Exhibit 10.19
SouthTrust Revolving Loan Agreement
SouthTrust Bank
ST Cap Fundssm
BORROWER: SECURED PARTY:
American Micro Computer Center, Inc. SouthTrust Bank
6073 N.W. 167th Street, Unit C-25 Post Office Box 2554
Miami, Miami-Dade, Florida 33015 Xxxxxxxxxx, Xxxxxxx 00000
City County State Zip Attn: Asset Based Lending Department
This Agreement dated October ___, 2000 (the "Effective Date") made by
and between AMERICAN MICRO COMPUTER CENTER, INC., a Florida corporation
("Borrower") and SOUTHTRUST BANK, an Alabama state banking corporation,
having its principal place of business in Birmingham, Alabama ("Bank").
WITNESSETH:
That for valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and in consideration of the mutual promises herein
made, Bank and Borrower, intending to be and being legally bound, hereby
agree as follows:
ARTICLE I - THE REVOLVING LOAN
Section 1.1. Bank hereby agrees to lend to Borrower, and Borrower
hereby agrees to borrow from Bank, upon the terms and conditions set forth in
this Agreement, the maximum principal sum of up to the lesser of One Million
Five Hundred Thousand dollars ($1,500,000) (the "Maximum Loan Amount") or the
"Aggregate Loan Values" (defined below in Section 1.2) (the "Revolving
Loan"). Borrower's obligation to repay the Revolving Loan and the interest
thereon shall be evidenced by a promissory note (the "Note") in form and
substance satisfactory to Bank. Until the earlier of November 1, 2001, (the
"Maturity Date") or the occurrence of any Event of Default (as defined under
Article VI of this Agreement), or any event that with notice or the lapse of
time or both, would become an Event of Default, Borrower may borrow
hereunder, prepay the principal sum of such loans in whole or in part without
penalty, and reborrow hereunder, so long as the aggregate unpaid principal
balance of such loans does not exceed the maximum principal amount set forth
in the preceding sentence of this Section 1.1. Bank may require at any time
that loans be made upon at least one banking day's notice to Bank. Bank may
disburse each loan by credit to Borrower's transaction account with Bank, by
check, or in such other manner as Borrower and Bank may agree. All interest
payable hereunder or under the Note shall be calculated based on a 360-day
year (i.e., computed on the actual number of days elapsed over a year of 360
days unless reference to a 365 or a 366-day year is necessary in order not to
exceed the highest rate permitted by any applicable law).
Section 1.2. Bank's obligation to advance funds under the Revolving
Loan shall be limited to the lesser of the Maximum Loan Amount or the
Aggregate Loan Values. For purposes of this Agreement, the "Aggregate Loan
Values" shall consist of the sum of the Loan Value of Accounts and the Loan
Value of Inventory. For purposes of this Agreement, Loan Value of Accounts
shall mean an amount no greater than eighty-five percent (85%) of the
Eligible Accounts of Borrower; and Loan Value of Inventory shall mean the
lesser of 50% of Borrower's Eligible Inventory or $750,000. With respect to
all Accounts, Borrower represents and warrants to Bank that Bank may rely, in
determining which Accounts are Eligible Accounts, on all statements and
representations made by Borrower with respect to any Account or Accounts.
Section 1.3. Borrower agrees to pay interest on the Revolving Loan at
the rate(s), on the date(s), and calculated by the method, set forth in the
Note. Unless payment is required to be made earlier under the terms of the
Note or pursuant to Section 6.2 of this Agreement following an Event of
Default, Borrower shall pay the unpaid principal balance of the Revolving
Loan in full on the Maturity Date.
Section 1.4. Borrower shall submit a Borrower's report in the form
prescribed by the Bank on the date of this Agreement and at least monthly (or
at Bank's request, daily) thereafter during the term of this Agreement. Bank
may, in its sole discretion, require that each advance made under the
Revolving Loan be effected by Borrower's submitting (and the Bank's
receiving) a Borrower's report at least one Business Day prior to the date
Borrower desires the advance to be made. Bank shall, if all the terms and
provisions of this Agreement have been met, including, without limitation,
the absence of an Event of Default hereunder, make such advances. Each such
Borrower's report shall be signed by an officer or employee of Borrower
authorized by Borrower to execute such reports, whose name(s) shall be
included in a certificate furnished to the Bank. Each request for a loan or
advance made by Borrower pursuant to this Agreement or any of the other Loan
Documents shall constitute (i) an automatic representation and warranty by
Borrower to Bank that there does not then exist any default or Event of
Default and (ii) a reaffirmation as of the date of said request that all of
the representations and warranties of Borrower contained in this Agreement
and the other Loan Documents are true in all material respects except for any
changes in the nature of Borrower's business or operations that would render
the information contained in any exhibit attached hereto either inaccurate or
incomplete, so long as Bank has consented to such changes or such changes are
expressly permitted by this Agreement.
Section 1.5. Borrower shall pay to Bank an annual facility fee in the
amount of $3,750.00 upon closing of the Revolving Loan and on each
anniversary date of the closing (the "Facility Fee"), which fee shall be
deemed fully earned at the closing of the transactions contemplated hereby,
shall be paid concurrently with the initial Loan hereunder and shall not be
subject to rebate except as may be required by any applicable law. The
Facility Fee shall compensate Bank for the costs associated with the
origination, structuring, processing, approving and closing of the
transactions contemplated by this Agreement, including, but not limited to,
administrative and general overhead, but not including any out-of-pocket or
other expenses for which Borrower has agreed to reimburse Bank pursuant to
any other provisions of this Agreement or any of the Loan Documents
Section 1.6. During the term of this Agreement and for so long as any
portion of the Loan shall be outstanding, Borrower shall pay to Bank an
administrative fee (the "Administrative Fee") in the amount of $500.00 per
month. The charge due pursuant to the terms of this paragraph shall be
payable monthly, in arrears. The Administrative Fee shall be in addition to
all other charges, interest and fees under this Agreement and shall act to
compensate Bank in part for the costs of administering the Loan account and
other services provided by Bank.
Section 1.7. From and after the occurrence of an Event of Default, the
Revolving Loan shall bear interest at a per annum rate of four percent (4%)
in excess of the rate provided for in the Note (the "Default Rate").
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Borrower acknowledges and agrees that the provisions herein and in the Note
relating to the Default Rate represent a fair and reasonable estimate by
Borrower and Bank of a fair average compensation for the loss that may be
sustained by Bank due to the failure of Borrower to make timely payments with
respect to the Obligations and for the cost and expenses that may be incurred
by Bank by reason of the occurrence of an Event of Default, the parties
recognizing that the damages caused by such extra administrative expenses and
loss of the use of funds is impracticable or extremely difficult to ascertain
or estimate. Interest at the Default Rate shall be paid without prejudice to
the rights of Bank to collect any other amounts provided to be paid hereunder.
Section 1.8. Borrower shall have no right to prepay the indebtedness
represented hereby except for periodic repayments not resulting in
termination of the agreement which arise out of application of funds in the
Special Collection account provided for in Section 1.10 or except as provided
in a separate writing executed by Bank.
Section 1.9. The Revolving Loan shall in any event be fully due and
payable upon the Maturity Date. Time is of the essence of this Agreement.
Section 1.10. Borrower shall open a special collection account (the
"Special Collection Account") with Bank, or with another bank designated by
Bank, in which all funds received by Borrower from any source whatsoever,
including, without limitation, funds received from sales of Inventory, all
refunds of taxes, all remittances by Borrower's Account Debtors, insurance
proceeds, all bank wire transfers from Borrower's Account Debtors, and all
other proceeds of Collateral, shall be deposited no later than the next
regular banking day following receipt thereof. The Bank shall have the
exclusive right to withdraw or debit funds from the Special Collection
Account which may be accomplished by any directive signed by any authorized
representative of the Bank. On a daily basis, the Collected Balance in the
Special Collection Account shall be withdrawn by Bank and applied to the
Revolving Loan, or, upon the occurrence of an Event of Default, to the other
Loans. If any Borrower's report shall show insufficient Aggregate Loan
Values to entitle Borrower to maintain the then current balance owing under
the Revolving Loan after applying thereto the Collected Balance of the
Special Collection Account, then Borrower shall immediately deposit into the
Special Collection Account sufficient immediately available funds from which
Bank may draw in order to reduce the principal balance of the Revolving Loan
to the amount allowable under the provisions of this Agreement. At the
request of the Bank, Borrower shall execute documents provided by the Bank to
allow officers or authorized representatives of the Bank to sign checks drawn
on accounts of Borrower maintained in other banks for the purpose of
transferring funds representing proceeds of Collateral to an account or
accounts of Borrower maintained with the Bank or another bank owned by
SouthTrust Corporation, including, without limitation, the Special Collection
Account. At its option, Bank may give Borrower immediate credit for amounts
deposited into the Special Collection Account and charge Borrower on a
monthly basis for interest on the difference between the Ledger Balance and
the Collected Balance for the period of time from the date of deposit until
the funds are collected. "Collected Balance" shall mean the book balance in a
bank account, minus the aggregate amount of all checks and other items of
payment in the process of collection, said amount to be computed in
accordance with the Bank's standard practices. "Ledger Balance" shall mean
the balance reflected on the books of the Bank of the amounts deposited in
the Special Collection Account. In addition to the foregoing charges, Bank
shall charge Borrower customer demand deposit account charges, including, but
not limited to, item charges, bank wire charges, lock box charges, stop
payment charges and other charges associated with demand deposit accounts
used in financings of this kind.
