EXHIBIT 10.2
[LOGO OF BANK ONE]
LETTER LOAN AGREEMENT
September 30, 2002
AMX Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx
Ladies and Gentlemen:
This Letter Loan Agreement (the "Loan Agreement") will serve to set
forth the terms of the financing transactions by and between AMX Corporation, a
Texas corporation ("Borrower") and Bank One, NA, with its principal place of
business in Chicago, Illinois ("Bank"):
1. Credit Extensions. Subject to the terms and conditions set forth
in this Loan Agreement and the other agreements, instruments and documents
evidencing, securing, governing and/or pertaining to the Indebtedness, as
hereinafter defined (collectively, together with the Loan Agreement, referred to
hereinafter as the "Loan Documents"), Bank and Borrower agree as follows:
(a) Revolving Loan. Subject to the terms and conditions set forth in
this Loan Agreement and the other Loan Documents, Bank agrees to lend to
Borrower for working capital and general corporate purposes, on a revolving
basis from time to time during the period commencing on the date hereof and
continuing through and including 11:00 a.m. (Dallas, Texas time) on
September 29, 2003 (the "Termination Date"), such amounts as Borrower may
request hereunder (the "Revolving Loan"); provided, however, the total
principal amount outstanding at any time shall not exceed the lesser of
(referred to herein as the "Availability") (a) an amount (the "Borrowing
Base") up to the sum of (i) 80% of Borrower's Eligible Accounts (as
hereinafter defined), plus (ii) 30% of Borrower's Eligible Inventory, plus
(iii) 25% of Borrower's Eligible Raw Material Inventory minus (iv) the
Reserve, or (b) $12,500,000 (the "Committed Sum"). The Availability under
the Revolving Loan shall be reduced by (i) amounts outstanding under the
EXIM Facility and the Revolving Loan, and (ii) the outstanding Letter of
Credit Liabilities. If at any time the aggregate principal amount
outstanding under the Loan shall exceed the Availability, Borrower agrees
to immediately repay to Bank such excess amount, plus all accrued but
unpaid interest thereon. Subject to the terms and conditions hereof,
Borrower may borrow, repay and reborrow hereunder. All sums advanced
hereunder in respect of the Revolving Loan, together with all accrued but
unpaid interest thereon, shall be due and payable in full on the
Termination Date.
As used herein, the term "Eligible Accounts" shall mean at any time, an
amount equal to the aggregate net invoice or ledger amount owing on all
trade accounts receivable of Borrower for goods sold or leased or services
rendered in the ordinary course of business, in which the Bank has a
perfected, first priority lien, after deducting (without duplication): (i)
each such account that is unpaid 90 days or more after the date due
thereof, (ii) the amount of all discounts, allowances, rebates,
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credits and adjustments to such accounts, (iii) the amount of all contra
accounts, setoffs, defenses or counterclaims asserted by or available to
the account debtors, (iv) all accounts with respect to which goods are
placed on consignment or subject to a guaranteed sale or other terms by
reason of which payment by the account debtor may be conditional, (v) all
accounts with respect to which Borrower has furnished a payment and/or
performance bond and that portion of any account for or representing
retainage if any, until all prerequisites to the immediate payment of
retainage have been satisfied, (vi) all accounts owing by account debtors
for which there has been instituted a proceeding in bankruptcy or
reorganization under the United States Bankruptcy Code or other law,
whether state or federal, now or hereafter existing for relief of debtors,
(vii) all accounts owing by any affiliates of Borrower, (viii) all accounts
in which the account debtor is the United States or any department, agency
or instrumentality of the United States, except to the extent an
acknowledgment of assignment to Bank of such account in compliance with the
Federal Assignment of Claims Act and other applicable laws has been
received by Bank, (ix) that portion of all accounts due Borrower by any
account debtor who is not a resident or citizen or otherwise located in the
continental United States of America, (x) all accounts subject to any
provision prohibiting assignment or requiring notice of or consent to such
assignment, (xi) that portion of all account balances owing by any single
account debtor which exceeds 25% of the aggregate of all accounts otherwise
deemed eligible hereunder which are owing to Borrower by all account
debtors, and (xii) any other accounts deemed unacceptable by Bank in its
sole and absolute discretion; provided, however, if more than 20% of the
then balance owing by any single account debtor does not qualify as an
Eligible Account under pursuant to clause (i) above, then the aggregate
amount of all accounts owing by such account debtor shall be excluded from
Eligible Accounts.
As used herein, the term "Eligible Inventory" shall mean as of any date,
the aggregate value of all inventory of finished goods (excluding work in
progress and packaging materials, supplies and any advertising costs
capitalized into inventory) then owned by Borrower and held for sale, lease
or other disposition in the ordinary course of its business, in which Bank
has a first priority lien, excluding (i) inventory which is damaged,
defective, obsolete or otherwise unsaleable in the ordinary course of
Borrower's business, (ii) inventory which has been returned or rejected,
and (iii) inventory subject to any consignment arrangement between Borrower
and any other person or entity (if any). For purposes of this definition,
Eligible Inventory shall be valued at the lower of cost or market value.
