EXHIBIT 10.1.1
AMENDED AND RESTATED LOAN AGREEMENT
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This AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") dated February 23,
1996 is by and among CORESTATES BANK, N.A., a national banking association
("Lender"), CONGRESS FINANCIAL CORPORATION, a California corporation, as agent
for Lender (in such capacity, "Agent") and P.N.Y. ELECTRONICS, INC., a Delaware
corporation, as successor by merger to P.N.Y. Electronics, Inc. a New Jersey
corporation ("Borrower").
W I T N E S S E T H :
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WHEREAS, P.N.Y. Electronics, Inc., a New Jersey corporation ("PNYNJ") and
Congress Financial Corporation, a California corporation ("Congress") entered
into financing arrangements pursuant to which Congress made loans and advances
and provided other financial accommodations to PNYNJ as set forth in the
Accounts Financing Agreement [Security Agreement], dated January 29, 1993,
between PNYNJ and Congress and other agreements, documents and instruments
executed and/or delivered in connection therewith;
WHEREAS, PNYNJ has merged with and into Borrower, with Borrower as the
surviving corporation, effective August 3, 1996, as set forth in the Agreement
and Plan of Merger, dated August 3, 1995, between PNYNJ and Borrower and the
Certificate of Merger of PNYNJ and Borrower as filed with the New Jersey
Secretary of State and the Delaware Secretary of State;
WHEREAS, pursuant to Amendment No. 4 to Financing Agreements, dated August
3, 1995, by and among Borrower, Congress, P.N.Y. Industries, Inc. and Xxxx
Xxxxx, Borrower, as survivor of the merger with PNYNJ, expressly assumed and
confirmed its continuing liability under the financing arrangements with
Congress;
WHEREAS, Congress has assigned or is about to assign all of its right,
title and interest in and to the financing arrangements with Borrower to Lender
as set forth in the Assignment and Assumption Agreement, dated of even date
herewith, between Congress, as assignor, and Lender, as assignee (the
"Assignment Agreement"), and Borrower has acknowledged and consented to such
assignment pursuant to the Acknowledgment of Assignment, dated of even date
herewith, by Borrower to Congress and Lender;
WHEREAS, Lender has appointed or is about to appoint Agent to act as agent
for Lender in connection with the management, administration, supervision and
servicing of the financing arrangements of Lender with Borrower as set forth in
the Agency and
Servicing Agreement, dated of even date herewith, between Lender and Agent;
WHEREAS, Borrower has also requested that the financing arrangements be
amended to increase the maximum amount of the line of credit, decrease the
interest rate payable by Borrower to Lender, extend the term of the arrangements
and various other matters and Lender is willing to agree to increase the maximum
amount of the line of credit, decrease the interest rate, extend the terms and
agree to such other amendments, subject to the terms and conditions contained
herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section
1. DEFINITIONS
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1.1 Additional Definitions. As used herein the following terms shall have
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the respective meanings given to them below, and the other Financing Agreements
shall be deemed and are hereby amended to include, in addition and not in
limitation, each of the following definitions:
(a) "Accounts Agreement" shall mean the Accounts Financing Agreement
[Security Agreement], dated January 29, 1993, between Borrower (as survivor of
the merger of PNYNJ with and into Borrower) and Lender (as assignee of Congress)
annexed hereto as Exhibit A, together with all supplements thereto (including,
without limitation, the Inventory Security Agreement Supplement to Accounts
Financing Agreement [Security Agreement], dated January 29, 1993, by Borrower in
favor of Lender annexed hereto as Exhibit B, and the Trade Financing Agreement
Supplement to Accounts Financing Agreement, dated January 29, 1993, by Borrower
in favor of Lender annexed hereto as Exhibit C), as the same now exist and are
amended and supplemented hereby or may hereafter be further amended, modified,
supplemented, extended, renewed, restated or replaced.
(b) "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (i) the Eurodollar Rate for such Interest Period by (ii)
a percentage equal to: (A) one (1) minus (B) the Reserve Percentage (to the
extent the Reserve Percentage is applicable to the funds used to provide such
Eurodollar Rate Loan). For purposes hereof, "Reserve Percentage" shall mean the
reserve percentage, expressed as a decimal, prescribed by any United States or
foreign banking authority for determining the reserve requirement which is or
would be applicable to deposits of United States dollars in a non-United States
or an
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international banking office of Reference Bank used to fund a Eurodollar Rate
Loan or any Eurodollar Rate Loan made with the proceeds of such deposit, for
which the Reference Bank actually holds or has made any such deposits or loans.
The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of
any change in the Reserve Percentage.
(c) "Adjusted Tangible Net Worth" shall mean, as to any Person, at any
time, in accordance with GAAP (except as otherwise specifically set forth
below), on a consolidated basis for such Person and its Subsidiaries (or as to
Borrower without regard for its Subsidiaries and Affiliates as provided below),
the amount equal to the difference between: (i) the aggregate net book value of
all assets of such Person and its Subsidiaries (excluding the book value of good
will, non-competition agreements, patents, trademarks, copyrights, licenses and
other intangible assets), calculating the book value of inventory for this
purpose on a first-in-first-out basis, after deducting from such book values all
appropriate reserves in accordance with GAAP (including all reserves for
doubtful receivables, obsolescence, depreciation and amortization) and (ii) the
aggregate amount of the Indebtedness and other liabilities of such Person and
its Subsidiaries (including tax and other proper accruals); provided, that, for
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purposes of this definition, notwithstanding anything to the contrary contained
herein, as to Borrower, the Subsidiaries and Affiliates of Borrower shall not be
included in the calculation of the Adjusted Tangible Net Worth of Borrower.
(d) "Affiliate" shall mean, with respect to a specified Person, any
other Person (i) who, directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
such Person, or (ii) who is a director, officer, shareholder or employee of such
Person.
(e) "Agent" shall mean Congress Financial Corporation, a California
corporation, in its capacity as agent on behalf of Lender pursuant to the Agency
and Servicing Agreement, dated of even date herewith, between Congress and
Lender, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced and any replacement or
successor agent thereunder.
(f) "Borrowing Base Certificate" shall mean a certificate
substantially in the form of Exhibit D hereto, as such form may from time to
time be modified by Agent in good faith, which is duly completed (including all
schedules thereto) and executed by the chief financial officer or other
appropriate financial officer of Borrower acceptable to Agent and delivered to
Agent.
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(g) "Business Day" shall mean (i) for Prime Rate Loans, any day other
than a Saturday, Sunday, or other day on which commercial banks are authorized
or required to close under the laws of the State of New York or the Commonwealth
of Pennsylvania, and a day on which Lender, the Reference Bank and Agent are
open for the transaction of business, and (ii) for all Eurodollar Rate Loans,
any such day as described in (i) above in this definition of Business Day,
excluding any day on which banks are closed for dealings in dollar deposits in
the London interbank market or other applicable Eurodollar Rate market.
(h) "Common Stock" shall mean the common stock, par value $.01 per
share, of Borrower.
(i) "Eligible Accounts" shall mean Accounts created by Borrower in the
ordinary course of business arising out of Borrower's sale of goods or rendition
of services, which are and at all times shall continue to be acceptable to Agent
in all respects. Standards of eligibility may be fixed and revised from time to
time solely by Agent in Agent's exclusive judgment exercised in good faith. In
determining eligibility, Agent may, but need not, rely on agings, reports and
schedules of Accounts furnished by Borrower, but reliance by Agent thereon from
time to time shall not be deemed to limit Agent's right to revise standards of
eligibility at any time as to both Borrower's present and future Accounts. In
general, an Account shall not be deemed eligible unless: (i) the Account Debtor
on such Account is and at all times continues to be acceptable to Agent, (ii)
such Account complies in all respects with the representations, covenants and
warranties contained in the Accounts Agreement and herein, (iii) no more than
ninety (90) days have elapsed since the original invoice date of such Account,
and (iv) as to Foreign Accounts, either, at Agent's option, (A) the Account
Debtor has delivered to Borrower an irrevocable letter of credit issued or
confirmed by a bank satisfactory to Agent, sufficient to cover such Account, in
form and substance satisfactory to Agent, and, if required by Agent the original
of such letter of credit has been delivered to Agent or to Agent's designee and
the issuer thereof notified of the assignment of the proceeds of such letter of
credit to Agent or (B) such Account is subject to credit insurance payable to
Agent issued by an insurer and on terms and in an amount acceptable to Agent or
(C) such Account and the Account Debtor with respect thereto are and continue to
otherwise be acceptable in all respects to Agent in Agent's good faith. Any
Accounts which Agent determines to be ineligible or unacceptable for purposes of
the lending formulas at any time shall nevertheless be and remain at all times
part of the Collateral.
(j) "Eligible Inventory" shall mean and include Inventory acceptable
to Agent in all respects consisting of first quality finished goods held for
resale in the ordinary course of
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our business and raw materials for such finished goods, which are located at the
premises of Borrower (except as provided below). General criteria for Eligible
Inventory may be established and revised from time to time by Agent in its
exclusive judgment exercised in good faith. In determining such acceptability
Agent may, but need not, rely on reports and schedules of Inventory furnished to
Agent by Borrower, but reliance thereon by Agent from time to time shall not be
deemed to limit its right to revise standards of eligibility at any time. In
general, except in Agent's sole discretion, Eligible Inventory shall not include
work-in-process, components which are not part of finished goods, spare parts,
packaging and shipping materials, supplies used or consumed in our business,
Inventory at the premises of third parties or subject to a security interest or
lien in favor of any third party, xxxx and hold goods, Inventory which is not
subject to the first priority perfected security interest of Agent, defective
goods, "seconds" and Inventory purchased on consignment; provided, however, any
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Inventory which would otherwise be deemed Eligible Inventory at locations which
are not owned and operated by Borrower may nevertheless be considered Eligible
Inventory: (i) if Agent shall have received an agreement in writing, in form and
substance satisfactory to Agent from the holder of such Inventory or the owner
and/or operator of such location, as the case may be, pursuant to which such
holder, owner and/or operator, if required by Agent: (A) acknowledges the first
priority lien on such Inventory of Agent, (B) agrees to waive any and all claims
such holder, owner and/or operator may, at any time, have against such
Inventory, whether for processing, storage or otherwise, and (C) grants to Agent
the right to enter and remain on the premises in order to exercise your rights
and remedies on terms acceptable to Agent and (ii) in addition to the agreement
described above, if the Inventory is on consignment and if required by Agent:
(A) the holder, owner and/or operator executes appropriate UCC-1 financing
statements in favor of Borrower, which are duly assigned to Agent and (B) if
required by Agent, any lenders to the holder, owner and/or operator with any
interest in Inventory is properly notified of your first priority lien on such
Inventory. Any Inventory which Agent determines to be ineligible or unacceptable
for purposes of the lending formulas at any time shall nevertheless be and
remain at all times part of the Collateral.
(k) "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
(l) "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market
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(or other Eurodollar Rate market selected by Borrower and approved by Agent) on
or about 9:00 a.m. (New York time) two (2) Business Days prior to the
commencement of such Interest Period in amounts substantially equal to the
principal amount of the Eurodollar Rate Loans requested by and available to
Borrower in accordance with this Agreement, with a maturity of comparable
duration to the Interest Period selected by Borrower.
(m) "Excess Availability" shall mean the amount, as determined by
Agent, as of any date, equal to:
(i) the lesser of: (A) the amount of the Loans available to Borrower
as of such date based on the applicable lending formulas
multiplied by the Net Amount of Eligible Accounts and the Value
of Eligible Inventory, as determined by Agent, and subject to the
sublimits and reserves from time to time established by Agent
hereunder and (B) the Maximum Credit,
minus
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(ii) the sum of: (A) the amount of all then outstanding and unpaid
Obligations, plus (B) the aggregate amount of all then
outstanding and unpaid trade payables of Borrower which are past
due.
(n) "Existing Agreements" shall mean each and all of the following as
the same now exist and have heretofore been amended, modified and supplemented:
(i) the Accounts Agreement, including all supplements thereto (including,
without limitation, the Covenant Supplement to Accounts Financing Agreement
[Security Agreement], dated January 29, 1993, between Borrower and Lender, the
Inventory Security Agreement Supplement to Accounts Financing Agreement
[Security Agreement], dated January 29, 1993, by Borrower and the Trade
Financing Agreement Supplement to Accounts Financing Agreement [Security
Agreement], dated January 29, 1993, by Borrower, and all amendments to the
foregoing, including, without limitation, Amendment No. 1 to Financing
Agreements, dated as of August 18, 1993, Amendment No. 2 to Financing
Agreements, dated as of July 1, 1994, Amendment No. 3 to Financing Agreements,
dated as of May 1, 1995, Amendment No. 4 to Financing Agreements, dated August
3, 1995, Amendment No. 5 to Financing Agreements, dated October 13, 1995, and
Amendment No. 6 to Financing Agreements, dated November 30, 1995), (ii) the
Inventory Loan Letter, dated January 29, 1993, between Borrower and Lender,
(iii) the letter, dated January 29, 1993, from Borrower with respect to the use
of tradenames and tradestyles by Borrower, (iv) UCC-1 financing statements
between Borrower, as debtor, and Congress, as secured party, as filed with the
Arizona Secretary of State, the New Jersey Secretary of State and the California
Secretary of State, and the
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UCC-3 assignments thereof from Congress, as secured party, to Agent, as secured
party, (v) the Notification and Acknowledgment of Security Interest, dated
January 29, 1993 by and among Congress, Borrower and WP Industries Inc.
(o) "Financing Agreements" shall mean, collectively, the Accounts
Agreement, this Agreement and all notes, guarantees, security agreements and
other agreements, documents and instruments at any time executed and/or
delivered by Borrower or any other person in connection with any of the
foregoing, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(p) "Foreign Accounts" shall mean any Account at any time owing by an
Account Debtor which: (i) does not maintain its chief executive office in the
United States, Puerto Rico or the U.S. Virgin Islands, (ii) is not organized
under the laws of the United States or any state thereof or Puerto Rico or the
U.S. Virgin Islands, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality or other political
subdivision thereof, or of any department, agency, public corporation or other
instrumentality thereof.
(q) "GAAP" shall mean generally accepted accounting principles as in
effect on the date hereof consistently applied.
(r) "Hedging Transaction" shall mean, for any Person, any transaction
entered into by such Person that is designed to protect such Person against
fluctuations in interest rates, or currency or commodity values, including,
without limitation, an interest rate swap, cap or collar agreement or similar
arrangement between such Person and one or more counterparties providing for the
transfer or mitigation of interest risks either generally or under specific
contingencies.
(s) "Indebtedness" shall mean, as to any Person, all items which, in
accordance with GAAP, would be included in determining total liabilities shown
on the liability side of its balance sheet as at the date such Indebtedness is
to be calculated and, in any event, shall include any liabilities secured by any
mortgage, pledge, lien or security interest existing on such person's owned or
acquired property.
(t) "Interest Coverage Ratio" shall mean the ratio of (i) the Net
Operating Income of Borrower for any fiscal quarter to (ii) Interest Expense for
such fiscal quarter.
(u) "Interest Expense" shall mean, for any period, for Borrower, (i)
all interest in respect of Indebtedness (including, without limitation, the
interest component of any payments in respect of capital lease obligations and
all commissions, discounts
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and other fees and charges owed with respect to letters of credit, bankers'
acceptances and similar instruments) accrued or capitalized during such period
(whether or not paid during such period) plus (ii) the net amount payable (or
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minus the net amount receivable) under interest rate protection agreements
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constituting Hedging Transactions accrued during such period (whether or not
actually paid or received during such period).
(v) "Interest Period" shall mean, for any Eurodollar Rate Loan, each
period commencing on the date such Eurodollar Rate Loan is made or converted
from a Prime Rate Loan, or in the event that a Eurodollar Rate Loan is continued
as provided by Section 4.3(b), then in such case commencing on the last day of
the immediately preceding Interest Period for such Eurodollar Rate Loan, and in
each case ending on the numerically corresponding day in the first, second,
third or sixth calendar month thereafter, as Borrower may specify to Lender in
its request for such Eurodollar Rate Loan, provided, that: (i) each Interest
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Period that commences on the last Business Day of a calendar month (or on any
day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the appropriate
subsequent calendar month; (ii) Borrower may not elect an Interest Period which
will end after the last day of the then-current term of the Accounts Agreement
and this Agreement; and (iii) each Interest Period that would otherwise end on a
day that is not a Business Day shall end on the next succeeding Business Day.
(w) "Interest Rate" shall mean, as to Prime Rate Loans, a rate of one-
quarter of one (1/4%) percent per annum in excess of the Prime Rate and, as to
Eurodollar Rate Loans, a rate of one and one-half (1-1/2%) percent per annum in
excess of the Adjusted Eurodollar Rate (based on the Eurodollar Rate applicable
for the Interest Period selected by Borrower as in effect three (3) Business
Days after the date of receipt by Agent of the request of Borrower for such
Eurodollar Rate Loans in accordance with the terms hereof, whether such rate is
higher or lower than any rate previously quoted to Borrower); provided, that,
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the Interest Rate shall mean the rate of two and one-quarter (2-1/4%) percent
per annum in excess of the Prime Rate as to Prime Rate Loans and the rate of
three and one-half (3-1/2%) percent per annum in excess of the Adjusted
Eurodollar Rate as to Eurodollar Rate Loans, at Agent's option, (i) for the
period on and after the date of termination or non-renewal of the Accounts
Agreement and of this Agreement, or the date fifteen (15) days after notice by
Agent to Borrower sent after the occurrence of an Event of Default under Section
8.1(a) of the Accounts Agreement as a result of the failure of Borrower to
comply with Sections 7.9 or 7.10 hereof or the date three (3) Business Days
after notice by Agent to Borrower sent after the occurrence of any other Event
of Default, and for so long as such Event of Default is continuing as determined
by Agent or
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until such time as all Obligations are indefeasibly paid in full
(notwithstanding entry of any judgment against Borrower) and (ii) on the Loans
at any time outstanding in excess of the amounts available to Borrower under
Section 4 hereof (whether or not such excess(es), arise or are made with or
without Lender's or Agent's knowledge or consent and whether made before or
after an Event of Default).
(x) "Loans" shall mean the loans at any time made by Agent on behalf
of Lender to or for the benefit of Borrower on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 4.1 of this
Agreement.
(y) "Management Stockholders" shall mean, collectively, the
individuals listed on Schedule 1.1(y) hereto who are parties to the Management
Stockholders Agreement and any other individuals who become a party to the
Management Stockholders Agreement as a "Management Stockholder" (as defined
therein) after the date hereof, provided, that, Agent shall have received prompt
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written notice thereof.
