Exhibit 10.27(b) to the Form 10-K
LOAN MODIFICATION AGREEMENT
THIS LOAN MODIFICATION AGREEMENT (the "Agreement") executed to be effective
as of the 29th day of January, 1999, by and between ScanSource, Inc., a
corporation organized and existing under the laws of South Carolina (hereinafter
referred to as the "Borrower"); and Branch Banking and Trust Company of South
Carolina, a state chartered banking institution with offices in Greenville,
South Carolina (the "Bank").
WITNESSETH:
WHEREAS, the Bank has previously issued the Borrower a line of credit in an
amount of Fifteen Million and No/100 Dollars ($15,000,000.00) (the "Revolving
Credit Loan");
WHEREAS, the Revolving Credit Loan is evidenced by that certain promissory
note executed by Borrower dated November 25, 1996 (the "Revolving Credit
Promissory Note");
WHEREAS, the Revolving Credit Loan is further evidenced, among other
things, by that certain Loan and Security Agreement executed by Borrower and the
Bank dated November 25, 1996 (the "Loan Agreement"):
WHEREAS, the Borrower has requested that the Bank, upon certain conditions
described herein, increase the amount of the Revolving Credit Loan Commitment
Thirty-Five Million and No/100 Dollars ($35,000,000.00) and to renew the
Resolving Credit Loan; and
WHEREAS, the expiration of the Revolving Credit Loan was extended pursuant
to a Note Modification Agreement dated December 18, 1998 (the "Note Modification
Agreement");
WHEREAS, the Borrower desires to amend the terms of the Revolving Credit
Loan pursuant to this Agreement and the Bank is willing to do so under certain
conditions described herein.
NOW, THEREFORE, in consideration of the mutual promises contained herein
below, the sum of Five and No/100 Dollars ($5.00) and other good and valuable
consideration, the receipt, sufficiency and adequacy of which the parties do
hereby acknowledge, the parties do hereby agree as follows:
1. The Loan Agreement, the Revolving Credit Note, Note Modification
Agreement, the other Loan Documents described in the Loan Agreement,
and any and all other documents relating thereto or amended or renewed
thereby are hereinafter referred to as the "Existing Loan Documents."
2. The Revolving Credit Note is hereby renewed and amended and increased
to the amount of up to $35,000,000.00, as evidenced by the
Modification, Increase, Renewal and Restatement of Promissory Note of
even date herewith, executed and
delivered by the Borrower in favor of the Bank (the "Note Amendment");
and the Loan Documents shall be amended to govern, secure and include
the Note Amendment to be effective as if the Note Amendment was
executed as of the initial date of the Revolving Credit Note. All
references in the Loan Documents to the Revolving Credit Note shall
hereinafter reference the Note Amendment. The Note Amendment is not a
novation or cancellation of the indebtedness evidenced by Revolving
Credit Promissory Note.
3. The Loan Agreement is hereby amended as follows:
a. The definition of Applicable Margin in Section 1 is hereby amended
-----------------
so that the Debt to Tangible Net Worth/Margin table found therein
is deleted and the following is hereby substituted in its place:
"Debt to Tangible Net Worth Margin
-------------------------- ------
Less than or equal to .75:1.00 150 basis points
Between .75:1.00 and 1.35:1.00 175 basis points
Between 1.36:1.00 and 2.00:1.00 200 basis points"
b. By adding a new definition of Commitment, as follows:
----------
"Commitment means the applicable figure set forth in Section
----------
2.01(A)(a)".
c. Section 2.01(A) is hereby deleted and the following is hereby
substituted in its place:
"Subject to the terms of this Agreement, the Bank has agreed to
make available to the Borrower for Borrower's use from time to time
during the term of this Agreement, pursuant to this Agreement and
the Credit Line Sweep Account Service Agreement, a total line of
credit ("Revolving Credit Loan") at any time equal to the lesser
of:
(a) (i) if prior to the Borrower's fulfillment of the conditions of
Section 2.01(C) hereof, $15,000,000.00, or (ii) if after the
Borrower's fulfillment of the conditions of Section 2.01 (c)
hereof, $35,000,000.00; or
(b) the Borrowing Base;
provided, however, that the Bank shall retain as a non-disbursed
reserve from the Revolving Credit Loan an amount equal to the
Borrower's Letter of Credit Obligations (the "Letter of Credit
Reserve"). Borrower shall submit a completed collateral Report to
the Bank at least once a month (within 15 days of month-end) so
long as any Obligations are outstanding."