Section 1.11. Borrower shall have no right to prepay the indebtedness
represented hereby (i) except for periodic repayments not resulting in
termination of the agreement which arise out of application of funds in the
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Special Collection Account provided for in Section 1.10 and (ii) except for
prepayment accompanied by termination of the Agreement in accordance with
Section below 1.12 and accompanied by the Termination Fees provided for
therein.
Section 1.12. This Agreement shall remain in force and effect until
the Loan and the Obligations, and any renewals or extensions, and all
interest thereon and costs provided for herein with regard to either of them
have been indefeasibly paid or satisfied in full and until the Bank has no
further obligation to advance funds to the Borrower hereunder. Subject to
the foregoing sentence, Borrower shall have the right to terminate this
Agreement prior to the Maturity Date upon payment of all outstanding
principal, accrued interest and other charges owing under the terms of this
Agreement accompanied by payment of a Termination Fee as follows: (i) If
termination, or if any portion is prepaid from the loan proceeds of another
lender to Borrower occurs on or before November 1, 2001, Borrower shall pay
to Bank a termination fee in the amount of $15,000; (ii) if termination
occurs on or after November 1, 2001, there shall be no termination fee. The
indemnities provided for in Section 8.10 shall survive the payment in full of
the Loan and the Obligations and the termination of this Agreement. Any
termination will be evidenced by a termination letter executed by Borrower
which shall include such indemnifications and releases in favor of Bank as
shall be required by Bank.
Section 1.13. All sums paid to the Bank by Borrower hereunder shall be
paid directly to the Bank in immediately available funds no later than 2:00
P.M., Birmingham, Alabama time on the date on which payment is due, except if
such date is not a Business Day such payment shall then be due on the first
Business Day after such date, but interest shall continue to accrue until the
date payment is received. Any payment received after 2:00 p.m. Birmingham,
Alabama, time shall be deemed to have been received on the immediately
following Business Day for all purposes, including, without limitation, the
accrual of interest on principal. The Bank shall send Borrower statements of
all amounts due hereunder, which statements shall be considered correct and
conclusively binding on the Borrower unless the Borrower notifies the Bank to
the contrary within ten (10) days of its receipt of any statement which it
deems to be incorrect. The Bank may, in its sole discretion, (a) charge
against any deposit account of the Borrower all or any part of any amount due
hereunder, any advances made by Bank to protect the Collateral, and any
commitment or servicing fee due the Bank, and (b) advance to Borrower, and
charge to the Loan, a sum sufficient each month to pay all interest accrued
on the Loan and fees and expenses due under this Agreement, any advances made
by Bank to protect the Collateral, and any commitment or servicing fee due
the Bank, during or for the immediately preceding month or any month prior.
Borrower shall be deemed to have requested an advance under the Loan upon the
occurrence of an overdraft in any of Borrower's checking accounts maintained
with the Bank or another bank owned by SouthTrust Corporation.
Section 1.14. Borrower irrevocably waives the right to direct the
application of any and all payments and collections at any time or times
hereafter received by Bank from or on behalf of Borrower or from any of the
Collateral, and Borrower does hereby irrevocably agree that Bank shall have
the continuing exclusive right to apply such payments and collections
received at any time or times hereafter by Bank or its agent against the
Obligations, in such manner as Bank may deem advisable, notwithstanding any
entry by Bank upon any of its books and records. If as the result of
collections of Accounts or for any other reason, a credit balance exists in
the Loan Account, such credit balance shall not accrue interest in favor of
Borrower but shall be available to Borrower at any time or times for so long
as no Event of Default exists.
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ARTICLE II - COLLATERAL
Section 2.1. The repayment by Borrower of the indebtedness under the
Revolving Loan and the Note, and the performance by Borrower of the
Obligations, are and shall be secured by every mortgage, deed of trust,
assignment, pledge, deed to secure debt and security agreement (whether one
or more, the "Separate Agreements") which secures an obligation so defined as
to include the Revolving Loan or the Note (including, without limitation,
those Separate Agreements described below), and by all property of Borrower
now or hereafter in the possession, control or custody of Bank (in which
property Borrower hereby grants Bank a security interest to secure such
indebtedness and obligations) and by all property in which Bank has or
hereafter acquires a lien, security interest, or other right, including,
without limitation, the property described below (in which property Borrower
hereby grants Bank a security interest to secure such indebtedness and
obligations) [describe property and Separate Agreements]:
1. Security Agreement between Borrower and Bank dated
______________, or if no date is listed, bearing even date herewith (the
"Security Agreement").
2. Loan Agreement dated October 28, 1999, as amended, between
European Micro Holdings, Inc., a Nevada corporation, American Micro Computers
Centers, Inc., a Florida corporation, Nor'easter Micro, Inc., a Nevada
corporation and SouthTrust Bank, and all "Security Instruments" referenced
therein.
3. Guaranty Agreements bearing even date herewith executed by Xxxxx
X. Xxxxxxx and Xxxx X. Xxxxxxxxx (the "Guaranty Agreements").
4. Agreement to Maintain Liquid Assets bearing even date herewith
executed by Xxxxx X. Xxxxxxx (the "Liquidity Agreement").
5. All existing and future security agreements, pledge agreements,
mortgages, deeds of trust, collateral assignments, and other similar security
instruments executed by Borrower or any Affiliate of Borrower, including
Nor'easter Micro, Inc., a corporation, and European Micro Holdings, Inc., a
corporation.
The Separate Agreements are hereby incorporated herein by this reference.
The property described above and the property described in every Separate
Agreement is individually and collectively referred to in this Agreement as
the "Collateral".
Section 2.2. Borrower shall execute and deliver, or shall cause to be
executed and delivered, such documents relating to the Collateral as Bank may
from time to time request.
ARTICLE III -
REPRESENTATIONS AND WARRANTIES; CONDITIONS PRECEDENT
Borrower represents and warrants to Bank that:
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Section 3.1. Borrower is a corporation duly organized and existing
under the laws of the State of Florida, County of Miami-Dade, that Borrower's
Federal Taxpayer Identification Number is 00-0000000 and that Borrower is
qualified to do business in all jurisdictions in which it conducts its
business. Borrower's principal place of business is at 0000 X.X. 000xx
Xxxxxx, Xxxx X-00, Xxxxx, Xxxxxxx 00000. Except for the name, "American
Micro Acquisition Corporation", Borrower has not changed its name or been
known by any other name within the last five (5) years nor has it been the
surviving corporation in a merger effected within the last five (5)years.
Borrower does not now use nor has it ever used any trade or fictitious name
in the conduct of its business.
Section 3.2. The execution and delivery of Borrower of, and the
performance by Borrower of its obligations under, this Agreement, the Note
and the Separate Agreements have been duly authorized by all requisite action
on the part of Borrower and do not and will not (i) violate any provision of
Borrower's articles of incorporation, by-laws, or other organizational
documents, any law or any judgment, order or ruling of any court or
governmental agency, or (ii) be in conflict with, result in a breach of, or
constitute, following notice or lapse of time or both, a default under any
indenture, agreement or other instrument to which Borrower is a party or by
which Borrower or any of its property is bound.
Section 3.3. Each of this Agreement and the Note is the legal, valid
and binding agreement of Borrower enforceable against Borrower in accordance
with its terms.
Section 3.4. Except for the case of BIG BLUE EUROPE AND XXXX AND
XXXXX ALNWICK V. EUROPEAN MICRO HOLDINGS, INC., Borrower's parent, Case No.
99-CV-7380, United States Court for the Eastern District of New York, (the
"Big Blue Litigation"), there are no pending or threatened actions or
proceedings before any court or administrative or governmental agency that
may, individually or collectively, adversely affect the financial condition
or business operations of Borrower.