(z) "Management Stockholders Agreement" shall mean the Management
Stockholders Agreement, dated as of January 19, 1996, by and among Borrower and
the Management Stockholders, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
(aa) "Maximum Credit" shall mean $70,000,000.
(ab) "Net Operating Income" shall mean, for any period, for Borrower,
the net operating income (calculated before taxes, Interest Expense,
extraordinary and unusual items and income or loss attributable to equity in
Subsidiaries or Affiliates) for such period.
(ac) "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including a business trust and a
subchapter "S" corporation), limited liability corporation, limited liability
partnership, unincorporated association, joint stock corporation, trust, joint
venture or other entity or government or any agency or instrumentality or
political subdivision thereof.
(ad) "PNY France" shall mean P.N.Y. Electronics Europe, S.A., a
corporation organized under the laws of France and a subsidiary of Borrower, and
its successors and assigns.
(ae) "Prime Rate" shall mean the rate from time to time publicly
announced by CoreStates Bank, N.A., or its successors, at its office in
Philadelphia, Pennsylvania, as its prime rate,
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whether or not such announced rate is the best rate available at such bank.
(af) "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
thereof.
(ag) "Reference Bank" shall mean CoreStates Bank, N.A., or such other
bank as Agent or Lender may from time to time select, which is reasonably
acceptable to Borrower.
(ah) "Restated Existing Agreements" shall mean each and all of the
following as the same now exist and have heretofore been amended, modified or
supplemented: (i) the Covenant Supplement to Accounts Financing Agreement
[Security Agreement], dated January 29, 1993, between Borrower and Lender, (ii)
the Inventory Loan Letter, dated January 29, 1993, between Borrower and Lender,
and (iii) all amendments to any of the Financing Agreements entered into prior
to the date hereof, including, Amendment No. 1 to Financing Agreements, dated as
of August 18, 1993, Amendment No. 2 to Financing Agreements, dated as of July 1,
1994, Amendment No. 3 to Financing Agreements dated as of May 1, 1995, Amendment
No. 4 to Financing Agreements, dated August 3, 1995, Amendment No. 5 to
Financing Agreements, dated October 13, 1995, and Amendment No. 6 to Financing
Agreements, dated November 30, 1995.
(ai) "Series A Preferred Stock" shall mean the shares of Preferred
Stock, par value $.01 per share, of Borrower having the rights and benefits set
forth in the Restated Certificate of Incorporation of Borrower dated August 4,
1995.
(aj) "Shareholder" shall mean Xxxx Xxxxx, an individual, and his
heirs, administrators, executors, successors and assigns and any trust
controlled by him.
(ak) "Stockholder Agreement" shall mean the Stockholder Agreement,
dated as of August 4, 1995, by and among Borrower, GS Capital Partners, II, L.P.
and affiliated parties and the Shareholder, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(al) "Subordinated Notes" shall mean, individually and collectively,
the Subordinated Note, dated August 3, 1995, issued by Borrower payable to the
order of Shareholder in the principal amount of $15,000,000, and the
Subordinated Note, dated August 3, 1995, issued by Borrower payable to the order
of Shareholder in the original principal amount of $5,140,000, subject to
adjustment as provided therein, as the same now exist or may be amended,
modified, supplemented, extended, renewed, restated or replaced.
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(am) "Subsidiary" or "subsidiary" shall mean any corporation,
association or organization, active or inactive, as to which more than fifty
(50%) percent of the outstanding voting stock or shares or interests shall now
or hereafter be owned or controlled, directly or indirectly by any Person, any
Subsidiary of such Person, or any Subsidiary of such Subsidiary.
(an) "Unwind Agreements" shall mean, collectively, each and all of the
Unwind Agreements, dated as of January 19, 1996, between Borrower and each of
the Management Stockholders, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
(ao) "Value" shall mean cost computed on a first-in-first-out basis or
market price, as determined by Agent, whichever is lower.
1.2 Amendments to Definitions.
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(a) All references to the term "Covenant Supplement" in the Accounts
Agreement and any of the other Financing Agreements shall be deemed and each
such reference is hereby amended to mean this Agreement.
(b) All references to the term "Congress" or "you" or "your", or
similar terms in the Accounts Agreement and any of the other Financing
Agreements shall be deemed and each such reference is hereby amended to mean
Agent, except, that, in Section 1.9 of the Accounts Agreement, all references to
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"you" or "your" shall be deemed to refer to Agent and/or Lender, individually
and collectively, jointly and severally.
(c) All references to the term "Maximum Credit" in the Accounts
Agreement and any of the other Financing Agreements shall be deemed and each
such reference is hereby amended to mean $70,000,000.
1.3 Interpretation. All capitalized terms used in this Agreement, unless
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otherwise defined herein, shall have the meanings assigned thereto in the
Accounts Agreement (as amended hereby).
Section 2. CONDITIONS PRECEDENT
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2.1 Conditions Precedent to Effectiveness of this Agreement. Each of the
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following is a condition precedent to the effectiveness of the other terms and
provisions contained in this Agreement:
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(a) Agent shall have received an original of this Agreement, duly
authorized, executed and delivered by Borrower and Lender (including all
schedules and exhibits hereto);
(b) Agent shall have received consents to the assignment of the
interests of Congress to Lender and all necessary amendments to its existing
participation arrangements, in form and substance satisfactory to Agent, to
reflect and consent to the terms hereof, duly authorized, executed and delivered
by such existing participants;
(c) Agent shall have received a Borrowing Base Certificate setting
forth the Loans available to Borrower and other matters as provided for therein
as of the date hereof as completed in a manner satisfactory to Agent and duly
authorized, executed and delivered on behalf of Borrower;
(d) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in form
and substance to Agent, and Agent shall have received all information and copies
of all documents, including, without limitation, records of requisite
corporation action and proceedings which Agent may have requested in connection
therewith, such documents where requested by Agent or its counsel to be
certified by appropriate corporate officers or governmental authorities;
(e) no material adverse change shall have occurred in the assets,
business or prospects of Borrower since the date of the financial statements of
Borrower dated December 31, 1995 furnished by Borrower to Agent and Lender and
Agent's latest field examination and no change or event shall have occurred
which would impair the ability of Borrower to perform its obligations hereunder
or under any of the other Financing Agreements to which it is a party or of
Lender or Agent to enforce the Obligations or realize upon the Collateral;
(f) Agent shall have received, in form and substance satisfactory to
Agent, all consents, waivers, acknowledgments and other agreements from third
persons which Agent may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, acknowledgments by lessors,
mortgagees and warehousemen of Agent's security interests in the Collateral,
waivers by such persons of any security interests, liens or other claims by such
persons to the Collateral and agreements permitting Agent access to, and the
right to remain on, the premises to exercise its rights and remedies and
otherwise deal with the Collateral;
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(g) Agent shall have received true, correct and complete copies of the
Management Stockholders Agreement, the Unwind Agreements and all agreements,
documents and instruments executed and/or delivered in connection therewith,
duly authorized, executed and delivered by the parties thereto;
(h) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent, and certificates of insurance policies
and/or endorsements naming Agent as loss payee, all at Borrower's cost and
expense;
(i) Agent shall have received, in form and substance satisfactory to
Agent, such opinion letters of counsel to Borrower with respect to the Financing
Agreements and such other matters as Agent may request;
(j) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Agent,
in form and substance satisfactory to Agent;
(k) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects;
and
(l) no Event of Default shall have occurred and no event shall have
occurred or condition be existing which, with notice or passage of time or both,
would constitute an Event of Default.
2.2 Additional Conditions Precedent to All Loans and Credits. Each of the
--------------------------------------------------------
following is an additional condition precedent to Agent making Loans and/or
providing Credits to Borrower:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan or providing each such
Credit and after giving effect thereto; and
(b) no Event of Default and no event or condition which, with notice
or passage of time or both, would constitute an Event of Default, shall exist or
have occurred and be continuing on and as of the date of the making of such Loan
or providing each such Credit and after giving effect thereto.
-13-
Section 3. ACKNOWLEDGEMENT AND RESTATEMENT
-------------------------------
3.1 Existing Obligations. Borrower hereby acknowledges, confirms and
--------------------
agrees that Borrower is indebted to Lender (as assignee of Congress pursuant to
the Assignment Agreement) for Loans to Borrower under the Financing Agreements,
as of the close of business on February 22, 1996, in the aggregate principal
amount of $40,896,307 and the aggregate amount of $0.00 in respect of Credits,
together with all interest accrued and accruing thereon (to the extent
applicable), and all costs, expenses and other charges relating thereto, all of
which are unconditionally owing by Borrower to Lender, without offset, defense
or unconditionally owing by Borrower to Lender, without offset, defense or
counterclaim of any kind, nature or description whatsoever.
3.2 Acknowledgment of Security Interests.
------------------------------------
(a) Borrower hereby acknowledges, confirms and agrees that Agent on
behalf of Lender and as assignee of Congress has and shall continue to have a
security interest in and lien upon the Collateral heretofore granted to Agent
(or Congress as assignor to Agent on behalf of Lender or to Lender) pursuant to
the Financing Arrangements to secure the Obligations.
(b) The liens and security interests of Agent in the Collateral shall
be deemed to be continuously granted and perfected from the earliest date of the
granting and perfection of such liens and security interests (whether to
Congress as assignor to Lender or Agent on behalf of Lender or to Lender), under
any of the Financing Agreements or otherwise.
3.3 Existing Agreements. Borrower hereby acknowledges, confirms and
-------------------
agrees that: (a) each of the Existing Agreements to which it is a party has
been duly executed and delivered by Borrower and each is in full force and
effect as of the date hereof, and (b) the agreements and obligations of Borrower
contained in the Existing Agreements constitute the legal, valid and binding
obligations of Borrower enforceable against it in accordance with their
respective terms and Borrower has no valid defense to the enforcement of such
obligations and (c) Agent and Lender are entitled to all of the rights and
remedies provided for in the Existing Agreements.
-14-
3.4 Restatement.
-----------
(a) Except as otherwise stated in Section 3.2 hereof and this Section
3.4, as of the date hereof, the terms, conditions, agreements, covenants,
representations and warranties set forth in the Restated Existing Agreements are
hereby amended and restated in their entirety, and as so amended and restated,
replaced and superseded, by the terms, conditions, agreements, covenants,
representations and warranties set forth in this Agreement, except that nothing
------
herein or in the other Financing Agreements shall impair or adversely affect the
continuation of the liability of Borrower for the Obligations heretofore
granted, pledged and/or assigned to Agent or Lender.
(b) The amendment and restatement contained herein shall not, in any
manner, be construed to constitute payment of, or impair, limit, cancel or
extinguish, or constitute a novation in respect of, the Indebtedness and other
obligations and liabilities of Borrower evidenced by or arising under the
Existing Agreements, and the liens and security interests securing such
Indebtedness and other obligations and liabilities, which shall not in any
manner be impaired, limited, terminated, waived or released.
(c) All of the Existing Agreements, other than the Restated Existing
Agreements, shall continue in full force and effect in accordance with their
terms in favor of Agent and Lender, except as specifically amended and
supplemented pursuant to the terms of this Agreement.
Section 4. ADDITIONAL LOAN PROVISIONS
--------------------------
4.1 Loans.
-----
(a) Subject to and upon the terms and conditions contained herein,
Agent and Lender agree that Agent will make Loans on behalf of Lender to
Borrower from time to time at the request of Borrower of up to the amount equal
to the sum of:
(i) eighty-five (85%) percent of the Net Amount of Eligible
Accounts, plus
----
(ii) the lesser of: (A) seventy (70%) percent of the Net Amount of
Eligible Accounts constituting Foreign Accounts or (B)
$5,000,000, plus
----
(iii) the lesser of: (A) fifty-five (55%) percent of the Value of
Eligible Inventory or (B) $25,000,000, less
----
(iv) any reserves.
-15-
(b) Agent may, in its discretion, from time to time, upon not less
than five (5) days prior notice to Borrower, (i) reduce the lending formulas
with respect to Eligible Accounts to the extent that Agent determines in good
faith that: (A) the dilution with respect to the Accounts for any period (based
on the ratio of (1) the aggregate amount of reductions in Accounts other than as
a result of payments in cash to (2) the aggregate amount of total sales) has
increased or may be reasonably anticipated to increase above historical levels,
or (B) the general creditworthiness of account debtors has declined or (ii)
reduce the lending formula with respect to Eligible Inventory to the extent that
Agent determines that: (A) the number of days of the turnover of the Inventory
for any period has changed or (B) the liquidation value of the Eligible
Inventory, or any category thereof, has decreased, or (C) the nature and quality
of the Inventory has deteriorated. In determining whether to reduce the lending
formula(s), Agent may consider events, conditions, contingencies or risks which
are also considered in determining Eligible Accounts, Eligible Inventory or in
establishing reserves.
(c) Except in Agent's discretion, the aggregate amount of the Loans
and the Credits outstanding at any time shall not exceed the Maximum Credit. In
the event that the outstanding amount of any component of the Loans, or the
aggregate amount of the outstanding Loans and Credits, exceed the amounts
available under the lending formulas, the sublimit for Credits set forth in
Section 4.2 or the Maximum Credit, as applicable, such event shall not limit,
waive or otherwise affect any rights of Agent or Lender in that circumstance or
on any future occasions and Borrower shall, upon demand by Agent or Lender,
which may be made at any time or from time to time, immediately repay to Agent
the entire amount of any such excess(es) for which payment is demanded.
4.2 Credits.
-------
(a) Credits may be arranged for by Agent on behalf of Lender subject
to the terms and conditions contained herein and in the Trade Financing
Agreement Supplement to Accounts Financing Agreement, dated January 29, 1993, by
Borrower in favor of Lender. Except in Agent's discretion, the amount of all
outstanding Credits and other commitments and obligations made or incurred by
Agent or Lender in connection therewith shall not exceed $20,000,000.
(b) Borrower shall pay to Lender a letter of credit fee at a rate
equal to three-quarters of one (3/4%) percent per annum on the daily outstanding
undrawn balance of the Credits for the immediately preceding month (or part
thereof), payable in arrears as of the first day of each succeeding month,
except that Borrower shall pay to Agent such letter of credit fee, at Agent's
option,
-16-
without notice, at a rate equal to two and three-quarters (2-3/4%) percent per
annum on such daily outstanding balance for: (i) the period from and after the
date of termination or non-renewal hereof until Agent has received full and
final payment of all Obligations (notwithstanding entry of a judgment against
Borrower) and (ii) the period from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing as
determined by Agent. Such letter of credit fee shall be calculated on the basis
of a three hundred sixty (360) day year and actual days elapsed and the
obligation of Borrower to pay such fee shall survive the termination or non-
renewal of this Agreement.
4.3 Interest.
--------
(a) Borrower shall pay to Lender interest on the outstanding principal
amount of the non-contingent Obligations at the Interest Rate. All interest
accruing hereunder on and after the date of any Event of Default or termination
or non-renewal hereof shall be payable on demand.
(b) Subject to the terms and conditions contained herein, Borrower may
from time to time request that Prime Rate Loans be converted to Eurodollar Rate
Loans or that any existing Eurodollar Rate Loans continue for an additional
Interest Period; provided, that: (i) no Event of Default, or event which with
-------- ----
notice or passage of time or both would constitute an Event of Default exists or
has occurred, (ii) Borrower shall have complied with such customary procedures
as are established by Agent and Lender and specified by Agent to Borrower from
time to time for requests by Borrower for Eurodollar Rate Loans, (iii) no more
than four (4) Interest Periods may be in effect at any one time, (iv) the
aggregate amount of the Eurodollar Rate Loans must be in an amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, and (v) the
amount of the Eurodollar Rate Loans requested, together with all other Loans
outstanding on the date of the request and on the date such Loan is to be
converted or continued, shall not exceed the amount of the Loans available to
Borrower under Section 4 hereof. Each notice from Borrower to convert Prime
Rate Loans to Eurodollar Rate Loans shall specify the principal amount of Prime
Rate Loans to be converted and the Interest Period(s) therefor. Each notice
from Borrower to continue a Eurodollar Rate Loan shall specify the Interest
Period therefor. Such notices to convert or continue Loans shall be irrevocable
and shall be effective only if received by Agent by 11:00 a.m. New York time at
least three (3) Business Days prior to the date of the requested conversion or
continuation. Any request by Borrower to convert Prime Rate Loans to Eurodollar
Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary contained herein, Agent,
Lender and Reference Bank shall not be required to purchase United States Dollar
deposits in the London interbank
-17-
market or other applicable Eurodollar Rate market to fund any Eurodollar Rate
Loans, but the provisions hereof shall be deemed to apply as if Agent, Lender
and Reference Bank had purchased such deposits to fund the Eurodollar Rate
Loans.
(c) If Agent has not received and approved a request to convert a
Eurodollar Rate Loan to a Prime Rate Loan or to continue such Eurodollar Rate
Loan for an additional Interest Period in accordance with Section 4.3(b), such
Eurodollar Rate Loan shall automatically convert to a Prime Rate Loan on the
last day of the Interest Period therefor. Eurodollar Rate Loans shall, at
Agent's option, upon notice by Lender to Borrower, convert to Prime Rate Loans
in the event that the Accounts Agreement or this Agreement shall terminate or
not be renewed. Borrower shall pay to Agent, upon demand by Agent (or Agent
may, at its option, charge any loan account of Borrower) any amounts required to
compensate Agent, Lender, the Reference Bank or any participant with Lender for
any loss (excluding loss of anticipated profits), cost or expense incurred by
such person, (i) as a result of the conversion of Eurodollar Rate Loans to Prime
Rate Loans upon the termination or non-renewal of the Accounts Agreement or this
Agreement or for any other reason or as a result of the prepayment of Eurodollar
Rate Loans prior to the end of the applicable Interest Period or (ii) in the
event that the aggregate principal amount of the Prime Rate Loans which have
previously been converted to Eurodollar Rate Loans shall at any time exceed the
then outstanding principal amount of the Loans then available to Borrower under
Section 4 hereof.
(d) Interest on non-contingent Obligations, other than Eurodollar Rate
Loans, shall be payable by Borrower to Agent monthly in arrears on the first day
of each calendar month and shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed. The interest rate on non-
contingent Obligations, other than Eurodollar Rate Loans, shall increase or
decrease by an amount equal to each increase or decrease in the Prime Rate
effective on the first day of the month after any change in such Prime Rate is
announced based on the Prime Rate in effect on the last day of the month in
which any such change occurs. Interest on each Eurodollar Rate Loan shall be
payable by Borrower to Agent on the last day of each Interest Period therefor,
except as to any Interest Period of six (6) months. Interest on any Eurodollar
Rate Loan for which the applicable Interest Period is six (6) months shall be
payable by Borrower to Agent on the date which is ninety (90) days after the
commencement of such Interest Period and on the last day of such Interest
Period. In no event shall charges constituting interest payable by Borrower to
Agent or Lender exceed the maximum amount or the rate permitted under any
applicable law or regulation, and if any such part or provision of this
Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.
