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Exhibit 10(j)
CREDIT AGREEMENT
This Agreement, dated as of March 27, 1998, is among Pioneer-Standard
Electronics, Inc., an Ohio corporation, and its successors and assigns (the
"Borrower"), National City Bank, a national banking association, and the several
banks, financial institutions and other entities from time to time parties to
this Agreement (sometimes collectively, "Lenders" and sometimes individually, a
"Lender"), and National City Bank, not individually, but as "Agent".
RECITALS
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A. Borrower is primarily engaged in the business of distributing
industrial and consumer electronic products.
B. Borrower is listed on the National Association of Securities Dealers
Incorporated stock exchange ("NASDAQ").
C. Borrower has requested that Lenders make loans available to Borrower
pursuant to the terms of this Agreement, and that Agent act as administrative
agent for Lenders. Agent and Lenders have agreed to do so.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
Borrower or any of its Subsidiaries (i) acquires any business as a going concern
or all or substantially all of the assets of any firm, corporation or division
thereof, whether through purchase of assets or stock, merger or otherwise or
(ii) directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or voting
power) of the outstanding partnership interests of a partnership.
"Advance" means a borrowing hereunder consisting of the aggregate amount
of the several Loans made by Lenders to Borrower of the same Type.
"Affected Lender" is defined in SECTION 2.15(d).
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"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
A Person shall be deemed to control another Person if the controlling Person
owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person whether through ownership of stock, by contract or otherwise.
"Agent" means National City Bank in its capacity as agent for Lenders
pursuant to ARTICLE IX, and not in its individual capacity as a Lender, and any
successor Agent appointed pursuant to ARTICLE IX.
"Aggregate Commitment" means the aggregate of the Commitments of all
Lenders; provided, however, prior to the consummation of the Merger the
Aggregate Commitment shall not exceed One Hundred and Sixty Five Million Dollars
($165,000,000.00).
"Aggregate Measured Credit Risk" means, as at any time during the
pendency of this Agreement that an interest rate exchange agreement or interest
rate option agreement is in effect, the amount determined by Agent in accordance
with the terms of such interest rate exchange agreement or interest rate option
agreement as being Borrower's measured credit risk thereunder at such time.
"Agreement" means this Credit Agreement, as it may be amended or
modified and in effect from time to time.
"Agreement for Inventory Financing" means that certain Agreement for
Inventory Financing, dated as of March 31, 1998, by and between IBM Credit
Corporation and Borrower.
"Applicable Currency" means, as to any particular payment or Loan,
Dollars, or the Foreign Currency in which it is denominated or payable.
"Applicable Margin" means the applicable margin determined by reference
to the table in SECTION 2.4 used in calculating the interest rate applicable to
the various Types of Advances; which shall vary from time to time in accordance
with SECTION 2.4.
"Applicable Law" means collectively, all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting Borrower or any of its
Subsidiaries, whether now or hereafter enacted and in force.
"Article" means an article of this Agreement unless another document is
specifically referenced.
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"Assets" means, with respect to any Person, as of any date of
determination, the total amount of assets of that Person as shown on the balance
sheet of such Person.
"Authorized Financial Officer" means any vice president or treasurer of
Borrower, acting singly.
"Authorized Officer" means the Vice President/Treasurer or Treasury
Analyst of Borrower, acting singly.
"Base Rate Applicable Margin" means, as of any date, the Applicable
Margin in effect on such date with respect to Base Rate Loans.
"Base Rate" or "Prime Rate" means the higher of (i) the Federal Funds
Rate plus one-half of one percent, or (ii) the fluctuating rate of interest
which is publicly announced from time to time by Agent at its Head Office as
being its "prime rate" or "base rate" thereafter in effect, with each change in
the Base Rate automatically, immediately and without notice being reflected in
the fluctuating interest rate thereafter applicable hereunder, it being
specifically acknowledged that the Base Rate is not necessarily the lowest rate
of interest then available from Agent on fluctuating-rate loans.
"Base Rate Advance" means an Advance which bears interest at the Base
Rate.
"Base Rate Loan" means a Loan which bears interest at the Base Rate.
"Borrower" means Pioneer-Standard Electronics, Inc., an Ohio
corporation.
"Borrower EBIT" means, for any period, the sum of Borrower's Net Income,
increased by the sum for such period of interest expense (including interest
paid or accrued with respect to the Convertible Debentures), income and
franchise tax expense, and non-recurring extraordinary expenses of Borrower (in
each case as determined in accordance with GAAP (except not on a consolidated
basis)) which was deducted in determining Borrower's Net Income for such
period.
"Borrower Interest Expense" means, for any period, the amount of
interest expense of Borrower, only, for such period on the aggregate principal
amount of its Indebtedness, determined in accordance with GAAP (except not on a
consolidated basis) plus any capitalized interest which accrued during such
period.
"Borrower's Net Income" means, for any period, net income (or loss) of
Borrower for such period determined in accordance with GAAP (except not on a
consolidated basis and thereby excluding Borrower's net equity in earnings of
Subsidiaries).
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"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in SECTION 2.9(a)(i).
"Business Day" means with respect to any borrowing, payment or rate
selection of Advances a day (other than a Saturday or Sunday) on which banks
generally are open in Cleveland, Ohio; provided, with respect to LIBOR Rate
Loans (including Foreign Currency Loans), Business Days shall not include a day
on which dealings in Dollars may not be carried on in the London interbank LIBOR
market; and provided, further that with respect to Foreign Currency Loans,
Business Days shall not include a day on which dealings in the Applicable
Currency may not be carried on in the applicable foreign exchange interbank
market.
"Canada" means Pioneer-Standard Canada Inc., a Canadian corporation.
"Capital Expenditures" means any and all amounts invested, expended or
incurred (including by reason of Capitalized Lease Obligations) incurred by
Borrower or any of its Subsidiaries in respect of the purchase, acquisition,
improvement, renovation or expansion of any properties or assets of Borrower or
any of its Subsidiaries, including, without limitation, expenditures required to
be capitalized in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person which is not a corporation
and any and all warrants or options to purchase any of the foregoing.
"Capitalized Lease" of a Person means any lease of Property imposing
obligations on such Person, as lessee thereunder, which are required in
accordance with GAAP to be capitalized on a balance sheet of such Person.
"Cash Equivalents" means, as of any date, (i) securities issued or
directly and fully guaranteed or insured by the United States Government or any
agency or instrumentality thereof having maturities of not more than one year
from such date, (ii) time deposits and certificates of deposit having maturities
of not more than one year from such date and issued by any domestic commercial
bank having (A) senior long-term unsecured debt rated at least A or the
equivalent thereof by S&P or A2 or the equivalent thereof by Moody's and (B)
capital and surplus in excess of $500,000,000, and (iii) commercial paper rated
at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof
by Moody's and in either case maturing within 90 days from such date.
"Change In Control" means, (i) with respect to any Person, the
transfer of the ownership or control (in one transaction or as the
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most recent transaction in a series of transactions) of such number of voting
securities (or other ownership interests) of the controlled Person that
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person whether through ownership of
stock, by contract or otherwise a majority, or (ii) with respect to any company
whose stock is publicly traded on a securities exchange, a change in the
membership of the board of directors at any time during any twelve (12) month
period, such that following such change, at least thirty percent (30%) of the
members of the board of directors were not members of the board of directors at
the start of such twelve (12) month period but only if the election of such new
members of the board of directors was not approved by at least three-quarters
(3/4) of the directors who were either sitting at the beginning of such twelve
(12) month period or elected to the board of directors during such twelve (12)
month period with the approval of three-quarters (3/4) of the directors who were
sitting at the beginning of such twelve (12) month period.
"Closing Date" means the date of this Agreement.
"Closing Fee" is defined in SECTION 2.5(b).