d. By adding a new Section 2.01(c), as follows:
2
"The Bank has agreed that, so long as there exists no default under
any Obligation of the Borrower and the Borrower has provided the
Bank with the following, the Commitment shall be increased to
$35,000,000.00:
i. Payment of an extension fee of $12,000.00 to the Bank;
ii. Receipt of evidence satisfactory to the Bank that the Bank has
a first priority security interest in all of the Borrower's
assets other than its real estate. Such evidence shall
include, but not be limited to opinion letters from Borrower's
counsel; and
iii. Receipt of evidence satisfactory to the Bank that the Borrower
has paid all necessary fees, taxes or other costs necessary to
fully secure the Bank's security interest in the assets of the
Borrower."
e. The following shall be added to the end of Section 2.01(B)(i): "if
the Commitment is limited to $15,000,000.00, and Eligible Inventory
shall at no time exceed $11,500,000.00 if the commitment has been
increased to $35,000,000.00, as provided herein;".
f. The first sentence in Section 2.05(C) is hereby deleted and the
following is substituted in its place: "An origination fee of
$9,000.00 will be payable by the Borrower to the Bank on or before
January 29, 1999, and if the Borrower elects to increase the
Commitment from $15,000,000.00 to $35,000,000.00, a fee of
$12,000.00 will be immediately payable by the Borrower to the Bank,
along with submission of the other documents required hereunder."
g. The first sentence in Section 6.01(P) is hereby deleted and the
following substituted in its place: "Borrower will maintain at all
times a Tangible Net Worth of not less than $49,000,000.00 as of
June 30, 1998, which amount shall increase by not less than
$3,500,000.00 as of each fiscal year of the Borrower."
h. Section 6.02(E)(6) is hereby deleted and the following substituted
in its place: "During any fiscal year of the Borrower, additional
indebtedness of One Million and No/100 Dollars ($1,000,000.00)."
i. Section 6.02(F) is hereby deleted and the following substituted in
its place: "During each fiscal year of the Borrower, the Borrower's
capital expenditures shall not exceed $2,500,000.00."
j. The following is added to the end of Section 6.02(H): "unless the
Borrower's acquisition of such stock in, or all or substantially
all of the assets of another Person, whether in a single
transaction or series of transactions do not exceed, for all such
transactions, an aggregate of $2,000,000.00, including the purchase
price thereof, and any and all expenses, fees, management
incentives, and other costs related thereto."
3
k. Section 6.02(K) is hereby deleted and the following substituted in
its place: "Borrower shall not incur operating leases for
machinery, real estate or equipment which in the aggregate annually
require payments in excess of $450,000.00."
l. Section 8.01 is hereby amended by replacing the date of October 31,
1998 with October 31, 2001.
4. It is a condition to the Bank's agreement to amend the terms of the
Revolving Credit Loan pursuant to this Agreement that the Borrower
execute and/or deliver to the Bank the following, each of which must
be acceptable to the Bank, in its sole discretion:
a. The Note Amendment;
b. A commitment fee of to $9,000.00;
c. Evidence of the proper authorization of the Borrower to enter into
this Agreement and to increase the Commitment.
d. Evidence of the Bank's first priority security interest in the
collateral described in the Loan Documents;
e. All Uniform Commercial Code Financing Statements and/or amendments
thereto necessary to fully protect the Bank's first priority
security in the Borrower's assets, each of which must evidence
payment for the taxes or filing fees relating thereto
(collectively, the "new UCC's");
f. Evidence of the Borrower's good standing in each of the
jurisdictions in which the Borrower is required to be authorized
to transact business; and
g. An opinion from Borrower's counsel, including applicable Tennessee
counsel, satisfactory to the Bank which states, among other
things, that the Bank has a first priority security interest in
all of the Borrower's assets other than its real property.
Notwithstanding anything in this subsection (g) to the contrary,
the Tennessee counsel opinion must be provided within 45 days of
the date hereof.