-18-
4.4 Servicing Fee. Borrower shall pay to Agent an annual servicing fee of
-------------
$120,000 in respect of Agent's services for the first twelve (12) month period
(or part thereof) commencing on the date hereof and a monthly servicing fee of
$10,000 thereafter, in each case while the Accounts Agreement or this Agreement
remain in effect and for so long thereafter as any of the Obligations are
outstanding, which annual servicing fee shall be fully earned as of the date
hereof and monthly servicing fee shall be earned and payable as of the first day
of each month. The annual servicing fee shall be payable in twelve (12) equal
monthly installments of $10,000, with the first such installment payable in
advance on the date hereof and with each installment thereafter payable in
advance on the first day of each month, provided, that, the entire amount of
-------- ----
such fee shall become immediately due and payable, without notice or demand, at
Agent's option, upon an Event of Default, or event which with notice or passage
of time or both would constitute an Event of Default, or upon the termination or
non-renewal hereof.
4.5 Unused Line Fee. Borrower shall pay to Agent monthly an unused line
---------------
fee at a rate equal to one-quarter of one (1/4%) percent per annum calculated
upon the amount by which the amount equal to eighty (80%) percent of the Maximum
Credit exceeds the average daily principal balance of the outstanding Loans and
Credits during the immediately preceding month (or part thereof) while the
Accounts Agreement or this Agreement are in effect and for so long thereafter as
any of the Obligations are outstanding, which fee shall be payable on the first
day of each month in arrears.
4.6 Changes in Laws and Increased Costs of Loans.
--------------------------------------------
(a) Notwithstanding anything to the contrary contained herein, in the
event that any change in applicable law or regulation (or the interpretation or
administration thereof) shall make it unlawful for Agent, Lender, Reference Bank
or any participant with Lender to make or maintain Eurodollar Rate Loans or to
comply with the terms hereof in connection with Eurodollar Rate Loans, Agent
shall promptly notify Borrower thereof and the right of Borrower to request
additional Eurodollar Rate Loans, or that Eurodollar Rate Loans continue or that
Prime Rate Loans be converted into Eurodollar Rate Loans shall cease, until such
time as Agent, Lender, Reference Bank or the participant with Lender may again
lawfully make and maintain Eurodollar Rate Loans. All Eurodollar Rate Loans
shall be automatically converted to Prime Rate Loans upon such notice by Agent
to Borrower. Borrower shall pay to Agent, upon demand by Agent (or Agent may,
at its option, charge any loan account of Borrower) any amounts required to
compensate Agent, Lender, the Reference Bank or any participant with Lender for
any loss (excluding loss of anticipated profits), cost or expense incurred by
such person as a result of the foregoing, including, without limitation, any
such loss, cost or
-19-
expense incurred by reason of the liquidation or re-employment of deposits or
other funds acquired by such person to make or maintain the Eurodollar Rate
Loans or any portion thereof. A certificate of Agent setting forth the basis for
the determination of such amount necessary to compensate Agent as aforesaid
shall be delivered to Borrower and shall be conclusive, absent manifest error.
(b) Borrower shall pay to Agent, upon demand by Agent (or Agent may,
at its option, charge any loan account of Borrower) any amounts required to
compensate Agent, Lender, Reference Bank or any participant with Lender for any
loss, cost or expense incurred by such person as a result of any change in
applicable law or regulation (or the interpretation or administration thereof)
that shall (i) increase the costs to Agent, Lender, Reference Bank or any
participant with Lender of making or maintaining any Eurodollar Rate Loans or
(b) reduce the amounts received or receivable by Agent, Lender, Reference Bank
or any participant with Lender in respect thereof, including, without
limitation, any such loss, cost or expense incurred by reason of the liquidation
or re-employment of deposits or other funds acquired by such person to make or
maintain the Eurodollar Rate Loans or any portion thereof. If Agent shall
demand compensation hereunder (or charge any loan account of Borrower), Borrower
shall promptly pay such compensation, and Borrower may, at its option, no longer
request that Lender thereafter make additional Eurodollar Rate Loans, continue
Eurodollar Rate Loans or convert Prime Rate Loans into Eurodollar Rate Loans
until the change giving rise to such increased costs ceases to be in effect,
provided, that, the foregoing shall not affect the right of Agent, Lender or
- -------- ----
Reference Bank to receive compensation hereunder. A certificate of Agent
setting forth the basis for the determination of such amount necessary to
compensate Agent as aforesaid shall be delivered to Borrower and shall be
conclusive, absent manifest error.
(c) If, on or prior to the determination of any Eurodollar Rate for
any Interest Period, Agent shall have determined that the amount of such
Eurodollar Rate Loan or such Eurodollar Rate for the Interest Period requested
by Borrower are not generally available to Agent through the Reference Bank, or
that the rate at which such Eurodollar Rate Loan is to be made will not
adequately reflect the cost of making or maintaining Eurodollar Rate Loans for
such Interest Period, or other reasonable means do not exist for ascertaining
the applicable Eurodollar Rate, Agent shall give notice to Borrower and, so long
as the circumstances giving rise to such determination continue to exist, the
right of Borrower to request additional Eurodollar Rate Loans, or to continue
any Eurodollar Rate Loans or to convert Prime Rate Loans into Eurodollar Rate
Loans shall cease. If on or after any such determination by Agent, Borrower, on
the last day(s) of the then current Interest Period(s) for then outstanding
Eurodollar Rate
-20-
Loans, does not prepay such Loans, such Eurodollar Rate Loans shall convert into
Prime Rate Loans.
Section 5. COLLECTION; ADMINISTRATION; TERM
--------------------------------
5.1 Collection of Accounts.
----------------------
(a) Borrower shall establish and maintain, at its expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Agent may specify, with such banks as are acceptable to Agent
into which Borrower shall promptly deposit and direct its account debtors to
directly remit all payments on Accounts and all payments constituting proceeds
of Inventory or other Collateral in the identical form in which such payments
are made, whether by cash, check or other manner. The banks at which the
Blocked Accounts are established shall enter into an agreement, in form and
substance satisfactory to Agent, providing that all items received or deposited
in the Blocked Accounts are the property of Agent and Lender, that the
depository bank has no lien upon, or right to setoff against, the Blocked
Accounts, the items received for deposit therein, or the funds from time to time
on deposit therein and that the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, at such time as
Agent shall direct, all funds received or deposited into the Blocked Accounts to
such bank account of Agent as Agent may from time to time designate for such
purpose ("Payment Account").
(b) Agent shall instruct the depository banks at which the Blocked
Accounts are maintained to transfer the funds on deposit in the Blocked Accounts
to such operating bank account of Borrower as Borrower may specify in writing to
Agent until such time as Agent shall notify the depository bank otherwise.
Agent may instruct the depository banks at which the Blocked Accounts are
maintained to transfer all funds received or deposited into the Blocked Accounts
to the Payment Account at any time that either: (i) an Event of Default, or
event which with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred, or (ii) Borrower shall have failed to
deliver any Borrowing Base Certificate in accordance with the terms hereof, or
(iii) upon Agent's good faith belief, any information contained in any Borrowing
Base Certificate is incomplete, inaccurate or misleading, or (iv) Excess
Availability shall be less than ten (10%) percent of the Maximum Credit. In the
event Agent shall instruct the depository banks at which the Blocked Accounts
are maintained to so transfer funds to the Payment Account, Borrower shall pay
Agent a collection charge equal to fifty (50%) percent of the amount of interest
which would be payable by Borrower if for purposes of calculating interest funds
received in payment of the Obligations were applied to the Obligations one (1)
Business Day
-21-
following the date of receipt of immediately available funds by Agent in the
Payment Account.
(c) Borrower agrees that all payments made to such Blocked Accounts or
other funds received and collected by Agent, whether on the Accounts or as
proceeds of Inventory or other Collateral or otherwise shall be the property of
Agent and Lender. Borrower and any of its Affiliates shall, acting as trustee
for Agent, receive, as the sole and exclusive property of Agent, any monies,
checks, notes, drafts or any other payment relating to and/or proceeds of
Accounts or other Collateral which come into the possession or under the control
of Borrower or any of its Affiliates immediately upon receipt thereof, Borrower
shall remit the same or cause the same to be remitted, in kind, to Agent.
Borrower agrees to reimburse Agent and Lender for any amounts paid to any bank
at which a Blocked Account is maintained arising out of Agent's or Lender's
indemnification of such bank against damages incurred by such bank in the
operation of the Blocked Accounts or otherwise related thereto. This agreement
of Borrower to reimburse Agent and Lender shall survive the termination or non-
renewal of the Accounts Agreement or this Agreement.
5.2 Borrowing Base Certificate.
--------------------------
(a) On the Business Day immediately preceding the Business Day on
which Borrower requests that Agent make a Loan or establish a Credit, and in
addition, twice each month on the fifteenth (15th) day of such month (or if not
a Business Day, then the immediately following Business Day) and the last
Business Day of such month, whether or not Borrower is requesting or has
requested any Loans or Credits or more frequently at Borrower's option or as
Lender may request, Borrower shall provide Agent a Borrowing Base Certificate
setting forth Borrower's calculation of the Loans and Credits available to
Borrower pursuant to the terms and conditions contained in the Accounts
Agreement and herein as of the immediately preceding Business Day in the case of
a Borrowing Base Certificate delivered to Agent other than on the fifteenth
(15th) day or last day of any month, or as of the last Business Day of the
immediately preceding two (2) week period in the case of a Borrowing Base
Certificate delivered to Agent on the fifteenth (15th) day or last day of the
month, as the case may be, in each case, duly completed and executed by the
chief financial officer or other appropriate financial officer of Borrower
acceptable to Agent, together with all schedules required pursuant to the terms
of the Borrowing Base Certificate duly completed (including, without limitation,
a schedule of all Accounts created, collections received and credit memos issued
for each day of the immediately preceding week); provided, that, without
-------- ----
limiting any other rights of Agent or Lender, upon Agent's request, Borrower
shall provide Agent on a daily basis with a schedule of Accounts, collections
received and credits issued and on a weekly basis with an inventory
-22-
report in the event that at any time either: (i) an Event of Default, or event
which with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred, or (ii) Borrower shall have failed to
deliver any Borrowing Base Certificate in accordance with the terms hereof, or
(iii) upon Agent's good faith belief, any information contained in any Borrowing
Base Certificate is incomplete, inaccurate or misleading, or (iv) Excess
Availability shall be less than ten (10%) percent of the Maximum Credit.
(b) Nothing contained in any Borrowing Base Certificate shall be
deemed to limit, impair or otherwise affect the rights of Agent contained herein
and in the event of any conflict or inconsistency between the calculation of the
Loans and Credits available to Borrower as set forth in any Borrowing Base
Certificate and as determined by Agent, the determination of Agent shall govern
and be conclusive and binding upon Borrower. Without limiting the foregoing,
Borrower shall furnish to Agent any information which Agent may reasonably
request regarding the determination and calculation of any of the amounts set
forth in the Borrowing Base Certificate. If any of Borrower's records or
reports of the Collateral are prepared or maintained by an accounting service,
contractor, shipper or other agent, Borrower hereby irrevocably authorizes such
service, contractor, shipper or agent to deliver such records, reports and
related documents to Agent and to follow Agent's instructions with respect to
further services at any time that an Event of Default exists or has occurred.
(c) Borrower shall promptly notify Agent in writing in the event that
at any time: (i) the amount of Loans and Credits available to Borrower pursuant
hereto is less than ninety (90%) percent of the amount of Loans and Credits
available to Borrower pursuant hereto and reflected in the most recent prior
Borrowing Base Certificate previously delivered by Borrower to Lender pursuant
to Section 5.2(a) hereof, (ii) the Loans made by Agent to Borrower and/or
Credits outstanding at such time exceed the amount of the Loans and Credits then
available to Borrower under the terms hereof as a result of any decrease in the
amount of Loans and Credits then available and the amount of such excess, or
(iii) Excess Availability is less than ten (10%) percent of the Maximum Credit
as a result of any decrease in the amounts of Loans and Credits available to
Borrower pursuant to the terms and conditions contained herein.
(d) Borrower shall furnish or cause to be furnished to Agent such
budgets, forecasts, projections and other information respecting the Collateral
and the business of Borrower, as Agent may, from time to time, reasonably
request. Agent is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business of Borrower to any
court
-23-
or other government agency or to any participant or assignee or prospective
participant or assignee.
5.3 Term.
----
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending the date three (3) years from the
date hereof (the "Renewal Date"), and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof. Lender or Borrower may
terminate this Agreement and the other Financing Agreements effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least sixty (60) days prior written notice; provided, that,
-------- ----
this Agreement and all other Financing Agreements must be terminated
simultaneously. Upon the effective date of termination or non-renewal of the
Financing Agreements, Borrower shall pay to Agent, in full, all outstanding and
unpaid Obligations and shall furnish cash collateral to Agent in such amounts as
Agent determines are reasonably necessary to secure Agent and Lender from loss,
cost, damage or expense, including attorneys' fees and legal expenses, in
connection with any contingent Obligations, including issued and outstanding
Credits and checks or other payments provisionally credited to the Obligations
and/or as to which Agent or Lender has not yet received final and indefeasible
payment. Such payments in respect of the Obligations and cash collateral shall
be remitted by wire transfer in Federal funds to such bank account of Agent, as
Agent may, in its discretion, designate in writing to Borrower for such purpose.
Interest shall be due until and including the next Business Day, if the amounts
so paid by Borrower to the bank account designated by Agent are received in such
bank account later than 12:00 noon, New York City time.
(b) No termination of this Agreement or the other Financing Agreements
shall relieve or discharge Borrower of its respective duties, obligations and
covenants under this Agreement or the other Financing Agreements until all
Obligations have been fully and finally discharged and paid, and Agent's
continuing security interest in the Collateral and the rights and remedies of
Agent and Lender hereunder, under the other Financing Agreements and applicable
law, shall remain in effect until all such Obligations have been fully and
finally discharged and paid.
Section 6. AMENDMENTS TO EXISTING AGREEMENTS
---------------------------------
6.1 Loans. Section 2.1 of the Accounts Agreement is hereby deleted in its
-----
entirety and the following substituted therefor: "Intentionally deleted".
-24-
6.2 Interest and Fees. Sections 3.1, 3.2, 3.5 and 3.6 of the Accounts
-----------------
Agreement are each hereby deleted in their entirety and the following
substituted therefor: "Intentionally deleted".
6.3 Collection and Administration. Section 5.1 of the Account Agreement
-----------------------------
is hereby deleted in its entirety and the following substituted therefor:
"Intentionally deleted".
6.4 Events of Default. Section 8.1(g) of the Accounts Agreement is hereby
-----------------
deleted in its entirety and the following substituted therefor: "Intentionally
omitted."
6.5 Remedies. Section 8.2 of the Accounts Agreement is hereby deleted in
--------
its entirety and the following substituted therefor: "Intentionally omitted."
6.6 Termination. Sections 9.1 and 9.2 of the Accounts Agreement are
-----------
hereby deleted and the following substituted therefor: "Intentionally deleted".
6.7 Exhibits. Exhibit A to the Inventory Security Agreement Supplement to
--------
Accounts Financing Agreement [Security Agreement], dated January 29, 1993,
between Borrower and Lender and Exhibit A to the Trade Financing Agreement
Supplement to Accounts Financing Agreement [Security Agreement], dated January
29, 1993, by Borrower in favor of Lender are each hereby replaced and superseded
in their entirety by Schedule 6.7 hereto.
6.8 Credits. Section 1.5 and 1.8 of the Trade Financing Agreement
-------
Supplement to Accounts Financing Agreement [Security Agreement], dated January
29, 1993, by Borrower in favor of Lender are each hereby deleted in their
entirety and the following substituted therefor: "Intentionally deleted".
Section 7. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
----------------------------------------------------
In addition to the representations, warranties and covenants contained in
the Accounts Agreement and the other Financing Agreements, Borrower hereby
represents, warrants and covenants to Agent and Lender the following, the truth
and accuracy of which are, and compliance with being, a continuing condition of
the making of Loans and providing Credits to Borrower by Agent or Lender under
the Accounts Agreement or hereunder:
7.1 Subsidiaries. Borrower does not have any Subsidiaries as of the date
------------
hereof except for PNY France and P.N.Y. Electronics GmbH. Borrower shall not
form or acquire any other Subsidiaries without the prior written consent of
Agent.