As used herein, the term "Eligible Raw Material Inventory" shall mean as of
any date, the aggregate value of all raw materials owned by Borrower,
including, without limitation, all materials used or consumed or to be used
or consumed in Borrower's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, excluding (i)
inventory which is damaged, defective, obsolete or otherwise unsaleable in
the ordinary course of Borrower's business, (ii) inventory which has been
returned or rejected, and (iii) inventory subject to any consignment
arrangement between Borrower and any other person or entity (if any). For
purposes of this definition, Eligible Raw Material Inventory shall be
valued at the lower of cost or market value.
As used herein, the term "Reserve" shall mean an amount from time to time
established by Bank in its reasonable good faith judgment as a reserve in
reduction of the Borrowing Base in respect of contingencies or other
potential factors which, in the event they should occur, could adversely
affect or otherwise reduce the anticipated amount of timely collections in
payment of Eligible Accounts or the value (whether at cost or market) of
Eligible Inventory and/or Eligible Raw Material Inventory. The "Reserve",
if any from time to time, does not represent cash funds.
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(b) Term Loan. Subject to the terms and conditions set forth in this
Loan Agreement and the other Loan Documents, Bank agrees to lend to
Borrower the amount of $1,532,175.00 (the "Term Loan"; together with the
Revolving Loan and the EXIM Facility, collectively the "Loan"), which funds
have previously been advanced to Borrower and are currently outstanding.
All sums previously advanced under the Term Loan shall be due and payable
in full on April 30, 2004.
(c) EXIM Facility. Contemporaneously with the execution of this Loan
Agreement, Borrower and Lender are entering into (i) an Export Loan
Agreement, (ii) a Borrower Agreement, (iii) a Loan Authorization Notice,
and (iv) an Amended and Restated EXIM Note (collectively, the "EXIM Loan
Documents") pursuant to which Lender is making available to Borrower a
credit facility for working capital and general corporate purposes which
shall be guaranteed by the Export-Import Bank of the United States (the
"EXIM Facility").
(d) Letters of Credit. Subject to the terms and conditions set forth
in this Loan Agreement and the other Loan Documents, Bank agrees to issue
one or more standby letters of credit (collectively, the "Letters of
Credit") for the account of Borrower from time to time from the date hereof
to and including the maturity date of the Revolving Note; provided,
however, that Bank's outstanding commitments under all outstanding Letters
of Credit (the "Letter of Credit Liabilities") shall not at any time exceed
the lesser of $500,000 or an amount equal to the Availability. All Letters
of Credit shall have an expiration date of no more than seven (7) months
beyond the Termination Date of the Revolving Loan, must support a
transaction that is entered into in the ordinary course of business, must
otherwise be satisfactory in form and substance to Bank, and shall be
issued pursuant to such documents and instruments, including, without
limitation, Bank's standard application and agreement for issuance of
letters of credit, as then in effect ("Letter of Credit Application") as
Bank may require. No Letter of Credit shall require any payment by Bank to
the beneficiary thereunder pursuant to a drawing prior to the third
business day following presentment of a draft and any related documents to
Bank. Each Letter of Credit shall be issued on at least two (2) business
days prior notice from Borrower to Bank. Each payment by Bank pursuant to a
drawing under a Letter of Credit must be repaid to Bank immediately by
Borrower in accordance with the terms of the subject Letter of Credit
Application. Borrower shall pay to Bank a letter of credit fee payable on
the date each Letter of Credit is issued in an amount equal to one and
one-half (1.5%) per annum of the stated amount of such Letter of Credit,
for the stated term of such Letter of Credit, based on a 360 day year and
the actual number of days elapsed.
2. Promissory Notes. The Revolving Loan shall be evidenced by a
Revolving Promissory Note (herein called, together with any renewals, extensions
and increases thereof, the "Revolving Note") payable by Borrower to the order of
Bank in the stated principal amount of $12,500,000, in form and substance
acceptable to Bank. The Term Loan shall be evidenced by a Term Promissory Note
(herein called, together with any renewals, extensions and increases thereof,
the "Term Note") payable by Borrower to the order of Bank in the stated
principal amount of $1,532,175.00, in form and substance acceptable to Bank. The
EXIM Facility shall be evidenced by an EXIM Note (herein called, together with
any renewals, extensions and increases thereof, the "EXIM Note"; and together
with the Revolving Note and the Term Note, collectively the "Notes") payable by
Borrower to the order of Bank in the stated principal amount of $5,000,000.00,
in form and substance acceptable to Bank. Interest on the Notes shall accrue at
the rate and be payable as set forth therein.
