or
reduction or termination of the Revolving Credit Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Bank shall comply with its obligation under this paragraph in
the same manner as provided in Section 2.2(d) with respect to Revolving Credit
Loans made by such Bank and the Agent shall promptly pay to the Swing Bank the
amounts so received by it from the Banks. The Agent shall notify the Borrower of
any participations in any Swing Loan acquired pursuant to this paragraph, and
thereafter payments in respect of such Swing Loan shall be made to the Agent and
not to the Swing Bank. Any amounts received by the Swing Bank from the Borrower
(or other party on behalf of the applicable Borrower) in respect of a Swing Loan
after receipt by the Swing Bank of the proceeds of a sale of participations
therein shall be promptly remitted to the Agent; any such amounts received by
the Agent shall be promptly remitted by the Agent to the Bank that shall have
made their payments pursuant to this paragraph and to the Swing Bank, as their
interests may appear. The purchase of participations in a Swing Loan pursuant to
this paragraph shall not relieve the Borrower of any default in the payment
thereof.
(d) The Swing Loans made by the Swing Bank on any date shall be in a
minimum amount of $250,000.00 and in integral multiples of $100,000.00.
2.3 Notes. (a) The Revolving Credit Loans made by the Banks pursuant to
-----
Section 2.2 hereof shall be evidenced by
13
promissory notes of the Borrower substantially in the form of Exhibit "A" hereto
with appropriate insertions (individually, a "Revolving Credit Note" and,
collectively, the "Revolving Credit Notes"), payable to the order of each Bank
and representing the obligations of the Borrower to pay to each Bank on the
Termination Date the lesser of (y) the amount of each Bank's Revolving Credit
Commitment or (z) the aggregate unpaid principal amount of all Revolving Credit
Loans made by such Bank, with interest thereon as hereinafter prescribed in
Section 2.4 hereof.
(b) The Swing Loans made by the Swing Bank pursuant to Section 2.2.1
hereof shall be evidenced by a promissory note of the Borrower payable to the
order of the Swing Bank and representing the obligations of the Borrower to pay
to the Swing Bank on the Termination Date the lesser of (y) $2,000,000.00 or (z)
the aggregate unpaid principal amount of all Swing Loans made by the Swing Loan
Bank, with interest thereon as hereafter prescribed in Section 2.4 hereof.
(c) The date and amount of each Loan, the basis for calculating
interest, the Interest Period applicable thereto and each payment of principal
with respect thereto shall be endorsed by the Banks on the schedule annexed to
and constituting a part of the Notes. The aggregate unpaid amount of Loans set
forth on such schedule shall be presumed to be the principal amount owing and
unpaid thereon. The failure of a Bank to make such endorsement on such schedule
shall not prejudice such Bank in any way, nor affect its rights hereunder with
respect to any Revolving Credit Loan. The Notes shall be dated the date of this
Agreement and be stated to mature on the Termination Date.
2.4 Interest. Interest on each Revolving Credit Loan shall be at a
--------
per annum rate to be elected by the Borrower, in accordance with Section 2.5
hereof, and shall be one of the following:
(a) a fluctuating rate equal to the Prime Rate, which interest rate
shall change when and as the Prime Rate changes; or
(b) subject to availability, the LIBOR Rate for Interest Periods
selected by the Borrower plus the applicable Margin.
14
The Agent shall determine each interest rate applicable to the Revolving Credit
Loans and shall promptly advise the Borrower and the Banks of the interest rate
so determined. Each Swing Loan shall be Prime Rate Loan. Interest on each
Prime Rate Loan, except Swing Loans, shall be payable monthly in arrears to the
Agent for the pro rata benefit of the Banks on the first Business Day of each
month, commencing on the first such day to occur after the pertinent loan is
made and upon payment in full thereof. Interest on Swing Loans shall be payable
on such dates as set forth above to the Swing Bank. Interest on each LIBOR Rate
Loan shall be payable to the Agent for the pro rata benefit of the Banks in
arrears (i) in the case of Revolving Credit Loans with Interest Periods of three
months or less, at the end of each applicable Interest Period and (ii) in the
case of Revolving Credit Loans with Interest Periods of more than three months,
at the end of each calendar quarter and at the end of the Interest Period.
Whenever the unpaid principal balance of any Loan shall become due and payable
(whether at the stated maturity thereof, by acceleration or otherwise) interest
shall thereafter be payable on demand to the Agent for the pro rata benefit of
the Banks at a rate per annum (computed daily) equal to 2% percent above the
rate in effect at such maturity; provided, however, that no interest payable
hereunder shall be in excess of the rate permitted by applicable law. Interest
on each Loan shall be calculated on the basis of a year of 360 days for the
actual number of days elapsed.
2.5 Procedure for Revolving Credit Borrowing. The Borrower may borrow
----------------------------------------
under the Revolving Credit Commitments during the Commitment Period on any
Business Day by giving the Agent irrevocable notice of a request for a Revolving
Credit Loan hereunder setting forth the amount of the Revolving Credit Loan
requested, the date thereof and whether it is to be a LIBOR Rate Loan or a Prime
Rate Loan. Requests for LIBOR Rate Loans shall be received by the Agent not
later than 11:00 a.m. (Philadelphia time) three (3) Business Days prior to the
first day of the Interest Period for each such Revolving Credit Loan. Requests
for Prime Rate Loans may be made up to 1:00 p.m. (Philadelphia time) on the
Business Day prior to the Business Day each such Revolving Credit Loan is to be
made. Any request for a Revolving Credit Loan may be written or oral, but if
oral, it shall be confirmed in writing sent by the Borrower to the Agent within
two (2) Business Days thereafter. The Agent shall promptly advise (but in any
event, by 1:00 p.m. Philadelphia time, two (2) Business Days
15
prior to a LIBOR Rate Loan or by 10:00 a.m. on the same Business Day in the case
of a Prime Rate Loan) the Banks of any notice given pursuant to this Section 2.5
and of each Bank's portion of the requested borrowing.
2.6 Conversion and Renewals. The Borrower may elect from time to
-----------------------
time to convert all or a part of one type of Revolving Credit Loan into another
type of Revolving Credit Loan or to renew all or part of a Revolving Credit Loan
by giving the Agent notice at least one (1) Business Day before the conversion
into a Prime Rate Loan and at least three (3) Business Days before the
conversion into or renewal of a LIBOR Rate Loan, specifying: (1) the renewal or
conversion date; (2) the amount of the Revolving Credit Loan to be converted or
renewed; (3) in the case of conversions, the type of Revolving Credit Loan to be
converted into; and (4) in the case of renewals of or a conversion into LIBOR
Rate Loans, the duration of the Interest Period applicable thereto; provided
that (a) the minimum principal amount of each Revolving Credit Loan outstanding
after a renewal or conversion to a LIBOR Rate Loan shall be $500,000.00 or to a
Prime Rate Loan shall be $250,000.00; and (b) LIBOR Rate Loans can be converted
only on the last day of the Interest Period of such Loan. All notices given
under this Section 2.6 shall be irrevocable and shall be given not later than
11:00 a.m. (Philadelphia time) on the day which is not less than the number of
Business Days specified above for such notice. Any request for a conversion or
a renewal under this Section 2.6 may be written or oral, but if oral, it shall
be confirmed in writing sent by the Borrower to the Agent within two (2)
Business Days thereafter. If the Borrower shall fail to give the Agent the
notice as specified above for the renewal or conversion of a LIBOR Rate Loan
prior to the end of the Interest Period with respect thereto, such LIBOR Rate
Loan shall automatically be converted into a Prime Rate Loan on the last day of
the Interest Period for such Revolving Credit Loan. The Agent shall promptly
advise (but in any event, by 2:00 p.m. Philadelphia time, two (2) Business Days
prior to a LIBOR Rate Loan or by 11:00 a.m. on the same Business Day in the case
of a Prime Rate Loan) the Banks of any notice given pursuant to this Section 2.6
and of each Bank's portion of the requested conversion or renewal.
2.7 Suspension of LIBOR Rate Loans.
------------------------------
16
(a) Disaster. Notwithstanding anything contained in this Agreement
--------
to the contrary, if the Agent determines that:
(i) it is unable for any reason to quote or determine rates based
upon a LIBOR Rate, or
(ii) the LIBOR Rate does not accurately reflect the cost to a
Bank of making or maintaining a LIBOR Rate Loan
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition shall remain in effect the right of the Borrower to select a
LIBOR Rate Loan or to convert a Prime Rate Loan into a LIBOR Rate Loan shall be
suspended. The Borrower, in such event, shall, on the last day of a then
current Interest Period either prepay such loan together with accrued interest
thereon or convert such loan into a Prime Rate Loan.
(b) Illegality. Notwithstanding any other provisions herein, if any
----------
Requirements of Law, regulation, order or decree or any change therein or in the
interpretation or application thereof shall make it unlawful for a Bank to make
or maintain LIBOR Rate Loans as contemplated by this Agreement, the Commitment
hereunder to make LIBOR Rate Loans shall forthwith be canceled with respect to
such Bank upon notice to the Agent and the Borrower and Revolving Credit Loans
then outstanding as LIBOR Rate Loans, if any, shall, at the option of the
Borrower, be prepaid in full together with all interest accrued and unpaid to
the date of any such prepayment together with any amounts required by Section
2.10 hereof, or converted into a Prime Rate Loan.