-25-
7.2 Indebtedness. Borrower shall not create, incur, assume or permit to
------------
exist, contingently or otherwise, any Indebtedness, except:
(a) Indebtedness to Lender and to Agent;
(b) Indebtedness consisting of unsecured current liabilities incurred
in the ordinary course of its business which are not unpaid after their original
or extended due dates;
(c) Indebtedness incurred in the ordinary course of its business
secured only by liens permitted under Sections 7.3(b), 7.3(c) and 7.3(d) hereof;
(d) the contingent Indebtedness permitted under Section 7.6(c) hereof;
(e) the unsecured Indebtedness of Borrower to Shareholder evidenced by
the Subordinated Notes as in effect on the date of the execution thereof, which
Indebtedness is subject and subordinate in right of payment to the right of
Agent and Lender to receive the prior full and final payment of all of the
Obligations; provided that: (i) the aggregate principal amount of such
-------- ----
indebtedness thereunder shall not exceed $20,140,000, subject to adjustment as
provided in the Subordinated Notes (as in effect on the date of the execution
thereof), less all repayments of principal in respect thereof, plus interest
thereon at the rate set forth in the Subordinated Notes as in effect on the date
of the execution thereof, (ii) Agent shall have received true, correct and
complete copies of the Subordinated Notes and all agreements, documents and
instruments evidencing or otherwise related to such indebtedness, (iii) the
Obligations shall at all times constitute "Senior Indebtedness" and "Designated
Senior Indebtedness" as such terms are defined in the Subordinated Notes, (iv)
there shall not be any other "Designated Senior Indebtedness" as such term is
defined in the Subordinated Notes, (v) Borrower shall not, directly or
indirectly, make any payments in respect of such Indebtedness, including, but
not limited to, any prepayments or other nonmandatory payments, except, that,
------ ----
Borrower may make mandatory prepayments of principal required as a result of an
initial public offering of the common stock of Borrower and regularly scheduled
payments of interest in accordance with the terms of the Subordinated Notes as
in effect on the date of the execution thereof, provided, that, (A) in the event
-------- ----
that any of the Obligations are not paid when due (whether at maturity, by
acceleration, by mandatory prepayment or otherwise) and such payment default is
not cured or waived in writing, then no such payments shall be made in respect
of such Indebtedness, and (B) upon the occurrence of any Event of Default, other
than a payment default, then no payments shall be made in respect of such
Indebtedness for a period commencing on the date of written notice
-26-
from at least a majority in outstanding principal amount of Designated Senior
Indebtedness, as such term is defined in the Subordinated Notes, of such other
Event of Default and ending on the earlier of one hundred seventy-five (175)
days after such date or all Obligations have been finally paid and satisfied in
full, (vi) Borrower shall not, directly or indirectly, (A) amend, modify, alter
or change the terms of the Subordinated Notes or any agreement, document or
instrument related thereto, except, that, Borrower may, after not less than ten
------ ----
(10) Business Days prior written notice to Lender, amend, modify, alter or
change the terms thereof so long as: (1) either (aa) such amendment,
modification, alteration or change does not in any manner adversely affect
Lender or any rights of Lender as determined in good faith by Lender or (bb)
Lender has consented in writing to such amendment, modification, alteration or
change and (2) such amendment, modification, alteration or change does not
relate to the terms of payment of the Indebtedness evidenced thereby, the
maturity date or amortization of such Indebtedness, the amount of such
Indebtedness, the terms of the subordination of such Indebtedness, the interest
rate or any fees or charges or any collateral with respect thereto or make any
terms thereof more restrictive or burdensome than as in effect on the date
hereof, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, and (vii) Borrower shall furnish to Agent all notices, demands or other
materials in connection with such indebtedness either received by Borrower or on
its behalf, promptly after the receipt thereof, or sent by Borrower or on its
behalf, concurrently with the sending thereof, as the case may be;
(f) the unsecured Indebtedness of Borrower arising after the date
hereof evidenced by promissory notes made by Borrower payable to the holders of
the Series A Preferred Stock in satisfaction of the mandatory dividends required
to be paid by Borrower to such holders in accordance with the terms thereof (as
in effect on the date hereof), which Indebtedness shall be subject and
subordinate in right of payment to the right of Agent and Lender to receive the
prior full and final payment of all of the Obligations; provided, that, (i) in
-------- ----
no event shall such Indebtedness constitute "Senior Indebtedness" or "Designated
Senior Indebtedness" as such terms are defined in the Subordinated Notes, (ii)
Lender shall have received not less than ten (10) Business Days prior written
notice of the intention of Borrower to incur such Indebtedness, (iii) Lender
shall receive, promptly upon its or their issuance, true, correct and complete
copies of any and all promissory notes issued by Borrower to evidence such
Indebtedness, (iv) on the date of incurring such Indebtedness and issuing such
notes, and after giving effect thereto, no Event of Default or act, condition or
event which with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred, (v) the terms of such Indebtedness and the
terms of the
-27-
subordination of such Indebtedness to the right of Agent and Lender to receive
the prior full and final payment of all of the Obligations shall be in all
respects in form and substance identical to those contained in the Subordinated
Notes (except as otherwise required hereunder) or otherwise satisfactory to
Agent and Lender, (vi) in no event shall Borrower make or be required to make
any payments in respect of such Indebtedness unless as of the date of such
payment and after giving effect thereto, Excess Availability shall be not less
than $5,000,000, (vii) Borrower shall not directly or indirectly (A) amend,
modify, alter or change the terms of the Series A Preferred Stock or any
promissory notes issued to evidence the Indebtedness permitted hereunder or any
agreement or instrument related thereto, except, that, Borrower may, after not
------ ----
less than ten (10) Business Days prior written notice to Lender, amend, modify,
alter or change the terms thereof so long as: (1) either (aa) such amendment,
modification, alteration or change does not in any manner adversely affect
Lender or any rights of Lender as determined in good faith by Lender or (bb)
Lender has consented in writing to such amendment, modification, alteration or
change, and (2) such amendment, modification, alteration or change does not
relate to the terms of payment of the Indebtedness evidenced thereby, the
maturity date or amortization of such Indebtedness, the amount of such
Indebtedness, the terms of the subordination of such Indebtedness, the interest
rate or any fees or charges or any collateral with respect thereto or make any
terms thereof more restrictive or burdensome than as in effect on the date
hereof, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, and (viii) Borrower shall furnish to Agent all notices, demands or
other materials concerning such Indebtedness, promptly after receipt thereof or
sent by it or on its behalf concurrently with the sending thereof, as the case
may be;
(g) Indebtedness existing on the date hereof which is described on
Schedule 7.2 hereto; provided, that: (i) Borrower may only make regularly
-------- ----
scheduled payments of principal and interest in respect of such Indebtedness as
set forth in Schedule 7.2, (ii) Borrower shall not, directly or indirectly, (A)
make any prepayments or other non-mandatory payments in respect of such
Indebtedness or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, or (C) amend, modify, alter or change the terms of such Indebtedness or
any agreement or instrument related thereto, and (iii) Borrower shall furnish to
Agent all notices, demands or other materials concerning such Indebtedness,
promptly after receipt thereof or sent by it or on its behalf concurrently with
the sending thereof, as the case may be.
-28-
7.3 Limitation on Liens. Borrower shall not create or suffer to exist
-------------------
any mortgage, pledge, security interest, lien, encumbrance, defect in title or
restriction upon the use of its real or personal properties, whether now owned
or hereafter acquired, except:
(a) the liens or security interests in favor of Agent;
(b) tax, mechanics and other like statutory liens arising in the
ordinary course of Borrower's business to the extent (i) such liens secure
Indebtedness which is not overdue or (ii) until foreclosure or similar
proceedings shall have been commenced, such liens secure Indebtedness relating
to claims or liabilities which are being contested in good faith by appropriate
proceedings available to Borrower prior to the commencement of foreclosure or
other similar proceedings and are adequately escrowed for or reserved against in
Agent's judgment;
(c) purchase money mortgages or other purchase money liens or
security interests upon any specific fixed assets hereafter acquired, or
mortgages, liens or security interests existing on any such future fixed assets
at the time of acquisition thereof (including, without limitation, capitalized
or finance leases), provided, that, (i) the Indebtedness secured by such
-------- ----
mortgages, liens or security interests outstanding at any one time shall not
exceed $3,000,000 in the aggregate, (ii) no such purchase money or other
mortgage, lien or security interest (or capitalized or finance lease, as the
case may be) with respect to specific future fixed assets or as refinanced shall
extend to or cover any other property, other than the specific fixed assets so
acquired, or acquired subject to such mortgage, lien or security interest (or
lease) and the proceeds thereof, (iii) such mortgage, lien or security interest
only secures the obligation to pay the purchase price of such specific fixed
assets (or the obligations under the capitalized or finance lease), and (iv) the
principal amount secured thereby shall not exceed one hundred (100%) percent of
the cost of the fixed assets so acquired; and
(d) the existing liens, encumbrances or security interests described
on Schedule 7.3 hereto.
7.4 Dividends. Borrower shall not, directly or indirectly, declare or pay
---------
any dividends on account of any shares of any class of capital stock of Borrower
now or hereafter outstanding, or set aside or otherwise deposit or invest any
sums for such purpose, or redeem, retire, defease, purchase or otherwise acquire
any shares of any class of capital stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration other than stock or
apply or set apart any sums, or make any other distribution (by reduction of
capital or otherwise) in respect of
-29-
any such shares or agree to do any of the foregoing; except, that, Borrower may:
------ ----
(a) declare and pay mandatory dividends required under the terms of
the Series A Preferred Stock as in effect on the date hereof pursuant to (i) the
issuance of subordinated promissory notes to the holders of such Series A
Preferred Stock to the extent permitted under Section 7.2(f) above or (ii) the
forgiveness of the Indebtedness owed to Borrower by the holders of the Series A
Preferred Stock arising pursuant to the loans by Borrower to such holders
permitted under Section 7.6(c) below, and
(b) purchase or redeem shares of Common Stock or Series A Preferred
Stock of Borrower from any party to the Stockholder Agreement pursuant to
Section 4 thereof (as in effect on the date hereof) or purchase or redeem Common
Stock or Series A Preferred Stock of Borrower pursuant to Sections 2.2, 2.4, 2.5
and 2.6 of the Management Stockholder Agreement (as in effect on the date
hereof), or purchase or redeem shares of Common Stock or Series A Preferred
Stock of Borrower pursuant to the Unwind Agreements (as in effect on the date
hereof), provided, that as to each such purchase or redemption all of the
-------- ----
following conditions are satisfied as determined by Agent: (i) as of the date
of such purchase or redemption and after giving effect thereto, no Event of
Default, or act, condition, or event which with notice or passage of time or
both would constitute an Event of Default shall exist or have occurred, (ii)
Lender shall have received not less than ten (10) Business Days prior written
notice of the intention of Borrower to purchase or redeem such Common Stock or
Series A Preferred Stock, which notice shall specify in reasonable detail
acceptable to Agent, the party from whom such Common Stock or Series A Preferred
Stock is being purchased, the amount which Borrower is paying for the Common
Stock or Series A Preferred Stock to be purchased or redeemed, the anticipated
date of such purchase or redemption, the agreement pursuant to which Borrower is
purchasing or redeeming such shares and such other information with respect
thereto as Lender may reasonably request, (iii) as of the date of any such
purchase or redemption and after giving effect thereto, Excess Availability
shall be not less than $5,000,000, except to the extent that the amount paid by
------
Borrower to purchase or redeem such Common Stock or Series A Preferred Stock is
equal to or less than the amount of cash or other immediately available funds
which was previously paid by the holder of such stock to Borrower to purchase
the stock then being purchased or redeemed by Borrower, (iv) Borrower shall not,
directly or indirectly, amend, modify, alter or change any of the terms of the
Stockholder Agreement, the Management Stockholder Agreement or the Unwind
Agreements or any agreement or instrument related thereto, except, that,
------ ----
Borrower may, after not less than ten (10) Business Days prior written notice to
Lender, amend, modify, alter or change the terms thereof so long as: (A) either
(1) such amendment, modification,
-30-
alteration or change does not in any manner adversely affect Lender or any
rights of Lender as determined in good faith by Lender or (2) Lender has
consented in writing to such amendment or modification, and (B) such amendment,
modification, alteration or change does not in any way relate to the terms of
any purchases, dividends, redemptions, or other payments by Borrower in respect
of any Common Stock or Series A Preferred Stock or under the terms of such
agreements or instruments, or make any terms thereof more restrictive or
burdensome than as in effect on the date hereof.
7.5 Transactions with Affiliates.
----------------------------
(a) Borrower shall not, directly or indirectly, purchase, acquire or
lease any property or receive any goods or services from, or sell, transfer or
lease any property or services to, any Affiliate of Borrower, except for
------ ---
(i) such transactions on terms no less favorable to Borrower than
would have been obtained in an arm's length transaction with a person who is not
an Affiliate,
(ii) the arrangements of Borrower with PNY France (or any other
substantially wholly-owned foreign subsidiary of Borrower, provided, that,
-------- ----
nothing contained herein shall be construed to constitute the consent of Agent
or Lender to the formation or acquisition of such foreign subsidiary) pursuant
to which PNY France or such other foreign subsidiary shall purchase
semiconductor chips and other related components and materials for Borrower as
the purchasing agent of Borrower in accordance with the terms of the
Commissionaire Agreement, dated January 1, 1996, between PNY France and Borrower
(as in effect on the date hereof) or an agreement containing substantially
similar terms with such other foreign subsidiary,
(iii) sales by Borrower from time to time to PNY France or any other
substantially wholly-owned foreign subsidiary of Borrower (provided, that,
-------- ----
nothing contained herein shall be construed to constitute the consent of Agent
or Lender to the formation or acquisition of such foreign subsidiary) of
inventory of Borrower in accordance with the terms of the Purchase and Sale
Agreement, dated as of January 1, 1996, between Borrower and PNY France or an
agreement containing substantially similar terms with such other foreign
subsidiary,
(iv) sales of equipment by Borrower to PNY France or any other
substantially wholly-owned foreign subsidiary of Borrower (provided, that,
-------- ----
nothing contained herein shall be construed to constitute the consent of Agent
or Lender to the formation or acquisition of such foreign subsidiary) on terms
and at a price determined by Borrower to be reasonable, provided, that, (A) PNY
-------- ----
France or such other foreign subsidiary shall pay for such
-31-
equipment in cash or other immediately available funds within ninety (90) days
after the sale or other transfer of such equipment by Borrower to PNY France or
such other foreign subsidiary, (B) the amount so paid by PNY France or such
other subsidiary to Borrower for such equipment shall be not less than the total
consideration paid for such equipment by Borrower and (C) nothing contained
herein shall be construed to constitute the consent of Agent or Lender to the
formation or acquisition of such subsidiary.
(b) Borrower shall, not directly or indirectly, make any payment of
management fees or the principal amount of or interest on any Indebtedness owing
to any Affiliate of Borrower, except, that, (i) Borrower may forgive
------ ----
Indebtedness owed to Borrower by the holders of the Series A Preferred Stock to
the extent permitted in Section 7.4(a)(ii) above and (ii) in the event Borrower
or any of the Management Stockholders shall elect to exercise his or her option
under the Unwind Agreements in accordance with the terms thereof (as in effect
on the date hereof) to require Borrower to repay amounts paid by such Management
Stockholder to Borrower under the Subscription Agreement between Borrower and
such Management Stockholder, Borrower may make such payments; provided, that,
-------- ----
such options shall only remain in effect until March 31, 1996.
7.6 Loans, Investments, Guaranties, Etc. Borrower shall not, directly or
------------------------------------
indirectly, make any loans or advance money or property to any Person, or invest
in (by capital contribution or otherwise) or purchase or repurchase the stock or
Indebtedness or all or a substantial part of the assets or property of any
Person, or guarantee, assume, endorse, or otherwise become responsible for
(directly or indirectly) the Indebtedness, performance, obligations or dividends
of any Person or agree to do any of the foregoing, except:
------
(a) loans by Borrower to Shareholder, provided, that: (i) in no event
-------- ----
shall the amount of the loans by Borrower to Shareholder exceed the amount of
$300,000 and (ii) the Indebtedness of Shareholder to Borrower arising pursuant
to such loans is not and shall not be evidenced by any promissory note or other
instrument, unless the original of such note or instrument is immediately upon
the reasonable request of Agent delivered to Agent duly endorsed and assigned by
Borrower to Agent;
(b) loans by Borrower to employees of Borrower other than Shareholder,
provided, that: (i) in no event shall the aggregate amount of the loans by
- -------- ----
Borrower to employees of Borrower other than Shareholder (other than loans to
employees permitted under Section 7.6(c) below) exceed the amount of $300,000
and (ii) the Indebtedness of each of such employees to Borrower arising pursuant
to such loans is not and shall not be evidenced by any promissory note or other
instrument, unless the original of such note or other instrument is immediately
upon the reasonable request
-32-
of Agent delivered to Agent, duly endorsed and assigned by Borrower to Agent;
(c) loans by Borrower to any of the Management Stockholders,
provided, that, (i) all of the proceeds of such loans shall be used by such
- -------- ----
Management Stockholder only to pay to Borrower the purchase price for shares of
Series A Preferred Stock, (ii) on the date of any such loan and after giving
effect thereto, no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of default shall
exist or have occurred, (iii) Borrower shall not be required to transfer any
cash or other immediately available funds (or any equivalent) to or for the
benefit of such Management Stockholder in connection with such loans, (iv)
Borrower shall not, and shall not be required to, make any payments in cash or
cash equivalents in respect of such shares of Series A Preferred Stock
(including, but not limited to, dividends, repurchases or redemptions) unless as
of the date of any such payment and after giving effect thereto, Excess
Availability shall be not less than $5,000,000, and (v) the Indebtedness of such
Management Stockholder to Borrower arising pursuant to such loans is not and
shall not be evidenced by any promissory note or other instrument, unless the
original of such note or other instrument is immediately upon the reasonable
request of Agent delivered to Agent, duly endorsed and assigned by Borrower to
Agent;
(d) loans by Borrower to PNY France, provided, that: (i) in no event
-------- ----
shall the amount of the loans by Borrower to PNY France exceed the aggregate
principal amount of $1,700,000 and (ii) the Indebtedness of PNY France to
Borrower arising pursuant to such loan is not and shall not be evidenced by any
promissory note or other instrument, unless the original of such note or other
instrument is immediately upon the reasonable request of Agent delivered to
Agent, duly endorsed and assigned by Borrower to Agent;
(e) Credits established for the account of Borrower in connection
with the business of or for the use or benefit of PNY France or any other
substantially wholly-owned foreign subsidiary of Borrower (provided, that,
-------- ----
nothing contained herein shall be construed to constitute the consent of Agent
or Lender to the formation or acquisition of such foreign subsidiary); provided,
--------
that, (i) such Credits shall be issued in accordance with the terms hereof and
- ----
the other Financing Agreements and (ii) in no event shall the aggregate face
amount of all such Credits outstanding at any time exceed $5,000,000;
(f) cash equity capital contributions after the date hereof by
Borrower to P.N.Y. Electronics GmbH; provided, that, (i) Agent shall have
-------- ----
received not less than ten (10) Business Days prior written notice of the
intention of Borrower to make any such capital contribution, which notice shall
specify the date and amount of such contribution, (ii) on the date of any such
capital contribution and after giving effect thereto, no Event of Default or
act, condition or event which with notice or passage of time or
-33-
both would constitute an Event of Default shall exist or have occurred, and
(iii) the aggregate amount of such capital contributions shall not exceed
$400,000;
(g) the endorsement of instruments for collection or deposit in the
ordinary course of business; and
(h) after written notice thereof to Agent, investments in the
following instruments, which shall be pledged and delivered to Agent upon
Agent's request, (i) marketable obligations issued or guaranteed by the United
States of America or an instrumentality or agency thereof, maturing not more
than one (1) year after the date of acquisition thereof, (ii) certificates of
deposit or other obligations maturing not more than one (1) year after the date
of acquisition thereof issued by any bank or trust company organized under the
laws of and located in the United States of America or any State thereof and
having capital, surplus and undivided profits of at least $50,000,000, and (iii)
open market commercial paper with a maturity not in excess of two hundred
seventy (270) days from the date of acquisition thereof which have the highest
credit rating by either Standard & Poor's Corporation or Xxxxx'x Investors
Service, Inc.