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to
make Loans not exceeding the amount set forth opposite its signature below or as
set forth in any Notice of Assignment relating to any assignment that has become
effective pursuant to SECTION 11.3.2, as such amount may be modified from
time to time pursuant to the terms hereof.
"Condemnation" is defined in SECTION 6.9.
"Consolidated Debt Service" means, for any period, (a) Consolidated
Interest Expense for such period PLUS (b) the aggregate amount of scheduled
principal payments of Indebtedness (excluding any unaccelerated Indebtedness
arising under this Facility, the Convertible Debentures and the Agreement for
Inventory Financing) required to be made during such period by Borrower or any
of its Subsidiaries.
"Consolidated EBIT" means, for any period, the sum of Borrower's and its
Subsidiaries' Consolidated Net Income, increased by the sum for such period of
Consolidated Interest Expense (including interest paid or accrued with respect
to the Convertible Debentures), income and franchise tax expense, and
non-recurring extraordinary expenses (in each case as determined in accordance
with GAAP) which was deducted in determining Consolidated Net Income for such
period and decreased by the sum of non-recurring extraordinary income
(determined in accordance with GAAP) which was included in determining
Consolidated Net Income for such period.
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"Consolidated EBITDA" means, for any period, the sum of Borrower's and
its Subsidiaries' Consolidated Net Income, increased by the sum for such period
of interest expense (including interest paid or accrued with respect to the
Convertible Debentures), income and franchise tax expense, amortization and
depreciation, non-recurring extraordinary expenses (in each case as determined
in accordance with GAAP) which was deducted in determining Consolidated Net
Income for such period and decreased by the sum of non-recurring extraordinary
income (determined in accordance with GAAP) which was included in determining
Consolidated Net Income for such period.
"Consolidated Fixed Charge Coverage Ratio" means, as of any date of
determination, the ratio of (a) Consolidated EBITDA to (b) the sum of
Consolidated Debt Service plus Distributions, Capital Expenditures, and
Consolidated Taxes.
"Consolidated Funded Debt" means as of any date of determination, all
Indebtedness for Borrowed Money of Borrower and its Subsidiaries outstanding at
such date (excluding Indebtedness arising under the Agreement for Inventory
Financing and the Convertible Debentures), determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the amount of
interest expense of Borrower and its Subsidiaries for such period on the
aggregate principal amount of their Indebtedness, determined on a consolidated
basis in accordance with GAAP plus any capitalized interest which accrued during
such period. Consolidated Interest Expense shall not include any amounts paid or
accrued with respect to the Convertible Debentures.
"Consolidated Net Income" means, for any period, consolidated net income
(or loss) of Borrower and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; PROVIDED that there shall be
excluded (a) the income (or deficit) of any other Person accrued prior to the
date it becomes a Subsidiary of Borrower or is merged into or consolidated with
Borrower or any of its Subsidiaries and (b) the undistributed earnings of any
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary.
"Consolidated Outstanding Indebtedness" means, as of any date of
determination, all Indebtedness of Borrower and its Subsidiaries outstanding at
such date, determined on a consolidated basis in accordance with GAAP.
"Consolidated Stockholder's Equity" means, as of any date of
determination, an amount equal to the sum of the following amounts appearing on
the consolidated balance sheet of Borrower and its Subsidiaries: (i) all equity
as calculated in accordance with GAAP,
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including, without limitation, the aggregate outstanding principal amount of the
Convertible Debentures and (ii) all indebtedness which is subordinate (to the
satisfaction of each Lender) to Indebtedness arising under this Agreement,
including, without limitation, the aggregate outstanding principal amount of the
Convertible Debentures.
"Contingent Obligation" means any direct or indirect liability,
contingent or otherwise, with respect to any indebtedness, lease, dividend,
letter of credit, banker's acceptance or other obligation of another Person
incurred to provide assurance to the obligee of such obligation that such
obligation will be paid or discharged, that any agreements relating thereto will
be complied with, or that the holders of such obligation will be protected (in
whole or in part) against loss in respect thereof. Contingent Obligations shall
include, without limitation, (i) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by any Person of the
obligation of another Person; (ii) any liability for the Obligations of another
Person through any agreement (contingent or otherwise) (A) to purchase,
repurchase, or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions, or otherwise),
(B) to maintain the solvency of any balance sheet item, level of income or
financial condition of another, or (C) to make take-or-pay, pay-or-play, or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, if in the case of any agreement described under
subclauses (A), (B) or (C) of this sentence the purpose or intent thereof is to
provide the assurance described above. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Convertible Debentures" shall mean the Series A 6 3/4% Junior
Convertible Subordinated Debentures of Borrower, due March 31, 2028, issued in
an aggregate original principal amount of up to $150,000,000, under that certain
Junior Subordinated Indenture, dated as of March 23, 1998, of Borrower to
Wilmington Trust Company, as trustee, as supplemented by that certain First
Supplemental Indenture, dated as of March 23, 1998, of Borrower to Wilmington
Trust Company, as trustee.
"Current Ratio" means, as of any date of determination, the ratio of (A)
the sum of cash and Cash Equivalents plus eighty-five percent (85%) of the value
of accounts receivable as set forth on
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the financial statements of Borrower issued contemporaneously with the date of
determination and fifty percent (50%) of the value of inventory as set forth on
the financial statements of Borrower issued contemporaneously with the date of
determination, to (B) the sum of Indebtedness for Borrowed Money less the
outstanding principal amount of the Convertible Debentures.
"Default" means an event of Default described in ARTICLE VI.
"Default Interest Rate" means an annual rate of interest equal to the
lesser of (i) two percent (2.0%) above the Base Rate; or (2) the maximum rate of
interest which may be lawfully charged in respect of the Obligations.
"Xxxxxxx" is defined in SECTION 3.1.
"Xxxxxxx, LLC" means The Xxxxxxx Services Group, a Pioneer-Standard
Company, LLC, a Delaware limited liability company.
"Distribution" shall mean with respect to Borrower and its Subsidiaries,
interest paid with respect to the Convertible Debentures, any dividends (other
than dividends payable solely in common stock), distributions, return of capital
to any stockholders, general or limited partners or members, other payments,
distributions or delivery of property or cash to stockholders, general or
limited partners or members, or any redemption, retirement, purchase or other
acquisition, directly or indirectly, of any shares of any class of capital stock
now or hereafter outstanding (or any options or warranties issued with respect
to capital stock) general or limited partnership interest, or the setting aside
of any funds for the foregoing.
"Dollar Equivalent" means, at any time, (a) as to any amount denominated
in Dollars, the amount thereof at such time, and (b) as to any amount
denominated in a Foreign Currency, the equivalent amount in Dollars as
determined by Agent at such time on the basis of the Exchange Rate. For purposes
of any calculation or determination hereunder related to Loans and measured in
Dollars (including, without limitation, calculation of the Outstanding Amount),
any Loans in a Foreign Currency shall be valued at the Dollar Equivalent.
"Environmental Laws" means any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect, in each case to the extent the
foregoing are applicable to Borrower or any of its Subsidiaries or any of their
respective assets or Properties.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Exchange Rate" means with respect to any Foreign Currency on a
particular date, the rate at which such Foreign Currency may be exchanged into
Dollars, as set forth on such date on the relevant Reuters currency page at or
about 11:00 a.m. London time, on such date. In the event that such rate does not
appear on any Reuters currency page, the "Exchange Rate" with respect to such
Foreign Currency shall be determined by reference to such other publicly
available service for exchange rates as may be agreed upon by Agent and
Borrower, in the absence of such agreement, such "Exchange Rate" shall instead
be Agent's spot rate of exchange in the market which its foreign currency
exchange operations are then being conducted, at or about 10:00 a.m., local
time, on such date for the purchase of Dollars with such Foreign Currency, for
delivery two (2) Business Days later; provided, that if at the time of any such
determination, no such spot rate can be reasonably quoted, Agent may use any
reasonable method as it deems applicable to determine such rate, and such
determination shall be conclusive absent manifest error.