2.8 Applicable Margin; Periods, Etc. The applicable Margin shall be
-------------------------------
reset four times each fiscal year for the relevant periods set forth below,
based upon the Leverage Ratio, as reflected at the close of the statement period
in the Borrower's consolidated financial statements indicated in the table
below, as follows:
Financial Margin Period of
Statements Each Fiscal Year
---------- ----------------
1st Quarter August 1 - October 31
2nd Quarter November 1 - January 31
17
3rd Quarter February 1 - June 15
Annual(Fiscal Year End) June 16 - July 31
2.9 Commitment Fee. As additional compensation for the Revolving Credit
--------------
Commitment, the Borrower agrees to pay the Agent for the pro rata benefit of the
Banks a commitment fee for the Commitment Period based on the average daily
unused portion of the Total Revolving Credit Commitments and the applicable
Leverage Ratio and Liabilities to Tangible Net Worth Ratio as reflected in the
financial statements delivered pursuant to Section 5.1 hereof in the percentage
per annum as determined by reference to the grid set forth below:
Liabilities to Tangible Net Worth Ratio
---------------------------------------
Equal to or greater Equal to or greater Equal to or
than .55 but less than .85 but less greater
Leverage Ratio Less than .55 than .85 than 1.15 than 1.15
====================================================================================================
equal to or greater .125 .125 .15 .25
than 2.50
----------------------------------------------------------------------------------------------------
equal to or greater .10 .125 .125 .15
than 1.85 but less
than 2.50
----------------------------------------------------------------------------------------------------
less than 1.85 .075 .10 .125 .125
====================================================================================================
Any fee payable under this Section 2.9 which is not paid when due shall
bear interest at a rate per annum equal to 2% above the Prime Rate until paid,
payable on demand. Such fee shall be computed on the basis of a 360 day year
for the actual days elapsed and shall be payable monthly on the first day of
each month during the Commitment Period and on the Termination Date. The
"unused portion of the Total Revolving Credit Commitments" means, at any time,
the Total Revolving Credit Commitments less the sum of (a) the unpaid principal
balance of all Revolving Credit Loans, (b) Letter of Credit Exposure and (c)
Acceptance Draft Exposure. Upon termination or reduction of the Revolving
Credit Commitments, the Borrower will pay to the Agent, for the pro rata account
of the Banks, accrued unused fees on the portion of the Revolving Credit
Commitment terminated or reduced to the date of termination or reduction.
18
2.10 Additional Compensation in Certain Circumstances.
------------------------------------------------
(a) Increased Costs or Reduced Return Resulting From Taxes,
-------------------------------------------------------
Reserves, Capital Adequacy Requirements, Expenses, Etc. If any Law or guideline
------------------------------------------------------
or interpretation or application thereof by any Governmental Authority charged
with the interpretation or administration thereof or compliance with any request
or directive of any Governmental Authority (whether or not having the force of
law) now existing or hereafter adopted:
(i) subjects the Agent or a Bank to any tax or changes the
basis of taxation with respect to this Agreement, the Notes, the Loans or
payments by the Borrower of principal, interest, commitment fee or other amounts
due from the Borrower hereunder or under the Notes (except for taxes on the
overall net income of the Agent or a Bank imposed by the jurisdiction in which
the Agent or such Bank's principal office is located),
(ii) imposes, modifies or deems applicable any reserve,
special deposit or similar requirement against credits or commitments to extend
credit extended by, assets (funded or contingent) of, deposits with or for the
account of, or other acquisition of funds by, the Agent or a Bank (or
participation therein) (other than requirements expressly included herein in the
determination of the LIBOR Rate hereunder),
(iii) imposes, modifies or deems applicable any capital
adequacy or similar requirement (A) against assets (funded or contingent) of, or
credits or commitments to extend credit extended by, the Agent or a Bank (or
participations therein) or (B) otherwise applicable to the obligations of the
Agent or a Bank under this Agreement, or
(iv) imposes upon the Agent or a Bank any other condition or
expense with respect to this Agreement, the Notes or its making, maintenance or
funding any part of the Loans (or participations therein),
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon the
Agent or a Bank with respect to this Agreement, the Notes or the making,
maintenance or funding of any part of the Loans (or, in the
19
case of any capital adequacy or similar requirement, to have the effect of
reducing the rate of return on the Agent's or a Bank's capital, taking into
consideration the Agent's and such Bank's policies with respect to capital
adequacy) by an amount which the Agent or a Bank deems to be material, the Agent
or Bank shall from time to time notify the Borrower of the amount determined in
good faith (using any averaging and attribution methods) by the Agent or Bank
(which determination shall be conclusive) to be necessary to compensate the
Agent or Bank for such increase, reduction or imposition. Such amount shall be
due and payable by the Borrower to the Agent or Bank ten (10) ten Business Days
after such notice is given. A certificate by the Agent or Bank as to the amount
due and payable under this Section 2.10(a) from time to time and the method of
calculating such amount shall be conclusive absent manifest error.
All references to "Bank" shall be deemed to include any participant in
such Bank's Revolving Credit Commitment.
(b) Indemnity. In addition to the compensation required by
---------
subsection (a) of this Section 2.10, the Borrower shall indemnify the Agent and
a Bank against any loss or expense (including loss of margin) which the Agent or
Bank has sustained or incurred as a consequence of any
(i) payment, prepayment or conversion of any part of any LIBOR
Rate Loan on a day other than the last day of the applicable Interest Period
(whether or not such payment, prepayment or conversion is mandatory or automatic
and whether or not such payment or prepayment is then due).
(ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any notice stated herein to
be irrevocable (the Agent having in its sole discretion the options (A) to give
effect to such attempted revocation and obtain indemnity under this Section
2.10(b) or (B) to treat such attempted revocation as having no force or effect,
as if never made), or
(iii) default by the Borrower in the performance or observance
of any covenant or condition contained in this Agreement or the Notes, including
without limitation any failure of the Borrower to pay when due (by acceleration
or otherwise) any principal, interest, commitment fee or any other amount due
hereunder or under a Note.
20
If the Agent or Bank sustains or incurs any such loss or expense it shall from
time to time notify the Borrower of the amount determined in good faith by the
Agent or Bank (which determination shall be conclusive) to be necessary to
indemnify the Agent or Bank for such loss or expense. Such amount shall be due
and payable by the Borrower to the Agent or Bank ten (10) Business Days after
such notice is given.
All references to "Bank" shall be deemed to include any participant in
such Bank's Revolving Credit Commitment.
The indemnities set forth herein shall survive payment in full of all
LIBOR Rate Loans and all other Revolving Credit Loans made pursuant to this
Agreement.
2.11 Termination or Reduction of Commitment. Subject to the indemnity
--------------------------------------
agreement with respect to LIBOR Rate Loans set forth in Section 2.10(b) hereof,
the Borrower shall have the right, upon not less than three (3) Business Days'
irrevocable notice to the Agent, to terminate the Total Revolving Credit
Commitment or, from time to time, to reduce the amount of the Total Revolving
Credit Commitment, provided that (a) any such reduction (i) shall be in the
minimum amount of $1,000,000 or a multiple thereof, (ii) shall reduce
permanently the amount of the Total Revolving Credit Commitment then in effect,
and (iii) shall be accompanied by prepayment of the Revolving Credit Loans
outstanding, together with accrued interest on the amount so prepaid to the
dates of each such prepayment, to the extent, if any, that the Revolving Credit
Loans then outstanding exceed the amount of the Total Revolving Credit
Commitment as then reduced, and (b) any such termination of the Total Revolving
Credit Commitment shall be accompanied by prepayment in full of the Revolving
Credit Loans outstanding, together with accrued interest thereon to the date of
prepayment, and the payment of any unpaid commitment fee then accrued hereunder.
2.12 Prepayment. Subject to the indemnity agreement with respect to
----------
LIBOR Rate Loans set forth in Section 2.10(b) hereof, the Borrower may prepay
any Loan in whole or in part without premium or penalty together with interest
accrued on the amount prepaid to the date of prepayment. Prepayments of Loans
may be reborrowed on a revolving basis as aforesaid.
21
2.13 Payments. (a) Except as set forth below with respect to Swing Loans,
--------
all payments (including prepayments) to be made by the Borrower on account of
principal, interest and fees shall be made without setoff or counterclaim and
shall be made to the Bank on the date of payment at the office of the Agent set
forth in Section 10.1 hereof or at such other place as the Agent may from time
to time designate in writing on or before 11:00 a.m. (Philadelphia time). All
such payments with respect to Swing Loans shall be to the Swing Bank. In each
case in lawful money of the United States of America and in immediately
available funds. If any payment hereunder (other than payments on LIBOR Rate
Loans) becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension. If any payment on a LIBOR Rate Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Business Day.
(b) The Borrower hereby authorizes the Agent to charge any of its
accounts maintained at the Agent on the date any payment is due hereunder or
under a Note.
2.14 Pro Rata Treatment. (a) Except for any payment, reimbursement or
------------------
other indemnity to any Bank or other indemnified person under Section 2.7(b),
2.10, 2.19 or 10.4 hereof, or under Section 2.4 and 2.13 with respect to Swing
Loans, each borrowing, each payment or prepayment of principal of the Revolving
Credit Notes, each payment of interest on the Revolving Credit 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 Banks in the
proportions that their Revolving Credit Commitments bear to the Total Revolving
Credit Commitment.
(b) Unless the Agent shall have been notified in writing by any Bank
prior to the time the Bank is required to fund any proposed borrowing that such
Bank 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
22
(assuming that the Agent has furnished such Bank with notice of the proposed
borrowing as required under Section 2.5 hereof) assume that such Bank 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 Bank to the Agent on a date after such
borrowing date, such Bank 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 Bank'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
Bank'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 Bank with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error. If such Bank's pro rata
share of such borrowing is not in fact made available to the Agent by such Bank
within three (3) 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 Revolving Credit Loans hereunder, on demand, from the
Borrower.
(c) Notwithstanding the foregoing provisions of this Section 2.14, in
the event that a Bank fails to make any amount that would constitute its pro
rata share of a borrowing available to the Agent, the Agent shall so notify the
other Bank(s) whereupon such Bank(s) shall be required to make such amount
available to the Agent on a pro rata basis between (or among) the Banks in the
proportions that their Revolving Credit Commitments bear to the Total Revolving
Credit Commitment, in an aggregate amount not to exceed the amount of such
Bank's Revolving Credit Commitment as set forth on Schedule A attached hereto.