5. The term "Loan Documents" is hereinafter defined to include, but not
limited to, the Existing Loan Documents, the Note Amendment and this
Agreement.
6. The Borrower hereby affirms that all of the representations and
warranties set forth in the Loan Documents, as amended hereby, are
true and correct as of the date hereof. The Borrower hereby warrants
and covenants to the Bank that it has not changed its company name,
principal place of business or the location of any of its assets, and
that each of the exhibits to the Loan Agreement are accurate and
complete.
7. It is intended that the modification of the Loan Documents set forth
in this Agreement and the Note Amendment shall not disturb the
existing priority of the Bank's security interests.
4
8. The Borrower represents and warrants that, at the time of the
execution and delivery of this Agreement, (i) the Borrower has good
and absolute title to the property encumbered by the Loan Documents
(collectively the "Property"); has full power and authority to subject
the same to the lien of the Loan Documents; and the same is free and
clear of all liens, charges and encumbrances whatsoever, except those
permitted by the Loan Documents; the Intercreditor Agreement by and
between the Bank and Finova Capital Corporation dated April 30, 1998;
and the Intercreditor Agreement by and between the Bank and IBM
Creditor Corporation dated April 8, 1996; (ii) all leases to which the
Borrower is party and valid and binding upon the Borrower and the
landlord(s) referenced therein; (iii) all leases to which the Borrower
is party and in good standing and no event of default has occurred
pursuant to any such lease, except as specifically described in
Exhibit A attached hereto; and (iv) the Borrower has provided to the
Bank landlord lien waivers from all landlords of the Borrower, except
those specifically waived by the Bank in writing.
9. The Loan Documents shall secure payment of the Loan, as modified by
this Agreement and Note Amendment, with the same force and effect as
when the Loan Documents were executed.
10. Any collateral given, pledged, assigned, or conveyed to the Bank by
the Borrower as security for any of the Loan Documents, shall also
secure each and every one of the Loan Documents, as amended hereby,
whether such collateral shall be real or personal, contract rights or
intangibles, and without regard to specific references in such
collateral document to a specific Loan Document or an amount secured
thereby.
11. The execution, delivery and performance of this Agreement and each
other agreement, note or other document contemplated hereby to which
the Borrower is a party in accordance with their respective terms do
not and will not, by the passage of time, the giving of notice, or
otherwise:
a. require any governmental approval or violate any applicable law
relating to the Borrower;
b. conflict with, result in a breach of, or constitute a default under
the Articles of Incorporation or Bylaws of the Borrower, any
material provisions of any indenture, agreement or other instrument
to which the Borrower is a party or by which the Borrower or any of
its properties may be bound or any governmental approval relating
to the Borrower.
12. Except as expressly amended herein, all terms, conditions and
provisions of the Loan Documents shall remain in full force and
effect.
13. It is the intention of each of the undersigned that the provisions of
this Agreement are hereby incorporated by reference into and made a
part of each of the Loan Documents.
5
14. All costs, fees and expenses (including reasonable attorneys' fees),
incurred in connection with this Agreement and/or the consummation of
the transactions contemplated hereby shall be paid by the Borrower
upon the execution hereof.
15. The Borrower agrees to indemnify the Bank and hold the Bank harmless
for any and all claims or causes of action that may arise in
connection with the consummation of the transactions contemplated by
this Agreement; provided, however, that Bank shall not have the right
to be indemnified for any liability resulting from the gross
negligence or willful misconduct of Bank.
16. This Agreement is not intended to operate as, and shall not be
construed as, a waiver of any Event of Default, whether known to Bank
or unknown, as to which all rights of Bank shall remain reserved.
17. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
18. This Agreement shall be construed in accordance with, and governed by,
the laws of the State of South Carolina.
19. BORROWER WAIVES TRIAL BY JURY AND CONSENT TO THE GRANTING OF SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE A JUDGE OF THE
COURT OF COMPETENT JURISDICTION.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of January 29, 1999.