"Existing Facilities" means the $125,000,000 revolving loan facility for
which NCB is agent.
"Facility Fee" is defined in SECTION 2.5(a).
"Facility Termination Date" means March 27, 2003; provided, however, the
Facility Termination Date may be extended annually for additional one (1) year
terms upon the prior written consent of Borrower and each Lender.
"Face Amount" means, as to any Letter of Credit, the maximum amount
which is available at such time to be drawn or disbursed under such Letter of
Credit.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal, for each day during such period, to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of Cleveland, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three federal funds brokers of recognized
standing selected by it.
"Financial Undertaking" of a Person means (i) any repurchase obligation
or liability of such Person or any of its Subsidiaries with respect to accounts
or notes receivable sold by such Person or any of its Subsidiaries, (ii) any
sale and leaseback transactions which do not create a liability on the
consolidated balance sheet
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of such Person, (iii) any other transaction which is the functional equivalent
of or takes the place of borrowing but which does not constitute a liability on
the consolidated balance sheet of such Person, or (iv) Hedge Agreements;
provided, however, Financial Undertaking shall not include any agreement, device
or arrangement (not otherwise described in (iv), above), that is designed to
protect a Borrower from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, forward currency exchange agreements, interest rate cap
or collar protection agreements, or forward rate currency options.
"Foreign Currency" shall mean any lawful currency other than Dollars
that is readily available, freely traded and convertible into Dollars in the
Cleveland market and is acceptable to Agent for purposes of making a Foreign
Currency Loan hereunder.
"Foreign Currency Advance" means any Advance denominated in a Foreign
Currency.
"Foreign Currency Loan" means any Loan denominated in a Foreign
Currency.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied in a manner consistent
with that used in preparing the financial statements referred to in SECTION 5.1;
PROVIDED, HOWEVER, that if there shall be any change in accounting principles
from GAAP as in effect at the Closing Date, then the Required Lenders and
Borrower shall make such adjustments to the financial covenants affected thereby
by reference to the official interpretations of GAAP by The Financial Accounting
Standards Board, its predecessors and successors or as are mutually determined
in good faith to be appropriate to reflect such changes so that the criteria for
evaluating the financial condition and operations of Borrower shall be the same
after such changes as if such changes had not been made.
"Georgia" means Pioneer-Standard Georgia, Inc., a Georgia corporation,
the Subsidiary of Borrower that is to be merged into Xxxxxxx in connection with
the Merger.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Head Office" means, in relation to Agent, the head office of National
City Bank, located at 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxx, 00000, or such
other office as may be designated as such by written notice to Borrowers and
Lenders by National City Bank or any successor Agent.
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"Hedge Agreement" means an interest rate swap, cap or other interest
rate management agreement.
"Illinois" means Pioneer-Standard Illinois, Inc., an Illinois
corporation.
"Indebtedness" means, in relation to any Person, at any time, all of the
obligations of such Person which, in accordance with GAAP, would be classified
as indebtedness upon a balance sheet (including any footnote thereto) of such
Person prepared at such time, and in any event shall include, without
limitation:
(i) all indebtedness of such Person arising or incurred under or in
respect of (A) any guaranties (whether direct or indirect) by such
Person of the indebtedness, obligations or liabilities of any other
Person, or (B) any endorsement by such Person of any of the
indebtedness, obligations or liabilities of any other Person (otherwise
than as an endorser of negotiable instruments received in the ordinary
course of business and presented to commercial banks for collection of
deposit), or (C) the discount by such Person, with recourse to such
Person, of any of the indebtedness, obligations or liabilities of any
other Person;
(ii) all indebtedness of such Person arising or incurred under or in
respect of any agreement, contingent or otherwise made by such Person
(A) to purchase any indebtedness of any other Person or to advance or
supply funds for the payment or purchase of any indebtedness of any
other Person or (B) to purchase, sell or lease (as lessee or lessor) any
property, products, materials or supplies or to purchase or sell
transportation or services, in each such case if primarily for the
purpose of enabling any other Person to make payment of any indebtedness
of such other Person or to assure the owner or holder of such other
Person's indebtedness against loss, regardless of the delivery or
non-delivery of the property, products, materials or supplies or the
furnishing or non-furnishing of the transportation or services, or (C)
to make any loan, advance, capital contribution or other investment in
any other Person for the purpose of assuring a minimum equity, asset
base, working capital or other balance sheet condition for or as at any
date, or to provide funds for the payment of any liability, dividend or
stock liquidation payment, or otherwise to supply funds to or in any
manner invest in any other Person;
(iii) all indebtedness, obligations and liabilities secured by or
arising under or in respect of any Lien, upon or in Property owned by
such Person, even though such Person has not assumed or become liable
for the payment of such indebtedness, obligations and liabilities;
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(iv) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to Property acquired by
such Person, even though the rights and remedies of the seller or lender
(or lessor) under such agreement in the event of default are limited to
repossession or sale of such Property; and
(v) all indebtedness arising or incurred under or in respect of any
Contingent Obligation.
"Indebtedness for Borrowed Money" means at any time, all Indebtedness
required by GAAP to be reflected as such on Borrower's balance sheet, including
as appropriate, all Indebtedness (i) in respect of any money borrowed (including
pursuant to this Agreement and debt incurred pursuant to or evidenced by the
Convertible Debentures or the Preferred Securities); (ii) under or in respect of
any Contingent Obligation (whether direct or indirect) of any money borrowed;
(iii) evidenced by any loan or credit agreement, promissory note, debenture,
bond, guaranty or other similar written obligation to pay money; (iv) arising
under the Agreement for Inventory Financing; and (v) arising under Capitalized
Leases.
"Initial Advance" means the first Advance made hereunder.
"Initial Borrowing Date" means the date on which the first Advance is
made hereunder.
"Intercreditor Agreement" means that certain Intercreditor Agreement,
dated as of March 31, 1998, by and between Agent and IBM Credit Corporation.
"Interest Expense" means, for any period, the amount of interest expense
of a Person for such period on the aggregate principal amount of its
Indebtedness (but excluding, for Borrower, any interest or distribution paid or
accrued with respect to the Convertible Debentures or the Preferred Securities),
plus any capitalized interest which accrued during such period.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade),
contribution of capital by such Person to any other Person or any investment in,
or purchase or other acquisition of, the stock, partnership interests, notes,
debentures, or other securities of any other Person made by such Person.
"Issuance Date" means, in relation to any Letter of Credit, the date on
which such Letter of Credit is issued or is to be issued pursuant to this
Agreement.
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"Issuing Bank" means NCB or its successor as the Lender responsible for
the issuance of Letters of Credit in accordance with SECTION 2.23.
"Late Charge" means with respect to any delinquent payment of principal
or interest hereunder, a fee that is equal to the greater of Five Hundred and
00/100 Dollars ($500.00) or three percent (3%) of the delinquent payment,
charged to Borrower or added to the unpaid balance of the Notes whenever any
payment of principal or interest is not paid when due.
"Lenders" means the lending institutions listed on the signature pages
of this Agreement, their respective successors and assigns and any other lending
institutions that subsequently become parties to this Agreement.
"Lending Installations" means, with respect to a Lender, any office,
branch, subsidiary, or affiliate of such Lender.
"Letter of Credit" means any stand-by letter of credit issued by the
Issuing Bank pursuant to this Agreement.
"Letter of Credit Commission" means a commission, payable annually in
advance to Agent for the ratable benefit of Lenders, equal to the Face Amount of
each Letter of Credit multiplied by the then in effect LIBOR Applicable Margin.