2.15 Sharing of Setoffs. Each Bank agrees that if it shall, through the
------------------
exercise of a right of banker's lien, setoff or counterclaim against the
Borrower or a 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 Bank under any
applicable bankruptcy, insolvency or other similar law or otherwise, obtain
payment (voluntary or involuntary) in respect of a Revolving Credit Note held by
it
23
or participation in a Swing Loan Note as a result of which the unpaid principal
portion of the Revolving Credit Notes held by it or participation in a Swing
Loan Note shall be proportionately less than the unpaid principal portion of the
Revolving Credit Notes or participation in a Swing Loan Note held by any other
Bank, it shall be deemed to have simultaneously purchased from such other Bank a
participation in the Revolving Credit Notes or Swing Loan Note held by such
other Bank with the purchase price payable in cash upon demand by such other
Bank, so that the aggregate unpaid principal amount of the Revolving Credit
Notes and participations in Revolving Credit Notes and Swing Loan Note held by
it shall be in the same proportion to the aggregate unpaid principal amount of
all Revolving Credit Notes and Swing Loan Note then outstanding as the principal
amount of the Revolving Credit Notes and Swing Loan Note held by it prior to
such exercise of banker's lien, setoff or counterclaim was to the principal
amount of all Revolving Credit Notes and Swing Loan Note 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 Bank shall thereafter receive or recover from or
respecting the Borrower or any Guarantor any amount in respect of a Revolving
Credit Note or Swing Loan Note proportionally greater than that received by the
first Bank, 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 Bank exceeds the amount necessary to restore the Banks
respective pro rata shares, then this section shall apply to such excess. The
Borrower expressly consents to the foregoing arrangements and agrees that any
Bank 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 the Borrower to such Bank as fully as if
such Bank held a Note in the amount of such participation.
2.16 Use of Proceeds. The Borrower will utilize the proceeds of the
---------------
initial Revolving Credit Loans to repay any amounts owing to KeyBank National
Association ("Key") and to Mellon under the revolving credit agreement among
Mellon, as Agent and a Bank, Key and the Borrower dated May 23, 1997 (the "Prior
Agreement"). Any remaining proceeds of the initial
24
borrowing and of any subsequent Loans may be used by the Borrower for working
capital purposes, capital expenditures and to fund the purchase price of
Permitted Acquisitions provided no portion of the proceeds of any Loan shall be
used by any Borrower in any manner which might cause the borrowing or the
application of such proceeds to violate Regulation G, Regulation U, Regulation T
or Regulation X of the Board of Governors of the Federal Reserve System.
2.17 Issuance of Letters of Credit. Upon the request of the Borrower, and
-----------------------------
subject to the conditions set forth herein 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, a "Letter of Credit") for the account of the Borrower. 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 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 Termination Date. The
Letters of Credit shall be issued in respect of any transactions occurring in
the Borrower's ordinary course of business.
2.18 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.
2.19 Indemnity as to Letters of Credit. The Borrower hereby agrees to
---------------------------------
indemnify and hold harmless the Agent and the Banks from and against any and all
claims, damages, losses, liabilities, costs or expenses whatsoever which the
Agent or the Banks may
25
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 Bank
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
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.
2.20 Letter of Credit Fees. The Borrower agrees to pay to the Agent its
---------------------
standard draw fees and commissions in effect from time to time. Any commission
in excess of $500.00 shall be shared with the Banks on a pro rata basis in
accordance with the provisions of Section 2.14 hereof.
2.21 Acceptance Drafts. (a) Upon the terms and conditions hereof, the
-----------------
Borrower may, from time to time from the date hereof until the Termination Date,
request the Banks to accept drafts in the form of Exhibit B (each an "Acceptance
Draft" and, collectively, the "Acceptance Drafts"), at the Borrower's election.
(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.
26
(Philadelphia 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 the Borrower shall designate, and
(b) the 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 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 thirty (30) days after the Acceptance Date. No Acceptance
Draft shall be dated or accepted more than thirty (30) days before or more than
thirty (30) days after the date of the shipment of goods to which it relates.
The Borrower hereby irrevocably authorizes the Agent to complete its Acceptance
Draft in accordance with the instructions given pursuant to this Section 2.21.
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 Bank 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. 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 the 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 Bank.
27
(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 Banks 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.
2.22 Payment in Respect of Letters of Credit and Acceptances;
--------------------------------------------------------
Reimbursement. Upon the issuance of any Letter of Credit, the Agent shall notify
-------------
each Bank of the principal amount, the number, and the expiration date thereof
and the amount of such Bank's participation therein. By the issuance of a Letter
of Credit hereunder and without further action on the part of the Agent or the
Banks, each Bank hereby accepts from the Agent a participation (which
participation shall be nonrecourse to the Agent) in such Letter of Credit equal
to such Bank's pro rata (based on its Revolving Credit Commitment) share of such
Letter of Credit, effective upon the issuance of such Letter of Credit. The
Agent shall notify each Bank 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 Draft, the
Agent shall: (i) notify each Bank of the net proceeds thereof and the amount of
such Banks's participation therein (acquired pursuant to the terms hereof) and
(ii) credit the net proceeds thereof to the Borrower's
28
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. 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 Banks, each Bank
hereby accepts from the Agent a participation (which participation shall be
nonrecourse to the Agent) in such Acceptance Draft equal to such Bank's pro rata
(based on its Revolving Credit Commitment) share of such Acceptance Draft,
effective upon the issuance of such Acceptance Draft. Each Bank 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 Bank's pro rata share of the amount of any
drawing under a Letter of Credit and payment of any Acceptance Draft. Each Bank
acknowledges and agrees that its obligation to acquire participation in each
Letter of Credit issued by and 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 a Default or 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 Banks, each draft presented under a Letter of Credit and shall
notify each Bank 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 Banks 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. (Philadelphia 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 Bank notice of any amount that remains unreimbursed,
and each Bank shall promptly, but in any event
29
within two hours of the receipt of such notice, pay the amounts required to the
Agent in immediately available funds, and the Agent, not later than 3:00 p.m.
(Philadelphia time) on such day, shall make the appropriate payment to the
beneficiary. If the Banks shall pay any draft presented under a Letter of Credit
or make any such payment upon the maturity of an Acceptance Draft, then the
Agent, on behalf of the Banks, 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 Banks for such payment. If the
Banks have not been reimbursed with respect to such drawing as provided above,
the Borrower shall pay to, the Agent, for the account of the Banks, 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 2% payable on demand. The obligations of the
Borrower under this Section 2.22 to reimburse the Banks and the Agent for all
drawings under Letters of Credit and 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 Letter of Credit or
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 Letter of Credit or the Acceptance Draft, the Agent or any Bank (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 Bank) 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
or 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 payment by the Agent or any Bank under such Letter of Credit or
Acceptance Draft against presentation of
30
such draft or document shall not have constituted gross negligence or willful
misconduct;
(d) payment by the Agent or any Bank 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 or Acceptance Draft;
(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 Bank.
It is understood that in making any payment under any Letter of Credit
or Acceptance Draft (x) the Agent's and any Bank's exclusive reliance on the
documents presented to it under such Letter of Credit or Acceptance Draft 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 or
Acceptance Draft, whether or not the amount due to the beneficiary equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit or 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 Letter of
Credit or 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 under such
Letter of Credit or Acceptance Draft with the terms thereof shall, in each case,
not be deemed willful misconduct or gross negligence of the Agent or any Bank.
31
2.23 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. REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Agent and the Banks to enter into this Agreement and
to make the Loans and to issue Letters of Credit and to create Acceptance Drafts
herein provided for, the Borrower hereby covenants, represents and warrants to
the Agent and the Banks that:
3.1 Financial Condition. The consolidated balance sheet and consolidated
-------------------
statements of income, retained earnings and cash flows of the Borrower and its
Subsidiaries as at February 28, 1999 audited by Xxxxx Xxxxxx & Company, LLC,
CPAs, and the interim consolidated balance sheet and consolidated related
statements of income, retained earnings and cash flows of the Borrower and its
Subsidiaries as at August 31, 1999 certified as true and correct by the chief
financial officer of the Borrower, have heretofore been furnished to the Banks,
and fairly present the financial condition of the Borrower and its Subsidiaries
as at such dates, and for the fiscal year and fiscal quarter, respectively, then
ended. Such annual financial statements have been prepared in accordance with
GAAP and, such interim financial statements have been prepared on a basis
consistent with the annual financial statements, subject to year end
adjustments. Neither the Borrower nor its Subsidiaries has any material
contingent obligations,
32
contingent liabilities or liability for taxes, long-term lease or unusual
forward or long-term commitment, which are not reflected in the foregoing
statements or in the notes thereto.
3.2 No Change. Since August 31, 1999 there has been no material adverse
---------
change in the business, operations, assets or financial or other condition of
the Borrower or its Subsidiaries.
3.3 Corporate Existence; Compliance with Law; Subsidiaries. The Borrower
------------------------------------------------------
and each of its Subsidiaries (i) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
corporate power and authority and the legal right to own and operate its
properties, and to conduct the business in which it is currently engaged, (iii)
does not own or operate properties or conduct business which requires
qualification as a foreign corporation in any jurisdiction in which it is not so
qualified, and (iv) is in compliance with all Requirements of Law; except to the
extent that the failure to so qualify as a foreign corporation as required by
clause (iii) of this Section 3.3 or to comply with all Requirements of Law as
required by clause (iv) of this Section 3.3 would not, in the aggregate, have a
material adverse effect on the business, operations, property or financial or
other condition of the Borrower and its Subsidiaries taken as a whole, and would
not materially adversely affect the ability of the Borrower or a Subsidiary to
perform its obligations under this Agreement and the Notes.
3.4 Corporate Power; Authorization; Enforceable Obligations. The Borrower
-------------------------------------------------------
and each of its Subsidiaries has the corporate power and authority and the legal
right to execute, deliver and perform its obligations under the Loan Documents
and to borrow hereunder. The Borrower has taken all necessary corporate action
to authorize the borrowings hereunder on the terms and conditions of this
Agreement and the Borrower and each of its Subsidiaries has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents. No consent or authorization of, filing with, or other act by or
in respect of any other Person (including stockholders and creditors of the
Borrower or its Subsidiaries) or any Governmental Authority, is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Loan Documents. Each of the Loan
Documents has been duly executed and delivered on behalf of the Borrower or its
33
Subsidiaries as applicable, and each of the Loan Documents constitutes a legal,
valid and binding obligation of the Borrower or its Subsidiaries as applicable
enforceable against the Borrower or its Subsidiaries as applicable, in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally.