7.7 Environmental Compliance.
------------------------
(a) Borrower has not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any hazardous materials, on or
off Borrower's premises (whether or not owned by it) in any manner which at any
time violates any applicable statute, rule or regulation relating to
environmental pollution and employee health and safety, or any license, permit,
certificate, approval or similar authorization thereunder and the operations of
Borrower comply in all material respects with all such statutes, rules and
regulations and all licenses, permits, certificates, approvals and similar
authorizations thereunder.
(b) There is no pending or threatened investigation, proceeding,
complaint, order, directive, claim, citation or notice by any governmental
authority or any other Person with respect to any alleged non-compliance with or
violation of the requirements of any statute, rule or regulation relating to
environmental pollution and employee health and safety, by Borrower or the
release, spill or discharge, threatened or actual, of any hazardous material or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any hazardous materials or any other environmental,
health or safety matter, which materially and adversely affects Borrower or its
business, operations or assets or any properties at which Borrower transported,
stored or disposed of any hazardous materials.
(c) Borrower has no material liability (contingent or otherwise) in
connection with hazardous materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any hazardous
materials.
-34-
(d) Borrower has all licenses, permits, certificates, approvals or
similar authorizations required to be obtained or filed in connection with the
operations of Borrower under any statute, rule or regulation relating to
environmental pollution and employee health and safety, and all of such
licenses, permits, certificates, approvals or similar authorizations are valid
and in full force and effect.
7.8 Compliance with Laws, Regulations, Etc. Borrower shall at all times
---------------------------------------
comply in all material respects with all applicable provisions of laws, rules,
regulations, licenses, permits, approvals and orders and duly observe all
requirements, of any foreign, federal, state or local governmental authority,
including, without limitation, the Employee Retirement Income Security Act of
1974, as amended, the Internal Revenue Code of 1986, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended and the rules and regulations thereunder and all other
statutes, rules, regulations, orders, permits and stipulations relating to
environmental pollution and employee health and safety, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended and the Resource Conservation and Recovery Act of 1976
and any similar state or local statutes with respect thereto.
7.9 Adjusted Tangible Net Worth. Borrower shall not permit Adjusted
---------------------------
Tangible Net Worth for the periods stated below to be less than the amount
specified below for such period:
Adjusted Tangible
Period Net Worth
------ -----------------
(a) From the date hereof
through March 31, 1996 $14,008,000 (or if less, the amount
equal to eighty (80%) percent of the
Adjusted Tangible Net Worth for
Borrower on a stand-alone basis as at
December 31, 1995 calculated based on
the audited financial statements of
Borrower delivered to Agent pursuant to
Section 7.11(a)(i))
(b) From April 1, 1996
through June 30, 1996 17,669,000
(c) From July 1, 1996
through September 30, 1996 20,897,000
(d) From October 1, 1996
through December 31, 1996 24,448,000
-35-
(e) From January 1, 1996
through March 31, 1997 26,415,000
(f) From April 1, 1997
through June 30, 1997 30,801,000
(g) From July 1, 1997
through August 31, 1997 36,589,000
(h) From September 1, 1997 and
at all times thereafter 42,568,000
7.10 Interest Coverage Ratio. Borrower shall not permit the Interest
-----------------------
Coverage Ratio to be less than 3.00 to 1 for any fiscal quarter commencing with
the fiscal quarter ending June 30, 1996.
7.11 Financial Statements and Other Information.
------------------------------------------
(a) Borrower shall promptly furnish to Agent and Lender all such
financial and other information as Agent and Lender shall reasonably request
relating to the Collateral and the assets, businesses and operations of
Borrower, and notify the auditors and accountants of Borrower that Agent and
Lender are authorized to obtain such information directly from them. Without
limiting the foregoing, Borrower shall furnish to Agent and Lender, in such
detail as they shall request, the following:
(i) As soon as available, but in any event not later than one
hundred twenty (120) days after the close of each fiscal year, audited
consolidated financial statements (including in each case balance sheets,
statements of income and loss, statements of cash flow and statements of
shareholders' equity) for Borrower and its Subsidiaries for such fiscal year,
and the accompanying notes thereto, and unaudited consolidating financial
statements (including in each case balance sheets, statements of income and
loss, statements of cash flow and statements of shareholders' equity) for
Borrower and its Subsidiaries for such fiscal year, and the accompanying notes
thereto, setting forth in each case in comparative form figures for the previous
fiscal year, all in reasonable detail, fairly presenting the financial position
and the results of operations of Borrower and its Subsidiaries as at the date
thereof and for the fiscal year then ended, and prepared in accordance with GAAP
consistently applied. Such audited consolidated statements of Borrower and its
Subsidiaries shall be examined in accordance with generally accepted auditing
standards by and accompanied by a report thereon unqualified as to scope of
independent certified public accountants selected by Borrower and satisfactory
to Agent and Lender.
(ii) As soon as available, but in any event not later than forty-five
(45) days after the close of each fiscal quarter other than the fourth quarter
of a fiscal year, consolidated and consolidating financial statements (including
in each case balance sheets, statements of income and loss, statements
-36-
of cash flow and statements of shareholders' equity) for Borrower and its
Subsidiaries as at the end of such quarter, and for the period from the
beginning of the fiscal year to the end of such quarter, together with the
accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and results of operation of Borrower and its Subsidiaries as
at the date thereof and for such periods, prepared in accordance with GAAP
consistently applied. Such statements shall be certified to be correct by the
chief financial officer of Borrower to the best of his knowledge, subject to
normal year-end adjustments.
(iii) With each of the audited financial statements delivered pursuant
to Section 7.11(a)(i) above, a certificate of the independent certified public
accountants that examined such statements to the effect that they have reviewed
and are familiar with the Financing Agreements and that, in examining such
financial statements, they did not become aware of any fact or condition of a
financial or accounting nature which then constituted an Event of Default,
except for those, if any, described in reasonable detail in such certificate.
(b) Borrower shall promptly notify Agent in writing of any material loss,
damage, investigation, action, suit, proceeding or claim relating to the
collateral or which might result in any material adverse change in its business,
properties, assets, goodwill or condition, financial or otherwise.
(c) Borrower shall promptly provide Agent and Lender such budgets,
forecasts, projections and other information respecting the business operations
and financial or other condition of Borrower and its Subsidiaries, as Agent and
Lender may, from time to time, reasonably request.
7.12 Use of Proceeds and Other Financial Accommodations. All Loans, Credits
--------------------------------------------------
and other financial accommodations provided by Agent or Lender to Borrower
pursuant to the Accounts Agreement, this Agreement and the other Financing
Agreements shall be used by Borrower for general operating and working capital
purposes of Borrower and such other purposes as are permitted hereunder.
7.13 Reserves. Without limiting any other rights or remedies of Agent under
--------
the other Financing Agreements, all Loans made or otherwise available to
Borrower from Agent or Lender hereunder shall be subject to Agent's continuing
right, in its discretion exercised in good faith, to establish reserves reducing
the amount of the Loans which Agent would otherwise determine to make available
to Borrower, and to increase and decrease such reserves from time to time, if
and to the extent that, in Agent's discretion exercised in good faith, Agent
believes such reserve is necessary to protect Agent against possible non-payment
for any reason by any Account Debtor, possible non-payment of any Indebtedness
owed by Borrower to third parties, or in respect of any state of facts which
does or would, with the passage of time or notice or both, constitute an Event
of Default under any of the Financing Agreements or for any other reason.
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Section 8. ADDITIONAL EVENTS OF DEFAULT AND REMEDIES
-----------------------------------------
8.1 Additional Events of Default. In addition to the Events of Default
----------------------------
set forth in the Accounts Agreement or other Financing Agreements, the
occurrence of any one or more of the following shall constitute an "Event of
Default" under the Accounts Agreement, including all supplements thereto, and
the other Financing Agreements:
(a) Borrower or any guarantor, endorser or other person liable on
the Obligations shall default in the payment of any amounts at any time due on
any Indebtedness owed by it to any Person other than Lender for borrowed money
or due under or in connection with any capitalized lease obligations, contingent
Indebtedness in connection with any guarantee, letter of credit, indemnity or
similar type of instrument in favor of any person other than Lender, or shall be
in default under any of the other terms or covenants of any evidence of such
Indebtedness or of any mortgage, security agreement, indenture, note, pledge or
other agreement relating thereto or securing such Indebtedness or, if Borrower
or any guarantor, endorser or other person liable on the Obligations shall
default under any other material contract, lease, license or other agreement
with any person other than Lender if such default results in or causes, or has a
reasonable likelihood of resulting in or causing, a material adverse change in
(i) the condition (financial or otherwise), business, performance, operations or
properties of Borrower, (ii) the legality, validity or enforceability of this
Agreement or any of the other Financing Agreements, (iii) the perfection or
priority of the security interests or liens of Agent on behalf of Lender in the
Collateral, (iv) the ability of Borrower to repay the Obligations or of Borrower
to perform its obligations under this Agreement or any of the other Financing
Agreements, or (v) the rights and remedies of Lender under this Agreement or any
of the other Financing Agreements; or
(b) the Shareholder dies; or
(c) the occurrence of an event of default under any other agreement,
document or instrument at any time executed and/delivered to, with or in favor
of Agent by Borrower or any other person liable on the Obligations, including,
without limitation, any of the other Financing Agreements.
8.2 Additional Remedies.
-------------------
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have the right (in addition to any other rights Lender
may have under this Agreement, any of the other Financing Agreements or
otherwise) without further notice to Borrower, to appropriate, set off and apply
to the payment of any or all of the Obligations, any or all Collateral, in such
manner as Lender shall in its sole discretion determine, to
-38-
enforce payment of any Collateral, to settle, compromise or release in whole or
in part, any amounts owing on the Collateral, to prosecute any action, suit or
proceeding with respect to the Collateral, to extend the time of payment of any
and all Collateral, to make allowances and adjustments with respect thereto, to
issue credits in the name of Lender or Borrower, to sell, assign and deliver the
Collateral (or any part thereof), at public or private sale, at broker's board,
for cash upon credit or otherwise, at Lender's sole option and discretion, and
Lender may bid or become purchaser at any such sale, if public, free from any
right of redemption which is hereby expressly waived.
(b) Without limiting any rights or remedies of Agent or Lender at any
time on or after an Event of Default pursuant to the other Financing Agreements
or applicable law, Agent may, at its option, cure any default by Borrower under
any agreement, law, regulation, permit, license or approval with, or issued or
promulgated by, any Person, which constitutes, or with notice or passage of time
or both would constitute an Event of Default hereunder or under any of the other
Financing Agreements, or pay or bond on appeal any judgment, order, directive,
claim or citation entered or made against Borrower (irrespective of the amount
of said judgment or the time elapsed since entry thereof) and charge Borrower's
account therefor, such amounts to be repayable by Borrower to Agent on demand,
together with interest thereon at the rate of interest then payable by Borrower
on the Obligations, provided, however, Agent shall be under no obligation to
--------
effect such cure, payment or bonding and shall not, by making any payment for
Borrower's account, be deemed to have assumed any obligation or liability of
Borrower or any such Affiliate.
Section 9. MISCELLANEOUS
-------------
9.1 Effect of this Amendment. Except as modified pursuant hereto, no
------------------------
other changes or modifications to the Financing Agreements are intended or
implied and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Agreement and the other Financing Agreements, the terms of this Agreement shall
control.
9.2 Further Assurances. The parties hereto shall execute and deliver such
------------------
additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Agreement.
9.3 Governing Law. The rights and obligations hereunder of each of the
-------------
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
9.4 Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of each of the parties hereto and their respective successors and
assigns.
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9.5 Counterparts. This Agreement may be executed in any number of
------------
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Agreement, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto.
P.N.Y. ELECTRONICS, INC.
By: /s/ XXXX XXXXX
-------------------------
Title: President
----------------------
CONGRESS FINANCIAL CORPORATION,
in its capacity as Agent
By: /s/ ILLEGIBLE
----------------------------
Title: Assistant Vice President
-------------------------
CORESTATES BANK, N.A.
By: /s/ ILLEGIBLE
----------------------------
Title: Vice President
-------------------------
-40-
EXHIBIT A
[AMENDED AND RESTATED LOAN AGREEMENT]
ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
BETWEEN
CONGRESS FINANCIAL CORPORATION
0000 XXXXXX XX XXX XXXXXXXX
XXX XXXX, XXX XXXX 00000
AND
P.N.Y. ELECTRONICS, INC.
- -----------------------------------------------------------------------------
(NAME OF CLIENT)
000 Xxxxxxxx Xxxxxx
- -----------------------------------------------------------------------------
(STREET XXXXXXX)
Xxxxxxxxx, Xxx Xxxxxx 00000
- -----------------------------------------------------------------------------
(CITY) (STATE)
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This Agreement states the terms and conditions upon which, effective as of
the date of acceptance by you, we may obtain loans and other financial
accommodations from you for our general corporate and business purposes upon the
security referred to herein. We shall be, if two or more, in number, jointly
and severally bound hereunder.
Section 1. DEFINITIONS.
1.1. All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code ("UCC") shall have the meanings given therein,
unless otherwise defined in this Agreement, and all references to the plural
herein shall also mean the singular.
1.2. "Accounts" shall mean all of our present and future accounts,
contract rights, general intangibles, chattel paper, documents and instruments,
as such terms are defined in the UCC, including, without limitation, all
obligations for the payment of money arising out of our sale, lease or other
disposition of goods or other property or rendition of services.
1.3. "Account Debtor" shall mean each debtor or obligor in any way
obligated on or in connection with any Account.
1.4. "Collateral" shall have the meaning set forth in Section 4.1 hereof.
1.5. "Eligible Accounts" shall have the meaning set forth in the Covenant
Supplement hereto.
1.6. "Events of Default" shall have the meaning set forth in Section 8.1
hereof.
1.7. "Maximum Credit" shall mean the amount of $15,000,000.
1.8. "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed.
1.9. "Obligations" shall mean any and all loans, indebtedness, liabilities
and obligations of any kind owing by us to you, however evidenced, whether as
principal, guarantor or otherwise, whether arising under this Agreement, any
supplement hereto, or otherwise, whether now existing or hereafter arising,
whether direct or indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, secured or unsecured,
original, renewed or extended, and whether arising directly or acquired from
others (including, without limitation, your participations or interests in our
obligations to others) and including, without limitation, your charges,
commissions, interest, expenses, costs and attorneys' fees chargeable to us in
connection with all of the foregoing.
1.10. "Records" shall have the meaning set forth in Section 4.1(f) hereof.
1.11. "Renewal Date" shall have the meaning set forth in Section 9.1
hereof.
Section 2. LOANS.
2.1. You shall, in your discretion, make loans to us from time to time, at
our request, of up to eighty-five percent (85%) of the Net Amount of Eligible
Accounts (or such greater or lesser percentage thereof as you shall in your sole
discretion determine from time to time).
2.2. All loans shall be charged to a loan account in our name on your
books. You shall render to us each month a statement of our loan account which
shall be considered correct and deemed accepted by, and conclusively binding
upon, us as an account stated, except to the extent that you receive a written
notice of any specific exceptions by us thereto within thirty (30) days after
the date of such statement.
2.3. Except in your sole discretion, the outstanding aggregate principal
amount of all loans by you to us hereunder, under any supplement hereto or
evidenced by any promissory note, and the outstanding amount of any other
financial accommodations provided by you to us under any supplement hereto,
shall not exceed the Maximum Credit at any time. Without limiting your right to
demand payment of the Obligations, or any portion thereof, in accordance with
any other terms of this Agreement, or any supplement hereto, in the event that
the outstanding aggregate principal amount of loans by you to us exceeds the
Maximum Credit or the formula set forth in Section 2.1 hereof, we shall remain
liable therefor and the entire amount of such excess(es) shall, at your option,
become immediately due and payable, upon your demand.
2.4. At your option, all principal, interest, fees, commissions, costs,
expenses or other charges with respect to this Agreement or any supplement
hereto (all of which shall be cumulative and not exclusive) and any and all
loans and advances by you to us may be charged directly to our account
maintained by you.
2.5. All loans shall be payable at your office specified above or at such
other place as you may hereafter designate from time to time and, at your option
and upon your request, we shall execute and deliver to you one or more
promissory notes in form and substance satisfactory to you to further evidence
such loans.
Section 3. INTEREST AND FEES.
3.1. Interest shall be payable by us to you on the first day of each month
upon the closing daily balances in our loan account for each day during the
immediately preceding month, at a rate equal to ____________ percent (____%) per
annum in excess of the prime commercial interest rate (presently _____% per
annum) from time to time publicly announced by Philadelphia National Bank,
incorporated as CoreStates Bank, N.A., Philadelphia, Pennsylvania, whether or
not such announced rate is the best rate available at such bank. The interest
rate charged hereunder shall increase or decrease by an amount equal to each
increase or decrease, respectively, in said prime loan rate, effective on the
first day of the month after any change in said prime loan rate based on the
prime loan rate in effect on the last day of the month in which
-3-
any such change occurs. The rate of interest in effect hereunder on the date
hereof, expressed in terms of simple interest, is __________ percent (_____%)
per annum. In the event that the outstanding principal amount of loans by you to
us exceeds the Maximum Credit or the formula set forth in Section 2.1 hereof or
any other formula or sublimit set forth in any supplement hereto, interest on
the entire amount of such excess(es) shall be payable at the rate set forth in
Section 3.2 hereof (whether or not such excess(es) arise or are made with our
without your knowledge or consent).
3.2. On and after the date of any Event of Default or termination or non-
renewal hereof, interest on all outstanding unpaid Obligations shall accrue at a
rate equal to __________ percent (______%) per annum in excess of the pre-
default rate set forth above from the date of such Event of Default or
termination or non-renewal, and all interest accruing hereunder shall thereafter
be payable on demand.
3.3. Interest shall be calculated on the basis of a 360-day year and shall
be included in each monthly statement of our loan account. You shall have the
right, at your option, to charge all interest to our loan account on the first
day of each month, and such interest shall be deemed to be paid by the first
amounts subsequently credited thereto.
3.4. In no event shall charges constituting interest, payable by us under
this Agreement, exceed the rate permitted under any applicable law or
regulation, and if any part or provision of this Agreement is in contravention
of any such law or regulation, such part or provision shall be deemed amended to
conform thereto.
3.5. We shall pay to you on or before the tenth (10th) day of the next
succeeding calendar month an unused line fee equal to one third of one percent
(.33%) per annum of the difference, if any, between (a) the greater of (i) the
average outstanding amount of loans available to us based on the applicable
lending formulas multiplied by the Net Amount of Eligible Accounts and the Value
of Eligible Inventory as determined by you in respect of the immediately
preceding calendar month (or part thereof) or (ii) $10,000,000, and (b) the
average outstanding daily principal balance of all such loans in respect of such
month.