Section 3.5. All financial statements of Borrower previously delivered
by Borrower to Bank fairly and accurately presents the financial condition of
Borrower as of such date and has been prepared in accordance with generally
accepted accounting principles consistently applied or, if not so prepared,
setting forth the manner in which such financial statement departs from
generally accepted accounting principles. Since the date of said financial
statements, there has been no material adverse change in the financial
condition of Borrower, and, after due inquiry, there exists no material
contingent liability or obligation assertable against Borrower.
Section 3.6. All federal, state and other tax returns of Borrower
required by law to be filed have been completed in full and have been duly
filed, and all taxes, assessments and withholdings shown on such returns or
billed to Borrower have been paid, and Borrower maintains adequate reserves
and accruals in respect of all such federal, state and other taxes,
assessments and withholdings. There are no unpaid assessments pending
against Borrower for any taxes or withholdings, and Borrower knows of no
basis therefor.
Section 3.7. Borrower has no subsidiaries. Borrower is not a partner
or joint venturer with any other Person or a participant in any business
enterprise other than its own for which it is generally liable, nor does
Borrower have any contingent liabilities of any description other than as
indicated in the financial statements heretofore delivered to Bank. Borrower
is not obligated as guarantor, surety or indemnitor under any indemnity,
guaranty, surety or similar bond or other contract issued or entered into any
agreement to assure payment, performance or completion of performance of any
undertaking or obligation of any Person, except that Borrower has guaranteed
certain indebtedness of its parent, European Micro Holdings, Inc., to Bank.
No authorization or approval or other action by, and no notice to or filing
with, any federal, state, or local government body, agency, or authority is
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required for the due execution, delivery, and performance by Borrower of this
Agreement, the Note, or any of the Separate Agreements.
Section 3.8. Borrower possesses all permits, memberships, franchises,
contracts, licenses, trademark rights, trade names, patents, and other
authorizations necessary to enable it to conduct its business operations as
now conducted, and no filing with, and no consent, permission, authorization,
order or license of, any individual, entity, or governmental authority is
necessary in connection with the execution, delivery, performance or
enforcement of this Agreement or the Note.
Section 3.9. No event has occurred and is continuing which is, or
which with the giving of notice or lapse of time or both would be, an Event
of Default (as defined in Article VI) of this Agreement.
Section 3.10. Borrower has good and marketable title to all of its
properties and assets including, without limitation, the Collateral and the
properties and assets reflected in the financial statements referenced in
Section 3.5.
Section 3.11. The minimum funding standards of Section 302 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") have
been met at all times with respect to all "plans" of Borrower to which such
standards apply; Borrower has not made a "partial withdrawal" or a "complete
withdrawal" from any "multi-employer plan"; and no "reportable event" or
"prohibited transaction" has occurred with respect to any such "plan" (as all
of the quoted terms are defined in ERISA).
Section 3.12. Except as otherwise expressly disclosed by Borrower to
Bank in writing on the date of this Agreement: No "hazardous substance" (as
that term is defined in Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ["CERCLA"]) has
been released, discharged, disposed of, or stored on any of Borrower's owned
or leased real or personal property by Borrower, by any third party, or by
any predecessor in interest or title to Borrower; Borrower and all of
Borrower's properties are in compliance with all applicable local, state and
federal environmental laws and regulations; no notice has been served on
Borrower by any governmental authority or any individual or entity claiming
violation of any environmental protection law or regulation, or demanding
compliance with any environmental protection law or regulation, or demanding
payment, indemnity, or contribution for any environmental damage or injury to
natural resources; no "hazardous substance" (as defined in CERCLA) is
produced or used in Borrower's business; and no improvement on any real
property owned or leased by Borrower contains any asbestos, including,
without limitation, asbestos insulation on ceilings, piping or structural
members or supports.
Section 3.13. All Inventory has been produced, and during the term
hereof will be produced, in compliance with the requirements of the Federal
Fair Labor Standards Act. No Inventory is now, nor shall any Inventory at any
time or times hereafter be, stored with a bailee, warehouseman or similar
party.
Section 3.14. Borrower is not engaged in any activity that might
constitute a pattern of racketeering activity or in any other conduct that
might subject all or a material portion of Borrower's assets to forfeiture.
Section 3.15. All information furnished by Borrower to the Bank
concerning the Borrower, its financial condition, the Collateral, or
otherwise for the purpose of obtaining credit or an extension of credit, is,
or will be at the time the same is furnished, accurate and correct in all
material respects and complete insofar as completeness may be necessary to
give the Bank a true and accurate knowledge of the subject matter.
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Section 3.16. Bank shall not be obligated to make any advance under
the Revolving Loan until Borrower shall have furnished to Bank, at Borrower's
expense, such evidence as Bank from time to time may require regarding the
truth or continued truth of the foregoing representations and warranties,
including, without limitation, opinions of Borrower's outside legal counsel,
opinions and certificates of Borrower's independent certified public
accountants, surveys, appraisals, environmental audits by qualified
environmental engineers selected by Bank, report of other independent
consultants selected by Bank, and certificates of Borrower's officers. All
such evidence must be in form and content satisfactory to Bank.
Section 3.17. No Collateral or other property or interests of Borrower
is or shall be located at any place other than as set forth in the Security
Agreement.
ARTICLE IV - AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as it may borrow under this
Agreement or so long as any indebtedness remains outstanding under the
Revolving Loan or under the Note, Borrower shall:
Section 4.1. Deliver to Bank (i) within 30 days after each month an
unaudited financial statement including a balance sheet and statements of
income and cash flows, certified by Borrower's chief executive or chief
financial officer to be correct and complete, (ii) within 90 days after the
end of each fiscal year a financial statement including a balance sheet of
Borrower as of the end of such year and statements of income, cash flows and
changes in equity for such year, setting forth in each case in comparative
form the corresponding figures for the previous year, together with
accompanying schedules and footnotes, certified or compiled (at Bank's
election) by the present independent certified public accountants of Borrower
or by another firm of independent certified public accountants designated by
Borrower which is satisfactory to Bank, such financial statement to be
prepared in accordance with generally accepted accounting principles applied
in a manner consistent with the financial statements previously furnished to
Bank, or if not so prepared, setting forth the manner in which such financial
statement departs from generally accepted accounting principles or from
previous financial statements furnished to Bank by Borrower, and (iii) with
reasonable promptness, such other information (including limitation, copies
of tax returns and amendments thereto filed by Borrower) as Bank may
request. Each said financial statement shall be accompanied by a Compliance
Certificate in the form set forth in Exhibit "B".
Section 4.2. Furnish the Bank with a copy of each letter written to
the Borrower by its independent certified public accountant concerning
internal controls and management review immediately upon receipt of same and
any comments made by the Borrower with respect thereto and permit Bank to
communicate directly with said accountants and with Borrower's insurance
representatives and agents regarding the financial affairs and condition of
Borrower, the books and records of Borrower, and insurance matters pertaining
to Borrower's business.
Section 4.3. Maintain its books, accounts and records in accordance
with generally accepted accounting principles or, if not so maintained,
setting forth the manner in which such books, accounts and records depart
from generally accepted accounting principles, applied in a manner consistent
with the financial statements previously furnished to the Bank, and shall
permit any person or entity designated in writing by Bank to visit and
inspect any of its properties, books and financial records, and to make
copies thereof and take extracts therefrom, and to discuss Borrower's
financial affairs with Borrower's financial officers and accountants.
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Section 4.4. Pay and discharge all taxes, assessments, fees,
withholdings and other governmental charges or levies imposed upon it, or
upon its income and profits, or upon any property belonging to it, prior to
the date on which penalties attach thereto, unless the legality thereof shall
be promptly and actively contested in good faith by appropriate proceedings,
and unless adequate reserves for such liability are maintained by Borrower
pending determination of such contest.
Section 4.5 Maintain its existence in good standing in the state of its
organization or incorporation and its qualification and good standing in all
jurisdictions where such qualification is required under applicable law, and
conduct its business in the manner in which it is now conducted subject only to
changes made in the ordinary course of business.
Section 4.6. Promptly notify Bank in writing of the occurrence of any
Event of Default or an event that with notice of the lapse of time or both,
would become an Event of Default or of any pending or threatened litigation
claiming damages in excess of $10,000 or seeking relief that, if granted,
would adversely affect the financial condition or business operations of
Borrower.
Section 4.7. Maintain and keep in force at all times insurance of the
types and in the amounts customarily carried in lines of business similar to
Borrower's and such other insurance as Bank may require, including, without
limitation, fire, public liability, casualty, property damage, wind damage,
flood damage, and worker's compensation insurance, which insurance shall be
carried with companies and in amounts satisfactory to Bank. All casualty and
property damage insurance shall name Bank as mortgagee or loss payee, as
appropriate, and shall provide for a minimum of ten (10) days' written notice
to Bank before cancellation or amendment. Borrower shall deliver to Bank
from time to time at Bank's request copies of all such insurance policies and
certificates of insurance and schedules setting forth all insurance then in
effect. Borrower hereby appoints Bank the attorney-in-fact for Borrower for
purposes of obtaining, adjusting, settling, and canceling such insurance and
endorsing in Borrower's name and giving receipt for checks and drafts issued
in payment of losses and as returned premiums. Borrower hereby assigns all
insurance policies at any time covering property that is Collateral for the
Note and all returned and unearned premiums thereon to Bank as additional
Collateral for the Note.