3.5 Legal Bar. The execution, delivery and performance of each of the
---------
Loan Documents and the borrowings hereunder and the use of the proceeds thereof,
will not violate any of the Requirements of Law or Contractual Obligations of
the Borrower or its Subsidiaries, and will not result in, or require the
creation or imposition of any Lien on any of its respective properties or
revenues pursuant to any Requirements of Law or Contractual Obligations except
those in favor of the Banks as provided herein.
3.6 No Material Litigation. No litigation, investigation or proceeding of
----------------------
or before any arbitrator or Governmental Authority is pending by or against the
Borrower or any Subsidiary or any of its respective properties or revenues (a)
with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) which if adversely determined, would have
a material adverse effect on the business, operations, property or financial or
other condition of the Borrower and its Subsidiaries taken as a whole.
3.7 No Default. Neither the Borrower nor any of its Subsidiaries is in
----------
default under or with respect to any Contractual Obligations in any respect
which would be materially adverse to the business, operations, property or
financial or other condition of the Borrower and its Subsidiaries taken as whole
or which would materially and adversely affect the ability of the Borrower or
its Subsidiaries to perform its respective obligations under any of the Loan
Documents. No Default or Event of Default has occurred and is continuing.
3.8 No Burdensome Restrictions. No Contractual Obligations of the
--------------------------
Borrower or its Subsidiaries and no Requirements of Law materially adversely
affect, or insofar as the Borrower or its Subsidiaries may reasonably foresee
may so affect, the business, operations, property or financial or other
condition of the Borrower and its Subsidiaries taken as a whole.
34
3.9 Federal Regulations. Neither the Borrower nor its Subsidiaries is
-------------------
engaged nor will it engage, principally or as one of its important activities,
in the business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. No part of the
proceeds of any Loans hereunder will be used for "purchasing" or "carrying"
"margin stock" as so defined or for any purpose which violates, or which would
be inconsistent with the provisions of the regulations of such Board of
Governors.
3.10 Environmental Regulation. (a) The Borrower has no knowledge of receipt
------------------------
of any past, pending or threatened:
(i) claims, complaints, notices or requests for information
with respect to any alleged violation of any Environmental Law that, singly or
in the aggregate, have resulted in, or may reasonably be expected to result in,
any material adverse change in the financial or business conditions of the
Borrower and its Subsidiaries taken as a whole; or
(ii) complaints, notices or inquiries to the Borrower or any
Subsidiary regarding potential liability under any Environmental Law that,
singly or in the aggregate, have resulted in, or may reasonably be expected to
result in, any material adverse change in the financial or business conditions
of the Borrower and its Subsidiaries taken as a whole;
(b) No property now or previously owned or leased by the Borrower or
any Subsidiary is listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS list or on any similar state list of sites
requiring investigation or clean-up; and
(c) Neither the Borrower nor any Subsidiary has directly transported
or directly arranged for the transportation of any Hazardous Material to any
location which is listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS list or on any similar state list or which is
the subject of federal, state or local enforcement actions or other
investigations which may lead to material claims against the Borrower for any
remedial work, damage to natural resources or personal injury, including claims
under CERCLA.
35
3.11 Title to Properties. The Borrower and its Subsidiaries have valid
-------------------
leases of or good and marketable title to its respective properties and assets,
including the properties and assets reflected in the balance sheets described in
Section 3.1. Such properties and assets are not subject to any Lien, except as
reflected in such balance sheets and except to the extent otherwise permitted by
Section 7.2 hereof.
3.12 Taxes. The Borrower and its Subsidiaries have filed all Federal,
-----
state and other tax returns which to the knowledge of the Borrower and its
Subsidiaries is required to be filed and have paid all taxes shown as due and
payable on said returns or on any assessments made against them or any of its
respective properties except such taxes, if any, as are being contested in good
faith and by proper proceedings and as to which adequate reserves have been
maintained.
3.13 ERISA. Based upon ERISA and the regulations and published
-----
interpretations thereunder, the Borrower, its Subsidiaries and each ERISA
Affiliate is in compliance in all material respects with all applicable
provisions, if any, of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any Plan; no notice
of intent to terminate a Plan has been filed nor has any Plan been terminated;
no circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administer a Plan, nor has the PBGC instituted such proceedings; the
Borrower, its Subsidiaries and each ERISA Affiliate has met its minimum funding
requirements under ERISA with respect to all of its Plans and the present fair
market value of all Plan assets exceeds the present value of all vested benefits
under each Plan, as determined on the most recent valuation date of the Plan in
accordance with the provisions of ERISA and the regulations thereunder for
calculating the potential liability of the Borrower, its Subsidiaries and each
ERISA Affiliate to the PBGC or the Plan under Title IV of ERISA, and neither the
Borrower, its Subsidiaries nor an ERISA Affiliate has incurred any liability to
the PBGC under ERISA.
3.14 Operation of Business. The Borrower and its Subsidiaries possess all
---------------------
licenses, permits, franchises, patents, copyrights, trademarks, and trade names,
or rights thereto, necessary to conduct their respective businesses
substantially as now conducted and as presently proposed to be conducted, and
neither the Borrower nor any Subsidiary is in material
36
violation of any valid rights of others with respect to any of the foregoing
except where the failure to obtain licenses or permits does not individually or
in the aggregate materially and adversely impair the ability of a Borrower or
any of its Subsidiaries to operate its business or perform its obligations under
a Loan Document.
3.15 Year 2000 Risk. Each of the Borrower and its Subsidiaries has reviewed
--------------
the "Year 2000 Risk" (that is the risk that computer applications used by the
Borrower and/or its suppliers, vendors and customers may be unable to recognize
and perform without error date-sensitive functions involving certain dates prior
to and any date after December 31, 1999) and represents that it is and, to the
best of its knowledge, its suppliers, vendors and customers are taking such
action as may be necessary to ensure that the Year 2000 Risk will not adversely
affect its business operations and/or financial condition.
3.16 Nu Horizons/Merit Electronics Corp. The Borrower represents and
----------------------------------
warrants that Nu Horizons/Merit Electronics Corp. has no assets.
SECTION 4. CONDITIONS PRECEDENT
--------------------
4.1 Conditions to Initial Revolving Credit Loan. The obligation of the
-------------------------------------------
Banks to make the initial Revolving Credit Loans to the Borrower hereunder is
subject to the satisfaction of the following conditions precedent:
(a) Revolving Credit Notes. Each Bank shall have received a Revolving
----------------------
Credit Note conforming to the requirements hereof and duly executed by the
Borrower.
(b) Legal Opinion. The Agent and each Bank shall have received a
-------------
favorable opinion of counsel to the Borrower and the Guarantors satisfactory in
form and substance to the Agent and the Banks and covering such matters incident
to the transactions contemplated by this Agreement as the Agent and the Banks
shall reasonably require.
(c) Guarantees. Each Bank shall have received the Guarantees of each
----------
Guarantor duly executed by each Guarantor.
(d) Certified Copies and Other Documents. The Banks shall have
------------------------------------
received such certificates and other documents relating to the Borrower and the
Guarantors with respect to the matters
37
herein contemplated as the Bank may request, including but not limited to:
(i) certificates of good standing from the Secretary of State
of New York if incorporated under the laws of the State of New York or doing
business in New York and, if incorporated in a jurisdiction other than New York,
from the Secretary of State or applicable Governmental Authority of such
jurisdiction of incorporation and from the Secretary of State or applicable
Governmental Authority of each jurisdiction in which an office is maintained;
(ii) certificates of incorporation and all amendments thereto
certified by the applicable Secretary of State or applicable Governmental
Authority;
(iii) certificates of the Secretary of the Borrower dated the
date of this Agreement certifying, (x) true and correct copies of the by-laws of
the Borrower as in effect on the date of adoption of the resolutions referred to
in (y) of this subsection (iii), (y) true and correct copies of resolutions
adopted by the board of directors of the Borrower (1) authorizing the borrowings
from the Bank hereunder, the execution, delivery and performance by the Borrower
of each of the Loan Documents to which it is a party and the performance by the
Borrower of its obligations under each of the Loan Documents to which it is a
party, (2) approving forms in substantially execution form of each of the Loan
Documents to which it is a party, and (3) authorizing officers of the Borrower
to execute and deliver each of the Loan Documents to which it is a party, and
(z) the incumbency and specimen signatures of the officers of the Borrower
executing any documents delivered to the Agent or a Bank by the Borrower in
connection herewith;
(iv) certificates of the Secretary of each Guarantor dated the
date of this Agreement certifying, (w) true and correct copies of the by-laws of
each Guarantor as in effect on the date of adoption of the resolutions referred
to in (x) of this subsection (iii), (x) true and correct copies of resolutions
adopted by the board of directors of each Guarantor authorizing (1) the
execution, delivery and performance by each Guarantor of each of the Loan
Documents to which it is a party and the performance by each Guarantor of its
obligations under each of the Loan Documents to which it is a party, (2)
approving forms in substantially execution form of each of the Loan Documents to
which it is a party, and (3) authorizing officers of each Guarantor to
38
execute and deliver each of the Loan Documents to which it is a party, (y) true
and correct copies of resolutions adopted by the shareholders of each Guarantor
authorizing the execution and delivery of the Loan Documents to which it is a
party and (z) the incumbency and specimen signatures of the officers of each
Guarantor executing any documents delivered to the Agent or a Bank by each
Guarantor in connection herewith.
(e) Fees. The Agent shall have received evidence of payment of the
----
Agent's per annum fee pursuant to a side letter between the Agent and the
Borrower and the Agent's attorneys fees and disbursements.