3.6. We shall pay to you a facility fee in an amount equal to $_________,
payable simultaneously with the execution hereof, which amount is fully earned
as of the date hereof.
Section 4. SECURITY INTEREST.
4.1. As security for the prompt performance, observance and payment in
full of all Obligations, we hereby grant to you a continuing security interest
in, a lien upon and a right of setoff against, and we hereby assign, transfer,
pledge and set over to you the following (which together with any of our other
property in which you may at any time have a security interest or lien, whether
pursuant to this Agreement or any supplement hereto, or otherwise, are herein
collectively referred to as the "Collateral"): All present and future (a)
accounts; (b) moneys, securities and other property and the proceeds thereof,
now or hereafter held or received by, or in transit to you from or for us,
whether for safekeeping, pledge, custody, transmission, collection or otherwise,
and all of our deposits (general or special), balances, sums and credits with
you at any time existing; (c) all of our right, title and interest, and all of
our rights, remedies, security
-4-
and liens, in, to and in respect of the Accounts and other Collateral,
including, without limitation, rights of stoppage in transit, replevin,
repossession and reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, guaranties or other contracts of suretyship with
respect to the Accounts, deposits or other security for the obligation of any
Account Debtor, and credit and other insurance; (d) all of our right, title and
interest in, to and in respect of all goods relating to, or which by sale have
resulted in, Accounts including, without limitation, all goods described in
invoices, documents, contracts or instruments with respect to, or otherwise
representing or evidencing, any Accounts or other Collateral, including, without
limitation, all returned, reclaimed or repossessed goods; (e) all deposit
accounts; (f) all books, records, ledger cards, computer programs, and other
property and general intangibles evidencing or relating to the Accounts and any
other Collateral or any Account Debtor, together with the file cabinets or
containers in which the foregoing are stored ("Records"); (g) all other general
intangibles of every kind and description, including, without limitation, trade
names and trademarks, and the goodwill of the business symbolized thereby,
patents, copyrights, licensee and Federal, State and local tax refund claims of
all kinds; and (h) all proceeds of the foregoing, in any form, including,
without limitation, any claims against third parties for loss or damage to or
destruction of any or all of the foregoing.
4.2. We shall keep and maintain, at our cost and expense, satisfactory and
complete books and records of all Accounts, all payments received or credits
granted thereon, and all other dealings therewith. At such times as you may
request, we shall deliver to you all original documents evidencing the sale and
delivery of goods or the performance of services which created any Accounts,
including but not limited to all original contracts, orders, invoices, bills of
lading, warehouse receipts, delivery tickets and shipping receipts, together
with schedules describing the Accounts and/or written confirmatory assignments
to you of each Account, in form and substance satisfactory to you and duly
executed by us, together with such other information as you may request. In no
event shall the making or the failure to make or the content of any schedule or
assignment or our failure to comply with the provisions hereof be deemed or
construed as a waiver, limitation or modification of your security interest in,
lien upon and assignment of the Collateral or our representations, warranties or
covenants under this Agreement or any supplement hereto.
Section 5. COLLECTION AND ADMINISTRATION.
5.1. Until our authority to do so is curtailed or terminated at any time
by you, we shall, at our expense and on your behalf, collect, as your property
and in trust for you, all remittances and all amounts unpaid on Accounts, and we
shall not commingle such collections with our own funds. We shall on the day
received remit all such collections to you in the form received duly endorsed by
us for deposit with you, unless you shall direct us otherwise. All amounts
collected on Accounts when received by you shall be credited to our loan
account, after adding three (3) business days for collection, clearance and
transfer of remittances, except for federal funds wire transfers, as to which
two (2) business days shall be added, conditional upon final payment to you.
5.2. You or your representatives shall at all times have free access to
and right of inspection of the Collateral and have full access to and the right
to examine and make copies of
-5-
our Records, to confirm and verify all Accounts, to perform general audits and
to do whatever else you deem necessary to protect your interests. You may at any
time remove from our premises or require us or any accountants and auditors
employed by us to deliver any Records and you may, without cost or expense to
you, use such of our personnel, supplies, computer equipment and space at our
places of business as may be reasonably necessary for the handling of
collections.
5.3. We shall immediately upon obtaining knowledge thereof report to you
all reclaimed, repossessed or returned goods, Account Debtor claims and any
other matter affecting the value, enforceability or collectibility of Accounts.
At your request, any goods reclaimed or repossessed by or returned to us will be
set aside, marked with your name and held by us for your account and subject to
your security interest. All claims and disputes relating to Accounts are to be
promptly adjusted within a reasonable time, at our own cost and expense. You
may, at your option, settle, adjust or compromise claims and disputes relating
to Accounts which are not adjusted by us within a reasonable time.
5.4. Intentionally Omitted.
Section 6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
We hereby represent, warrant and covenant to you the following (which shall
survive the execution and delivery of this Agreement), the truth and accuracy of
which, on compliance with, being a continuing condition of the making of loans
hereunder by you or under any supplement hereto:
6.1. We are and shall be, with respect to all Collateral and all our
inventory now existing or hereafter acquired, the owner of such Collateral and
inventory free from any lien, security interest, claim or encumbrance of any
kind, except in your favor and as otherwise consented to it writing by you, and
we shall defend the same against the claims of all persons.
6.2. We will not directly or indirectly sell, lease, transfer, abandon or
otherwise dispose of all or any substantial portion or our property or assets or
consolidate or merge with or into any other entity or permit any other entity to
consolidate or merge with or into us. We will at all times preserve, renew and
keep in full force and effect our existence as a corporation and the rights and
franchises with respect thereto and continue to engage in business of the same
type as we are engaged as of the date hereof. We shall give you thirty (30)
days prior written notice of any proposed change in our corporate name which
notice shall set forth the new name.
6.3. Our Records and chief executive office are maintained at the address
referred to below. We shall not change such location without our prior written
consent and prior to making any such change, we agree to execute any additional
financing statements or other documents or notices which you may require.
6.4. We shall maintain our shipping forms, invoices and other related
documents in a form satisfactory to you and shall maintain our books, records
and accounts in accordance with generally accepted accounting principles
consistently applied. We agree to furnish you monthly with accounts receivable
agings, inventory reports (if requested by you), and interim financial
-6-
statements (including balance sheet, statement of income and surplus account,
and cash flow statements), and to furnish you, at any time or from time to time
with such other information regarding our business affairs and financial
condition as you may reasonably request, including, without limitation, balance
sheets, statements of profit and loss, financial statements, cash flow and other
projections, earnings forecasts, schedules, agings and reports. We hereby
irrevocably authorize and direct all accountants, auditors or other third
parties to deliver so you, at our expense, copies of our financial statements,
papers related thereto, and other accounting records of any nature in their
possession and to disclose to you any information they may have regarding our
business affairs and financial conditions. We shall furnish you with audited
financial statements on an annual basis certified by independent public
accountants selected by us and acceptable to you. All such statements and
information shall fairly present our financial condition as of the dates and the
results of our operations for the periods, for which the same are furnished.
Any documents, schedules, invoices or other papers delivered to you may be
destroyed or otherwise disposed of by you one (1) year after the date the same
are delivered to you, unless we make written request therefor and pay all
expenses attendant to their return, in which event you shall return same when
your actual or anticipated need therefor has ceased.
6.5. Each Eligible Account represents a valid and legally enforceable
indebtedness based upon an actual and bona fide sale and delivery of goods or
rendition of services in the ordinary course of our business which has been
finally accepted by the Account Debtor and for which the Account Debtor is
unconditionally liable to make payment of the amount stated in each invoice,
document or instrument evidencing the Eligible Account in accordance with the
terms thereof, without offset, defense or counterclaim and will be paid in full
at maturity.
6.6. All statements made and all unpaid balances appearing in the
invoices, documents and instruments evidencing each Eligible Account are true
and correct and are in all respects what they purport to be and all signatures
and endorsements that appear thereon are genuine and all signatories and
endorsers have full capacity to contract and each Account Debtor is solvent and
financially able to pay in full the Eligible Account when it matures. None of
the transactions underlying or giving rise to any Account shall violate any
state or federal laws or regulations, and all documents relating to the Accounts
shall be legally sufficient under such laws or regulations and shall be legally
enforceable in accordance with their terms and all recording, filing and other
requirements of giving public notice under any applicable law have been duly
complied with.
6.7. We shall duly pay and discharge all taxes, assessments, contributions
and governmental charges upon or against us or our properties or assets prior to
the date on which penalties attach thereto. We shall be liable for any tax or
penalty imposed upon any transaction under this Agreement or any supplement
hereto or giving rise to the Accounts or any other Collateral or which you may
be required to withhold or pay for any reason and we agree to indemnify and hold
you harmless with respect thereto, and to repay to you on demand the amount
thereof, and until paid by us such amount shall be added to and deemed part of
your loans to us.
6.8. Except as otherwise disclosed to you in writing, there is no present
investigation by any governmental agency pending or threatened against us and
there is no action, suit,
-7-
proceeding or claim pending or threatened against us or our assets or goodwill,
or affecting any transaction contemplated by this Agreement, or any supplement
hereto, or any agreements, instruments or documents delivered in connection
herewith or therewith before any court, arbitrator, or governmental or
administrative body or agency which is adversely determined with respect to us
would result in any material adverse change in our business, properties, assets,
goodwill, or condition, financial or otherwise.
6.9. The execution, delivery and performance of this Agreement, any
supplement hereto, or any agreements, instruments and documents executed and
delivered in connection herewith, are within our corporate powers, have been
duly authorized, are not in contravention of law or the terms of our Charter,
By-Laws or other incorporation papers, or of any indenture, agreement or
undertaking to which we are a party or which we are bound.
6.10. We shall, at our expense, duly execute and deliver, or shall cause
to be duly executed and delivered, such further agreements, instruments and
documents, including, without limitation, additional security agreements,
mortgages, deeds of trust, deeds to secure debt, collateral assignments, Uniform
Commercial Code financing statements or amendments or continuations thereof,
landlord's or mortgagee's waivers of liens and consents to the exercise by you
of all your rights and remedies hereunder, under any supplement hereto or
applicable law with respect to the Collateral, and do or cause to be done such
further acts as may be necessary or proper in your opinion to evidence, perfect,
maintain and enforce your security interest and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any supplement hereto. Where permitted by law, we hereby authorize
you to execute and file one or more Uniform Commercial Code financing statements
signed only by you.
Section 7. SPECIFIC POWERS.
7.1. We hereby constitute you and your agent and any designee, as our
attorney-in-fact, at our own cost and expense, to exercise at any time all or
any of the following powers which, being coupled with an interest, shall be
irrevocable until all Obligations have been paid in full: (a) to receive, take,
endorse, assign, deliver, accept and deposit, in your or our name, any and all
checks, notes, drafts, remittances and other instruments and documents relating
to the Collateral; (b) on or after the occurrence of an Event of Default to
receive open and dispose of all mail addressed to us and to notify postal
authorities to change the address for delivery thereof to such address as you
may designate; (c) to transmit to Account Debtors notice of your interest
therein and to request from such Account Debtors at any time, in your or our
name or that of your designee, information concerning the Accounts and the
amounts owing thereon; (d) on or after the occurrence of an Event of Default, to
notify Account Debtors to make payment directly to you; (e) on or after the
occurrence of an Event of Default, to take or bring, in your or our name, all
steps, actions, suits or proceedings deemed by you necessary or desirable to
effect collection of the Collateral; and (f) to execute in our name and on our
behalf any UCC financing statements or amendments thereto. We hereby release
you and your officers, employees and designees, from any liability arising from
any act or acts under this Agreement or in furtherance thereof, whether of
omission or commission, and whether based upon any error of judgment or mistake
of law or fact.
-8-
Section 8. EVENTS OF DEFAULT AND REMEDIES.
8.1. All Obligations shall be, at your option, immediately due and payable
without notice or demand (notwithstanding any deferred or first installment
payments allowed, if any, by any instrument evidencing or relating to the
Obligations) and any provision of this Agreement or any supplement hereto, as to
future loans and advances by you shall, at your option, terminate forthwith,
upon the termination or non-renewal of this Agreement or upon the occurrence of
any one or more of the following ("Events of Default"): (a) If we shall fail to
pay to you when due any Amounts owing to you under any Obligation, or shall
breach any of the terms, covenants, conditions or provisions of this Agreement,
any supplement hereto or any other agreement between you and us or between any
other third person or entity and us; (b) if any guarantor, endorser or other
person liable on the Obligations shall terminate or breach any of the terms,
covenants, conditions or provisions of any guarantee, endorsement or other
agreement of such person with, or in favor of, you or any other third person or
entity; (c) if any representation, warranty, or statement of fact made to you at
any time by us or on our behalf is false or misleading in any material respect;
(d) if we, or any guarantor, endorser or other person liable on the Obligations,
shall become insolvent, fail to meet our or their debts as they mature, call a
meeting of creditors or have a creditors' committee appointed, make an
assignment for the benefit of creditors, commence or have commenced against us
or them any action or proceeding for relief under any bankruptcy law, or if a
judgment is rendered against us or them, or if we or they suspend or discontinue
doing business for any reason, or if a receiver, custodian or trustee of any
kind is appointed for us or them or any of our or their respective properties;
(e) if there shall be a material adverse change in our business, assets or
condition (financial or otherwise) from the date hereof; (f) if there is any
change in our majority control or majority ownership; or (g) if at any time you
shall, in your sole discretion, consider the Obligations insecure or any part of
the Collateral unsafe, insecure or insufficient and we shall not on your demand
furnish other Collateral or make payment on account, satisfactory to you.
8.2. Upon the occurrence of any Event of Default and at any time
thereafter, you shall have the right (in addition to any other rights you may
have under this Agreement, any supplement hereto or otherwise), without further
notice to us, to appropriate, set off and apply to the payment of any or all of
the Obligations, any or all Collateral, in each manner as you shall in your sole
discretion determine, to enforce payment of any Collateral, to settle,
compromise or release in whole or in part, any amounts owing on the Collateral,
to prosecute any action, suit or proceeding with respect to the Collateral, to
extend the time of payment of any and all Collateral, to make allowances and
adjustments with respect thereto, to issue credits in your or our name, to sell,
assign and deliver the Collateral (or any part thereof), at public or private
sale, at broker's board, for cash, upon credit or otherwise, at your sole option
and discretion, and you may bid or become purchaser at any such sale, if public,
free from any right of redemption which is hereby expressly waived.
8.3. In the event you seek to take possession of all or any portion of the
Collateral by judicial process, we irrevocably waive: (a) the posting of any
bond, surety or security with respect thereto which might otherwise be required,
(b) any demand for possession prior to the commencement of any suit or action to
recover the Collateral, and (c) any requirement that you retain possession and
not dispose of any Collateral until after trial or final judgment.
-9-
8.4. We agree that the giving of five (5) days notice by you, sent by
ordinary mail, postage prepaid, to our address set forth below, designating the
place and time of any public sale or of the time after which any private sale or
other intended disposition of the Collateral is to be made, shall be deemed to
be reasonable notice thereof and we waive any other notice with respect thereto.
8.5. The net cash proceeds resulting from the exercise of any of the
foregoing rights or remedies shall be applied by you to the payment of the
Obligations in such order as you may elect, and we shall remain liable to you
for any deficiency. Without limiting the generality of the foregoing, if you
enter into any credit transaction, directly or indirectly, in connection with
the disposition of any Collateral, you shall have the option, at any time, in
your sole discretion, to reduce the Obligations by the principal amount of such
credit transaction or to defer the reduction thereof until actual receipt by you
of cash or other immediately available funds in connection therewith.
8.6. The enumeration of the foregoing rights and remedies is not intended
to be exclusive, and such rights and remedies are in addition to and not by way
of limitation of any other rights or remedies you may have under the UCC or
other applicable law. You shall have the right, in your sole discretion, to
determine which rights and remedies, and in which order any of the same, are to
be exercised, and to determine which Collateral is to be proceeded against and
in which order, and the exercise of any right or remedy shall not preclude the
exercise of any others, all of which shall be cumulative.
8.7. No act, failure or delay by you shall constitute a waiver of any of
your rights and remedies. No single or partial waiver by you of any provision
of this Agreement or any supplement hereto, or breach or default thereunder, or
of any right or remedy which you may have shall operate as a waiver of any other
provision, breach, default, right or remedy or of the same provision, breach,
default, right or remedy on a future occasion.
8.8. We waive presentment, notice of dishonor, protest and notice of
protest of all instruments included in or evidencing any of the Obligations or
the Collateral and any and all notices or demands whatsoever (except as
expressly provided herein). You may, at all times, proceed directly against us
to enforce payment of the Obligations and shall not be required to take any
action of any kind to preserve, collect or protect your or our rights in the
Collateral.
Section 9. EFFECTIVE DATE; TERMINATION; COSTS.
9.1. This Agreement shall become effective upon acceptance by you and
shall continue in full force and effect for a term ending three (3) years from
the date hereof (the "Renewal Date") and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof. Either party may terminate this
Agreement on the Renewal Date or on the anniversary of the Renewal Date in any
year by giving the other party at least sixty (60) days prior written notice by
registered or certified mail, return receipt requested, and, in addition, you
shall have the right to terminate this Agreement immediately at any time upon
the occurrence of an Event of Default. No termination of this Agreement,
however, shall relieve or discharge us of our duties, obligations and covenants
hereunder until all Obligations have been paid in full, and
-10-
your continuing security interest in the Collateral shall remain in effect until
said Obligations have been fully discharged.
9.2. If you terminate this Agreement upon the occurrence of an Event of
Default or at our request, in view of the impracticability and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of your lost profits as a result thereof, we
hereby agree that we shall pay to you, upon the effective date of such
termination, an early termination fee in an amount equal to: (a) five (5%)
percent of the Maximum Credit if such termination occurs on or prior to the
first anniversary of this Agreement; (b) two (2%) percent of the Maximum Credit
if such termination occurs after the first anniversary of this Agreement but on
or prior to the second anniversary of this Agreement; or (c) one (1%) percent of
the Maximum Credit if such termination occurs after the second anniversary of
this Agreement but prior to the third anniversary of this Agreement. Such
termination fee shall be presumed to be the amount of damages sustained by said
early termination and we agree that it is reasonable under the circumstances
currently existing. The early termination fee provided for in this paragraph
9.2 shall be deemed included in the Obligations.
9.3. This Agreement, any supplement hereto, and any agreements,
instruments or documents delivered or to be delivered in connection herewith
represent our entire agreement and understanding concerning the subject matter
hereof and thereof, and supersede all other prior and contemporaneous
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, offers, contracts, whether oral or written.