Section 4.8. Keep all of its properties in good repair and condition,
and from time to time make necessary repairs, renewals and replacements
thereto so that Borrower's property shall be fully and efficiently preserved
and maintained.
Section 4.9. Perform or take, on request of Bank, such action as may
be necessary or advisable to perfect any lien or security interest in the
Collateral or otherwise to carry out the intent of this Agreement.
Section 4.10. Pay or reimburse Bank on demand for any out-of-pocket
expenses, including reasonable attorneys' fees, incurred by Bank in preparing
or enforcing this Agreement, the Note, and the Separate Agreements, or in
preparing or enforcing any amendment thereto, or in collecting the Revolving
Loan and any other sum due under the Note or this Agreement after default by
Borrower in the payment thereof.
Section 4.11. Fund all of its "plans" to which the minimum funding
standards of Section 302 of ERISA apply in accordance with such standards;
furnish Bank, promptly upon Bank's request, copies of all reports or other
statements filed with, or received from, the United States Department of
Labor, the Internal Revenue Service, or the Pension Benefit Guaranty
Corporation with respect to all of Borrower's "plans"; and promptly advise
Bank of the occurrence of any "reportable event" or "prohibited transaction"
with respect to any such "plan" (as all of the quoted terms are defined in
ERISA).
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Section 4.12. Comply with all applicable present and future local,
state and federal laws and regulations having application to the Borrower, to
the Borrower's business or property, or to any of the Collateral, including,
without limitation, all environmental protection or clean-up laws and
regulations and all laws and regulations providing protection to persons with
disabilities; notify Bank immediately if any "hazardous substance" (as
defined in CERCLA) is released, discharged, disposed of, stored, or
discovered on any real or personal property owned or leased by Borrower;
notify Bank in writing within three days after Borrower receives notice from
any governmental authority or any individual or entity claiming violation of
any environmental protection law or regulation, or demanding compliance with
any environmental protection law or regulation, or demanding payment,
indemnity, or contribution for any environmental damage or injury to natural
resources; and permit Bank from time to time to observe Borrower's operations
and to perform tests (including soil tests and ground water tests) for
"hazardous substances" on any real or personal property owned or leased by
Borrower.
Section 4.13. Use the proceeds of the Revolving Loan only for
repayment of existing working capital indebtedness existing as of Effective
Date and thereafter for working capital purposes.
Section 4.14. Furnish to Bank at least weekly (and more frequently if
requested by Bank) a detailed accounts receivable aging report, a detailed
accounts payable aging report, and an inventory report, all in form and
substance, and containing such detail and information, as Bank shall request,
and furnish to Bank copies of all physical inventory listings when prepared
by Borrower.
Section 4.15. Diligently pursue collection of all Accounts and other
amounts due Borrower by others, including Affiliates of Borrower.
Section 4.16. Provide Bank with a debt subordination agreement, in
form and substance satisfactory to Bank, executed by Borrower and any Person
who is an officer, director, shareholder, partner, member, owner or Affiliate
of Borrower to whom Borrower is or hereafter becomes indebted, subordinating
in right of payment and claim all of Debt owed by Borrower to any said Person
and any future advances thereon to the full and final payment of the
Obligations.
Section 4.17. [reserved]
ARTICLE V - NEGATIVE COVENANTS
Borrower covenants and agrees that, without the prior written consent
of Bank, so long as it may borrow under this Agreement or so long as any
indebtedness remains outstanding under the Revolving Loan or under the Note,
Borrower shall not:
Section 5.1. [reserved]
Section 5.2. Create, incur, assume, or suffer to exist any
indebtedness of any description whatsoever not existing as of the date of
this Agreement, except (i) indebtedness incurred under this Agreement, or
(ii) any trade indebtedness incurred in the ordinary course of business
payable within 60 days of its incurrence.
Section 5.3. Merge, consolidate or enter into a partnership or joint
venture with any other person or entity; or sell, lease, transfer or
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otherwise dispose of all or any substantial portion of its assets, except
sales of inventory in the ordinary course of business; or change its name; or
change the location of its chief executive office or principal place of
business.
Section 5.4. Guarantee or become contingently liable for any
obligation or indebtedness of any other person or entity, except that
Borrower may endorse negotiable instruments for collection in the ordinary
course of business.
Section 5.5 Make any loans, advances or extensions of credit to any
person or entity.
Section 5.6. Pay or declare any dividend on any of its capital stock
after the date hereof, provided, however, that if Borrower is an S
Corporation, it may pay dividends not to exceed the amount of income taxes
payable by its shareholders attributable to Borrower's income.
Section 5.7. Grant any lien on or security interest in, or otherwise
encumber, any of its properties or assets including, without limitation, the
Collateral, and, except for liens for taxes not yet due and payable or which
are being actively contested in good faith by appropriate proceedings and for
which adequate reserves are being maintained by Borrower and those liens
disclosed to Bank by Borrower in writing prior to the execution of this
Agreement, Borrower shall not permit to exist any lien, security interest or
other encumbrance on any of its properties or assets.
Section 5.8. Take, or fail to take, any act if such act or failure to
act results in the imposition of withdrawal liability under Title IV of ERISA.
Section 5.9. Release, discharge, dispose of, store, accept or receive
for storage or disposal, or allow to be stored or disposed of, any "hazardous
substance" (as defined in CERCLA) on or in any real or personal property
owned or leased by Borrower, except as otherwise expressly consented to by
Bank in writing; or release, discharge, use, transport, or dispose of any
"hazardous substance" in an unlawful manner.
Section 5.10. Purchase, acquire or lease property from, or sell,
transfer or lease any inventory, materials, goods, equipment, assets, rights
or property to, any Affiliate of Borrower, except in the ordinary course of
Borrower's business and under terms and conditions which would apply if
disinterested parties were involved.
Section 5.11. Change the locations at which the Collateral is
maintained; change the name, identity, or corporate structure of Borrower;
adopt or make use of any fictitious or trade name not disclosed elsewhere in
this Agreement; or change the location of its chief executive office.
Section 5.12. Enter into any merger or consolidation or acquire all or
substantially all of the assets of any Person; or sell, lease, or otherwise
dispose of any of its assets in an aggregate amount exceeding $50,000 during
any fiscal year, except sales in the ordinary course of its business;
purchase or acquire the obligations or stock of or any other interest in any
Person, except direct obligations of the United States of America or
certificates of deposit or other investments issued by the Bank or by any
bank designated in writing by the Bank; enter into any sale and lease-back
arrangement, either directly or indirectly; hereafter create any Subsidiary
or divest itself of any material assets by transferring them to any
Subsidiary; transfer, sell, pledge, encumber or otherwise assign any shares
of stock or other interest in any Subsidiary or permit any Subsidiary to sell
or otherwise dispose of all or substantially all of its assets; or become or
agree to become a general or limited partner in any general or limited
partnership or a joint venturer in any joint venture.
11
Section 5.13. Prepay any Debt except Debt to the Bank; provided,
however, the Borrower may take ordinary trade discounts on purchases made in
the ordinary course of business.
Section 5.14. Enter into any sale and lease-back arrangement, either
directly or indirectly.
Section 5.15. Increase the salary and fringe benefits of any officer
or director or shareholder or any Affiliate of any officer or director or
shareholder of Borrower by more than 5% in any fiscal year from the amount
paid in the previous fiscal year.
Section 5.16. Deposit proceeds of the Collateral into any account
other than the Special Collection Account.
Section 5.17. Make any payment (principal or interest) with respect to
Subordinated Debt, or with respect to any Debt that would be Subordinated
Debt but for the absence of a subordination agreement in effect with respect
thereto, if the making of such payment or the financial condition of Borrower
immediately after said payment would violate the financial covenants
contained in the Loan Agreement dated October 28, 1999, as amended, between
European Micro Holdings, Inc., a Nevada corporation, American Micro Computers
Centers, Inc., a Florida corporation, Nor'easter Micro, Inc., a Nevada
corporation and SouthTrust Bank, except that Borrower shall be entitled to
make payments with respect to such Debt to the extent provided in any
subordination agreement in effect with respect thereto, but only during such
time as no default or Event of Default exists hereunder.