(f) Termination of the Prior Agreement. The Banks shall have received
----------------------------------
evidence of payment of any sums due under and the termination of the Prior
Agreement.
(g) Additional Matters. All other documents and legal matters in
------------------
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Agent and its counsel.
4.2 Conditions to All Loans, Etc. The obligation of the Banks to make any
----------------------------
Loan (including the initial Revolving Credit Loan), issue any Letter of Credit
or accept any Acceptance Draft to be made by it hereunder is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. The representations and
------------------------------
warranties made by the Borrower herein or which are contained in any
certificate, document or financial or other statement furnished at any time
under or in connection herewith, shall be correct on and as of the borrowing
date for such Loan as if made on and as of such date except to the extent that
such representation is stated to be made as of a date certain.
(b) No Default or Event of Default. No Default or Event of Default
------------------------------
shall have occurred and be continuing on the date a Loan is to be made or after
giving effect to the Loan to be made on such date.
Each borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower hereunder as of the date of each
such borrowing that the conditions in clauses (a) and (b) of this Section have
been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
---------------------
39
The Borrower hereby agrees that so long as the Revolving Credit Commitments
remain in effect, a Note, any Letter of Credit or any Acceptance Draft remains
or remain outstanding and unpaid, or any other amount is owing to the Agent or a
Bank hereunder, the Borrower will and will cause each of its Subsidiaries to:
5.1 Information. Furnish to the Banks or cause to be furnished to the
-----------
Banks:
(1) As soon as available, but not more than one hundred (100) days
after the close of each fiscal year, the financial statements of the Borrower
and its Subsidiaries including the consolidated and consolidating balance sheets
of the Borrower and its Subsidiaries with related consolidated and consolidating
statements of income, retained earnings and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all prepared in accordance with GAAP consistently applied and
audited by a firm of independent certified public accountants acceptable to the
Required Banks. Such financial statements shall be accompanied by a certificate
of the chief financial officer of the Borrower demonstrating compliance with the
financial covenants contained in Section 6 of this Agreement and to the effect
that, having read this Agreement and the Loan Documents and based upon an
examination which in the opinion of such officer was sufficient to enable such
officer to make an informed statement, nothing came to such officer's attention
which would cause such officer to believe that an Event of Default or Default
had occurred hereunder or thereunder, and, if so, stating the facts with respect
thereto and whether the same has been cured prior to the date of such
certificate, and, if not, what action is proposed to be taken with respect
thereto.
(2) As soon as possible, but not more than fifty-five (55) days after
the close of the first three (3) fiscal quarters of each year, the financial
statements of the Borrower and its Subsidiaries including its consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries with related
consolidated and consolidating statements of income, retained earnings and cash
flows as of the last day of and for such quarter and for the period of the
fiscal year ended as of the close of the particular quarter, all such quarterly
statements to be in reasonable detail, all prepared on a basis consistent with
the annual financial statements, subject to year end adjustments and certified
by the chief financial officer of the Borrower. Such financial statements shall
be accompanied by a certificate signed by the
40
chief financial officer of such Borrower as specified in paragraph (1) above.
(3) Prompt written notice if: (i) any obligation (other than an
obligation under this Agreement) of the Borrower or any of its Subsidiaries for
borrowed money or for the deferred purchase price of any property is declared or
shall become due and payable prior to its stated maturity, (ii) the holder of
any note (other than a Note), or other evidence of indebtedness, certificate or
security evidencing any such obligation, has the right to declare such
obligation due and payable prior to its stated maturity, or (iii) to the
knowledge of any officer of the Borrower or any of its Subsidiaries there shall
occur an Event of Default or a Default.
(4) Prompt written notice of: (i) any citation, summons, subpoena,
order to show cause or other order naming the Borrower or any of its
Subsidiaries a party to any proceeding before any governmental body which if
adversely determined would have a material adverse effect on the business,
financial condition or operations of the Borrower and its Subsidiaries taken as
a whole, and include with such notice a copy of such citation, summons,
subpoena, order to show cause or other order, (ii) any lapse or other
termination of a license, permit or other authorization issued to the Borrower
or any of its Subsidiaries by any Governmental Authority or Person, which lapse
or other termination would have a material adverse effect on the property,
business, profits or conditions (financial or otherwise) of the Borrower and its
Subsidiaries taken as a whole, (iii) any refusal by any Governmental Authority
or Person to renew or extend such license, permit or other authorization, and
(iv) any suit between the Borrower or any of its Subsidiaries and any
Governmental Authority or Person or formal demand made upon the Borrower or any
of its Subsidiaries by any Governmental Authority or Person which if adversely
determined would have a material adverse effect on the property, business,
profits or conditions (financial or otherwise) of a Borrower and its
Subsidiaries taken as a whole.
(5) Prompt written notice in the event that: (i) a Borrower or an
ERISA Affiliate shall fail to make any payment when due and payable under any
Plan or (ii) the Borrower or an ERISA Affiliate shall receive notice from the
Internal Revenue Service or the Department of Labor that it shall have failed to
meet the minimum funding requirements of any Plan, and include therewith a copy
of such notice.
41
(6) Copies of any request for a waiver of the funding standards or
any extension of the amortization periods required by Sections 303 and 304 of
ERISA, or Section 402 of the Code, promptly after any such request is submitted
to the Department of Labor or the Internal Revenue Service, as the case may be.
(7) Promptly after a Reportable Event occurs which may result in a
termination of a Plan, or the Borrower or an ERISA Affiliate receives notice
that the PBGC has instituted or intends to institute proceedings under Section
4042 of ERISA to terminate a Plan, a copy of any notice of such Reportable Event
which is filed with the PBGC, or any notice delivered by the PBGC evidencing its
institution of such proceedings or its intent to institute such proceedings, or
any notice to the PBGC that a Plan is to be terminated, as the case may be.
(8) Promptly upon becoming aware of the occurrence of any Prohibited
Transaction in connection with any Plan, a written notice specifying the nature
thereof, what action the Borrower or an ERISA Affiliate is taking or proposes to
take with respect thereto, and, when known, any action taken by the Internal
Revenue Service with respect thereto.
(9) Promptly after the filing thereof, copies of each annual report
required to be filed pursuant to Section 103 of ERISA and copies of any other
reports required to be filed with respect to any Plan.
(10) Within ten (10) days after the filing thereof, copies of all
periodic reports which any Borrower or any of its Subsidiaries may now or
hereafter be required to file with or deliver to any securities exchange or to
the Securities and Exchange Commission, or any other Governmental Authority
succeeding to the functions thereof.
(11) Promptly upon request therefor, such other information and
reports relating to the financial condition and operations of the Borrower or
any of its Subsidiaries as the Agent or a Bank at any time or from time to time
may reasonably request.
5.2 Corporate Existence; Continuance of Business. Preserve and maintain
--------------------------------------------
its corporate existence and its rights, privileges and franchises, continue to
engage in substantially the same line of business in which it was engaged on the
date hereof and its right to conduct business in all states in which the nature
of its business requires qualification to do business; provided,
42
however, that the Borrower may add a line of business to the extent such
addition is the result of a Permitted Acquisition and provided further, however,
that nothing herein shall prevent the dissolution or termination of the
existence, rights, privileges or franchises of a Subsidiary if the Board of
Directors of the Borrower shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Borrower and its
Subsidiaries taken as a whole. In the event of dispute between the Borrower or
any of its Subsidiaries and the Agent as to when qualification is necessary, the
decision of the Agent in its reasonable judgment shall control.
5.3 Payment of Obligations. Pay and discharge all taxes, assessments and
----------------------
governmental charges or levies imposed upon it or upon its income and profits,
or upon any property belonging to it, prior to the date upon which penalties
attach thereto except where contested in good faith and by proper proceedings if
appropriate reserves are maintained with respect thereto.
5.4 Insurance. Maintain insurance, at all times throughout the term of
---------
this Agreement, on its property with responsible insurance carriers licensed or
authorized to do business in the State of New York and each state in which the
Borrower or any of its Subsidiaries conducts business against such risks, loss,
damage and liability (including liability to third parties) and in such amounts
as is customarily maintained by similar businesses, including, without
limitation, public liability and workers' compensation insurance, and file with
the Agent within ten (10) Business Days after request therefor a certificate of
such insurance then in effect on Xxxxx form or other similar form acceptable to
the Agent.
5.5 Payment of Indebtedness and Performance of Obligations. Pay and
------------------------------------------------------
discharge promptly all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, would have a material adverse effect on the
operations, business or financial or other condition of the Borrower and its
Subsidiaries taken as a whole except where contested in good faith and by proper
proceedings if appropriate reserves are maintained with respect thereto.
5.6 Condition of Property. At all times, maintain, protect and keep in
---------------------
good repair, working order and condition, normal wear and tear excepted, all
property of the Borrower and its Subsidiaries necessary and useful in the
judgment of the Borrower and its Subsidiaries in connection with the proper
conduct of the business of the Borrower and its Subsidiaries.
43
5.7 Observance of Legal Requirements. Observe and comply in all respects
--------------------------------
with all material laws (including but not limited to ERISA), ordinances, orders,
judgments, rules, regulations, certifications, franchises, permits, licenses,
directions and requirements of all governmental bodies which now or at any time
thereafter may be applicable to the Borrower or any of its Subsidiaries.
5.8 Books and Records. Keep proper books of record and account.
-----------------
5.9 Inspection. At any reasonable times and from time to time, upon
----------
reasonable notice permit the Agent and the Banks, through officers or employees
or authorized representatives to visit and inspect any of the properties of the
Borrower or any of its Subsidiaries, and to examine the minute books, books of
account, reports and other records of the Borrower and its Subsidiaries and make
copies thereof or extracts therefrom, and discuss the affairs, finances and
accounts of the Borrower and its Subsidiaries with its principal officers or
with such Borrower's independent accountants.