ScanSource, Inc. (SEAL)
/S/ XXXX XXXXXXXX By: /S/ XXXXXXX X. XXXXXX
------------------------------ --------------------------------
WITNESS Its: CFO
------------------------------
/S/ XXXXX XXXXX
-------------------------------
WITNESS
BRANCH BANKING AND TRUST
COMPANY OF SOUTH CAROLINA
(SEAL)
/S/ XXXX XXXXXXXX By: XXXXXXX X. XXXXX
------------------------------- ------------------------------
WITNESS Its: VICE-PRESIDENT
------------------------------
/S/ XXXXX XXXXX
-------------------------------
WITNESS
6
STATE OF SOUTH CAROLINA )
) PROBATE
COUNTY OF GREENVILLE
PERSONALLY appeared before me the undersigned witness who made oath that
s/he saw the within named ScanSource, Inc. by its duly authorized officer, sign,
seal and as its act and deed deliver the within written instrument and that s/he
with the other witness subscribing above witnessed the execution thereof.
/S/ XXXX XXXXXXXX
----------------------------------
(Witness)
SWORN to and subscribed before me
this 29th day of January, 1999.
/S/ XXXXX XXXXX (L.S.)
------------------------------
Notary Public for South Carolina
My Commission Expires: 8/17/2000
7
STATE OF SOUTH CAROLINA )
) PROBATE
COUNTY OF GREENVILLE
PERSONALLY appeared before me the undersigned witness who made oath that
s/he saw the within named Branch Banking and Trust Company of South Carolina by
its duly authorized officer, sign, seal and as its act and deed deliver the
within written instrument and that s/he with the other witness subscribing above
witnessed the execution thereof.
/S/ XXXX XXXXXXXX
----------------------------------
(Witness)
SWORN to and subscribed before me
this 29th day of January, 1999.
/S/ XXXXX XXXXX (L.S.)
------------------------------------
Notary Public for South Carolina
My Commission Expires: 8/17/2000
8
EXHIBIT A
---------
Leases Not In Good Standing
l. Lease between Procom Supply Corporation and Diversified Properties
dated July 24, 1986, amended April 30, 1998 covering the premises
located at 0000 Xxxxxxx Xxxxxx, Xxxxxxxx X-x, Xxx Xxxxx, Xxxxxxxxxx,
containing approximately 6,765 square feet, for a term expiring July
31, 2000. ScanSource acquired the assets of the Lessee in September
1997. ScanSource vacated the premises in December 1998 and claims the
landlord breached the lease for unreasonably withholding consent to
assign the lease. The Landlord has not filed any claim against
ScanSource.
9
MAKER: ScanSource, Inc. 751-0066566
-----------
ADDRESS: 0 Xxxxx Xxxxx, Xxxxx X Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
003
--------------
Note Number
MODIFICATION, INCREASE, RENEWAL AND
RESTATEMENT OF PROMISSORY NOTE
$35,000,000.00 $15,000,000.00 $ -0- November 25, 1996 January 29, 1999
--------------- --------------- ------------------------ ----------------- -----------------
Modified Amount Original Amount Balance at Modification Original Date Modification Date
THIS MODIFICATION, INCREASE, RENEWAL AND RESTATEMENT OF PROMISSORY NOTE
("Note") is made this 29/th/ day of January, 1999, by and between ScanSource,
Inc. ("Maker"), a South Carolina corporation, and BRANCH BANKING AND TRUST
COMPANY OF SOUTH CAROLINA ("Bank"), a South Carolina banking corporation, having
branch offices in Greenville, South Carolina. This Note renews, increases and
restates Maker's Promissory Note dated November 25, 1996, as modified on
December 18, 1998 (as modified, the "Original Note"), payable to the order of
the Bank in the original principal amount of Fifteen Million and No/100ths
Dollars ($15,000,000.00). As of the date hereof, the outstanding principal
balance under the Original Note is $ -0-, and, at the Maker's request, the Bank
has advanced the principal sum of $ -0-.
FOR VALUABLE CONSIDERATION RECEIVED, Maker promises to pay to Bank or order
at its offices in Greenville, South Carolina, or such other place as may be
designated by Bank, the principal amount of Thirty-five Million and No/100ths
Dollars ($35,000,000.00) as follows: (i) accrued interest payable monthly
commencing February 26, 1999 and continuing on the same day of each calendar
period thereafter with one final payment of all interest due on October 31, 2001
(the "Maturity Date"), and (ii) any unpaid principal and any accrued but unpaid
interest on the Maturity Date. Prior to an event of default hereunder, the
Maker may borrower, repay and reborrow until the Maturity Date. This Note may
be prepaid in whole or in part at any time; provided, that any partial
prepayment shall be applied first to interest then accrued, then to the
outstanding principal balance in the inverse order of maturity. Principal and
interest shall be payable in lawful money of the United States of America and in
immediately available funds.