Section 5.18. Enter into any transaction, or permit any Subsidiary to
enter into any transaction, which materially and adversely affects or may
materially and adversely affect the Collateral or Borrower's ability to repay
the Obligations or permit or agree to any material extension, compromise or
settlement or make any change or modification of any kind or nature with
respect to any Account, including any of the terms relating thereto, other
than discounts and allowances in the ordinary course of business.
ARTICLE VI - EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Any one or more of the following shall constitute an
Event of Default hereunder by Borrower:
(a) Failure to pay when due any payment of principal or interest due
on the Note or any fee, expense, other sum due hereunder; or
(b) Failure to pay when due any payment of principal or interest due
on any other obligation for money borrowed or the deferred
purchase price of goods or services; or
(c) Default under any Separate Agreement or any other document, note,
agreement, mortgage, security agreement, instrument, or
understanding with, held by, or executed in favor of Bank; or
(d) Should any representation or warranty contained herein or made by
or furnished on behalf of Borrower in connection herewith be
false or misleading in any material respect as of the date made;
or
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(e) Failure to perform or observe any covenant or agreement contained
in Articles IV or V of this Agreement; or
(f) Failure to pay its debts generally as they become due; or
(g) Borrower's or any guarantor's making or taking any action to make
an assignment for the benefit of creditors, or petitioning or
taking any action to petition any tribunal for the appointment of
a custodian, receiver or any trustee for it or a substantial part
of its assets, or commencing or taking any action to commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or debt or relief
law or statute of any jurisdiction, whether now or hereafter in
effect, including, without limitation, any chapter of the federal
Bankruptcy Code; or, if there shall have been filed or commenced
against Borrower or any Guarantor any such petition, application
or proceeding which is not dismissed within 30 days or in which
an order for relief is entered; or should Borrower or any such
Guarantor by any act or omission indicate its approval of or
acquiescence in any such petition, application or proceeding or
order for relief or the appointment of a custodian, receiver or
any trustee for it or any substantial part of any of its
properties; or should Borrower or any such guarantor suffer to
exist any such custodianship, receivership or trusteeship; or
(h) Borrower's or any Guarantor's concealing, removing, or permitting
to be concealed or removed, any part of its property, with intent
to hinder, delay or defraud its creditors or any of them, or
making or suffering a transfer of any of its property which may
be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or making any transfer of its property to or for the
benefit of a creditor at a time when other creditors similarly
situated have not been paid, or suffering or permitting, while
insolvent, any creditor to obtain a lien upon any of its property
through legal proceedings or distraint which is not vacated
within 30 days after the date thereof; or
(i) Occurrence of any of the following with respect to Borrower or
any Guarantor: death (if an individual), death, withdrawal or
removal of a general partner (if a partnership), death of a
member or manager (if a limited liability company), dissolution
or cessation of business (if a general partnership, limited
partnership or limited liability partnership, corporation,
limited liability company or other organization), or insolvency;
or
(j) If the cancellation, termination or limitation of any guaranty of
Borrower's obligations under this Agreement or the Loans shall
occur, or if any such guarantor shall be in default under or
breach the terms of any guaranty agreement between the Bank and
such guarantor; or if any such guarantor should die; or if any
subordination agreement executed by any creditor of Borrower or
of any such guarantor in favor of the Bank should be canceled,
terminated, or breached; or if any Guarantor's financial
condition as represented in the last personal financial statement
delivered to and received by Bank is substantially impaired; or
(k) If Borrower or any Guarantor is a corporation and the ownership
or power to vote more than fifty percent (50%) of the voting
stock of such corporation is transferred, directly or indirectly
(including through any voting trust, irrevocable proxy or the
like), during any twelve (12) month period; or
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(l) If a final judgment for the payment of money in excess of $10,000
shall be rendered against the Borrower, or in the case of the Big
Blue Litigation a final judgment for the payment of money in
excess of reserves carried on the books of Borrower for said
purpose, and the same shall remain undischarged for a period of
30 days during which execution shall not be effectively stayed,
unless such judgment is fully covered by collectible insurance; or
(m) If Borrower or any Guarantor shall be criminally indicted or
convicted under any law that could lead to a forfeiture of any
property of the Borrower or such Guarantor or the indictment of
either Borrower or any Guarantor shall impair their respective
abilities to do business; or
(n) Any material loss, theft, damage or destruction not fully covered
by insurance (as required by this Agreement and subject to such
deductibles as Bank shall have agreed to in writing), or sale,
lease or encumbrance of any of the Collateral or the making of
any levy, seizure, or attachment thereof or thereon except in all
cases as may be specifically permitted by other provisions of
this Agreement; or
(o) There shall occur any material adverse change in the financial
condition or business prospects of Borrower or any Guarantor; or
(p) If a creditor of Borrower shall obtain possession of any of the
Collateral by any legal means; or
(q) Should their occur any breach, default or "Event of Default"
under or with respect to that certain Loan Agreement between
Nor'easter Micro, Inc., a Nevada corporation and Bank bearing
even date herewith or any "Loan Document" referenced therein, or
should said agreement terminate or cease to be in force and
effect for any reason, including the repayment in full of the
indebtedness referenced therein; or
(r) Should there occur any "Event of Default" under that Loan
Agreement dated October 28, 1999, as amended, between European
Micro Holdings, Inc., a Nevada corporation, American Micro
Computers Centers, Inc., a Florida corporation, Nor'easter Micro,
Inc., a Nevada corporation and SouthTrust Bank, or any "Security
Instrument" as defined therein, and without limiting the
generality of the foregoing, should any financial covenant
therein contained be breached, or should said Loan Agreement
terminate for any reason, including the repayment in full of the
indebtedness referenced therein; or
(s) Should there occur any breach or event of default under or with
respect to the Guaranty Agreements or the Liquidity Agreement; or
(t) Should there occur any breach or default or "Event of Default"
under or with respect to any other loan agreement, note, debt,
instrument, agreement, indebtedness, pledge, or other obligation
or undertaking of (i) European Micro Holdings, Inc., a Nevada
corporation, (ii) Nor'easter Micro, Inc., a Nevada corporation or
(iii) any Affiliate of either said entity, to Bank.
Section 6.2. Upon the occurrence and continuation of an Event of
Default, Bank may (i) terminate all obligations of Bank to Borrower,
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including, without limitation, all obligations to lend money under this
Agreement, (ii) declare immediately due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived, the Note and any other note of Borrower held by Bank,
including, without limitation, principal, accrued interest and costs of
collection (including, without limitation, reasonable attorneys' fees, if
collected by or through attorney(s) who is/are not salaried employee(s) of
Bank in bankruptcy or in other judicial proceedings) and (iii) pursue any
remedy available to it under this Agreement, under the Note, under any other
note of Borrower held by Bank, or available at law or in equity.
Section 6.3. Upon and after the occurrence of any Event of Default,
Bank may, and is hereby authorized by Borrower, at any time and from time to
time, to the fullest extent permitted by applicable laws, and without advance
notice to Borrower (any such notice being expressly waived by Borrower),
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and any other indebtedness at any time
owing by Bank to, or for the credit or the account of, Borrower against any
or all of the Loans and Obligations and other liabilities and obligations of
Borrower now or hereafter existing whether or not such obligations have
matured and irrespective of whether Bank has exercised any other rights that
it has or may have with respect to such Loans and Obligations and other
liabilities and obligations, including, without limitation, any acceleration
rights. The aforesaid right of set-off may be exercised by Bank against
Borrower or against any trustee in bankruptcy, debtor in possession, assignee
for the benefit of the creditors, receiver, or execution, judgment or
attachment creditor of Borrower, notwithstanding the fact that such right of
set-off shall not have been exercised by Bank prior to the making, filing or
issuance, or service upon Bank of, or of notice of, any such petition;
assignment for the benefit of creditors; appointment or application for the
appointment of a receiver; or issuance of execution, subpoena, order or
warrant. Bank agrees to notify Borrower after any such set-off and
application, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of Bank under this
Section are in addition to the other rights and remedies (including, without
limitation, other rights of setoff) which Bank may have.
ARTICLE VII - DEFINITIONS
Section 7.1. As used in this Agreement, the following terms shall have
the meanings set forth below:
(a) Accounting terms used herein but not specifically defined herein
shall have the meanings normally given them by, and shall be
calculated, both as to amounts and classification of items, in
accordance with generally accepted accounting principles applied
in a consistent manner from period to period.
(b) "Account Debtor" means any Person who is or may become obligated
under or on account of an Account.
(c) "Accounts" means all accounts, accounts receivable, chattel
paper, chattel mortgages, leases, instruments, documents,
promissory notes, contracts for receipt of money, conditional
sales contracts, and evidences of Debt of or owing to or acquired
by Borrower whether now existing or hereafter arising, including,
without limitation, (i) all accounts and other rights to payment
of money which arise or result from Borrower's selling or other
disposition of Borrower's goods or the providing of services by
the Borrower, (ii) the proceeds of any insurance covering the
Collateral, and (iii) the return of unearned insurance premiums.