5.10 Compliance with Environmental Laws; Indemnity. (a) Use and operate
---------------------------------------------
all of its facilities and properties in material compliance with all
Environmental Laws, keep all necessary permits, approvals, certificates,
licenses and other authorizations relating to environmental matters in effect
and remain in material compliance therewith, and handle all Hazardous Materials
in material compliance with all applicable Environmental Laws;
(b) Immediately notify the Agent and the Banks, and provide copies
upon receipt, of all written claims, complaints, notices or inquires relating to
the condition of its facilities and properties relating to, or compliance with,
Environmental Laws, and promptly cure and have dismissed with prejudice to the
satisfaction of the Agent and the Bank any actions and proceedings relating to
compliance with Environmental Laws;
(c) Provide such information and certifications which the Agent or a
Bank may reasonably request from time to time to evidence compliance with this
Section 5.10; and
(d) Indemnify the Agent and the Banks for, and hold the Agent and the
Banks harmless from all liability, cost and expenses (including reasonable
attorney's fees) incurred by, or imposed upon, or sought to be imposed upon the
Bank arising
44
out of the breach by the Borrower of any of the covenants set forth in this
Section 5.10. The provisions of this paragraph shall survive payment in full of
the Revolving Credit Loans.
5.11 Agent's Fee. The Borrower agrees to pay a fee to the Agent in
-----------
accordance with the terms of a side letter between the Borrower and the Agent.
5.12 Dissolution of Nu Horizons/Merit Electronics Corp. The Borrower
-------------------------------------------------
agrees to file a certificate of dissolution and take all other steps necessary
to dissolve Nu Horizons/Merit Electronics Corp. within thirty (30) days of the
date of this Agreement.
SECTION 6. FINANCIAL COVENANTS
-------------------
The Borrower hereby agrees that, so long as the Revolving Credit
Commitments remain in effect, a Note, any Letter of Credit or any Acceptance
Draft remains or remain outstanding and unpaid, or any other amount is owing to
the Agent or a Bank hereunder, the Borrower and its Subsidiaries, on a
consolidated basis, will comply with the following financial covenants:
6.1 Quick Ratio. Maintain at all times a Quick Ratio of at least .80:1.
-----------
As used herein, Quick Ratio shall mean a ratio of (1) the sum of (a)
cash on hand or on deposit in banks, (b) readily marketable securities issued by
the United States of America and (c) accounts receivable not more than ninety
(90) days past due to (2) total current liabilities. For purposes of
calculating compliance with this covenant, amounts outstanding under the Loans
shall be included as a current liability.
6.2 Leverage Ratio. Maintain at all times during the periods indicated, a
--------------
Leverage Ratio on a rolling four quarters basis not to exceed 3.50:1 from
closing through 5/31/00, 3.00:1 from 6/1/00 through 5/31/01 and 2.75:1 from
6/1/01 and at all times thereafter.
6.3 Tangible Net Worth. Maintain Tangible Net Worth (including
------------------
Subordinated Debt) at all times during the periods indicated of at least:
- $63,000,000 from closing to 2/27/00
- 2/28/00 to 2/27/01 - $63,000,000 plus 50% of fiscal year 2000 net
income ("'00 Base")
- 2/28/01 to 2/27/02 - '00 Base plus 75% of fiscal year 2001 net
income ("'01 Base")
45
- 2/28/02 to 2/27/03 - '01 Base plus 75% of fiscal year 2002 net
income ("'02 Base")
- 2/28/03 to 2/27/04- '02 Base plus 75% of fiscal year 2003 net
income
In addition, 75% of the net proceeds received by the Borrower or its
Subsidiaries from any equity offering, will be added to the applicable base
Tangible Net Worth amount required as set forth above for the next fiscal year.
6.4 Liabilities to Tangible Net Worth. Maintain at all times a
---------------------------------
Liabilities to Tangible Net Worth Ratio not to exceed 1.25:1.
Except as specifically otherwise provided, all financial covenants
shall be calculated in accordance with GAAP consistently applied.
SECTION 7. NEGATIVE COVENANTS
------------------
The Borrower hereby agrees that, so long as the Revolving Credit
Commitments remain in effect, a Note, any Letter of Credit or any Acceptance
Draft remains or remain outstanding and unpaid, or any other amount is owing to
a Bank hereunder, the Borrower will not, nor will it permit any Subsidiary to:
7.1 Indebtedness for Borrowed Money. Incur, or permit to exist, any
-------------------------------
indebtedness for borrowed money except (i) indebtedness incurred pursuant to
borrowings hereunder, (ii) purchase money indebtedness secured by Liens
described in Section 7.2(iv) hereof, (iii) indebtedness existing on the date
hereof and reflected in the financial statements referred to in Section 3.1
hereof and extensions, renewals and refinancings thereof (without increase in
principal amount) other than amounts owing under the Prior Agreement which shall
be repaid in full and terminated prior to or on the date hereof, (iv)
indebtedness incurred in the ordinary course of business exclusive of that
incurred in the borrowing of money, (v) the Subordinated Indebtedness, (vi)
indebtedness owing to Mellon in a principal amount not to exceed $3,000,000
pursuant to that certain loan agreement dated October 10, 1997 between Mellon
and the Company (as such agreement may be amended from time to time, the "ESOP
Loan Agreement") and (vii) other indebtedness which shall not exceed in the
aggregate, for the Borrower and all Subsidiaries, at any time outstanding, the
sum of $500,000.
7.2 Liens. Create, assume or permit to exist, any Lien on any of its
-----
property or assets now owned or hereafter acquired
46
except (i) Liens in favor of the Agent for the benefit of the Banks; (ii) other
Liens incidental to the conduct of its business or the ownership of its property
and assets which were not incurred in connection with the borrowing of money or
the obtaining of advances or credit and which do not materially impair the use
thereof in the operation of its business; (iii) Liens for taxes or other
governmental charges which are not delinquent or which are being contested in
good faith and for which a reserve shall have been established in accordance
with GAAP; (iv) purchase money Liens on fixed assets granted to secure either
the unpaid balance of the purchase price thereof or a Loan made to finance the
purchase of such assets, all to the extent permitted under Section 7.7 hereof;
and (v) Liens existing on the date hereof and disclosed in writing to the Banks
as indicated on Schedule I hereto.
7.3 Loans and Investments. Lend or advance money, credit or property to
---------------------
or invest in (by capital contribution, loan, purchase or otherwise) any firm,
corporation, or other Person except (i) investments in United States Government
obligations, certificates of deposit of any banking institution with combined
capital and surplus of at least $200,000,000 and commercial paper of the highest
credit rating given by Xxxxx'x Investors Service, Inc. or Standard and Poors
Corporation, (ii) the Borrower may make loans provided that the aggregate
thereof at any time outstanding and owing by any one Person shall not exceed
$100,000, (iii) investments in stocks, securities and assets of other
corporations in connection with any transaction not otherwise qualifying as a
Permitted Acquisition, the result of which will constitute an investment by the
Borrower in a new Subsidiary or a merger in which the Borrower is the surviving
corporation; provided, however, that the aggregate of such investments shall not
exceed $1,000,000, and provided, further, that the Borrower shall cause any new
Subsidiary which is so acquired to guarantee payment to the Banks of all of the
Borrower's obligations arising hereunder, (iv) Permitted Acquisitions and (v)
the ESOP Loans as defined in and in accordance with the ESOP Loan Agreement.
7.4 Fundamental Changes. Wind up, liquidate, or dissolve itself,
-------------------
reorganize, merge or consolidate with or into, or convey, sell, assign,
transfer, lease, or otherwise dispose of (whether in one transaction or a series
of transactions) all or substantially all of its assets, (whether now owned or
hereafter acquired other than sales of inventory and obsolete equipment in the
ordinary course of business) to any Person, or acquire all or substantially all
of the assets or the business of any Person except: the Borrower or a wholly
owned
47
Subsidiary may merge into or consolidate with a wholly owned Subsidiary,
provided in each case that immediately after giving effect thereto, the
surviving entity is obligated under this Agreement and no event shall occur and
be continuing which constitutes a Default or an Event of Default.
7.5 Contingent Liabilities. Assume, endorse, be or become liable for or
----------------------
guarantee the obligations of any Person if, as a result thereof, the aggregate
of such contingent liabilities with respect to any one Person would exceed
$100,000 excluding, however, (a) the endorsement of negotiable instruments for
deposit or collection in the ordinary course of business, and (b) guarantees
given by the Borrower for obligations of its Subsidiaries and guarantees given
by Subsidiaries for the obligations of the Borrower.
7.6 Sales of Receivables; Sale - Leasebacks. Sell, discount or otherwise
---------------------------------------
dispose of notes, accounts receivable or other obligations owing to the
Borrower, with or without recourse, except for the purpose of collection in the
ordinary course of business; or sell any asset pursuant to an arrangement to
thereafter lease such asset from the purchaser thereof.
7.7 Lease Payments. Expend in the aggregate for the Borrower and all
--------------
Subsidiaries in excess of $4,000,000 in any fiscal year for the lease, rental or
hire of real or personal property provided the limitation shall exclude leases
that have been or should be capitalized in accordance with GAAP.
7.8 Dividends. Declare or pay any dividends on its capital stock (other
---------
than dividends payable solely in shares of its own common stock), or purchase,
redeem, retire or otherwise acquire any of its capital stock at any time
outstanding, except that (i) the Borrower may, in any fiscal year, purchase
shares of its own common stock in an amount not to exceed 10% of the issued and
outstanding shares of such stock, excluding any shares purchased by an employee
stock ownership plan formed by the Borrower, (ii) any Subsidiary wholly-owned by
the Borrower may declare and pay dividends to, and purchase, redeem, retire and
otherwise acquire its capital stock from, the Borrower and (iii) the Borrower
may declare and pay cash dividends solely out of 25% of fiscal consolidated net
income (minus 100% of any loss) after the date hereof on a cumulative basis.
7.9 Supply and Purchase Contracts. Enter into or be a party to any
-----------------------------
contract for the purchase of materials, supplies or other property if such
contract requires that payment for such
48
materials, supplies or other property be made whether or not delivery of such
materials, supplies or other property is ever made or tendered.