Interest shall accrue on the principal balance outstanding at a fluctuating
rate equal to the Adjusted LIBOR Rate, as defined in the Addendum to Promissory
Note attached hereto and incorporated by reference herein, which shall be
adjusted monthly on the first day of each month. From and after the date of
any event of default under this Note, interest shall accrue at the Bank's Prime
Rate plus 5.0% per annum (the "default rate"), provided however that such rate
shall not exceed at any time the highest rate of interest permitted under the
law of the State of South carolina. The term "Prime Rate" as used herein means
the rate of interest per annum announced by the Bank from time to time and
adopted as its prime rate at its executive offices in Greenville, South
Carolina, which is one of several rate indexes employed by the Bank when
extending credit. All interest shall be computed and charged for the actual
number of days elapsed on the basis of a year consisting of 360 days. The Maker
shall pay to Bank a late fee in the amount of 4% of any installment past due for
15 or more days. Where any installment payment is past due for 15 or more days,
subsequent payments shall first be applied to the past due balance.
This Note is executed and delivered by the Maker subject to the terms of a
Loan and Security Agreement dated November 25, 1996, as amended by a Loan
Modification Agreement dated of even date herewith between the Maker and the
Bank (collectively, the "Loan Agreement"), and the Maker is entitled to the
rights, benefits, and obligations set forth therein, reference to which is made
for a complete description thereof. This Note is secured by a security interest
in the Maker's assets granted under the Loan Agreement. The Maker hereby
ratifies and affirms the terms and provisions of the Loan Agreement, and
represents and warrants that it has no claims or defenses to their validity or
enforceability. The indebtedness and obligations of the Maker evidenced by the
Original Note are not extinguished hereby, and the Maker acknowledges that this
Note constitutes a modification, renewal, increase and restatement of and for
the Original Note. The execution and delivery of this Note shall in no way
impair the security now held for the indebtedness evidenced by the Original
Note, and all such security shall secure payment of this Note to the same extent
as the Original Note.
The failure to pay any part of the principal or interest when due under
this Note or to fully perform any covenant or obligation under the Loan
agreement or any other security document executed in connection therewith or on
any other liability to Bank my the Maker, or by any guarantor or surety of this
Note (such surety or guarantor herein called Obligor), or if any financial
statement or other representation or warranty made to Bank by Maker or any
Obligor shall be found to be materially incorrect or incomplete or in the event
of a default under any other obligation of Maker in favor of Bank, or in the
event Bank demands that Maker secure or provide additional security for their
obligations under the Note and security deemed adequate and sufficient by Bank
is not given when demanded, or in the event Maker shall terminate its existence
or allow the appointment of a receiver for any part of its property, make an
assignment for the benefit of creditors or where a proceeding under bankruptcy
or insolvency laws is initiated
10
by or against Maker or any Obligor, or in the event Bank shall in good faith
otherwise deem itself, its liens and security interests, or any collateral
unsafe or insecure; or should Bank in good faith believe that the prospect of
payment or performance is impaired, then any one of the same shall be material
default hereunder and this Note and any other indebtedness due the Bank by Maker
shall immediately become due and payable without notice, at the option of the
Bank. In the event of any default, the then remaining unpaid principal amount
and accrued but unpaid interest shall bear interest at the default rate set
forth above until such principal and interest have been paid in full, and the
default rate shall apply from and after th date of any judgement obtained
against Maker. In addition, in the event of any default, Bank may pursue its
full legal remedies at law or equity, and the balance due hereunder may be
charged against obligation of the Bank to Maker or any Obligor.
No delay or omission on the part of the holder of this Note in exercising
any right hereunder shall operate as a waiver of such right or of any other
right of such holder, nor any delay, omission, or waiver on any one occasion be
deemed a bar to or a waiver of the same or of any other right on any future
occasion. Maker and each Obligor regardless of the time, order or place of
signing, waives presentment, demand, protest and notices of every kind, and
consents to any one or more extensions or postpones of the time of payment or
any other indulgences, to any substitutions, exchanges or releases of collateral
if any time there shall be available to the holder collateral for this Note, and
to the additions or releases of any other parties or person primarily or
secondarily liable herefor.