3. Collateral. As collateral and security for the indebtedness
evidenced by the Notes and any and all other indebtedness or obligations from
time to time owing by Borrower to Bank (the "Indebtedness"), Borrower shall
grant, and hereby grants, to Bank, its successors and assigns, a first and
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prior lien and security interest in and to the following described property,
together with any and all PRODUCTS and PROCEEDS thereof (the "Collateral"):
(a) All of Borrower's present and future accounts, chattel paper,
contract rights and general intangibles including any and all of
Borrower's general intangible property, whether now owned or
hereafter acquired by Borrower or used in Borrower's business
currently or hereafter, including, without limitation, all
patents, trademarks, service marks, trade secrets, copyrights and
exclusive licenses (whether issued or pending) literary rights,
contract rights and all documents, applications, materials and
other matters related thereto, all inventions, all manufacturing,
engineering and production plans, drawings, specifications,
processes and systems, all trade names, goodwill and all chattel
paper, documents and instruments relating to such general
intangibles.
(b) All of Borrower's present and future inventory, finished goods
and raw material.
(c) All of Borrower's present and future equipment, fixtures,
furniture and furnishings.
(d) All of Borrower's Intellectual Property. "Intellectual Property"
means (i) all of Borrower's present and future Copyrights,
Trademarks, Patents, and Mask Works including amendments,
renewals, extensions, and all licenses or other rights to use and
all license fees and royalties from the use thereof; (ii) any
trade secrets and any intellectual property rights in computer
software and computer software products now or later existing,
created, acquired or held; (iii) all design rights which may be
available to Borrower now or later created, acquired or held;
(iv) any claims for damages (past, present or future) for
infringement of any of the rights above, with the right, but not
the obligation, to xxx and collect damages for use or
infringement of the intellectual property rights above; and (v)
all proceeds and products of the foregoing, including all
insurance, indemnity or warranty payments. "Copyrights" are all
copyright rights, applications or registrations and like
protections in each work or authorship or derivative work,
whether published or not (whether or not it is a trade secret)
now or later existing, created, acquired or held. "Trademarks"
are trademark and service xxxx rights, registered or not,
applications to register and registrations and like protections,
and the entire goodwill of the business of Borrower connected
with the trademarks. "Patents" are patents, patent applications
and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions and
continuations-in-part of the same. "Mask Works" are all mask
works or similar rights available for the protection of
semiconductor chips, now owned or later acquired.
(e) 65% of AMX (UK) LIMITED.
"Collateral" does not include any license or contract rights to the extent (i)
the granting of a security interest in it would be contrary to applicable law,
or (ii) that such rights are nonassignable by their terms (but only to the
extent the prohibition is enforceable under applicable law, including, without
limitation, Section 9.406(d) of the Uniform Commercial Code as in effect in the
State of Texas) without the consent of the licensor or other party (but only to
the extent such consent has not been obtained).
Borrower agrees to execute such security agreements, pledge agreements,
intellectual property security agreement, assignments, deeds of trust and other
agreements and documents as Bank shall deem
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appropriate and otherwise require from time to time to more fully create and
perfect Bank's liens and security interests in the Collateral.
4. Unused Fee; Waiver and Amendment Fee. (a) Borrower shall pay to
Bank a fee on any difference between the Committed Sum and the amount of credit
it actually uses, determined by the average of the daily amount of credit
outstanding during the specified period. The fee shall be due and payable
quarterly in arrears on the last day of December and on the last day of each
March, June, September and December until the expiration of the availability of
advances under the Revolving Loan, and shall be based on the ratio of Funded
Indebtedness to EBITDA, determined as follows:
Ratio of Funded Indebtedness to Unused Fee (per annum)
EBITDA
----------------------------------------------------------
* 1.00 .20%
** 1.00, * 2.00 .30%
** 2.00 .40%
(b) In the event Bank waives compliance with any term or provision of
the Loan Documents by Borrower or agrees to any amendment to the terms or
provisions of the Loan Documents, Borrower shall pay to Bank a waiver or
amendment fee in an amount to be mutually agreed to in each particular
circumstance.
As used herein, "EBITDA" means, Net Income plus, to the extent deducted in
determining Net Income, (i) Interest Expense, (ii) expense for income taxes paid
or accrued, (iii) depreciation, and (iv) amortization. As used herein, "Funded
Indebtedness" means, at any time, the aggregate dollar amount of Borrower's
indebtedness for borrowed money, which has actually been funded and is
outstanding at such time, whether or not such amount is due or payable at such
time. As used herein, "Interest Expense" means, with reference to any period,
the interest expense of Borrower during such period as reflected in the
financial statements of Borrower prepared in accordance with generally accepted
accounting principals ("GAAP"). As used herein, "Net Income" means, with
reference to any period, the net income (or loss) of Borrower during such period
as reflected in the financial statements of Borrower prepared in accordance with
GAAP.