7.10 Nature of Business. Materially alter the nature of a Borrower's or a
------------------
Subsidiary's business.
7.11 Stock of Subsidiaries. Sell or otherwise dispose of any Subsidiary
---------------------
(except in connection with a merger or consolidation of a Subsidiary into the
Borrower or another Subsidiary or with the dissolution of a Subsidiary) or
permit a Subsidiary to issue any additional shares of its capital stock except
pro rata to its stockholders.
7.12 Liabilities of Subsidiaries. Notwithstanding any prior provision
---------------------------
hereof which may indicate the contrary, permit a Subsidiary to have any
liabilities except liabilities incurred in the ordinary course of business but
not in connection with the borrowing of money, except for any guarantee of the
obligations of the Borrower hereunder.
7.13 Transactions with Affiliates. Except for existing employment
----------------------------
agreements and any stock options or warrants or except in the ordinary course of
and pursuant to the reasonable requirements of the Borrower's or any of its
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary than would obtain in a comparable arms' length
transaction with a Person not an Affiliate, enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate. "Affiliate" shall mean a
Person (1) which directly or indirectly controls, or is controlled by, or is
under common control with the Borrower or any of its Subsidiaries, (2) which
directly or indirectly beneficially owns or holds five (5%) percent or more of
any class of voting stock of the Borrower or any of its Subsidiaries, or (3)
five (5%) percent or more of the voting stock of which is directly or indirectly
beneficially owned or held by the Borrower or any of its Subsidiaries. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
7.14 ERISA. (a) Terminate any Plan so as to result in any material
-----
liability of the Borrower to the PBGC, (b) engage in or permit any Person to
engage in any Prohibited Transaction involving any Plan which would subject the
Borrower or any of
49
its Subsidiaries to any material tax, penalty or other liability, (c) incur or
suffer to exist any material "accumulated funding deficiency" (as defined in
Section 202 of ERISA), whether or not waived, involving any Plan, or (d) allow
or suffer to exist any event or condition, which presents a material risk of
incurring a material liability of the Borrower to the PBGC by reason of
termination of any Plan.
7.15 Change of Management. Permit Xxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx and
--------------------
Xxxxxx Xxxxxx at any time not to be active on a substantially full time basis in
the affairs of the Borrower by maintaining the positions of President/Chief
Operating Officer, Vice President/Secretary and Chairman of the Board,
respectively, or their equivalents, provided that the failure of any one or two
of such individuals to comply with this Section 7.15 shall not be deemed a
violation of this Section 7.15.
SECTION 8. EVENTS OF DEFAULT
-----------------
Upon the occurrence of any of the following events (each an "Event of
Default"):
(a) The Borrower shall fail to pay within five (5) days of the due
date thereof any interest under or principal of Note; any other amount payable
hereunder including, without limitation, amounts necessary to reimburse the
Agent for a draw under a Letter of Credit or payment of an Acceptance Draft or
the Borrower shall default under any other agreement, instrument or obligation
made with or in favor of or owing to the Agent or a Bank (including any
applicable grace period or notice requirement); provided, however, that the
five-day grace period provided in this paragraph for payment of interest and
principal under the Notes and for reimbursement obligations with respect to
Letters of Credit and Acceptance Drafts shall not affect the obligation of the
Borrower to pay interest for such period at the rate in effect prior to maturity
with respect to payments due under the Notes and at the rates provided in
Section 2.22 with respect to Letters of Credit and Acceptance Drafts; or
(b) Any representation or warranty made or deemed made by the
Borrower herein or which is contained in any certificate, document or financial
or other statement furnished at any time under or in connection with this
Agreement shall prove to have been false in any material respect on or as of the
date made or deemed made; or
50
(c) The Borrower shall default in the observance or performance of
any of its agreements set forth in Sections 5.11, 6 or 7 hereof; or
(d) The Borrower shall default in the observance or performance of
any other agreement contained in this Agreement and such default shall continue
unremedied for a period of ten (10) days after written notice thereof is given
to the Borrower by the Agent; or
(e) With respect to any indebtedness for borrowed money, which
indebtedness is in an outstanding principal amount in excess of One Hundred
Thousand and 00/100 ($100,000.00) Dollars (other than the Notes), the Borrower
or any Subsidiary shall (i) default in any payment of any such indebtedness
beyond the grace period, if any, provided in the instrument or agreement under
which such indebtedness was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto or any event shall occur or condition exist, in each case the
effect of which default or other event or condition is to entitle the holder or
holders of such indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause such indebtedness to become due prior to its stated maturity;
or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or a Borrower or any of
its Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; or (iii) there shall be commenced
against the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the
51
entry of an order for any such relief which shall have not been vacated,
discharged, or stayed or bonded pending appeal within twenty (20) days from the
entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) of this
Section 8(f); or (v) the Borrower or any of its Subsidiaries shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) Any of the following events occur or exist with respect to the
Borrower or an ERISA Affiliate: (1) any Prohibited Transaction involving any
Plan, (2) any Reportable Event shall occur with respect to any Plan, (3) a
notice of intent to terminate any Plan shall be filed or the termination of any
Plan, (4) any event or circumstance exists which might constitute grounds
entitling the PBGC to institute proceedings for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution by the PBGC
of any such proceedings, or (5) the complete or partial withdrawal from any
Multiemployer Plan, and in each case above, such event or condition, together
with all other events or conditions listed above, if any, would reasonably be
expected to subject the Borrower or any Subsidiary of the Borrower to any tax,
penalty, or other liability to a Plan, the PBGC or otherwise (or a combination
thereof) which in the aggregate exceed or may exceed One Hundred Thousand and
00/100 ($100,000.00) Dollars; or
(h) The rendition by any court of a final judgment or judgments
against the Borrower or any of its Subsidiaries which shall not be
satisfactorily stayed, discharged, vacated or set aside within sixty (60) days
of the making thereof; or the attachment of any property of the Borrower or any
of its Subsidiaries which has not been released or provided for to the
reasonable satisfaction of the Agent within sixty (60) days after the making
thereof, which judgment or attachment is for an amount of $100,000 or more; or
(i) A Loan Document shall cease to be in full force and effect, shall
be declared null and void, a default shall occur thereunder or any party thereto
shall assert that it has no further obligation to a Bank or the Agent thereunder
(unless such party has been discharged from its obligation under such Loan
Document by a Bank or the Agent in writing); or
52
(j) Any representation or warranty made or deemed herein or in any
Loan Document or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this Agreement
shall prove to have been false in any material respect on or as of the date made
or deemed made.
then, in any such event, any or all of the following actions shall be taken: (i)
the Agent with the written consent of the Required Banks may, and upon the
written request of the Required Banks shall by notice of default to the
Borrower, declare the Revolving Credit Commitments to be terminated forthwith,
whereupon the Revolving Credit Commitments and all obligations of the Banks to
make Loans, issue Letters of Credit or create Acceptance Drafts, shall
immediately terminate; (ii) the Agent with the written consent of the Banks may,
and upon the written request of the Banks shall, by notice of default to the
Borrower, declare the entire amounts due under the Notes (with accrued interest
thereon) and all other amounts owing under this Agreement to be immediately due
and payable; provided, however, that upon the happening of an event specified in
subsection (f) of this Section 8, the obligation of the Banks to make further
Loans and the Agent to issue Letters of Credit and create Acceptance Drafts
shall terminate and the Notes shall be immediately due and payable without
declaration or other notice to the Borrower. Except as expressly provided above
in this Section, presentment, demand, protest and all other notices of any kind
are hereby expressly waived.
SECTION 9. AGENT
-----
In order to expedite the transactions contemplated by this Agreement,
Mellon Bank, N.A. is hereby appointed to act as Agent on behalf of the Banks.
Each of the Banks and each subsequent holder of any Note or issuer of any Letter
of Credit, 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 Banks (or, if otherwise
specifically required hereunder or thereunder, the consent of the Banks) or (b)
in the absence of its or their own gross negligence or willful misconduct.
53
The Agent is hereby expressly authorized on behalf of the Banks, without
hereby limiting any implied authority, (a) to receive on behalf of each of the
Banks 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 Bank its proper share of all payments so received, (b) to
distribute to each Bank 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 Banks; 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 Banks; provided, however, that, unless and
until the Agent shall have 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 Banks.
The Agent shall not be responsible in any manner to any of the Banks 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 a 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
54
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 Banks
hereunder.
The Agent shall promptly give notice to the Banks 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 Bank.
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 Bank other than the Agent of any of its
obligations hereunder or to any Bank on account of the failure of or delay in
performance or breach by any other Bank 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.
The Agent and the Borrower may deem and treat the payee or most recent
assignee pursuant to Section 10.3 hereof, as applicable, of any Note as the
holder thereof until written notice of transfer shall have been delivered as
provided in Section 10.3 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 extension of credit 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 Bank 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 Bank agrees (i) to reimburse the Agent in the amount of such Bank's
pro rata share (based on its Revolving Credit
55
Commitment hereunder) of any expenses incurred for the benefit of the Banks by
the Agent, including counsel fees and compensation of agents and employees paid
for services rendered on behalf of the Banks, 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 Bank shall be liable to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, 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 Bank acknowledges that it has, independently and without reliance upon
the Agent or any other Bank 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 Bank is a party. Each
Bank also acknowledges that it will, independently and without reliance upon the
Agent or any other Bank 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.
Subject to the appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by notifying the Banks and the Borrower.
Upon any such resignation, the Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by such Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent gives notice of its resignation, then the retiring Agent may, on behalf of
the Banks, 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
56
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 Banks 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 Banks.
SECTION 10. MISCELLANEOUS
-------------
10.1 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, telecopier or other
telecommunications equipment, with receipt confirmed) addressed,
(a) if to the Borrower, any Guarantor or any of their respective
subsidiaries at Nu Horizons Electronics Corp., 00 Xxxxxx Xxxx, Xxxxxxxx, Xxx
Xxxx 00000, Attn.: Xx. Xxxx Xxxxxxx, Vice President/Finance with a copy to Blau,
Kramer, Wactlar & Xxxxxxxxx, P.C., 000 Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxxx,
Xxx Xxxx 00000, Attn: Xxxxx Xxxxxxxxx, Esq.