If this Note is placed with an attorney for collection, Maker agrees to pay
in addition to principal, interest, and late fees, if any, all costs of
collection, including but not limited to reasonable attorney's fees. All
obligations of Maker and of any Obligor shall bind their respective heirs,
executors, administrators, personal representatives, and assigns. This Note
shall be governed by and construed in accordance with the laws of South
Carolina, and wherever, possible each provision of this Note shall be
interpreted in such a manner to be effective and valid under applicable law. If
any provision of this Note shall be prohibited or invalid under applicable law,
such provision shall be ineffective but only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note. Maker hereby waives all exemptions and
homestead laws. No waivers or modifications shall be valid unless in writing and
signed by Bank. In case of a conflict between the terms of this Note and the
Loan Agreement, the priority of controlling terms shall be first in the Loan
Agreement, then in this Note.
From time to time the maturity date of this Note may be extended, or this
Note may be renewed in whole or in part, or a new note of different form may be
substituted for this Note, or the rate of interest may be modified, or changes
may be made in consideration of loan extensions, and the holder hereof, from
time and time may waive or surrender, either in whole or in part any rights,
guaranties, secured interest, or liens, given for the benefit of the holder in
connection with the payment and the securing the payment of this Note; but no
such occurrence shall in any manner affect, limit, modify, or otherwise impair
any rights, guaranties or security of the holder note specifically waived,
released, or surrendered in writing, nor shall the Maker, or any guarantor,
endorser, or any person who is or might be liable hereon, either primarily or
contingently, be released from such liability by reason of the occurrence of any
such event. The holder hereof, from time to time, shall have the unlimited
right to release any person who might be liable hereon, in any such release
shall not affect or discharge the liability of any other person who is or might
be liable hereon.
IN WITNESS WHEREOF, the Maker on the day and year first written above has
caused this Note to be executed under seal by its officer.
SCANSOURCE, INC.
a South Carolina Corporation (SEAL)
ATTEST:
By: /S/ XXXX XXXXXXXX By: /S/ XXXXXXX X. XXXXXX (SEAL)
----------------- ---------------------------
_________________ Secretary Its: CFO
---------------------------
[Corporate Seal]
Approved:
BRANCH BANKING AND TRUST COMPANY
OF SOUTH CAROLINA (SEAL)
By: /S/ XXXXXXX X. XXXXX
------------------------------------
/S/ XXXXXXX X. XXXXX, Vice President
------------------------------------
11
ADDENDUM TO PROMISSORY NOTE
THIS ADDENDUM TO PROMISSORY NOTE ("Addendum") is hereby made a part of the
Modification, Increase, Renewal and Restatement of Promissory Note dated January
29, 1999, from ScanSource, Inc., a South Carolina corporation ("Borrower")
payable to the order of Branch Banking and Trust Company of South Carolina
("Bank") in the principal amount of $35,000,000.00 (including all renewals,
extensions, modifications and substitutions therefore, the "Note").
1 DEFINITIONS.
1.1 Adjusted LIBOR Rate means a rate of interest per annum equal to the sum
obtained (rounded upwards, if necessary, to the next higher 1/100ths of
1.0%) by adding (i) 30-day LIBOR plus (ii) the Applicable Margin, as
described in the Loan and Security Agreement dated November 25, 1996, by
and between the Bank and the Borrower, as amended of even date herewith
(collectively, the "Loan Agreement"), which shall be adjusted monthly on
the first day of each month for each LIBOR Interest Period. If the first
day of any month falls on a date when the Bank is closed, the Adjusted
LIBOR Rate shall be determined as of the last preceding business day. The
Adjusted LIBOR Rate shall be adjusted for any change in the LIBOR Reserve
Percentage so that Bank shall receive the same yield.