(d) [reserved]
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(e) "Affiliate" shall mean any director or officer of Borrower or any
Person who, directly, indirectly or beneficially, owns 5% or more
of the capital stock of Borrower or any member of the immediate
family of any such officer, director or stockholder, or any
corporation or other entity which is controlled by, controls, or
is under common control with the Borrower, including, without
limitation, the Guarantors.
(f) "Agreement" means this Revolving Loan Agreement, as amended or
supplemented in writing from time to time.
(g) "Bank" means the banking corporation or association named in the
first sentence of this Agreement and which executes this
Agreement below as "Bank".
(h) "Borrower" means the person or entity named in the first sentence
of this Agreement and who executes this Agreement below as
"Borrower," for purposes of Section 3.11, 4.11, and 5.8, such
term also includes any member of a "controlled group" (as defined
in ERISA) of which the named Borrower is a member.
(i) [reserved]
(j) "Capitalized Lease Obligations" means any Debt represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP, and the
amount of such Debt shall be the capitalized amount of such
obligations determined in accordance with GAAP.
(k) "CERCLA" is defined in Section 3.12.
(l) "Collateral" is defined in Section 2.1.
(m) "Commitment Period means the period from the date of initial
funding hereunder until the earlier to occur of the Maturity Date
or the occurrence of an Event of Default.
(n) "Debt" means the sum of (i) indebtedness for borrowed money or
for the deferred purchase price of property or services, (ii)
Capitalized Lease Obligations, (iii) all other items which in
accordance with GAAP would be included in determining total
liabilities as shown on a balance sheet of a person as at the
date as of which Debt is to be determined.
(o) "Eligible Accounts" shall include only Accounts arising in the
ordinary course of Borrower's business from the sale of goods or
rendition of services which Bank, in its sole credit judgment,
deems to be an Eligible Account. Examples of Accounts which are
not under any circumstance deemed to be Eligible Accounts by Bank
are set forth on Exhibit "A" hereto.
(p) "Eligible Inventory" shall mean Inventory valued at the lesser of
cost or current market value, all of which Inventory is, at any
given time, (a) not damaged or defective in any way; (b) not sold
or segregated for sale and reflected as an Account of Borrower;
(c) not consigned Inventory; (d) not inventory-in-transit or
located in a place other than at the locations listed in Section
3.17; (e) not work-in-process Inventory; (f) not constituting
packaging materials and supplies; (g) not Inventory evidenced by
negotiable warehouse receipts or by non-negotiable warehouse
receipts or documents of title which have not been issued in the
name of Bank; (h) not subject to a document of title such as a
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warehouse receipt or xxxx of lading; and (i) not Inventory deemed
ineligible by Bank in its sole discretion.
(q) "ERISA" is defined in Section 3.11.
(r) "Event of Default" is defined in Section 6.1.
(s) [reserved]
(t) "Governing State" shall mean the State of Alabama.
(u) "Guarantor" means any person or entity who endorses the Note or
who now or hereafter guarantees payment or collection of the
Revolving Loan in whole or in part.
(v) "Inventory" shall mean all inventory of whatever kind or nature
of Borrower, now owned or hereafter acquired by Borrower, and
wherever located, including, without limitation, all goods held
for sale or lease or furnished or to be furnished under
contracts, and any raw materials, goods in transit, work in
process or finished goods, supplies, returned or repossessed
goods, together with all goods and materials used or consumed in
Borrower's business
(w) "Loan Documents" shall mean this Agreement, the Note, the
Security Agreement, each Separate Agreement, the guaranty
agreements of guarantors, and each and every mortgage, deed of
trust, guarantee, reimbursement agreement, credit agreement, loan
agreement, note, security agreement, financing statement or other
instrument executed and delivered to evidence the Loans or any
other Obligation, to constitute collateral for the Loans or any
other Obligation, or to evidence security for the Loans or any
other Obligation, and any and all other agreements, instruments,
and documents heretofore, now or hereafter, executed by Borrower
and delivered to Bank in respect to the transactions contemplated
by this Agreement.
(x) "Maturity Date" is defined in Section 1.1.
(y) "Note" is defined in Section 1.1 and includes any promissory note
or notes given in extension or renewal of, or in substitution
for, the original Note.
(z) "Obligation(s)" shall mean the "Obligations" as defined in the
Security Agreement, together with all loans and all other
advances, debts, liabilities, obligations, covenants and duties
owing, arising, due or payable from Borrower to Bank of any kind
or nature, present or future, whether or not evidenced by any
note, guaranty or other instrument, whether arising under this
Agreement or any of the other Loan Documents or otherwise,
whether direct or indirect (including those acquired by
assignment), absolute or contingent, primary or secondary, due or
to become due, now existing or hereafter arising and however
evidenced or acquired. The term includes, without limitation,
all interest, charges, expenses, fees, attorneys' fees and any
other sums chargeable to Borrower under any of the Loan Documents
and all rights Bank may at any time or times have to
reimbursement in connection with any letter of credit or guaranty
issued for Borrower's benefit.
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(aa) "Person" means an individual, partnership, corporation, joint
stock company, firm, land trust, business trust, limited
liability company, limited liability partnership, unincorporated
organization, or other business entity, or a government or agency
or political subdivision thereof.
(bb) "Revolving Loan" is defined in Section 1.1.
(cc) "Separate Agreement" is defined in Section 2.1.
(dd) "Subordinated Debt" means the Debt of the Borrower which is
fully subordinated to the Loan (including principal, interest,
and agreed charges) in a manner satisfactory to the Bank (which
may be either according to its terms or by separate agreement)
and which Debt arises from the Borrower's actual receipt of cash
and not from "in kind" or non cash consideration.
(ee) "Subsidiary" means any corporate entity or partnership, or other
business entity, controlling interest of which is owned by the
Borrower.
(ff) [reserved]
ARTICLE VIII - MISCELLANEOUS
Section 8.1. No delay or failure on the part of Bank in the exercise
of any right, power or privilege granted under this Agreement or the Note, or
available at law or in equity, shall impair any such right, power or
privilege or be construed as a waiver of any Event of Default or any
acquiescence therein. No single or partial exercise of any such right, power
or privilege shall preclude the further exercise of such right, power or
privilege. No waiver shall be valid against Bank unless made in writing and
signed by Bank, and then only to the extent expressly specified therein.
Section 8.2. All notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed to have been given or made
(i) when actually received, if delivered by hand or sent by facsimile or
telegraphic transmission, or (ii) upon the earlier of the actual receipt or
five (5) days after mailing, if sent by certified or registered mail, postage
or prepaid, return receipt requested, and addressed to Borrower or to Bank as
the case may be at the addresses listed on the first page of this Agreement.
Either Borrower or Bank, or both, may change its address or facsimile number
for notice purposes by notice to the other party in the manner provided
herein.
Section 8.3. This Agreement and the Note shall be governed by and
construed and enforced in accordance with the substantive laws of the
Governing State, without regard to that state's rules governing conflicts of
law. Borrower consents to the nonexclusive jurisdiction of any court of
original jurisdiction located in the Governing State, and, to the extent
permitted by applicable law, waives any objection based on venue or forum non
conveniens with respect to any action instituted in any such court. Borrower
agrees that process in any such action will be sufficient if served on
Borrower by certified mail, return receipt requested, or in any other manner
provided by law. Notwithstanding the foregoing, Bank shall have the right to
bring any action or proceeding against Borrower, or against the property of
Borrower, in the courts of any other jurisdiction Bank deems necessary or
appropriate in order to enforce the obligations of Borrower under this
Agreement, and the Note, and any Separate Agreements.
Section 8.4. All representations and warranties contained in this
Agreement or made or furnished on behalf of Borrower in connection herewith
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shall survive the execution and delivery of this Agreement and the Note,
shall be deemed to be made anew each time Borrower requests a loan under this
Agreement, and shall survive until the Revolving Loan and all interest
thereon are paid in full.
Section 8.5. This Agreement shall bind and inure to the benefit of
Borrower and Bank, and their respective successors and assigns; provided,
however, Borrower shall have no right to assign its rights or obligations
hereunder to any person or entity.
Section 8.6. Time is of the essence in the payment and performance of
every term and covenant of this Agreement and the Note.