(b) if to the Agent or Swing Bank, Mellon Bank, N.A., 000 Xxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attn.: Xx. Xxxxx Xxxxx, Vice
President, with a copy to Mellon Bank, N.A., 165 EAB Plaza, West Tower - 6th
Floor, Uniondale, New York 11556, Attn.: Xx. Xxxxxxx X. Xxxxxxxx, Vice
President; and
(c) if to EAB, at European American Bank, 000 Xxxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, Attn.: Xxxx Xxxxxxx, Vice President; and
(d) if to HSBC, at HSBC Bank USA, 000 Xxxxx Xxxxxx Xxxx,
Xxxxxxxx, Xxx Xxxx 00000, Attn: Xxxxxx Dionion, Vice President.
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 (3) Business Days after being sent by
registered or certified mail, postage prepaid, return receipt requested, if by
mail, or upon receipt during normal business
57
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 10.1 or in accordance with the latest
unrevoked direction from such party.
10.2 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 Banks and shall survive the making by the Banks of the Revolving
Credit Loans and the execution and delivery to the Banks of the Notes and
occurrence of any other extension of credit 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 Notes or this Agreement or any other Loan
Document is outstanding and unpaid and so long as any Banks' Revolving Credit
Commitment has not been terminated.
10.3 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 Banks, 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 Bank 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 Banks.
(b) Each Bank, 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 Bank's obligations under this Agreement
(including, without limitation, its Revolving Credit Commitment) shall remain
unchanged, (ii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the banks or other
entities buying
58
participations shall be entitled to the cost protection provisions contained in
Sections 2.10 (except to the extent that application of such Section 2.10 to
such banks and entities would cause the Borrower to make duplicate payments
thereunder) and Section 2.7 hereof, and (iv) the Borrower, the Agent and the
other Banks shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement.
(c) Each Bank may assign by novation as of the date of
assignment, to any one or more banks or other entities with the consent of the
Borrower (which consent shall be given in its sole discretion unless the Agent
waives its additional fee for the assignment to such bank or banks in which case
consent will not be unreasonably withheld) and the Agent (which consent will not
be unreasonably withheld) (except that in the case of an assignment by a Bank to
one of its Affiliates or to another 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
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 Bank'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 Bank 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 $3,000,000 Revolving Credit Commitment of such
Bank 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 in form and substance acceptable to the Agent (an
"Assignment and Acceptance"), together with any Note subject to such assignment
and a processing and recordation fee of $2,500.00 payable by the assigning Bank.
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 Bank hereunder and under the other Loan
Documents and (y) the Bank which is assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
59
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
Bank's rights and obligations under this Agreement, such Bank shall cease to be
a party hereto and thereto).
(d) By executing and delivering an Assignment and Acceptance,
the Bank 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,
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 Bank makes no representation or
warranty and assumes no 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 Bank or any other Bank 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 Bank.
(e) The Agent shall maintain at its address referred to in
Section 10.1 hereof a copy of each Assignment and Acceptance delivered to it and
a register for the recordation of the names and addresses of the Banks and the
Revolving Credit Commitment of, and principal amount of the Loans owing
60
to, each Bank 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 Banks may treat each person whose name is so recorded in the
Register as a Bank hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Bank 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 Bank and an assignee together with any Note subject to such assignment
and the written consent to such assignment, the Agent shall (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Banks 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 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 the assigning Bank has retained any Revolving
Credit Commitment hereunder, a new Note to the order of the assigning Bank in an
amount equal to the Revolving Credit Commitment retained by it hereunder. Such
new Note shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A hereto.
(g) Notwithstanding any other provision herein, any Bank may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 10.03, disclose to the assignee or
participant or proposed assignee or participant, any information relating to the
Borrower furnished to such Bank 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 Bank.
(h) Nothing in this Section shall limit or restrict the ability of
any Bank to sell, rediscount or otherwise dispose of any Acceptance Draft.
(i) The annual Agent's fee shall be payable in accordance with the
provisions of Section 5.11 hereof.
61
10.4 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 or
incurred by the Agent or any of the Banks 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 Banks. The Borrower
further indemnifies the Banks 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 10.4 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 Agreement or the Notes, or any investigation made by or on
behalf of the Agent or any Bank. All amounts due under this Section 10.04 shall
be payable on written demand therefor.
10.5 Applicable Law. THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED IN
--------------
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
10.6 Right of Setoff. If an Event of Default shall have occurred and be
---------------
continuing, upon the request of the Banks each Bank 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 Bank 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 Bank,
irrespective of whether or not such Bank shall have made any demand under this
Agreement or the Notes and although such obligations may be unmatured. Each Bank
agrees to notify promptly the Agent and the Borrower and any applicable
62
Guarantor after any such setoff and application made by such Bank, but the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Bank under this Section are in addition to other
rights and remedies (including, without limitation, other rights of setoff)
which may be available to such Bank.
10.7 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.
10.8 Waivers; Amendments. (a) No failure or delay of any Bank 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 Bank 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 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 Banks or by the Borrower and the
Agent with the consent of the Required Banks; provided that no such agreement
--------
shall (i) increase the Revolving Credit Commitment of any Bank without the
written consent of such Bank, (ii) reduce the principal amount of any Loan or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Bank affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan or any interest
thereon, or any
63
fees payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of any Revolving Credit
Commitment, without the written consent of each Bank affected thereby, (iv)
change Section 2.13 or 2.14 in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Bank, (v) change
any of the provisions of this Section or the definition of "Required Banks" or
any other provision hereof specifying the number or percentage of Banks required
to waive, amend or modify any rights hereunder or make any determination or
grant any consent hereunder, or (vi) release any Guarantee without the written
consent of each Bank; provided further that no such agreement shall amend,
----------------
modify or otherwise affect the rights or duties of the Agent or the Swing Bank
hereunder without the prior written consent of the Agent or the Swing Bank, as
the case may be.
10.9 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.
10.10 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 contemplated hereby 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) THE BORROWER HEREBY EXPRESSLY WAIVES ANY AND EVERY RIGHT TO A
TRIAL BY JURY IN ANY ACTION ON OR RELATED TO ANY OF THE LOAN DOCUMENTS OR THE
ENFORCEMENT OF ANY OR ALL OF THE SAME. THE BORROWER HEREBY EXPRESSLY WAIVES ANY
RIGHT TO INTERPOSE A COUNTERCLAIM IN ANY ACTION OR PROCEEDING ON OR RELATED TO
THIS AGREEMENT EXCEPT FOR MANDATORY COUNTERCLAIMS.
64
(c) Each party hereto (i) certifies that no representative, agent or
attorney of any Bank has represented, expressly or otherwise, that such Bank
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.
10.11 Confidentiality. The Agent and the Banks 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 Bank (the "Information").
Notwithstanding the foregoing, the Agent and each Bank 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 Bank 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 Bank on a non-
confidential basis prior to its disclosure to the Agent or such Bank 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 subsection 10.3(g) hereof.
10.12 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 proceeding, any objection, including,
without limitation, any objection to the laying of venue or based on the grounds
of
65
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 10.1 hereof.
(d) Nothing herein shall affect the right of the Agent or any Bank 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.
10.13 Further Assurances. The Borrower agrees at any time and from time
------------------
to time at its expense, upon request of the Bank, to promptly execute, deliver,
or obtain or cause to be executed, delivered or obtained any and all further
instruments and documents and to take or cause to be taken all such other action
as the Bank may reasonably deem desirable in obtaining the full benefits of the
Loan Documents.
10.14. Counterparts. 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.
10.15. 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.
66
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
Borrower:
---------
NU HORIZONS ELECTRONICS CORP.
By: /s/ Xxxx Xxxxxxx
---------------------------
Xxxx Xxxxxxx
Vice President/Finance
Agent:
------
MELLON BANK, N.A., as Agent
By Mellon Financial Services Corporation, as
Attorney-in-fact for Mellon Bank, N.A.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxx
Vice President
Banks:
------
MELLON BANK, N.A., as Agent
By Mellon Financial Services Corporation, as
Attorney-in-fact for Mellon Bank, N.A.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxx
Vice President
EUROPEAN AMERICAN BANK
By: /s/ Xxxx Xxxxxxx
---------------------------
Xxxx Xxxxxxx
Vice President
HSBC BANK USA
By: /s/ Xxxxxx Dionion
---------------------------
Xxxxxx Dionion
Vice President
00
Xxxxx xx Xxx Xxxx, Xxxxxx xx Xxxxxx, ss:
On the 28/th/ day of October, in the year 1999, before me the undersigned,
personally appeared XXXX XXXXXXX, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual or the
person upon behalf of which the individual acted, executed the instrument.
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Notary Public
State of New York, County of Nassau, ss:
On the ___ day of October, in the year 1999, before me the undersigned,
personally appeared XXXXXXX X. XXXXXXXX, personally known to me or proved to me
on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual or the person upon behalf of which the individual acted, executed the
instrument.
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Notary Public
State of New York, County of Nassau, ss:
On the ___ day of October, in the year 1999, before me the undersigned,
personally appeared XXXX XXXXXXX, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual or the
person upon behalf of which the individual acted, executed the instrument.
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Notary Public
State of New York, County of Nassau, ss:
On the ___ day of October, in the year 1999, before me the undersigned,
personally appeared XXXXXX DIONION, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual or the
person upon behalf of which the individual acted, executed the instrument.
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Notary Public
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SCHEDULE I
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Revolving Credit Commitments (Section 2.1)
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Percentage of Total
Revolving Credit Revolving Credit
Bank Commitment Commitment
---- ---------------- -------------------
Mellon Bank, N.A. $25,000,000 45.5%
European American Bank $16,500,000 30%
HSBC Bank USA $13,500,000 24.5%
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