If a Default exists hereunder, the Applicable Margin used for determining the
Letter of Credit Commission will be increased by two percent (2%). The Letter of
Credit Commission shall be paid annually in respect of each Letter of Credit,
with the first year's payment being due and payable, in advance, on the Issuance
Date therefor and subsequent years' payments being due and payable in advance on
each anniversary thereof so long as such Letter of Credit remains outstanding.
"Letter of Credit Facing Fee" is defined in SECTION
2.23(g) (ii).
"Letter of Credit Usage" means, as at the date on which the same is
determined, the sum of (x) the aggregate of the Face Amounts of all Letters of
Credit then outstanding, plus (y) the aggregate amount of all drawings under
Letters of Credit honored by the Issuing Bank and not theretofore either
reimbursed by Borrower or converted into Loans as provided in SECTION 2.23(e).
"LIBOR Applicable Margin" means, as of any date with respect to any
LIBOR Interest Period, the Applicable Margin in effect for such LIBOR Interest
Period for LIBOR Rate Loans made in Dollars as determined in accordance with
SECTION 2.4 hereof.
"LIBOR Break Funding Costs" means an amount sufficient to reimburse each
Lender for any and all loss, cost or expense actually incurred by the Lender as
the result of the occurrence of
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any LIBOR Break Funding Event, determined by Agent by multiplying the amount of
the principal prepayment hereunder by the deficiency, if any, between, (x) LIBOR
for a term then available closest to the remaining duration of the LIBOR
Interest Period for the principal sum being prepaid, and for an amount
comparable to such principal sum, in the Applicable Currency, and (y) the LIBOR
Rate in effect for the principal sum being so prepaid, in the Applicable
Currency, immediately prior to the prepayment of such sum, all as determined as
of the date of occurrence of the LIBOR Break Funding Event.
"LIBOR Break Funding Event" means any of the events or occurrences set
for forth in SECTIONS 2.14(a) or 2.14(b).
"LIBOR Interest Period" means a period of one, two, three or six months
commencing on a Business Day selected by Borrower pursuant to this Agreement.
Such LIBOR Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three or six months thereafter, PROVIDED,
HOWEVER, that if there is no such numerically corresponding day in such next,
second, third or sixth succeeding month, such LIBOR Interest Period shall end on
the last Business Day of such next, second, third or sixth succeeding month. If
a LIBOR Interest Period would otherwise end on a day which is not a Business
Day, such LIBOR Interest Period shall end on the next succeeding Business Day;
PROVIDED, HOWEVER, that if said next succeeding Business Day falls in a new
calendar month, such LIBOR Interest Period shall end on the immediately
preceding Business Day.
"LIBOR Rate" means one, two, three or six-month London InterBank Offered
Rate (for the Applicable Currency), adjusted for statutory reserves, if
applicable ("LIBOR") PLUS for each fiscal quarter, the LIBOR Applicable Margin.
"LIBOR Rate Advance" means an Advance which bears interest at a LIBOR
Rate, and may be a Foreign Currency Advance or a Loan denominated in Dollars.
"LIBOR Rate Loan" means a Loan which bears interest at a LIBOR Rate, and
may be a Foreign Currency Loan or a Loan denominated in Dollars.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Limited Partnership" means Pioneer-Standard Electronics, Ltd., a Texas
limited partnership.
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"Loan" means, with respect to a Lender, such Lender's portion of any
Advance.
"Loan Documents" means this Agreement, the Notes, the Non-Borrowing and
Non-Pledge Agreements, the Subordination Agreement, the Intercreditor Agreement,
and any other document from time to time evidencing or securing indebtedness
incurred by Borrower under this Agreement, as any of the foregoing may be
amended or modified from time to time.
"Maryland" means Pioneer Standard of Maryland, Inc., a Maryland
corporation.
"Material Adverse Change" means a material adverse change with respect
to (i) the business, Property, condition (financial or otherwise), results of
operations, or prospects of Borrower and its Subsidiaries taken as a whole, (ii)
the ability of Borrower to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of Agent or Lenders thereunder.
"Materials of Environmental Concern" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and ureaformaldehyde insulation.
"Merger" is defined in SECTION 3.1.
"Merger Documents" is defined in SECTION 3.1.
"Minnesota" means Pioneer-Standard Minnesota, Inc., a Minnesota
Corporation.
"Money Market Line Advance" means an advance pursuant to SECTION 2.6.
"Money Market Loan" means a Loan pursuant to SECTION 2.6.
"Moody's" means Xxxxx'x Investors Service, Inc. and its successors.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which Borrowers or any member
of the Controlled Group is a party to which more than one employer is obligated
to make contributions.
"NCB" means National City Bank, a national banking association.
"Net Income" means for any period, net income (or loss) of Borrower for
such period determined in accordance with GAAP;
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provided, however that interest paid on the Convertible Debentures shall be
deemed a Distribution.
"Non-Borrowing and Non-Pledge Agreement" means a Non-Borrowing and
Non-Pledge Agreement, executed by each of Borrower's Substantial Subsidiaries in
favor of Lenders, substantially in the form of EXHIBIT C, as the same may be
amended, supplemented, or otherwise modified from time to time.
"Notes" means the Revolving Promissory Notes.
"Notice of Assignment" is defined in SECTION 11.3.3.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of Borrower to Lenders or to
any Lender, Agent or any indemnified party hereunder (i) in respect of the Loans
made or Letters of Credit issued pursuant to this Agreement; or (ii) under or in
respect of any one or more of the Loan Documents. Obligations shall also
include, without limitation, all interest, charges and other fees payable
hereunder (or under any of the Loan Documents) by Borrower, or due hereunder (or
under any of the Loan Documents) from Borrower to Agent or any one or more of
Lenders from time to time, together with all costs and expenses payable
hereunder or under any of the Loan Documents.
"Outstanding Amount" means, at any time, the aggregate of (w) the
principal balance of all Advances in Dollars then outstanding hereunder, PLUS,
(x) the Dollar Equivalent of all Advances in a Foreign Currency then outstanding
hereunder, PLUS (y) the Face Amount of all Letters of Credit then outstanding
hereunder, PLUS (z) the amount of all draws or disbursements made under any
Letter of Credit which Borrower has not converted into a Loan or otherwise
reimbursed to the Issuing Bank in accordance with SECTION 2.23, below.
"Participant" means a participant under SECTION 11.2.1.
"Payment Date" means, with respect to the payment of interest accrued on
any Base Rate Loan, the last day of each calendar month, and, with respect to
the payment of interest accrued on any LIBOR Rate Loan, the last day of the
LIBOR Interest Period except that for any LIBOR Interest Period in excess of
three months, interim payments shall be made every third month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Liens" are defined in SECTION 5.15.
"Person" means any natural person, corporation, firm, joint
venture, partnership, association, enterprise, trust or other
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entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which Borrower or any member of the Controlled Group may have any
liability.
"Preferred Securities" means the preferred securities issued by the
Trust pursuant to the Preferred Securities Offering.
"Preferred Securities Offering" shall mean Borrower's private placement
as described in Schedule 4 hereto, in an amount not to exceed $150,000,000.
"Preferred Securities Offering Documents" is defined in SECTION 3.1.
"Pre-Tax Income" means, for any period, Net Income plus the sum of all
income taxes paid by Borrower for such period.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"Pro Rata Share" means, in relation to any particular item, the share of
any Lender in such item, which shall be in the same proportion which the
Commitment of a Lender bears to the Aggregate Commitment (excluding the
commitment of NCB to make Swingline Loans), except that with respect to
application of payments of principal and interest, Pro Rata Shares shall be
adjusted as determined by Agent in its reasonable discretion to account for the
portion of the Outstanding Amount at such time attributable to each Lender. Pro
Rata Shares shall be net of any and all charges or fees due and payable to Agent
under the Loan Documents.
"Purchasers" is defined in SECTION 11.3.1.