Section 8.7. This Agreement may be amended or modified, and Borrower
may take any action herein prohibited, or omit to perform any action required
to be performed by it, only if Borrower shall obtain the prior written
consent of Bank to such amendment, modification, action or omission to act,
and no course of dealing between Borrower and Bank shall operate as a waiver
of any right, power or privilege granted under this Agreement, under the Note
or the course of dealing between Borrower and Bank shall operate as a waiver
of any right, power or privilege granted under this Agreement, under the Note
or the Separate Agreements, or available at law or in equity. This
Agreement, the Note, and the Separate Agreements contain the entire agreement
between Borrower and Bank regarding the Revolving Loan and the Collateral.
No oral representations or statements shall be binding on Bank, and no agent
of Bank has the authority to vary the terms of this Agreement except in
writing on the face hereof or on a separate page attached hereto.
Section 8.8. All rights, powers and privileges granted hereunder shall
be cumulative, and shall not be exclusive of any other rights, powers and
privileges granted by the Note or any other document or agreement, or
available at law or in equity.
Section 8.9. Upon the occurrence and during the continuation of an
Event of Default, Borrower recognizes Bank's right, without notice or demand,
to apply any indebtedness due or to become due to Borrower from Bank in
satisfaction of any of the indebtedness, liabilities or obligations of
Borrower under this Agreement, under the Note, or under any other note,
instrument, agreement, document or writing of Borrower held by or executed in
favor of Bank, including, without limitation, the right to set off against
any deposits or cash collateral of Borrower held by Bank. In addition to the
right of setoff, as additional collateral for the Revolving Loan, Borrower
hereby grants to Bank a continuing lien on and security interest in all
deposit accounts of Borrower now or hereafter held by Bank, including all
certificates of deposit now or hereafter issued to Borrower by Bank.
Section 8.10. Borrower hereby agrees to indemnify Bank and its
officers, directors, agents and attorneys against, and to hold Bank and all
such other persons harmless from, any claims, demands, liabilities, costs,
damages, and judgments (including, without limitation, liability under
CERCLA, the Federal Resource Conservation and Recovery Act, or other
environmental law or regulation, and costs of defense and attorneys' fees)
resulting from Borrower's breach of any of the covenants set forth in
Articles IV or V of this Agreement. In addition, Borrower will indemnify and
hold Bank harmless from and against any liability, claim, cost or expense
incurred by Bank or imposed against Bank for any stamp tax, intangible tax,
or other tax, fee or charge imposed by any governmental entity arising out of
or relating to the Note(s), the Security Agreement, or this Agreement or the
transactions anticipated herein. These agreements of indemnity shall be
continuing agreements and shall survive payment of the Revolving Loan and the
Note and termination of this Agreement.
Section 8.11. The provisions of this Agreement are independent of and
separable from each other, and no such provision shall be affected or
19 ____________ initials
rendered invalid or unenforceable by virtue of the fact that for any reason
any other such provision shall be invalid or unenforceable in whole or in
part. If any provision of this Agreement is prohibited or unenforceable in
any jurisdiction, such provision shall be ineffective in such jurisdiction
only to the extent of such prohibition or unenforceability, and such
prohibition or unenforceability shall not invalidate the balance of such
provision to the extent it is not prohibited or unenforceable nor render
prohibited or unenforceable such provision in any other jurisdiction.
Section 8.12. A photocopy of this agreement may be filed as a
financing statement in any public office.
Section 8.13. All obligations of each Person named as Borrower shall
be joint and several obligations of all such Persons.
Section 8.14. To the fullest extent permitted by applicable law,
Borrower waives (i) presentment, demand and protest and notice of
presentment, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Bank on which Borrower may in any way be liable; (ii) notice
prior to Bank's taking possession or control of any of the Collateral or any
bond or security which might be required by any court prior to allowing Bank
to exercise any of Bank's remedies, including the issuance of an immediate
writ of possession; (iii) the benefit of all valuation, appraisement and
exemption laws; (iv) any right Borrower may have upon payment in full of the
Obligations to require Bank to terminate its security interest in the
Collateral until the execution by Borrower of an agreement indemnifying Bank
from any loss or damage Bank may incur as the result of dishonored checks or
other items of payment received by Bank from Borrower or any Account Debtor
and applied to the Obligations; and (v) notice of Bank's acceptance hereof or
of any Separate Agreement.
Section 8.15. Borrower hereby irrevocably designates, makes,
constitutes and appoints Bank (and all Persons designated by Bank) as
Borrower's true and lawful attorney (and agent-in-fact) and Bank, or Bank's
agent, may, without notice to Borrower and in either Borrower's or Bank's
name, but at the cost and expense of Borrower:
8.15.1. At such time or times hereafter as Bank or said
agent, in its sole discretion, may determine, endorse Borrower's name on any
checks, notes, acceptances, drafts, money orders or any other evidence of
payment or proceeds of the Collateral which come into the possession of Bank
or under Bank's control; and
8.15.2. At such time or times as Bank or its agent in its
sole discretion may determine (and irrespective of whether an Event of
Default exists): (i) demand payment of the Accounts from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise,
and generally exercise all of Borrower's rights and remedies with respect to
the collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral; (iii) sell or collect any of
the Accounts or other Collateral upon such terms, and for such amounts and at
such time or times as Bank deems advisable; (iv) take possession, in any
manner, of any item of payment or proceeds relating to any Collateral and
apply the same to the Obligations; (v) prepare, file and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of lien or
similar document in connection with any of the Collateral; (vi) during such
time as a lock box arrangement may be in effect, if any, receive, open and
dispose of all mail addressed to Borrower and to notify postal authorities to
change the address for delivery thereof to such address as Bank may
designate; (vii) endorse the name of Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Bank or any other bank on account of the Obligations; (viii)
endorse the name of Borrower upon any chattel paper, document, instrument,
invoice, freight xxxx, xxxx of lading or similar document or agreement
relating to the Accounts, Inventory and any other Collateral; (ix) use
20 ____________ initials
Borrower's stationery and sign the name of Borrower to verifications of the
Accounts and notices thereof to Account Debtors; (x) use the information
recorded on or contained in any data processing equipment and computer
hardware and software relating to the Accounts, Inventory, and any other
Collateral and to which Borrower has access; (xi) make and adjust claims
under policies of insurance; and (xii) for and in the name of Borrower to
give instructions and direct any bank or financial institution in which
proceeds of the Collateral are deposited to turn over said proceeds to Bank;
and (xiii) do all other acts and things necessary, in Bank's determination,
to fulfill Borrower's obligations under this Agreement.
Section 8.16. Borrower will at all times keep accurate and complete
records of the Collateral, and the Bank or its agents shall have the right to
call at Borrower's place or places of business at intervals to be determined
by Bank, upon reasonable notice and during Borrower's regular business hours,
and without hindrance or delay, to inspect and examine the Inventory and the
Equipment and to inspect, audit, check, and make abstracts from the books,
records, journals, orders, receipts, computer printouts, correspondence and
other data relating to the Collateral or to any other transactions between
the parties hereto. If requested by Bank, Borrower agrees to make its books,
records, journals, orders, receipts, computer printouts, correspondence, and
other data relating to the Collateral available at the Bank's main office for
inspection, audit and checking by the Bank or its agents.
Section 8.17. Regardless of any provision contained in this Agreement
or any of the Separate Agreements, in no event shall the aggregate of all
amounts that are contracted for, charged or collected pursuant to the terms
of this Agreement, the Note or any of the Separate Agreements, and that are
deemed interest under applicable law, exceed the Maximum Rate. No provision
of this Agreement or in any of the Separate Agreements or the exercise by
Bank of any right hereunder or under any Separate Agreement or the prepayment
by Borrower of any of the Obligations or the occurrence of any contingency
whatsoever, shall entitle Bank to charge or receive, or to require Borrower
to pay, interest or any amounts deemed interest by applicable law (such
amounts being referred to herein collectively as "Interest") in excess of the
Maximum Rate, and all provisions hereof or in any Separate Agreement which
may purport to require Borrower to pay Interest exceeding the Maximum Rate
shall be without binding force or effect to the extent only of the excess of
Interest over such Maximum Rate. Any Interest charged or received in excess
of the Maximum Rate ("Excess"), shall be conclusively presumed to be the
result of an accident and bona fide error, and shall, to the extent received
by Bank, at the option of Bank, either be applied to reduce the principal
amount of the Obligations or returned to Borrower. The right to accelerate
the maturity of any of the Obligations does not include the right to
accelerate unaccrued interest, and no such interest will be collected by
Bank. All monies paid to Bank hereunder or under any of the Separate
Agreements shall be subject to any rebate of unearned interest as and to the
extent required by applicable law. By the execution of this Agreement,
Borrower covenants that (i) the credit or return of any Excess shall
constitute the acceptance by Borrower of such Excess, and (ii) Borrower shall
not seek or pursue any other remedy, legal or equitable, against Bank, based
in whole or in part upon contracting for, charging or receiving any Interest
in excess of the Maximum Rate. For the purpose of determining whether or not
any Excess has been contracted for, charged or received by Bank, all interest
at any time contracted for, charged or received from Borrower in connection
with this Agreement shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread in equal parts throughout the full
term of the Obligations. Borrower and Bank shall, to the maximum extent
permitted under applicable law, (i) characterize any non-principal payment as
an expense, fee or premium rather than as Interest and (ii) exclude voluntary
prepayments and the effects thereof. The provisions of this Section shall be
deemed to be incorporated into the Note and each Separate Agreement (whether
or not any provision of this Section is referred to therein). "Maximum Rate"
shall be the maximum non-usurious rate of interest permitted by applicable
law that any time, or from time to time, may be contracted for, taken,
21 ____________ initials
reserved, charged or received on the Debt in question or, to the extent
permitted by applicable law, under such applicable laws that may hereafter be
in effect and which allow a higher maximum non-usurious interest rate than
applicable laws now allow. Notwithstanding any other provision hereof, the
Maximum Rate shall be calculated on a daily basis (computed on the actual
number of days elapsed over a year of 365 or 366 days, as the case may be).