5. Representations and Warranties. Borrower hereby represents and
warrants, and upon each request for an advance pursuant to the Notes further
represents and warrants, to Bank as follows:
(a) Borrower is duly organized, validly existing and in good
standing under the laws of the State of Texas and all other states where
it is doing business, except to the extent that the failure to maintain
such status could not reasonably be expected to result in a material
adverse effect on the financial condition, properties, or operations of
Borrower, and has all requisite power and authority to execute and
deliver the Loan Documents; and
(b) The execution, delivery, and performance of the Loan
Documents by Borrower have been duly authorized by all necessary action
by Borrower, and constitute legal, valid and binding obligations of
Borrower; and
* denotes less than
** denotes greater than
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(c) The execution, delivery and performance of the Loan
Documents, and the consummation of the transactions contemplated
thereby, do not conflict with, result in a violation of, or constitute a
default under (i) any provision of its Articles of Incorporation or
Bylaws, (ii) any agreement or other instrument binding upon Borrower, or
(iii) any law, governmental regulation, court decree, or order
applicable to Borrower, or require the consent, approval or
authorization of any third party; and
(d) Each financial statement of Borrower supplied to Bank was
prepared in accordance with generally accepted accounting principles,
consistently applied, in effect on the date such statements were
prepared and truly discloses and fairly presents Borrower's financial
condition as of the date of each such statement.
(e) There are no actions, suits or proceedings, pending or, to
the knowledge of Borrower, threatened against or affecting Borrower or
the properties of Borrower, before any court or governmental department,
commission or board, which could reasonably be expected to have a
material adverse effect on the financial condition, properties, or
operations of Borrower.
(f) Borrower has filed all federal, state and local tax reports
and returns required by any law or regulation to be filed by it and has
either duly paid all taxes, duties and charges indicated due on the
basis of such returns and reports, or made adequate provision for the
payment thereof (except to the extent any such tax, duty or charge is
being contested in good faith and with diligence by the Borrower and for
which Borrower has established and maintains reserves for such contested
tax, duty or charge in accordance with GAAP), and the assessment of any
material amount of additional taxes in excess of those paid and reported
is not reasonably expected.
(g) Borrower is in compliance in all material respects with all
material laws which are applicable to it, including, without limitation,
all environmental laws and all applicable provisions of (i) the Employee
Retirement Income Security Act of 1974, as amended, and (ii) the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, and Borrower has not incurred any liability to the
Pension Benefit Guaranty Corporation or any entity succeeding to any or
all of its functions thereunder.
(h) Borrower has good title to all of its property and assets,
subject to no liens of any kind, except for Permitted Liens. As used
herein, the term "Permitted Liens" means the following: (i) liens for
taxes, assessments or other governmental charges or levies not
delinquent, or, being contested in good faith and with diligence by the
Borrower and for which Borrower has established and maintains reserves
for such contested tax, assessment or other governmental charge in
accordance with GAAP; provided that such lien shall have no effect on
the priority of the liens in favor of Bank or the value of assets in
which Bank has such a lien and a stay of enforcement of any such lien
shall be in effect; (ii) deposits or pledges securing obligations under
worker's compensation, unemployment insurance, social security or public
liability laws or similar legislation; (iii) deposits or pledges
securing bids, tenders, contracts (other than contracts for the payment
of money), leases, statutory obligations, surety and appeal bonds and
other obligations of like nature arising in the ordinary course of
Borrower's business, (iv) judgment liens that have been stayed or
bonded; (v) mechanics', workers', materialmen's or other like liens
arising in the ordinary course of Borrower's business with respect to
obligations which are not due; (vi) purchase money liens placed upon
fixed assets hereafter acquired to secure a portion of the purchase
price thereof, provided that any such lien shall not encumber any other
property of Borrower; and (vii) liens in favor of Bank.
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(i) No event has occurred and is continuing which constitutes an
Event of Default.
6. Conditions Precedent to any Advances. Any obligation of Bank to
make any advance under the Loan shall be subject to the complete and continuing
satisfaction, on or before the date of any such advance, of the following
conditions precedent: As of the date of such advance and after giving effect
thereto (a) all representations and warranties made to Bank by Borrower in the
Loan Documents shall be true and correct in all material respects, as of and as
if made on such date; (b) no material adverse change in the financial condition
of Borrower since the effective date of the most recent financial statements
furnished to Bank by Borrower shall have occurred and be continuing; (c) no
event has occurred and is continuing, or would result from the requested
advance, which with notice or lapse of time, or both, would constitute an Event
of Default; and (d) Bank's receipt of all Loan Documents appropriately executed
by Borrower and all other proper parties.