9.4. No provision hereof shall be modified or amended orally or by course
of conduct but only by a written instrument expressly referring hereto signed by
both parties.
9.5. Upon your request we shall pay to you, or reimburse you for, all
sums, costs and expenses which you may pay or incur in connection with or
related to the negotiation, preparation, consummation, administration and
enforcement of this Agreement, any supplement hereto, and all other agreements,
instruments and documents in connection herewith and therewith, and the
transactions contemplated hereunder and thereunder, together with any
amendments, supplements, consents or modifications which may be hereafter made
or entered into in respect hereof or thereof, and all efforts made to defend,
protect or enforce the security interest granted herein or therein or in
enforcing payment of the Obligations, including, without limitation, appraisal
fees, filing fees and taxes, title insurance premiums, recording taxes, expenses
for searches, expenses heretofore incurred by you and from time to time
hereafter during the course of periodic field examinations of the Collateral and
our operations, plus a charge of $500 per person per day for your examiners (in
addition to reimbursement of their expenses), wire transfer fees, check dishonor
fees, the fees and disbursements of counsel to you, all fees and expenses for
the service and filing of papers, premiums on bonds and undertakings, fees of
marshalls, sheriffs, custodians, auctioneers and others, travel expenses and all
court costs and collection charges, all of which shall be part of the
Obligations and shall accrue interest after demand thereof at a rate equal to
the highest rate then payable on any of the Obligations.
-11-
Section 10. NOTICES.
10.1. All notices, requests and demands to or upon the respective parties
hereto shall be deemed to have been duly given or made: if by hand, telex,
telegram or facsimile, immediately upon sending; if by Federal Express, Express
Mail or any other overnight delivery service, one (1) day after dispatch; and if
mailed by certified mail, return receipt requested, five (5) days after mailing.
All notices, requests and demands are to be given or made to the respective
parties at the address (or to such other addresses as either party may designate
by notice in accordance with the provisions of this paragraph) set forth herein.
Section 11. WAIVER OF JURY TRIAL; JURISDICTION; CHOICE OF LAW.
11.1. We and you each hereby waive all rights to a trial by jury in any
action or proceeding of any kind arising out of or relating to this Agreement,
any supplement hereto, the Obligations, the Collateral, or any such other
transaction. We hereby waive rights of setoff and rights to interpose
counterclaims in the event of any litigation with respect to any matter
connected with this Agreement, any supplement hereto, the Obligations, the
Collateral or any other transaction between the parties and we hereby
irrevocably consent and submit to the non-exclusive jurisdiction of the Supreme
Court of the State of New York and the United States District Court for the
Southern District of New York in connection with any action or proceeding of any
kind arising out of or relating to this Agreement, any supplement hereto, the
Obligations, the Collateral or any such other transaction.
11.2. In any such litigation we waive personal service of any summons,
complaint or other process and agree that service thereof may be made by
certified or registered mail directed to us at our address set forth below.
Within thirty (30) days after such mailing, we shall appear in answer to such
summons, complaint or other process, failing which we shall be deemed in default
and judgment may be entered by you against us for the amount of the claim and
other relief requested therein.
-12-
11.3. This Agreement and all transactions thereunder shall be deemed to be
consummated in the State of New York and shall be governed by and interpreted in
accordance with the laws of that State. If any part or provision of this
Agreement is invalid or in contravention of any applicable law or regulation,
such part or provision shall be severable without affecting the validity of any
other part or provision of this Agreement.
Very truly yours,
P.N.Y. ELECTRONICS, INC.
/s/ ILLEGIBLE
-----------------------------------------
By:
-----------------------------------------
Title:
Address:
000 Xxxxxxxx Xxxxxx
------------------------------------------
Xxxxxxxxx, Xxx Xxxxxx 00000
------------------------------------------
Accepted at New York, New York
on January 29, 1993
----------
CONGRESS FINANCIAL CORPORATION
By: /s/ ILLEGIBLE
-----------------------------------
Title: VP
--------------------------------
-13-
EXHIBIT B
[AMENDED AND RESTATED LOAN AGREEMENT]
INVENTORY SECURITY AGREEMENT
SUPPLEMENT TO ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This Inventory Security Agreement ("Supplement") is a supplement to the
Accounts Financing Agreement [Security Agreement] between us, dated of even date
herewith (the "Agreement"). This Supplement is (a) hereby incorporated into the
Agreement, (b) made a part thereof and (c) subject to the other terms,
conditions, covenants and warranties thereof. All terms (including capitalized
terms) used herein shall have the meanings ascribed to them respectively in the
Agreement, unless otherwise defined in this Supplement.
Section 1. ADDITIONAL SECURITY INTEREST.
As additional security for the prompt performance, observance and payment
in full of all Obligations, we hereby grant to you a continuing a security
interest in, a lien upon, and a right of setoff against, and we hereby assign,
transfer, pledge and set over to you the following (which is and shall be deemed
part of the Collateral as defined and used in this Agreement):
1.1. All raw materials, work in process, finished goods, and all other
inventory of whatsoever kind or nature, wherever located, whether now owned or
hereafter existing or acquired by us ("Inventory"), including, without
limitation, all wrapping, packaging, advertising, shipping materials, and all
other goods consumed in our business, all labels and other devices, names or
marks affixed or to be affixed thereto for purposes of selling or of identifying
the same or the seller or manufacturer thereof and all of our right, title and
interest therein and thereto;
1.2. All books, records, documents, other property and general intangibles
at any time relating to the Inventory;
1.3. All products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and any claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
Section 2. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
We hereby represent, warrant and covenant to you the following (which shall
survive the execution and delivery of this Supplement), the truth and accuracy
of which, and compliance
with, being a continuing condition of the making of loans by you under the
Agreement or any other supplement thereto:
2.1. The only locations of any Collateral are those addresses listed on
Exhibit A annexed hereto and made a part hereof. Exhibit A sets forth the owner
and/or operator of the premises at such addresses for all locations which we do
not own and operate and all mortgages, if any, with respect to the premises. We
shall not remove any Collateral from such locations, without your prior written
consent, except for sales of Inventory in the ordinary course of our business.
2.2. We shall at all times maintain, with financially sound and reputable
insurers, casualty and hazard insurance with respect to the Collateral for not
less than its full market value and against all risks to which it may be
exposed. All such insurance policies shall be in such form, substance, amounts
and coverage and may be satisfactory to you and shall provide for thirty days
minimum prior cancellation notice in writing to you. You may act as attorney
for us in obtaining, adjusting, settling, amending and canceling such insurance.
We shall promptly (a) obtain endorsements to all existing and future insurance
policies with respect to the Collateral specifying that the proceeds of such
insurance shall be payable to you and us as our interests may appear and further
specifying that you shall be paid regardless of any act, omission or breach of
warranty by us, (b) deliver to you an original executed copy of, or executed
certificate of the insurance carrier with respect to, such endorsement and, at
your request, the original or a certified duplicate copy of the underlying
insurance policy, and (c) deliver to you such other evidence which is
satisfactory to you of compliance with the provisions hereof.
2.3. We shall promptly notify you in writing of the details of any loss,
damage, investigation, action, suit, proceeding or claim relating to the
Collateral or which would result in any material adverse change in our business,
properties, assets, goodwill or condition, financial or otherwise.
2.4. At your option, you may apply any insurance monies received at any
time to the cost of repairs to or replacement for the Inventory and/or to
payment of any of the Obligations, whether or not due, in any order and in such
manner as you, in your sole discretion, may determine.
2.5. Upon your request, at any time and from time to time, we shall, at
our sole cost and expense, execute and deliver to you written reports or
appraisals as to the Inventory listing all items and categories thereof,
describing the condition of same and setting forth the lower of cost or fair
market value thereof, in such form as is satisfactory to you.
2.6. We shall (a) use, store and maintain the Inventory with all
reasonable care and caution, and (b) use the Inventory for lawful purposes for
and in conformity with applicable laws, ordinances and regulations.
2.7. All Inventory shall be produced in accordance with the requirements
of the Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations and orders related thereto.
-2-
2.8. We assume all responsibility and liability arising from or relating
to the use, sale or other disposition of the Inventory.
Section 3. ADDITIONAL REMEDIES.
Upon the occurrence of any Event of Default and at any time thereafter, you
shall have the right (in addition to any other rights you may have under the
Agreement, this Supplement or otherwise), without notice to us, at any time and
from time to time, in your discretion, with or without judicial process or the
aid or assistance of others and without cost to you:
3.1. To enter upon any premises on or in which any of the Inventory may be
located and, without resistance or interference by us, take possession of the
Inventory;
3.2. To complete processing, manufacturing and repair of all or any
portion of the Inventory;
3.3. To sell, foreclose or otherwise dispose of any part or all of the
Inventory on or in any of our premises or premises of any other party;
3.4. To require us, at our expense, to assemble and make available to you
any part or all of the Inventory at any place and time designated by you; and
3.5. To remove any or all of the Inventory from any premises on or in
which the same may be located, for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose (and if any of
the Inventory consists of motor vehicles, you may use our registrations and
license plates).
IN WITNESS WHEREOF, we have caused these presents to be duly executed this
29 day of January, 1993.
-- ------- --
P.N.Y. ELECTRONICS, INC.
/s/ XXXX XXXXX
-----------------------------------------
By:
President
-----------------------------------------
Title:
-3-
Exhibit A - Location of Collateral
----------------------------------
1. P.N.Y. ELECTRONICS, INC.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
2. FOX ELECTRONICS
000 X. Xxxxxx Xxxx
Xxx Xxxx, XX 00000-0000
3. XXXXXXX COMPANY
0000 X. Xxxxxxx Xxxx
Xxxxx, XX 00000
4. W.P. INDUSTRIES INC.
0-00 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
5. STARION
0000 Xxx Xxxxxx 000
Xxxxxx, XX 00000
6. STRACON
0000 Xxxxx Xxxxxx #0
Xxxxxxxxxx Xxxxx, XX 00000
7. JATON
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
EXHIBIT C
TRADE FINANCING AGREEMENT
SUPPLEMENT TO ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This Trade Financing Agreement ("Supplement") is a supplement to the
Accounts Financing Agreement [Security Agreement] between us dated of even date
herewith (the "Agreement"). This Supplement is (a) hereby incorporated into the
Agreement, (b) made a part thereof and (c) subject to the other terms,
conditions, covenants and warranties thereof. All terms, including capitalized
terms, used herein shall have the meanings ascribed to them respectively in the
Agreement, unless otherwise defined in this Supplement.
This Supplement will confirm the terms and conditions upon which you may,
from time to time in your sole discretion, assist us in establishing or opening
foreign or domestic letters of credit and extend other financial accommodations
for our account. Accordingly, each of us hereby agrees as follows:
Section 1. CREDIT ACCOMMODATIONS
1.1. You may, in your sole discretion, from time to time, for our account,
at our request, provide one or more of the following financial accommodations to
us or our designee(s): (a) issue, open, or cause the issuance or opening of
letters of credit or purchase or other guaranties for the purchase of goods and
services in the ordinary course of our or any such designee's business or for
any other purpose approved by you, (b) assist us in establishing or opening
letters of credit for such purposes by indemnifying the issuer thereof or
guaranteeing our payment or performance to such issuer in connection therewith,
(c) make payments for our or such designee's account in connection with such
purchases and/or (d) issue or guarantee drafts and acceptances relating to the
foregoing or otherwise. All such letters of credit or purchase or other
guaranties and other financial accommodations are referred to herein
individually as a "Credit" and collectively as "Credits".
1.2. The opening or issuance of any Credit shall at all times and in all
respects be in your sole discretion. The amount and extent of any Credit and
the terms, conditions and provisions thereof shall in all respects be determined
solely by you and shall be subject to change, modification and revision by you,
in your sole discretion, at any time and from time to time. The maturity of
each Credit shall not exceed one hundred and eighty (180) days after opening or
issuance, except in your sole discretion.
1.3. Our loan availability under the Agreement and any other Supplements
thereto shall be reduced by the amount of all outstanding Credits or such lesser
amount as you may elect in your discretion.
1.4. All outstanding Credits shall be secured by all collateral in which
you are now or hereafter granted a security interest by us or any guarantor of
our Obligations. All outstanding Credits shall be deemed loans for purposes of
determining whether the Maximum Credit has been exceeded.
1.5. Except in your sole discretion, the amount of all Credits and all
other Commitments and obligations made or incurred by you for our account in
connection therewith shall not exceed $1,000,000 in the aggregate at any time
outstanding.
1.6. All indebtedness, liabilities, expenses and obligations of any kind
paid, arising or incurred by you in connection with this Supplement, any Credit
or any documents, drafts and acceptances thereunder, whether present or future,
whether arising or incurred before or after termination or nonrenewal of this
Agreement shall be incurred solely as an accommodation to us and for our account
and constitute part of the Obligations, including without limitation: (a) all
amounts due or which may become due under any Credit or any drafts or
acceptances thereunder; (b) all amounts charged or chargeable to you or us by
any bank or other issuer of any Credit or any correspondent which opens, issues
or is otherwise involved with any Credit, including, without limitation, all
fees, expenses and commissions; (c) your fees, expenses and commissions; (d)
duties, freight, taxes, costs, insurance and all such other charges and expenses
which may pertain directly or indirectly to any Obligations or to the Credits or
goods or documents relating thereto; and (e) all other indebtedness and
obligations owed by us to you pursuant to, in connection with or arising from
this Supplement, the Credits or any drafts or acceptances relating thereto.
1.7. All such Obligations shall accrue interest at the rate provided for
in the Agreement, commencing on the date any payment is made, or non-contingent
obligation incurred, by you and all such Obligations shall, together with
interest thereon and other sums owed by us to you hereunder, be payable and
evidenced as provided in the Agreement.
1.8 In addition to all other fees, charges and expenses payable under the
Agreement, this Supplement, and to any bank or other issuer or correspondent in
connection with any Credit, we agree to pay to you the following commissions for
your services hereunder, which shall be due and payable on the opening or
issuance of each Credit or, if the original term is extended, on the extension
thereof: (a) a charge of one quarter of one percent (.25%) of the face amount
of any Credit (other than drafts or acceptances) for up to the initial sixty
(60) days of the term thereof and an additional charge of one quarter of one
percent (.25%) of such face amount for each additional thirty (30) days, or any
portion thereof, of the original term or any extension thereof. We also agree
to pay to you, your and any bank's, other issuer's or correspondent's customary
charges for amendments, extensions and administration relating to any Credit,
which charges shall be due and payable on the first day of the month following
the date of incurrence and, at your option may be charged to any of our
account(s) maintained by you.
-2-
1.9. Nothing contained herein shall be deemed or construed to grant us any
right, power or authority to pledge your credit in any manner. You shall have
no liability of any kind with respect to any Credit opened or issued by a bank
or other issuer or any draft or acceptance with respect thereto unless and until
you shall have first duly executed and delivered your guarantee or
indemnification in writing with respect thereto, as provided herein.
Section 2. ADDITIONAL SECURITY INTEREST.
2.1. As additional security for the prompt performance, observance and
payment in full of all Obligations, we hereby grant to you a continuing security
interest in, a lien upon, and a right to set off against, and we hereby assign,
transfer, pledge and set over to you all of the following property acquired by
us in connection with any Credit or otherwise owned by us, whether now owned or
hereafter acquired (which is and shall be deemed a part of the Collateral as
defined and used in the Agreement): (a) all raw materials, work-in-process,
finished goods and all other inventory and goods of whatsoever kind or nature,
wherever located, including inventory or goods in transit ("Inventory"),
including, without limitation, all wrapping, packaging, advertising and shipping
materials, and all other goods consumed in our business, all labels and other
devices, names or marks affixed or to be affixed thereto for purposes of selling
or of identifying the same or the seller or manufacturer thereof and all of our
right, title and interest therein and thereto; (b) documents of payment,
transport and title or the equivalent thereof, including, without limitation,
original contracts, orders, invoices, checks, drafts, notes, letters of credit,
documents, warehouse receipts, bills of lading, shipping receipts, dock
receipts, delivery tickets and documents made available to us for the purpose of
ultimate sale or exchange of Inventory or for the purpose of loading, unloading,
storing, shipping, transhipping, manufacturing, processing or otherwise dealing
with Inventory in a manner preliminary to their sale or exchange; (c) all books,
records, other property and general intangibles relating to the foregoing; and
(d) all products and proceeds of the foregoing in any form, including, without
limitation, insurance proceeds and any claims against third parties for loss or
damage to or destruction of any or all of the foregoing.
2.2. We hereby recognize and admit that until all of the Obligations have
been fully and indefeasibly paid and discharged, you may be deemed to have
absolute ownership in and unqualified right to the possession and disposal of
the following: (a) all property shipped under or pursuant to or in connection
with any Credit or in any way related thereto and, including, but not limited
to, the documents, drafts or acceptances drawn thereunder, whether or not
released to us, (b) in and to all shipping documents, warehouse receipts,
policies or certificates of insurance and other documents accompanying or
relative to documents, drafts or acceptances drawn under or relating to any
Credit, and (c) all proceeds of each of the foregoing.
2.3. You may, on or after occurrence of any Event of Default, exercise any
or all of your rights of ownership, including the rights of possession and sale
or other disposition, with or without notice to us, without liability to you and
entirely at our expense and without relieving us from any Obligations.
-3-
Section 3. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
We hereby represent, warrant and covenant to you the following (which shall
survive the execution and delivery of this Supplement), the truth and accuracy
of which, or compliance with, being a continuing condition of the making of
loans by you under the Agreement or any supplement thereto and the extension by
you of each Credit and other financial accommodations pursuant hereto:
3.1. All sales of any Inventory shall be made by us only in the ordinary
course of business and the Accounts arising from such sales and proceeds thereof
shall be and are hereby transferred and assigned to you and we confirm that your
lien and security interest extends and attaches to those Accounts and proceeds.
3.2. Except as you may otherwise specifically consent in writing prior to
the opening or issuance of any Credit, all Credits shall be opened or issued to
cover the actual purchase and delivery of Inventory solely for our account.
3.3 All shipments made under any Credit are in accordance with the
governmental laws and regulations of the countries in which the shipments
originate and terminate, and are not prohibited by any such laws and
regulations.
3.4. We assume all risk, liability and responsibility for, and agree to
pay and discharge, all present and future local, state, federal or foreign
taxes, duties, or levies. Any embargo, restriction, laws, customs or
regulations of any country, state, city, or other political subdivision, where
the Collateral is or may be located, or wherein payments are to be made, or
wherein drafts may be drawn, negotiated, accepted, or paid, shall be solely our
risk, liability and responsibility.