"Purchase Money Security Interest" is defined in SECTION 5.15(iv).
"Rate Option" means the Base Rate or the LIBOR Rate.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for
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the purpose of purchasing or carrying margin stocks applicable to member banks
of the Federal Reserve System.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or
SECTION 412(d) of the Code.
"Request for Issuance of a Letter of Credit" means the form,
substantially similar to that which is attached hereto as Exhibit D, to be
executed by Borrower and delivered to Agent, requesting the issuance of a Letter
of Credit and providing the information required in connection therewith by
SECTION 2.23(a), below.
"Required Lenders" means those Lenders whose aggregate Pro Rata Shares
of the outstanding Advances equal or exceed sixty-six and two thirds percent (66
2/3%) of the aggregate amount of the outstanding Advances, or, in the event that
there are no Advances outstanding, those Lenders having sixty-six and two thirds
percent (66 2/3%) of the Aggregate Commitment.
"Reserve Requirement" means, with respect to a LIBOR Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on new
non-personal time deposits of $100,000 or more with a maturity equal to that of
on Eurocurrency liabilities (in the case of LIBOR Rate Loans).
"Revolving Promissory Note" means a promissory note, in substantially
the form of EXHIBIT E hereto, duly executed by Borrower and payable to the order
of a Lender in the amount of its Commitment, including any amendment,
modification, renewal or replacement of such promissory note.
"Same Day Funds" means (i) with respect to disbursements and payments in
Dollars, immediately available funds, and (ii) with respect to disbursements and
payments in a Foreign Currency, same day or other funds as may be determined by
Agent to be customary in the place of disbursement or payment for the settlement
of international banking transactions in the relevant Foreign Currency.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
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"Single Employer Plan" means a Plan maintained by Borrower or any member
of the Controlled Group for employees of Borrower or any member of the
Controlled Group.
"Stockholder's Equity" means, as of any date of determination, an amount
equal to the sum of the following amounts appearing on the balance sheet of
Borrower or a Subsidiary, as the case may be: (i) all equity as calculated in
accordance with GAAP, and (ii) all indebtedness which is subordinate (to the
satisfaction of Agent) to Indebtedness arising under this Agreement, including,
without limitation, the aggregate outstanding principal amount of the
Convertible Debentures.
"Subordination Agreement" means a Subordination Agreement, executed by
Borrower and Limited Partnership in favor of Lenders, substantially in the form
of EXHIBIT F attached hereto, as the same may be amended, supplemented or
otherwise modified from time to time.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of Borrower.
"Substantial Portion" means, with respect to the Property of Borrower
and its Subsidiaries, Property which (i) represents more than 2% of the
consolidated assets of Borrower and its Subsidiaries as would be shown in the
consolidated financial statements of Borrower and its Subsidiaries as at the
beginning of the twelve-month period ending with the month in which such
determination is made.
"Substantial Subsidiary" means any Subsidiary that has received funding
or will receive funding from Borrower in excess of $100,000, other than the
Trust, Georgia and Xxxxxxx, LLC.
"Swingline Loan" means a Loan pursuant to SECTION 2.7.
"SECT" shall mean Borrower's stock employee compensation trust as
described in Schedule 5 hereto.
"S&P" means Standard & Poor's Ratings Group and its successors.
"Tangible Assets" means of Borrower, as of any date of determination,
the total amount of assets after deducting therefrom (i) all investments and
loans of Borrower to its Subsidiaries, as
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permitted under this Agreement, and (ii) all goodwill of Borrower, all as shown
on the balance sheet of Borrower.
"Tangible Net Worth" means, as of any date of determination, as to any
Person on a nonconsolidated basis, an amount equal to Stockholder's Equity minus
the sum of (i) any surplus resulting from any write-up of assets subsequent to
December 31, 1997 (ii) goodwill, including any amounts, however designated on a
balance sheet of such Person, representing the excess of the purchase price paid
for assets or stock over the value assigned to it on the books of such Person,
(iii) patents, trademarks, trade names and copyrights, (iv) any amount at which
shares of capital stock of such Person appear as an asset on such Person's
balance sheet, and (v) any other amount in respect of an intangible that should
be classified as an asset on such Person's balance sheet, in accordance with
GAAP.
"Target's EBITDA" means, for any period, the sum of a Person's
Consolidated Net Income, increased by the sum for such period of interest
expense, income and franchise tax expense, amortization and depreciation,
non-recurring extraordinary expenses (in each case as determined in accordance
with GAAP) which was deducted in determining Consolidated Net Income for such
period.
"Tax" means any present or future assessments, taxes, charges, levies,
imposts, or withholding taxes, provided, that "Tax" shall not include (a) any
assessment, tax, charge, levy, impost, or withholding tax imposed on the net
income, profits or gains of Lenders, (b) any franchise tax imposed on Lenders by
the United States of America or by the state in which the lending office of
Lenders is located.
"Transferee" is defined in SECTION 11.4.
"Trust" means Pioneer-Standard Financial Trust, a statutory business
trust created under the laws of the State of Delaware.
"Type" means, with respect to any Loan, its nature as a LIBOR Rate Loan
in Dollars, Base Rate Loan, Money Market Line Loan, Swingline Loan or a Foreign
Currency Loan.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date, for such
Plans.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or
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one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one
or more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE CREDIT
----------
2.1 COMMITMENT. From and including the date of this Agreement and prior
to the Facility Termination Date, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, that Borrower may, subject to the terms
and conditions of this Agreement, borrow on a revolving basis from Lenders on
the Closing Date and from time to time thereafter sums, the outstanding amount
of which shall not when added to the Letter of Credit Usage, exceed the
Aggregate Commitment at any time; PROVIDED, HOWEVER, that (i) with regard to
each Lender individually, the sum of each such Lender's outstanding Loans shall
not exceed such Lender's Commitment; (ii) with regard to Lenders collectively,
the Outstanding Amount shall not exceed the Aggregate Commitment; (iii) the
Dollar Equivalent of Foreign Currency Loans shall not exceed Fifty Million
Dollars ($50,000,000); (iv) the amount of Money Market Line Loans shall not
exceed Fifty Million Dollars ($50,000,000), provided, however, the amount of
Money Market Line Loans may exceed Fifty Million Dollars ($50,000,000) by the
amount of any Swingline Loans that are converted into a Money Market Loan
pursuant to SECTION 2.7(b); and (v) the amount of Swingline Loans shall not
exceed Five Million Dollars ($5,000,000). The Commitments to lend hereunder
shall expire on the Facility Termination Date and may earlier terminate pursuant
to Section 6.14. The credit facility established hereunder shall be evidenced by
Revolving Promissory Notes delivered by Borrower in favor of each Lender,
respectively. Loans shall be made in the Applicable Currency.
2.2 FINAL PRINCIPAL PAYMENT. Any outstanding Loans and all other unpaid
Obligations shall be paid in full by Borrower on the Facility Termination Date.
2.3 RATABLE LOANS. (a) Each Advance hereunder shall consist of Loans
made from the several Lenders ratably in accordance with their Pro Rata Share of
the Aggregate Commitment, except for Swingline Loans, which shall be made solely
by NCB. Each Lender will make the amount of its Pro Rata Share of each proposed
Advance of LIBOR Rate Loans or Base Rate Loans available to Agent for the
account of Borrower in Same Day Funds by 12:00
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noon (Cleveland time) on the day requested except that in the case of a proposed
Foreign Currency Loan, Lenders will make the amount of its share thereof
available to Agent by such time on such day as Agent may specify.
(b) For all purposes of this Agreement (but not for purposes of the
preparation of any financial statements delivered pursuant hereto), the
equivalent in any Foreign Currency of an amount in Dollars, and the equivalent
in Dollars of an amount in any Foreign Currency, shall be determined at the
Exchange Rate.