7. Affirmative Covenants. Until (i) the Notes and all other
obligations and liabilities of Borrower under the Loan Documents are fully paid
and satisfied, and (ii) the Bank has no further commitment to lend hereunder
Borrower agrees and covenants that it will, unless Bank shall otherwise consent
in writing:
(a) Promptly inform Bank of (i) any and all material adverse
changes in the financial condition of Borrower, and (ii) all litigation
and claims affecting Borrower which could materially affect the
financial condition of Borrower; and
(b) Maintain its books and records in accordance with generally
accepted accounting principles, consistently applied, and permit Bank to
examine, audit and make and take away copies or reproductions of
Borrower's books and records, at all reasonable times; and
(c) Permit such persons as Bank may designate to visit its
properties and installations and examine its records, as Bank may
reasonably request;
(d) Conduct its business in an orderly and efficient manner
consistent with good business practices, and perform and comply with all
statutes, rules, regulations and/or ordinances imposed by any
governmental unit upon Borrower, its businesses, operations and
properties (including without limitation, all applicable environmental
statutes, rules, regulations and ordinances and all applicable
provisions of (i) the Employee Retirement Income Security Act of 1974,
as amended, and (ii) the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended);
(e) Cause to be done all things required of Borrower by the
Securities and Exchange Commission (the "SEC"), including the
maintenance with the SEC of all required reports and filings;
(f) Cause to be done all things necessary to preserve and keep
in full force and effect its existence and good standing as a
corporation. Borrower shall maintain all of its property that is used or
useful in its business in good condition and repair and make all
necessary replacements thereof, and preserve and maintain all material
leases, licenses, privileges, franchises, certificates and the like
necessary for the operation of its business. Borrower shall timely
comply with all requirements of any indebtedness now existing or
hereafter incurred with respect to such property.
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(g) Pay and discharge when due all of its indebtedness and
obligations, including without limitation, all assessments, taxes,
governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to
the date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties,
income, or profits; provided, however, Borrower will not be required to
pay and discharge any such assessment, tax, charge, xxxx, xxxx or claim
so long as (i) the legality of the same shall be contested in good faith
by appropriate judicial, administrative or other legal proceedings, and
(ii) Borrower shall have established on its books adequate reserves with
respect to such contested assessment, tax, charge, xxxx, xxxx or claim
in accordance with generally accepted accounting principles,
consistently applied.
(h) Maintain insurance, including but not limited to, fire
insurance, comprehensive property damage, public liability, worker's
compensation, business interruption and other insurance deemed necessary
or otherwise required by Bank.
(i) Promptly inform Bank of the creation, incurrence or
assumption by Borrower of any actual or contingent liabilities not
permitted under this Loan Agreement.
(j) Use the proceeds of the Loans only for the purposes
contemplated herein.
(k) Maintain the financial ratios and covenants set forth on
Addendum I attached hereto.
(l) Permit Bank to perform, at Borrower's expense, a field exam
of Borrower's assets at least twice during each calendar year.
8. Negative Covenants. Until (i) the Notes and all other obligations
and liabilities of Borrower under the Loan Documents are fully paid and
satisfied, and (ii) the Bank has no further commitment to lend hereunder
Borrower will not, without the prior written consent of Bank:
(a) Make any material change in the nature of its business as
carried on as of the date hereof.
(b) Liquidate, merge, acquire or consolidate with or into any
other entity.
(c) Create or incur any lien or encumbrance on any of its
assets, other than (i) liens and security interest securing indebtedness
owing to Bank, (ii) liens for taxes, assessments or similar charges
which are (1) not yet due or (2) being contested in good faith by
appropriate proceedings and for which Borrower has established adequate
reserves, (iii) liens and security interest existing as of the date
hereof which have been disclosed to and approved by the Bank in writing,
and (iv) Permitted Liens.
(d) Create, incur or assume any indebtedness for borrowed money
or issue or assume any other note, debenture, bond or other evidences of
indebtedness, or guarantee any such indebtedness or such evidences of
indebtedness of others, other than (i) borrowings from Bank, (ii)
borrowings outstanding on the date hereof and disclosed in writing to
Bank and (iii) borrowings not to exceed the aggregate amount of
$250,000.00 in any fiscal year.
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(e) Make any loan to any person or entity; provided, however,
Borrower may make loans to employees or Affiliates (as hereinafter
defined) which do not exceed the aggregate amount of $150,000.00.
(f) Enter into any transaction, including, without limitation,
the purchase, sale or exchange of property or the rendering of any
service, with any Affiliate (as hereinafter defined) of Borrower, except
in the ordinary course of and pursuant to the reasonable requirements of
Borrower's business and upon fair and reasonable terms no less favorable
to Borrower than would be obtained in a comparable arm's-length
transaction with a person or entity not an Affiliate of Borrower. As
used herein, the term "Affiliate" means any individual or entity
directly or indirectly controlling, controlled by, or under common
control with, another individual or entity.