3.5. All documents, instruments, notices and statements relating to any
Credit and/or the Collateral, if any, shall at your request, be promptly
delivered to you.
3.6. We shall procure promptly, or cause to be procured, any necessary
licenses for the shipping of goods and comply or cause any drawer under, or
beneficiary of, any Credit (or any transferee or assignee thereof), to comply
with all foreign and domestic governmental laws and regulations in regard to the
shipping of the Inventory, the financing thereof or payment therefor, including
governmental laws and regulations pertaining to transactions involving
designated foreign countries or their nationals and to furnish such certificates
in that respect as you or any bank or other issuer or correspondent may at any
time require.
3.7. The only locations of any Collateral are those addresses listed on
Exhibit A to the Inventory Security Agreement Supplement to Accounts Financing
Agreement [Security Agreement], dated of even date herewith, between you and us.
Such Exhibit A sets forth the owner and/or operator of the premises at such
addresses, for all locations which we do not own and operate and all mortgages,
if any, with respect to the premises. We shall not remove any Collateral from
such locations, without your prior written consent, except for sales of
Inventory in the ordinary course of our business.
-4-
3.8. We shall at all times maintain, with financially sound and reputable
insurers, casualty and hazard insurance with respect to the Collateral for not
less than its full market value and against all risks to which it may be
exposed. All such insurance policies shall be in such form, substance, amounts
and coverage as may be satisfactory to you and shall provide for thirty (30)
days' minimum prior cancellation notice in writing to you. You may act as
attorney for us in obtaining, adjusting, settling, amending and canceling such
insurance. We shall promptly (a) obtain endorsements to all existing and future
insurance policies with respect to the Collateral specifying that the proceeds
of such insurance shall be payable to you as your interests may appear and
further specifying that you shall be paid regardless of any act, omission or
breach of warranty by us, (b) deliver to you an original executed copy of, or
executed certificate of the insurance carrier with respect to, such endorsement
and, at your request, the original or a certified duplicate copy of the
underlying insurance policy and (c) deliver to you such other evidence which is
satisfactory to you of compliance with the provisions hereof.
3.9. We shall promptly notify you in writing of the details of any loss,
damage, investigation, action, suit, proceeding or claim relating to the
Collateral or which would result in any material adverse change in our business,
assets, goodwill or condition, financial or otherwise.
3.10. At your option, you may apply any insurance monies received at any
time to the cost of repairs to or replacement for the Inventory and/or to
payment of any of the Obligations, whether or not due, in any order and in such
manner as you, in your sole discretion, may determine.
3.11. Upon your request, at any time and from time to time, we shall, at
our sole cost and expense, execute and deliver to you written reports or
appraisals as to the Inventory listing all locations, items and categories
thereof, describing the condition of same and setting forth the lower of cost or
fair market value thereof, in such form as is satisfactory to you.
3.12. We shall (a) use, store and maintain the Inventory with all
reasonable care and caution and (b) use the Inventory for lawful purposes only
and in conformity with applicable laws, ordinances, regulations and insurance
policies.
3.13. We assume all responsibility and liability arising from or relating
to the use, sale or other disposition of the Inventory and other Collateral.
Section 4. INDEMNIFICATION AND RELEASE.
4.1. We shall and do hereby indemnify you and hold you harmless from and
against, and agree to pay you on demand the amount of, any and all losses,
costs, claims, demands, causes of action, liabilities or expenses (collectively,
"Liabilities") which you may suffer or incur arising from or in connection with
any transactions or occurrences relating to any Credit, the Collateral and any
documents, drafts or acceptances thereunder or relating thereto, including, but
not limited to, Liabilities due to any action taken by any bank or other issuer
or correspondent with respect to any Credit. We further agree to and do hereby
release and hold you harmless for any acts, waivers, errors, delays or
omissions, whether caused by you, by any bank or other issuer or correspondent
or otherwise with respect to or relating to any Credit. Our
-5-
unconditional obligation to you hereunder shall not be modified or diminished
for any reason or in any manner whatsoever. Any fees, commissions or other
charges made to you with respect to any Credit or other Obligations by any bank
or other issuer or correspondent thereof shall be conclusive and may be charged
by you to any of our account(s) maintained by you.
4.2. The drawer under or beneficiary of any Credit (or any assignee or
transferee thereof) shall be deemed our agent and we assume all risk, loss,
liabilities, charges and expenses with respect to their acts or omissions.
4.3. If any Credit provides that payment is to be made by any bank, other
issuer or correspondent, you shall not be responsible for the failure of any of
the documents specified in any Credit to come into your possession or for any
delay in connection therewith, and our obligation to make reimbursement shall
not be affected by such failure or delay in the receipt by you of any such
documents.
4.4. We agree that any action taken by you, or any action taken by any
bank or other issuer or correspondent under or in connection with any Credit,
the Collateral and any documents, drafts or acceptances thereunder, shall,
notwithstanding any judgment or instructions we may or may not express to the
contrary or inconsistent therewith, be conclusive and binding on us and shall
not create any resulting liability to you, except for your own willful
misconduct or gross negligence. In furtherance thereof, you shall have the full
and sole right and authority to: (a) clear and resolve any questions of non-
compliance of documents; (b) give any instructions as to acceptance or rejection
of any documents or goods; (c) execute any and all applications for steamship or
airway guaranties, indemnities or delivery orders; (d) grant any extensions of
the maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents; and (e) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Credits, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral; all
in your sole name, and any bank or other issuer or correspondent shall be
entitled to comply with and honor any and all such documents or instruments
executed by or received solely from you, all without any notice to or any
consent from us.
4.5. Without your express consent and endorsement in writing, we agree not
to: (a) approve or resolve any questions of non-compliance of documents; (b)
give any instructions as to acceptance or rejection of any documents or goods;
(c) execute any and all applications for steamship or airway guaranties,
indemnities or delivery orders; (d) grant any extensions of the maturity of,
time of payment for, or time of presentation of, any drafts, acceptances or
documents; or (e) agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Credits, or documents, drafts or acceptances thereunder.
4.6. Any rights, remedies, duties or obligations granted or undertaken by
us to any bank or other issuer or correspondent in any application for any
Credit, or any outstanding agreement relating to the opening or issuance of any
Credit or acceptances or otherwise, shall be deemed to have been granted to you
and apply in all respects to you and shall be in addition to any rights,
remedies, duties or obligations contained herein.
-6-
4.7. Any duties or obligations undertaken by you to any bank or other
issuer or correspondent in any application for or in connection with any Credit,
including any outstanding agreement relating to the opening or issuance of any
Credit or otherwise, shall be deemed to have been undertaken by us and apply in
all respects to us and shall be in addition to the duties or obligations
contained herein.
Section 5. ADDITIONAL REMEDIES.
Upon the occurrence of any Event of Default and at any time thereafter, you
shall have the right (in addition to any other rights you may have under the
Agreement, this Supplement or otherwise), without notice to us, at any time and
from time to time, in your discretion, with or without judicial process or the
aid or assistance of others and without cost to you:
5.1. To enter upon any premises on or in which any of the Inventory may be
located and, without resistance or interference by us, take possession of the
Inventory;
5.2. To complete processing, manufacturing, repair and shipment to
customers of all or any portion of the Inventory;
5.3. To sell, foreclose or otherwise dispose of any part or all of the
Inventory on or in any of our premises or premises of any other party;
5.4. To require us, at our expense, to assemble and make available to you
any part or all of the Inventory at any place and time designated by you;
5.5. To remove any or all of the Inventory from any premises on or in
which the same may be located, for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose (and if any of
the Inventory consists of motor vehicles, you may use our registrations and
license plates).
IN WITNESS WHEREOF, we have caused these presents to be duly executed this
29th day of January, 1993.
P.N.Y. ELECTRONICS, INC.
By:/s/ Xxxx Xxxxx
---------------
Title: President
-7-
EXHIBIT D
BORROWING BASE CERTIFICATE
--------------------------
CONGRESS FINANCIAL CORPORATION ("Agent") in its
capacity as agent for CoreStates Bank, N.A. ("Lender")
Purpose of this Form
----------------------
Many asset based borrowers are required to keep the dollar amount of their
borrowings within a dollar total based on percentage advances against accounts
receivable and inventory. This Certificate assures compliance with the terms.
Completion Instructions
-------------------------
The Borrowing Base Certificate should be completed by the Borrower.
A. Enter date of information.
B. All Certificates should be numbered in sequential order.
RECONCILIATION OF COLLATERAL BALANCE
--------------------------------------
Accounts Availability
-----------------------
C. Enter date of most recent Certificate previously delivered to Agent.
1. Enter dollar balance certified to Agent per previous Certificate and the
date of the previous Certificate. (Dollar figure from line 5 of previous
Certificate).
2. Enter dollar amount of collections applied by the Borrower against accounts
receivable since the date of the last Certificate.
3. Enter dollar amount of other credits and adjustments applied by the
Borrower against accounts receivable.
4. Enter dollar amount of any new sales since the date of the last
Certificate.
5. Enter total of all Accounts being certified to Agent per the date of the
Certificate. This is the sum of lines 1 through 4 above and is calculated
as follows:
(a) Dollar balance certified to Agent per previous Certificate
minus (-)
-----
(b) Dollar amount of collections and credits received since date of last
Certificate
plus (+)
----
(c) Dollar amount of any new sales since the date of the last Certificate.
6. Enter dollar amount of Accounts not meeting the criteria of Eligible
Accounts. Eligible Accounts are defined in the Amended and Restated Loan
Agreement by and among Agent, Lender and Borrower.
7. Subtract item 6 from item 5 and enter this figure.
8. Multiply the dollar amount in item 7 by the percentage of the lending
formula applicable to Eligible Accounts provided for in the Amended and
Restated Loan Agreement and enter this new dollar amount.
9. Enter Availability Reserves.
10. Subtract the Availability Reserves from item 8 and enter Accounts
Availability.
Inventory Availability
------------------------
D. Enter date of most recent Inventory Report delivered to Agent.
11. Enter total Value of Inventory as of the most recent Inventory Report
delivered to Agent. "Value" is lower of cost or market and should be
determined in the same manner as in prior certificates.
12. Enter the total Value of Inventory from the most recent Inventory Report
delivered to Agent which did not meet the criteria for Eligible Inventory.
Eligible Inventory is defined in the Amended and Restated Loan Agreement by
and among Agent, Lender and the Borrower.
13. Subtract item 12 from item 11 and enter this figure.
14. Multiply the dollar amount in item 13 by the percentage of the lending
formula applicable to Eligible Inventory provided for in the Amended and
Restated Loan Agreement and enter this new dollar amount.
15. Enter applicable availability reserves, excluding reserves for Credits
relating to Inventory purchases and freight, taxes,
(D-2)
duty and other amounts which Agent estimates must be paid in connection
with delivery of Inventory to Borrower's premises.
16. Subtract the Availability Reserves, excluding reserves for Credits, from
item 14.
17. Enter the amount of the sublimit on loans based on Inventory from the
Amended and Restated Loan Agreement by and among Agent, Lender and
Borrower.
18. Enter lesser of formula availability as set forth in item 16 or the
sublimit on loans based on Inventory provided for in the Amended and
Restated Loan Agreement as set forth in item 17.
Total Availability
--------------------
19. Enter the sum of item 10 plus item 18.
20. (a) Enter outstanding undrawn amounts of Credits issued for any purpose
other than the purchase of Eligible Inventory.
(b) Enter the sum of: (i) the amount equal to (A) 100% minus the
percentage set forth in item 14 multiplied by (B) the outstanding
undrawn amounts of Credits issued for purposes of purchasing Eligible
Inventory plus (ii) the amount equal to freight, taxes, duty and other
amounts which Agent estimates must be paid in connection with delivery
of Inventory to Borrower's premises.
21. Subtract the sum of item 20(a) and 20(b) from item 19 and enter this
figure.
22. Enter the amount of the Maximum Credit from the Amended and Restated Loan
Agreement, less the then outstanding principal amount of the Term Loan, if
any.
23. Enter the lesser of item 21 or item 22.
RECONCILIATION OF LOAN BALANCE
--------------------------------
24. Enter dollar figure of outstanding Loans from last Certificate.
25. List cash collections received by Borrower and remitted or to be remitted
to Agent since last Certificate.
26. Enter dollar amount of Loans made by Agent and other charges payable to
Agent (including adjustments for returned checks and other remittances,
fees, interests, costs and expenses) since last Certificate.
27. Enter dollar amount of outstanding Revolving Loans (item 24 less item 25
plus item 26).
(D-3)
28. Enter outstanding undrawn amounts of Credits.
29. Enter total outstanding Revolving Loans and Credits. (Add items 27 and
28).
30. Subtract item 29 from 23 and enter dollar amount.
31. Name of Borrower.
32. Signature of person authorized by Borrower on the corporate borrowing
resolution.
(D-4)
Date: (A)
--------
Number: (B)
--------
BORROWING BASE CERTIFICATE
--------------------------
Pursuant to the Amended and Restated Loan Agreement between Congress Financial
Corporation (________) ("Agent") and the undersigned ("Borrower"), and any
amendments thereto (the "Loan Agreement), Borrower hereby certifies to Agent, as
of the above date, as follows:
RECONCILIATION OF COLLATERAL BALANCE
- ------------------------------------
Accounts Availability
- ---------------------
1. Total Accounts as of (C) $ (1)
---------------- ----------------
2. Less: Collections $ (2)
----------------
3. Less: Credits and Adjustments since
date of prior Certificate $ (3)
----------------
4. Add: New sales since date of prior
Certificate $ (4)
----------------
5. Current total of all Accounts $ (5)
----------------
6. Total amount of Accounts which
are not Eligible Accounts (as $ (6)
per Schedule I annexed hereto) ----------------
7. Net Amount of Eligible Accounts
(item 5 less item 6) $ (7)
----------------
8. Availability based on Net
Amount of Eligible Accounts
(_____% of item 7) $ (8)
----------------
9. Less: Availability Reserves $ (9)
----------------
10. Accounts Availability $ (10)
----------------
(D-5)
Inventory Availability
- ----------------------
11. Total Value of Inventory as of (D) $ (11)
-------- ----------
12. Total Value of Inventory which is not
Eligible Inventory (as per Schedule II
annexed hereto) $ (12)
----------
13. Value of Eligible Inventory (item 11
less item 12) $ (13)
----------
14. Availability based on Eligible Inventory
(_____% of item 13) $ (14)
----------
15. Less: Availability Reserves $ (15)
----------
16. Inventory Formula Availability $ (16)
----------
17. Inventory Sublimit $ (17)
----------
18. Inventory Availability (lesser of
item 16 or item 17) $ (18)
----------
Total Availability
- ------------------
19. Total Availability based on Accounts
and Inventory $ (19)
----------
20. Less: Availability Reserves for Letters
of Credit
(a) 100% X Standby Letters of Credit $ (20a)
----------
(b) _____% X Letters of Credit for
Inventory plus freight, duty,
taxes, etc. $ (20b)
----------
21. Availability $ (21)
----------
22. Maximum Credit (less the then outstanding
amount of the Term Loan, if any) $ (22)
----------
23. Total Availability (lesser of item 21 or 22) $ (23)
----------
RECONCILIATION OF LOAN BALANCE
24. Principal amount of outstanding
Loans as of the date of prior
Certificate $ (24)
----------
25. Less: Net cash collections since
date of prior Certificate _____________
_____________
_____________ $ (25)
----------
(D-6)
26. Add: Principal amount of Revolving
Loans made since date of prior
Certificate $ (26)
-----------
27. Current principal amount of outstanding
Revolving Loans $ (27)
-----------
28. Current undrawn amount of outstanding
Credits $ (28)
-----------
29. Total Revolving Loans and Letters of
Credit Accommodations $ (29)
-----------
30. Unused availability (item 23 less item 29) $ (30)
-----------
As of the date of this Certificate, no Event of Default exists or has
occurred and is continuing. Borrower acknowledges that the Loans and Credits by
Agent to Borrower are based upon Agent's reliance on the information contained
herein and all representations and warranties with respect to Accounts and
Inventory in the Loan Agreement are applicable to the Accounts and Inventory
included in this Certificate. The reliance by Agent on this Certificate should
not be deemed to limit the right of Agent to establish or revise criteria of
eligibility or Availability Reserves or otherwise limit, impair, or affect in
any manner the rights of Agent under the Loan Agreement. In the event of any
conflict between the determination of Agent of the amount of the Loans and
Credits available to Borrower in accordance with the terms of the Loan Agreement
and the determination by Borrower of such amounts, the determination of Agent
shall govern. All capitalized terms used in this Certificate shall have the
meaning assigned to them in the Loan Agreement.
(31)
------------------------
By: (32)
---------------------
Title:
(D-7)
SCHEDULE I
to
BORROWING BASE CERTIFICATE
1. Accounts unpaid more than ____ days
after invoice date $________________
2. Cross-Age Accounts ________________
3. Concentration Accounts ________________
4. Affiliate Accounts ________________
5. Returns, Discounts, Claims, Credits
Allowances, Taxes ________________
6. Other ________________
Total Accounts which are
not Eligible Accounts $
================
(D-8)
SCHEDULE II
to
BORROWING BASE CERTIFICATE
1. Work-in-Process $________________
2. Slow Moving ________________
3. Packaging and Supplies ________________
4. Other ________________
Total Value of Inventory
which is not Eligible Inventory $
================
(D-9)
Schedule 1.1(y)
MANAGEMENT STOCK PURCHASERS
---------------------------
NAME
----
Xxxxxx X. Xxxxxx
Xxxxx Xxxx
Xxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxx Xxxxxxxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxx
Xxx XxXxxxx
Xxxxxxx Xxxxxxxxxxx
Xxxxx Xxxx
Xxxxxx Xxxxxx
Xxxxxxx X. Xxxx XX
Xxxxxxx Plucky
Xxxxxx Xxxxxx
Xxxx-Xxxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxxxxx Xxxxxxxxx
Schedule 6.7
------------
LOCATIONS OF COLLATERAL
-----------------------
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx, 00000
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx, 00000
0000 Xxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
SCHEDULE 7.2
EXISTING INDEBTEDNESS
1. Indebtedness owed to Congress that is being assigned to Lender pursuant
to the Assignment Agreement, more specifically identified in Section 3.1
of the Loan Agreement.
2. Indebtedness in the principal amount of $20,140,000 owed to Xxxx Xxxxx
evidenced by the Subordinated Notes.
SCHEDULE 7.3
EXISTING LIENS
1. Liens in favor of Congress that are being assigned to Lender.
Attached hereto is a schedule listing equipment leases with General
Electric Capital Corporation for which informational filings have been made.