2.4 APPLICABLE MARGINS. On the Closing Date, the Applicable Margin shall
be determined using Tier I of the performance grid below until June 30, 1998.
Thereafter, the Base Rate Applicable Margin and LIBOR Applicable Margin shall be
adjusted on the first day of each calendar quarter, beginning July 1, 1998, and
on each October 1, January 1, April 1, and July 1, thereafter, based on the
ratio of Consolidated Funded Debt plus Indebtedness for Borrowed Money arising
under the Agreement for Inventory Financing as of the end of the quarter ending
on March 31, 1998, and on each June 30, September 30, December 31, and March 31,
thereafter, to Consolidated EBITDA for the most recent preceding four (4) fiscal
quarters, including the fiscal quarter ending on the date of determination. To
the extent that, as of an adjustment date, Borrower has not provided to Agent
information necessary to apply the performance grid, interest shall be payable
retroactively upon receipt of such information and calculation by Agent. In such
event, Borrower shall continue to pay interest at the interest rate and on the
Payment Dates in effect for the preceding quarter and the parties shall adjust
for the difference between interest payable and interest actually paid, when
information to apply the performance grid is available.
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==============================================================================
Tier Consolidated LIBOR + Base Facility
Funded Debt plus Rate Fee
Indebtedness for
Borrowed Money
arising under the
Agreement for
Inventory
Financing / EBITDA
------------- ---------------------- ---------------- -------- ------------
Tier I greater than 3.50x 112.5 bps* 0 bps 37.5
------------- ---------------------- ---------------- -------- ------------
Tier II less than or equal 100.0 bps 0 bps 37.5
to 3.50x but
greater than 3.25x
------------- ---------------------- ---------------- -------- ------------
Tier III less than or equal 87.5 bps 0 bps 37.5
to 3.25x but
greater than 3.00x
------------- ---------------------- ---------------- -------- ------------
Tier IV less than or equal 75 bps 0 bps 37.5
to 3.00x but
greater than 2.75x
------------- ---------------------- ---------------- -------- ------------
Tier V less than or equal 62.5 bps 0 bps 37.5
to 2.75x but
greater than 2.50x
------------- ---------------------- ---------------- -------- ------------
Tier VI less than or equal 62.5 bps 0 bps 25
to 2.50x but
greater than 2.25x
------------- ---------------------- ---------------- -------- ------------
Tier VII less than 2.25x 50.0 bps 0 bps 25
==============================================================================
* bps = basis points
Notwithstanding anything contained in this Agreement to the
contrary, if at any time, or from time to time, Borrower is required to pay
interest to IBM Credit Corporation pursuant to the Agreement for Inventory
Financing, then, during such period that Borrower is required to pay such
interest to IBM Credit Corporation, the rate of interest to be paid on all
outstanding Loans hereunder will be equal to the greater of (i) the rate as
determined pursuant to this Agreement, and (ii) the rate of interest the
Borrower is required to pay IBM Credit Corporation.
2.5 FACILITY FEE; CLOSING FEE. (a) Borrower agrees to pay to
Agent for the account of each Lender a facility fee (the "FACILITY FEE") on each
Lender's Commitment from the Closing Date to and including the Facility
Termination Date, calculated as follows (i) .375% per annum on such Lender's
commitment in the
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event the Applicable Margin in Tiers I, II, III, IV or V, and (ii) .25% per
annum on such Lender's Commitment in the event the Applicable Margin is Tier VI
or Tier VII. The Facility Fee shall be payable quarterly in arrears on the first
day of each calendar quarter hereafter beginning July 1, 1998, and on the
Facility Termination Date.
(b) Borrower further agrees to pay to Agent for the account of each
Lender a closing fee (the "Closing Fee") equal to each such Lender's Commitment
multiplied by 0.125%.
(c) Borrower further agrees to pay all fees payable to Agent pursuant to
a separate letter agreement.
2.6 MONEY MARKET LINE LOANS. Borrower may, subject to the terms and
conditions of this Agreement, borrow on an overnight basis, payable on demand by
Agent, on the Closing Date and from time to time thereafter sums which shall
bear interest at a rate of interest equal to the rate of interest that would be
payable on a thirty day (30) day LIBOR Rate Loan plus the LIBOR Applicable
Margin. Each Money Market Line Advance shall be in an amount equal to or greater
than Ten Million Dollars ($10,000,000); PROVIDED, HOWEVER, that, (i) a Money
Market Advance that is the result of a conversion of a Swingline Loan pursuant
to SECTION 2.7(b) shall not be required to be in an amount equal to or greater
than Ten Million Dollars ($10,000,000), (ii) with regard to each Lender
individually, the sum of each such Lender's outstanding Loans shall not exceed
such Lender's Commitment; (iii) with regard to Lenders collectively, the
Outstanding Amount shall not exceed the Aggregate Commitment; and (iv) Borrower
may elect not to borrow a Money Market Line Loan by Telephonic Notice to Agent
within two (2) hours of notice from Agent of the interest rate to be applicable
to such Loan. Any Money Market Line Loan not repaid in full, including the
principal amount thereof and all accrued interest, within one (1) Business Day
of demand for payment by Agent or the Required Lenders shall automatically
convert into a Base Rate Loan and bear interest at the Base Rate.
2.7 Swingline Loans.
----------------
(a) Borrower may, subject to the terms and conditions of this Agreement,
borrow on an overnight basis, payable on demand by NCB, from NCB, on the Closing
Date and from time to time thereafter sums which shall bear interest at a rate
of interest equal to the rate of interest that would be payable on a thirty day
(30) day LIBOR Rate Loan plus the LIBOR Applicable Margin. Each Swingline Loan
shall be in an amount equal to or greater than One Million Dollars ($1,000,000);
PROVIDED, HOWEVER, that, (i) the sum of NCB's outstanding Loans of all Types
shall not exceed NCB's Commitment; (ii) with regard to Lenders collectively, the
Outstanding Amount shall not exceed the Aggregate Commitment; and (iii) Borrower
may elect not to borrow a Swingline Loan by Telephonic Notice to NCB within two
(2) hours of notice from NCB of the interest rate to be
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applicable to such Loan. Any Swingline Loan not repaid in full, including the
principal amount thereof and all accrued interest, within one (1) Business Day
of demand for payment by NCB shall automatically convert into a Base Rate Loan
and bear interest at the Base Rate.
(b) Agent may, in its sole discretion, convert any Swingline Loan into a
Money Market Line Loan upon delivery of notice thereof to Borrower. Upon
delivery to Lenders of a copy of a notice delivered by Agent under this Section,
all Swingline Loans shall be automatically converted to a Money Market Line Loan
under this Agreement, and each Lender agrees to immediately fund its Pro Rata
Share of such Money Market Line Loan. Conversions to Money Market Line Loans
under this Section shall be in the sole discretion and control of Agent and
shall be effective regardless of any default under this Agreement by Borrower or
Agent, or any other circumstance.
2.8 MINIMUM AMOUNT OF ADVANCES. Base Rate Advances shall be in the
minimum amount of $5,000,000, and in multiples of $1,000,000 if in excess
thereof. LIBOR Rate Advances shall be in the minimum amount of $10,000,000, and
in multiples of $1,000,000 if in excess thereof. Money Market Line Advances
shall be in the minimum amount of $10,000,000. The Swingline Loans shall be in
increments of $1,000,000.