(g) Make or have outstanding any investments other than (i)
direct obligations of, or obligations guaranteed by, the United States
of America, or any agency thereof, having a maturity of not more than
six (6) months from the date of issuance, (ii) time deposits with,
including certificates of deposit, overnight deposits or banker's
acceptances issued by, Bank, (iii) money market accounts or funds in
Bank, (iv) demand deposit accounts maintained in the ordinary course of
business in Bank, and (v) investments in existence and approved by Bank
in writing on the date hereof and extensions, renewals, modifications
and restatements and replacements thereof.
(h) Permit the aggregate amount of all rental payments under
operating leases to exceed, in any fiscal year, an amount equal to (i)
$1,000,000 plus (ii) any and all amounts owed with respect to the
existing lease for Borrower's main office, provided that, in no event,
shall the aggregate amount of (i) and (ii) exceed $2,500,000.
(i) Make capital expenditures in excess of $4,000,000 during any
fiscal year.
(j) Declare or pay any dividends on any class of shares of
Borrower's capital stock, make any other distributions with respect to
any payment on account of the purchase, redemption or other acquisition
or retirement of any shares of Borrower's capital stock, or make any
other distribution, sale, transfer or lease of any of Borrower's assets
other than in the ordinary course of business.
9. Reporting Requirements. Until (i) the Notes and all other
obligations and liabilities of Borrower under the Loan Documents are fully paid
and satisfied, and (ii) the Bank has no further commitment to lend hereunder
Borrower will, unless Bank shall otherwise consent in writing, furnish to Bank:
(a) Within forty-five (45) days after the end of each quarter of
each fiscal year of Borrower (other than the fiscal quarter ending on
March 31), (i) a consolidated and consolidating balance sheet, income
statement and cash flow statement of Borrower and its consolidated
subsidiaries as of the end of such quarter, all in form and substance
and in reasonable detail satisfactory to Bank and duly certified
(subject to year-end adjustments) by an authorized representative of
Borrower (A) as being true and correct in all material aspects to the
best of his or her knowledge, and (B) as having been prepared in
accordance with generally accepted accounting principles, consistently
applied and (ii) Borrower's 10-Q Report; and
(b) Within ninety (90) days after the end of each fiscal year of
Borrower, a consolidated and consolidating balance sheet, income
statement and cash flow statement of
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Borrower and its consolidated subsidiaries as of the end of such fiscal
year, in each case audited by independent public accountants of
recognized standing acceptable to Bank;
(c) Within forty-five (45) days after the end of each quarter of
each fiscal year of Borrower, a certificate from an authorized officer
of Borrower, all in form and substance acceptable to Bank, stating that
Borrower is in full compliance with all of its obligations under this
Loan Agreement and the other Loan Documents (including detailed
calculations demonstrating Borrower's compliance with the financial
covenants contained on Addendum 1), and is not in default of any term or
provision hereof or thereof; and
(d) Within twenty (20) days after the end of each calendar
month, an analysis of Borrower's accounts receivable and payable showing
an aging of such accounts, in form and substance acceptable to Bank ;
and
(e) Within twenty (20) days after the end of each calendar
month, a borrowing base certificate signed by an authorized
representative of Borrower, in form and substance acceptable to Bank;
and
(f) Copies of filed federal and state income tax returns of
Borrower for each taxable year, within twenty (20) days after filing.
(g) An inventory schedule within twenty (20) days after the end
of each calendar month, in form and detail satisfactory to Bank, but in
any case including the aggregate value of (1) all inventory of finished
goods (including work in progress and packaging materials, supplies and
any advertising costs capitalized into inventory) and (2) all raw
materials, shown at cost and at market value, owned by Borrower,
including, without limitation, all materials used or consumed or to be
used or consumed in Borrower's business or in the processing,
production, packaging, promotion, delivery or shipping of the same,
including (i) inventory which is damaged, defective, obsolete or
otherwise unsaleable in the ordinary course of Borrower's business, (ii)
inventory which has been returned or rejected, and (iii) inventory
subject to any consignment arrangement between Borrower and any other
person or entity.
(h) Copies of all export orders/invoices within twenty (20) days
after the end of each month of each fiscal year, in form and detail
satisfactory to Bank.
(i) A general ledger to support the calculation of the Borrowing
Base, with reconcilement, if required by Bank.
(j) Such other information respecting the business, properties
or condition or the operations, financial or otherwise of Borrower as
Bank may from time to time reasonably request.