1.2 30-day LIBOR means the average rate (rounded upward, if necessary, to the
next higher 1/100th of one percent) quoted on Bloomberg Screen MMR2 or Page
3750 (or such replacement page) of the Telerate Service on the
determination date for deposits in U.S. Dollars offered in the London
interbank market for one month, or if the above method for determining
LIBOR shall not be available, a rate determined by a substitute method of
determination agreed on by Borrower and Bank; provided, if such agreement
is not reached within a reasonable period of time (in Bank's judgment), a
rate reasonably determined by Bank in its sole discretion as a rate being
paid, as of the determination date, by first class banking organizations
(as determined by Bank) in the London interbank market for U.S. Dollar
deposits.
1.3 LIBOR Advance means the outstanding principal balance of the Loan made by
Bank to Borrower evidenced by this Note upon which the Adjusted LIBOR Rate
of interest shall apply.
1.4 LIBOR Interest Period means a period of one calendar month as may be
elected by the Borrower applicable to any LIBOR Advance which shall begin
on the first day of any month notwithstanding the maturity date of this
Note; provided, however, that a LIBOR Interest Period may be less than one
calendar month in and only in the calendar month in which the Note
originates or matures.
1.5 LIBOR Reserve Percentage means the maximum aggregate rate at which
reserves (including, without limitation, any marginal, supplemental or
emergency reserves) are required to be maintained under Regulation D by
member banks of the Federal Reserve System with respect to dollar funding
in the London interbank market. Without limiting the effect of the
foregoing, the LIBOR Reserve Percentage shall reflect any other reserves
required to be maintained by such member banks by reason of any applicable
regulatory change against (i) any category of liability which includes
deposits by reference to which the Adjusted LIBOR Rate is to be determined
or (ii) any category of extensions of credit or other assets related to
LIBOR.
1.6 Standard Advance means the aggregate principal advances made by Bank to
Borrower evidenced by this Note upon which the Standard Rate shall apply
should the conditions in 2.2(b) occur.
1.7 Standard Rate means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to the Bank's announced Prime
Rate per annum, and each change in the Standard Rate shall be effective on
the date any change in the Prime Rate is publicly announced as being
effective.
II. LOANS BEARING ADJUSTED LIBOR RATE
2.1 Election of Adjusted LIBOR Rate. The Adjusted LIBOR Rate shall apply to
-------------------------------
the entire principal balance outstanding of the loan for any LIBOR Interest
Period.
2.2 Adjusted LIBOR Based Rate Protections.
-------------------------------------
a. Inability to Determine Rate. In the event that Bank shall have
---------------------------
determined, which determination shall be final, conclusive and binding,
that by reason of circumstances occurring after the date of this Note
affecting the London interbank market, adequate and fair means do not
exist for ascertaining the LIBOR on the basis provided for in this Note,
Bank shall give notice (by telephone confirmed in writing or by
telecopy) to Borrower of such
12
determination, whereupon (i) no LIBOR Advance shall be made until Bank
notifies Borrower that the circumstances giving rise to such notice no
longer exist, and (ii) any request by Borrower for a LIBOR Advance shall
be deemed to be a request for a Standard Advance.
b. Illegality; Impracticability. In the event that Bank shall determine,
----------------------------
which determination shall be final, conclusive and binding, that the
making, maintaining or continuance of any portion of a LIBOR Advance (i)
has become unlawful as a result of compliance by Bank with any law,
treaty, governmental rule, regulation, guideline or order (or would
conflict with any of the same not having the force of law even though
the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause Bank material hardship, as a result
of contingencies occurring after the date of this Note materially and
adversely affect the London interbank market or Bank's ability to make
LIBOR Advances generally, then, and in any such event, Bank shall give
notice (by telephone confirmed in writing or by telecopy) to Borrower of
such determination. Thereafter, (x) the obligation of Bank to make any
LIBOR Advances or to convert any portion of the loan to a LIBOR Advance
shall be suspended until such notice be withdrawn by Bank, and (y) any
request by Borrower for a LIBOR Advance shall be deemed to be a request
for a Standard Advance.
BORROWER:
ScanSource, Inc.,
a South Carolina Corporation (SEAL)
ATTEST:
By: /S/ XXXX XXXXXXXX By:/S/ XXXXXXX X. XXXXXX
-------------------------- --------------------------- (SEAL)
________________ Secretary Its: CFO
---------------------------
[Corporate Seal]
13