2.9 INTEREST PAYABLE ON THE LOANS.
(a) METHOD OF SELECTING RATE OPTIONS AND LIBOR INTEREST PERIODS. (i)
Borrower shall select the Rate Option for each Advance and shall select the
LIBOR Interest Period applicable to each LIBOR Rate Loan from time to time and
whether such Loan shall be in Dollars or a foreign currency, by delivery to
Agent of an irrevocable notice in the form of EXHIBIT H hereto (a "BORROWING
NOTICE"), or by telephonic notice to Agent ("TELEPHONIC NOTICE"), followed by a
same day (which shall mean prior to 5:00 p.m. Cleveland, Ohio, time) written
Borrowing Notice delivered to Agent via facsimile. Agent will notify Borrower
within four (4) Business Days of receipt of a Borrowing Notice requesting a loan
in a foreign currency, whether such foreign currency is an acceptable Foreign
Currency. If such foreign currency is an acceptable Foreign Currency, the
Foreign Currency Advance shall be made on the fourth Business Day after Borrower
requests a Foreign Currency Advance. Foreign Currency Loans shall bear interest
at the LIBOR Rate.
(ii) Each LIBOR Rate Loan shall bear interest from and including the
first day of the LIBOR Interest Period applicable thereto until (but not
including) the last day of such LIBOR Interest Period at the interest rate
determined as applicable to such Loan. Borrower shall select LIBOR Interest
Periods so that it is not necessary to pay such Loan prior to the last day of
the applicable LIBOR Interest Period in order to repay the Loans on the
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Facility Termination Date. Provided that no Default shall have occurred and be
continuing, Borrower may elect to continue a Loan as a LIBOR Rate Loan by giving
irrevocable written, telephonic or telegraphic notice thereof to Agent not more
than ten (10) nor less than three (3) Business Days prior to the last day of the
then-current LIBOR Interest Period for such Loan, specifying the duration of the
succeeding LIBOR Interest Period therefor. If Agent does not receive timely
notice of such election, Borrower shall be deemed to have elected to convert
such Loan to a Base Rate Loan in Dollars at the end of the then-current LIBOR
Interest Period. Provided that no Default shall have occurred and be continuing,
Borrower may, on any Business Day, convert any outstanding Base Rate Loan, or
portion thereof, into a LIBOR Rate Loan in the same aggregate principal amount
(or Dollar Equivalent). If Borrower desires to convert a Base Rate Loan, it
shall give Agent prior written or telephonic notice not more than ten (10) nor
less than three (3) Business Days prior to the requested conversion date, which
notice shall specify the duration of the LIBOR Interest Period applicable
thereto.
(b) DETERMINATION OF RATE. Agent shall determine, in the exercise of its
good faith discretion, the Base Rate or Federal Funds Rate, as the case may be,
in effect from time to time. Any change in the Base Rate or Federal Funds Rate
shall, for all purposes of this Agreement and the other Loan Documents, become
effective on the effective date announced by Agent in accordance with Agent's
customary practices.
(C) MONTHLY INSTALLMENTS.
(i) Borrower shall pay to Agent, for the account of Lenders
in accordance with their respective Pro Rata Share,
monthly in arrears on the last Business Day of each month
beginning with the month following the month in which the
Closing Date occurs, interest on the outstanding
principal amount of the Base Rate Loans at the annual
rate equal to the Base Rate plus the Base Rate Applicable
Margin and on the outstanding principal amount of Money
Market Line Loans and Swingline Loans at the annual rate
determined pursuant to SECTION 2.6 AND SECTION 2.7.
RESPECTIVELY,; PROVIDED, HOWEVER, that if Borrower
elects, pursuant to the final paragraph of SECTION 2.9(a)
(ii), to convert a Base Rate Loan, or any portion
thereof, to a LIBOR Rate Loan, Borrower shall pay to
Agent, for the account of Lenders in proportion to their
respective Commitments, all accrued but unpaid interest
on such Base Rate Loan, or that portion thereof which is
being so converted, for the period commencing on the date
of the last payment date under this
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SECTION 2.9(c) (i) and concluding on the day immediately
preceding the first day of the LIBOR Interest Period for
the LIBOR Rate Loan into which such Base Rate Loan is
converted.
(ii) Borrower shall pay to Agent, for the account of Lenders
in accordance with their Pro Rata Share, in arrears,
interest on the outstanding principal amount of the LIBOR
Rate Loans, in Dollars at the annual rate equal to the
LIBOR Rate. Such interest shall be due and payable on the
last Business Day of the applicable LIBOR Interest Period
of three months or less, and for all other LIBOR Rate
Loans, interest shall be payable, in arrears as
aforesaid, on (x) that Business Day which is three months
after the beginning of the LIBOR Interest Period for such
Loans; and (y) on the final day of the LIBOR Interest
Period therefor.
(d) INTEREST ON OVERDUE PAYMENTS; DEFAULT INTEREST RATE. If any payment
of principal or interest is not paid when due, or prior to the expiration of the
applicable period of grace (if any) therefor, Agent may charge and collect from
Borrower, or may add to the unpaid balance of the Notes, a Late Charge. Any Late
Charge charged and collected by Agent shall be distributed to Lenders in
proportion to their respective Commitments. No failure by Agent to charge or
collect any Late Charge in respect of any delinquent payment shall be considered
to be a waiver by Agent or Lenders of any rights they may have hereunder,
including without limitation the right subsequently to impose a Late Charge for
such delinquent payment or to take such other actions as may then be available
to them hereunder or at law or in equity, including but not limited to the right
to terminate the Commitments and/or to accelerate the Obligations pursuant to
the terms hereof. If the Notes have been accelerated pursuant to this Agreement
or if a Default hereunder or under any other Loan Document shall have occurred
and be continuing, the outstanding principal balance of the Indebtedness
advanced under this Agreement, together with all accrued interest thereon and
any and all other Obligations, shall bear interest from the date on which such
amount shall have first become due and payable to the date on which such amount
shall be paid (whether before or after judgment) at the Default Interest Rate.
Interest at the Default Interest Rate will continue to accrue and will (to the
extent permitted by applicable law) be compounded daily until the Obligations in
respect of such payment are discharged (whether before or after judgment).
(e) LIBOR Rate Loans in Dollars not repaid on the last day of the LIBOR
Interest Rate Period applicable thereto shall be continued as LIBOR Rate Loans
to the extent that Borrower provides written notice thereof to Agent and
satisfies the requirements hereof for LIBOR Rate Loans, or, if such requirements
are not
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satisfied, converted into Base Rate Loans and bear interest as provided herein,
from and including the last day of such LIBOR Interest Rate Period.
(f) Foreign Currency Loans not repaid on the last day of the LIBOR
Interest Rate Period applicable thereto shall be continued as Foreign Currency
Loans in the same Foreign Currency to the extent that Borrower provides written
notice thereof to Agent and satisfies the requirements hereof for Foreign
Currency Loans in such Foreign Currency, or, if such requirements are not
satisfied, converted into Base Rate Loans (and redenominated in Dollars at its
Dollar Equivalent) and bear interest as provided herein, from and including the
last day of such LIBOR Interest Rate Period.
2.10 REPAYMENTS AND PREPAYMENTS OF PRINCIPAL.
(a) OPTIONAL PREPAYMENTS. Without derogating from the mandatory
prepayment requirements contained in Section 2.10(b) hereof, Borrower may prepay
the principal of the Loans in full or in part at any time and from time to time
upon payment to Agent of all accrued interest to the date of payment; PROVIDED,
HOWEVER, that (i) all partial payments of principal shall be in an amount equal
to or greater than One Hundred Thousand Dollars ($100,000.00); and (ii) all
Loans may be prepaid without penalty or premium. If Borrower shall prepay any
Loan which is a LIBOR Rate Loan on a day other than the final day of the
applicable LIBOR Interest Period therefor, such prepayment must include an
amount equal to all of Lenders' aggregate LIBOR Break Funding Costs, applicable
to or resulting from such prepayment in accordance with SECTION 2.10(b), below.
(B) MANDATORY PREPAYMENTS.
(i) If at any time the Outstanding Amount exceeds the Aggregate
Commitment, Borrower shall immediately prepay an amount equal to such
excess.