10. Events of Default. Each of the following shall constitute an
"Event of Default" under this Loan Agreement:
(a) Any default by Borrower in the payment when due of any part
of the principal of, or interest on, the Notes or any other indebtedness
or obligation from time to time owing by Borrower to Bank, and the
continuation of such default for ten (10) days; or
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(b) Any failure by Borrower or any Obligated Party (as
hereinafter defined) to perform or keep any nonpayment covenant or
condition contained in this Loan Agreement or in any of the other Loan
Documents or the EXIM Loan Documents and the continuation of such
failure for thirty (30) days (other than the covenants contained in
Sections 8, 9 or Addendum 1, for which there is no grace period); or
(c) Any representation or warranty of Borrower set forth in any
of the Loan Documents or the EXIM Loan Documents proves to have been
false or untrue in any material respect when made; or
(d) The occurrence of any event which permits the acceleration
of the maturity of any indebtedness in excess of $100,000.00 owing by
Borrower to any third party under any agreement or undertaking; or
(e) If Borrower or any Obligated Party (i) becomes insolvent, or
makes a transfer in fraud of creditors, or makes an assignment for the
benefit of creditors, (ii) admits in writing its inability to pay its
debts as they become due, (iii) has a receiver, trustee or custodian
appointed for, or take possession of, all or substantially all of the
assets of such party or any of the Collateral, either in a proceeding
brought by such party or in a proceeding brought against such party and
such appointment is not discharged or such possession is not terminated
within sixty (60) days after the effective date thereof or such party
consents to or acquiesces in such appointment or possession, or (iv)
files a petition for relief under the United States Bankruptcy Code or
any other present or future federal or state insolvency, bankruptcy or
similar laws (all of the foregoing hereinafter collectively called
"Applicable Bankruptcy Law") or an involuntary petition for relief is
filed against such party under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within sixty (60) days after the
filing thereof, or an order for relief naming such party is entered
under any Applicable Bankruptcy Law, or any composition, rearrangement,
extension, reorganization or other relief of debtors now or hereafter
existing is requested or consented to by Borrower.
(f) The liquidation, dissolution, merger or consolidation of
Borrower or any entity obligated to pay any part of the Loans.
(g) The entry of any judgment against Borrower or the issuance
or entry of any attachment or other lien against any of the property of
Borrower for an amount in excess of $250,000.00, if undischarged,
unbonded or undismissed within thirty (30) days after such entry.
(h) The occurrence of a default or an event of default under the
documents evidencing, securing, governing and/or pertaining to the EXIM
Facility.
Nothing contained in this Loan Agreement shall be construed to limit the Events
of Default enumerated in any of the other Loan Documents or any other document
executed in connection with the Loan and all such Events of Default shall be
cumulative. The term "Obligated Party", as used herein, shall mean any party
other than Borrower who secures, guarantees and/or is otherwise obligated to pay
all or any portion of the indebtedness evidenced by the Notes.
11. Remedies. Upon the occurrence of any one or more of the foregoing
Events of Default, (a) the entire unpaid balance of principal of the Notes,
together with all accrued but unpaid interest thereon, and all other
Indebtedness shall, at the option of Bank, become immediately due and payable
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without further presentation, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest or notice of protest of any kind, all of which
are expressly waived by Borrower, and/or (b) Bank may, at its option, cease
further advances under the Notes; provided, however, concurrently and
automatically with the occurrence of an Event of Default under subparagraph (e)
of the immediately preceding paragraph above (i) further advances under the
Notes shall cease, and (ii) the Notes and all other Indebtedness shall, without
any action by Bank, become due and payable, without further notice, demand,
presentment, notice of dishonor, notice of intent to accelerate, protest or
notice of protest of any kind, all of which are expressly waived by Borrower.
All rights and remedies of Bank set forth in this Loan Agreement and in any of
the other Loan Documents may also be exercised by Bank, at its option to be
exercised in its sole discretion, upon the occurrence of an Event of Default.
12. Rights Cumulative. All rights of Bank under the terms of this
Loan Agreement shall be cumulative of, and in addition to, the rights of Bank
under any and all other agreements between Borrower and Bank (including, but not
limited to, the other Loan Documents), and not in substitution or diminution of
any rights now or hereafter held by Bank under the terms of any other agreement.
13. Waiver and Agreement. Neither the failure nor any delay on the
part of Bank to exercise any right, power or privilege under any of the Loan
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
waiver of any provision in any of the Loan Documents and no departure by
Borrower therefrom shall be effective unless the same shall be in writing and
signed by Bank, and then shall be effective only in the specific instance and
for the purpose for which given and to the extent specified in such writing. No
modification or amendment to any of the Loan Documents shall be valid or
effective unless the same is signed by the party against whom it is sought to be
enforced.
14. Benefits. This Loan Agreement shall be binding upon and inure to
the benefit of Bank and Borrower, and their respective successors and assigns;
provided, however, that Borrower may not, without the prior written consent of
Bank, assign any rights, powers, duties or obligations under any of the Loan
Documents.