SECTION 8.18. Waiver of Right to Trial by Jury. BORROWER AND BANK
HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF,
DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN ANY WAY PERTAINING
OR RELATING TO THIS AGREEMENT, THE NOTES, THE LOAN DOCUMENTS, OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION WITH
THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO
OR INCIDENTAL TO ANY DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS
AGREEMENT, THE NOTES, THE LOAN DOCUMENTS, OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR IN CONNECTION
WITH THE TRANSACTIONS RELATED THERETO OR CONTEMPLATED THEREBY OR THE EXERCISE
OF EITHER PARTY'S RIGHTS AND REMEDIES THEREUNDER, IN ALL OF THE FOREGOING
CASES WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE. BORROWER AND BANK AGREE THAT EITHER OR BOTH OF
THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF
THE KNOWING, VOLUNTARY AND BARGAINED AGREEMENT BETWEEN THE PARTIES
IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY
WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
Section 8.19. This Agreement and the credit facilities described
herein are intended to be an amendment and restatement of Borrower's existing
indebtedness to Bank. This Agreement is not intended to be, nor shall it be
construed to create, a novation or accord and satisfaction of Borrower's
indebtedness to Bank.
Witness the hand of the parties hereto on or as of the date first above
written.
BORROWER:
--------
AMERICAN MICRO COMPUTER CENTER, INC., a
Florida corporation
By: ____________________________________
Title: ____________________________________
Attest: _______________________
Title: _______________________
[CORPORATE SEAL]
22 ____________ initials
BANK:
----
SOUTHTRUST BANK
By: _____________________________________
Its: _____________________________________
23 ____________ initials
EXHIBIT "A"
EXAMPLES OF ACCOUNTS DISQUALIFIED AS ELIGIBLE ACCOUNTS
------------------------------------------------------
Examples of Accounts which are not under any circumstance deemed to be
Eligible Accounts by Bank include the following:
(i) it arises out of a sale made by Borrower to a Subsidiary or to an
Affiliate of Borrower or to a Person controlled by an Affiliate
or Subsidiary of Borrower; or
(ii) it is unpaid for the lesser of (i) more than sixty (60) days
after the original due date shown on the invoice or (ii) more
than ninety (90) days after the original invoice date; or
(iii) fifty percent (50%) or more of the Accounts from the Account
Debtor are not deemed Eligible Accounts hereunder; or
(iv) the total unpaid Accounts of the Account Debtor exceed
twenty-five percent (25%) of the net amount of all Accounts, to
the extent of such excess; or
(v) any covenant, representation or warranty contained in this
Agreement with respect to such Account has been breached; or
(vi) the Account Debtor is also Borrower's or an Affiliate's creditor
or supplier, or has disputed liability with respect to such
Account, or has made any claim with respect to any other Account
due from such Account Debtor to Borrower or an Affiliate, or the
Account otherwise is or may become subject to any right of setoff
by the Account Debtor or an Affiliate of the Account Debtor; or
(vii) the Account Debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended,
or made an assignment for the benefit of creditors, or a decree
or order for relief under the federal bankruptcy laws has been
filed against the Account Debtor, or if the Account Debtor has
failed, suspended business, ceased to be solvent, or consented to
or suffered a receiver, trustee, liquidator or custodian to be
appointed of it or for all or a significant portion of its assets
or affairs; or
(viii)it arises from a sale to the Account Debtor on a
xxxx-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; or
(ix) Bank believes, in its sole judgment, that collection of such
Account is insecure or that payment thereof is doubtful or will
be delayed by reason of the Account Debtor's financial condition;
or
(x) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower
assigns its right to payment of such Account to Bank, in form and
substance satisfactory to Bank, so as to comply with the
Assignment of Claims Act of 1940, as amended; or
Exhibit "A" - 1 ____________ initials
(xi) the Account is subject to a lien; or
(xii) the goods giving rise to such Account have not been delivered to
and accepted by the Account Debtor or the services giving rise to
such Account have not been performed by Borrower and accepted by
the Account Debtor or the Account otherwise does not represent a
final sale; or
(xiii) the total unpaid Accounts of the Account Debtor exceed a credit
limit determined by Bank, in its sole discretion, to the extent
such Account exceeds such limit; or
(xiv) the Account is evidenced by chattel paper, a note, or an
instrument of any kind, or has been reduced to judgment; or
(xv) Borrower has made any agreement with the Account Debtor for any
deduction therefrom, except for discounts or allowances which are
made in the ordinary course of business for prompt payment and
which discounts or allowances are reflected in the calculation of
the face value of each invoice related to such Account; or
(xvi) Borrower has made an agreement with the Account Debtor to extend
the time of payment thereof; or
(xvii) the Account arises from a retail sale of goods to a Person
who is purchasing same primarily for personal, family or
household purposes; or
(xviii) the Account Debtor is not a resident citizen of the United
States or a corporate entity or partnership formed and existing
under the laws of the United States or a political subdivision
thereof or the Account arises from a sale to an Account Debtor
outside the United States or it arises out of a shipment of
Inventory, goods or products to an address other than an address
in the United States, unless in each case the Account is covered
by credit insurance or a letter of credit acceptable to Bank in
the exercise of its sole discretion; or
(xix) the Account is deemed ineligible by the Bank in its sole judgment
and discretion.
In addition, Eligible Account shall not include any portion of an
Account which consists of service charges, late charges or penalties,
interest of Account Debtors, or other charges relating to the extension
of credit by the Borrower or the timing of payment by Account Debtor.
In determining the aggregate amount of Eligible Accounts, there shall
be excluded from consideration any credit balance of an Account Debtor
which is more than 90 days old as measured from the date of original
posting of said credit balance to Borrower's books and records.
Exhibit "A" - 2 ______ initials
EXHIBIT "B"
COMPLIANCE CERTIFICATE
SouthTrust Xxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Asset-Based Lending Department
In accordance with the requirements of that certain Loan and Security
Agreement ("Loan Agreement") dated ___________, 2000, between
_____________________________ ("Borrower") and SouthTrust Bank, the
undersigned officer(s) of
("Borrower"), based
upon my (our) review of the balance sheets and statements of income of the
Borrower for the (month, quarter, fiscal year) ending _____________, ______,
DO HEREBY CERTIFY THAT:
(1) We are in compliance with all financial covenants contained in
the Loan Agreement.
(2) To the best of my (our) knowledge, Borrower has kept, observed,
performed, and fulfilled each and every undertaking contained in the Loan
Agreement and is not at this time in default in the observance or performance
of any terms or conditions of the Loan Agreement, on the date hereof, except
as follows: ____________________________________________________.
(if none, so state)
(3) And, no Event of Default has occurred and is continuing that,
with the giving of notice or the passage of time or both, would be an Event
of Default, on the date hereof, except as follows:
______________________________________________________________________.
(if none, so state)
Without limiting the generality of the foregoing, Borrower is solvent as of
the date hereof.
I (we) further certify to you that:
No material adverse change has occurred in either the financial
condition or the business of the Borrower since the date of the Loan
Agreement and that all representations and warranties set forth within the
Loan Agreement are true as of the date hereof.
During the period noted above, Borrower has not changed its name, its
place of business, principal executive officers, nor has it become a
surviving corporation in a merger, nor has it changed the places where the
Collateral is located.
Executed this ____ day of _______________, 20____.
Exhibit "B" - 1 ______ initials
Signed: ______________________________
Print Name: ______________________________
Print Title: ______________________________
Signed: ______________________________
Print Name: ______________________________
Print Title: ______________________________
ON BEHALF OF:
___________________________________________
("Borrower")
Exhibit "B" - 2 ______ initials