15. Notices. Any notice or other communications provided for in this
Loan Agreement shall be in writing and either (i) messenger delivered, or (ii)
deposited in the United States mail, postage prepaid, and sent to the intended
addressee at the address set froth on the signature page hereof. Any such notice
or other communication shall be deemed to have been given on the day it is
personally delivered or, if mailed, on the second day after it is deposited in
an official receptacle of the United States mail, postage prepaid.
16. Construction. This Loan Agreement and the other Loan Documents
have been executed and delivered in the State of Texas, shall be governed by and
construed in accordance with the laws of the State of Texas, and shall be
performable by the parties hereto in the county in Texas where the Bank's
address set forth on the signature page hereof is located.
17. Invalid Provisions. If any provision of any of the Loan Documents
is held to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and the remaining provisions of the Loan
Documents shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance.
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18. Expenses. Borrower shall pay all costs and expenses (including,
without limitation, the reasonable attorneys' fees of Bank's legal counsel) in
connection with (i) any and all extensions, renewals, amendments, supplements,
extensions or modifications of the Loan Documents, (ii) any action required in
the course of administration of the indebtedness and obligations evidenced by
the Loan Documents, and (iii) any action in the enforcement of Bank's rights
upon the occurrence of an Event of Default.
19. Participation of the Loans. Borrower agrees that Bank may provide
any information Bank may have about Borrower or about any matter relating to the
Notes to Bank One Corporation, or, any of its subsidiaries or affiliates or
other successors. Borrower agrees that Bank may, at its option, sell interests
in the Loans and its rights under this Loan Agreement to a financial institution
or institutions and, in connection with each such sale, Bank may disclose any
financial and other information available to Bank concerning Borrower to each
prospective purchaser.
20. Conflicts. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the other Loan Documents,
the terms and provisions in this Loan Agreement shall control.
21. Entire Agreement. This Loan Agreement (together with the other
Loan Documents) contains the entire agreement among the parties regarding the
subject matter hereof and supersedes all prior written and oral agreements and
understandings among the parties hereto regarding same.
22. Conflicts. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the other Loan Documents,
the terms and provisions contained in this Loan Agreement shall be controlling.
23. Counterparts. This Loan Agreement may be separately executed in
any number of counterparts, each of which shall be an original, but all of
which, taken together, shall be deemed to constitute one and the same
instrument.
If the foregoing correctly sets forth our mutual agreement, please so
acknowledge by signing and returning this Loan Agreement to the undersigned.
Very truly yours,
BANK ONE, NA, a national banking association
By: /s/ Xxxx Points
-----------------------------------------
Name: Xxxx Points
---------------------------------------
Title: FVP
--------------------------------------
Bank's Address:
0000 Xxxx Xxxxxx
0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Middle Market Banking Group (Xxxx Points)
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ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE:
BORROWER:
AMX CORPORATION, a Texas corporation
By: /s/ Xxxx X. Xxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------------
Title: VP & CFO
----------------------------------------
Borrower's Address:
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx
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ADDENDUM I
TO
LETTER LOAN AGREEMENT
Unless otherwise specified, all accounting and financial terms and
covenants set forth below are to be determined according to generally accepted
accounting principles, consistently applied:
FINANCIAL COVENANTS
NET WORTH
(a) Borrower will maintain its Tangible Net Worth, as of the
last day of each of its fiscal quarters, at not less than $14,000,000.
Borrower will report compliance with this covenant as of the last day of
each of its fiscal quarters.
(b) Borrower will maintain, as of the last day of each of its
fiscal quarters, a ratio of (a) total liabilities, to (b) Tangible Net
Worth of not greater than 1.50 to 1.0. Borrower will report compliance
with this covenant as of the last day of each of its fiscal quarters.
As used herein, "Tangible Net Worth" means, as of any date, the
total shareholders' equity (including capital stock, additional
paid-in-capital and retained earnings after deducting treasury stock)
which would appear on a balance sheet of Borrower, less the aggregate
book value of intangible assets shown on such balance sheet, plus any
subordinated debt as of such date.
EBITDA
Borrower will maintain as of the last day of each of its fiscal
quarters, for the immediately preceding 12 month period, EBITDA
(excluding Tax Refunds) of not less than $3,500,000. Borrower will
report compliance with this covenant as of the last day of each of its
fiscal quarters.
As used herein, "EBITDA" means, Net Income plus, to the extent
deducted in determining Net Income, (i) Interest Expense, (ii) expense
for income taxes paid or accrued, (iii) depreciation, and (iv)
amortization.
As used herein, "Interest Expense" means, with reference to any
period, the interest expense of Borrower during such period as reflected
in the financial statements of Borrower prepared in accordance with
generally accepted accounting principles ("GAAP").
As used herein, "Net Income" means, with reference to any
period, the net income (or loss) of Borrower during such period as
reflected in the financial statements of Borrower prepared in accordance
with GAAP.
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