(ii) If at any time the Outstanding Amount with respect to any Lender
exceeds such Lender's Commitment, Borrower shall immediately prepay an
amount equal to such excess.
(iii) If (and on each occasion that) a drawing or disbursement is made
under a Letter of Credit and is not reimbursed by Borrower (either by
causing the amount of such drawing or disbursement to be converted into
a Loan or by paying the Issuing Bank the amount of such showing or
disbursement in immediately available funds, in either case as and when
required by SECTION 2.23, below), Borrower shall immediately prepay an
amount equal to such drawing or disbursement, together with interest
thereon.
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(c) APPLICATION OF PREPAYMENTS. Any prepayment of the Obligations shall
be applied by Agent as set forth in SECTION 2.11 hereof. To the extent that such
payment, repayment or prepayment shall be applied to LIBOR Rate Loan, Agent
shall retain such amount until the expiration of the LIBOR Interest Period
applicable to such Loan, and, shall apply such payment at such time so as to
minimize the LIBOR Break Funding Costs applicable to such payment, repayment or
prepayment, unless otherwise instructed by Borrower to pay, repay or prepay such
Loan and nonetheless incur the applicable LIBOR Break Funding Cost.
(d) MATURITY. Subject to the terms and conditions of this Agreement,
Borrower will be entitled to reborrow all or any part of the principal of the
Notes repaid or prepaid prior to the termination of the Commitments. The
Commitments shall terminate, and all of the Indebtedness evidenced by each Note
shall, if not sooner paid, be in any event absolutely and unconditionally due
and payable in full by Borrower, on the Facility Termination Date.
(e) NOTICE OF PREPAYMENTS OF PRINCIPAL. Unless otherwise specified
herein, Borrower will provide Agent at least (1) one Business Day's advance,
written notice of its intention to make any voluntary prepayment of principal.
Such notice shall be irrevocable and shall specify the date of prepayment and
the aggregate amount to be paid.
(f) REDUCTION IN COMMITMENT. Provided there is not then any Default or
Unmatured Default hereunder or any other Loan Document, Borrower may, upon and
subject to the terms and conditions set forth in this SECTION 2.10(f), elect
permanently to reduce the Aggregate Commitment by providing Agent and each
Lender with not less than thirty (30) days' prior written notice of its election
to do so. Such notice shall specify the date on which such reduction is intended
to become effective and the amount to which Borrower would propose to reduce the
Aggregate Commitment. Provided that Borrower shall, on or prior to the effective
date for such reduction specified in such notice, have made such payments or
prepayments as may be necessary to cause the outstanding balance of all Loans to
Borrower to be reduced to an amount equal to or less than the amount of the
Aggregate Commitment (giving effect to the proposed reduction thereof
contemplated in Borrower's notice), the Aggregate Commitment shall, on the date
specified in Borrower's notice, be reduced to the amount stipulated in
Borrower's notice. In the event that Borrower shall elect to reduce the
Aggregate Commitment as aforesaid, each Lender's Commitment shall be reduced,
pro rata, to reflect any such reduction in the Aggregate Commitment, and the
amount of the Facility Fee payable during the fiscal quarter in which such
reduction shall become effective shall be calculated so as to give effect to
such reduction, as of the effective date thereof, on a per diem basis. Each
reduction in the amount of the Aggregate Commitment effected pursuant to this
SECTION 2.10(f) (i) shall be in a multiple of Ten Million Dollars ($10,000,000).
Each reduction in the amount of the Aggregate
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Commitment shall be permanent. Borrower may exercise their right permanently to
reduce the amount of the Aggregate Commitment not more frequently than twice
during any six-month period. Borrower shall pay all reasonable costs and
expenses of Agent (including, without limitation, reasonable attorney's fees)
incurred in connection with the exercise of Borrower's rights under this SECTION
2.10(f).
2.11 PAYMENTS AND COMPUTATIONS.
(a) TIME AND PLACE OF PAYMENTS. Each payment to be made by Borrower
under this Agreement or any other Loan Documents shall be made directly to Agent
at its Head Office, not later than 12:00 noon Cleveland time, on the due date of
each such payment, in Same Day Funds, and (i) in the case of Foreign Currency
payments, no later than such time on the dates specified herein as may be
determined by Agent to be necessary for such payment to be credited on such date
in accordance with normal banking procedures in the place of payment, and (ii)
in the case of any Dollar payments, no later than 12:30 p.m. (Cleveland time) on
the date specified herein. Any payment which is received by Agent later than
12:30 p.m. (Cleveland time), or later than the time specified by Agent as
provided in clause (i), above; (in the case of Foreign Currency payments), shall
be deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue. Except as otherwise expressly provided
herein (including payments with respect to Swingline Loans), all payments by
Borrower shall be made to Agent for the account of Lenders, and, with respect to
principal of, interest on, and any other amounts relating to, any Foreign
Currency Loan, shall be made in the Foreign Currency in which such Loan is
denominated or payable, and, with respect to all other amounts payable
hereunder, shall be made in Dollars. Agent will, on the same Business Day that
it receives (or is deemed to receive, as aforesaid) each such payment, cause to
be distributed to each Lender, in immediately available and freely transferrable
funds, such Lender's Pro Rata Share of each such payment received by Agent.
(b) APPLICATION OF FUNDS. Notwithstanding anything herein to the
contrary, the funds received by Agent with respect to the Obligations shall be
applied as follows:
(i) NO DEFAULT. Provided that the Notes have not been accelerated
pursuant to SECTION 7.1, below, and provided further that no
Default or Unmatured Default hereunder or under any Loan
Document shall have occurred and be continuing at the time that
Agent receives such funds, in the following manner: (a) FIRST,
to the payment of all fees, charges, and other sums (other than
principal and interest) then due and payable to Agent or Lenders
under the Notes, this Agreement or the other Loan Documents
(including, without limitation, any LIBOR Break
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Funding Costs which may then be payable); (b) SECOND, to the
payment of all accrued but unpaid interest at the time of such
payment in accordance with each Lender's Pro Rata Share; and
(c) THIRD, to the payment of principal of the Notes in
accordance with each Lender's Pro Rata Share.
(ii) DEFAULT. If the Notes have been accelerated pursuant to SECTION
7.1, or if a Default hereunder shall have occurred and be
continuing hereunder or under the Notes or any of the other Loan
Documents at the time Agent receives such funds, in the
following manner: (a) FIRST to the payment or reimbursement of
Lenders and Agent for all costs, expenses, disbursements and
losses which shall have been incurred or sustained by Lenders or
Agent in or incidental to the collection of the Obligations owed
by Borrower hereunder or the exercise, protection, or
enforcement by Lenders or Agent of all or any of the rights,
remedies, powers and privileges of Lenders and Agent under this
Agreement, the Notes, or any of the other Loan Documents and in
and towards the provision of adequate indemnity to Agent and any
of Lenders against all taxes or Liens which by law shall or
may have priority over the rights of Agent or Lenders in and to
such funds; and (b) SECOND to the payment of all of the
Obligations in accordance with SECTION 2.11(b) (i) above.
(c) PAYMENTS ON BUSINESS DAYS. If any sum would (but for the provisions
of this SECTION 2.11(c)) become due and payable on any day which is not a
Business Day, then such sum shall become due and payable on the next succeeding
Business Day, and interest payable on such sum shall continue to accrue and
shall be adjusted by Agent accordingly.
(d) COMPUTATION OF INTEREST. All computations of interest payable under
this Agreement, the Notes, or any of the other Loan Documents shall be computed
by Agent on the basis of the actual principal amount outstanding on each day
during the payment period, and shall be calculated with reference to the actual
number of days elapsed during such period on the basis of a year consisting of
three hundred and sixty (360) days. The daily interest charge shall be one
three-hundred-sixtieth (1/360th) of the annual interest amount. Each
determination of any interest rate by Agent shall be conclusive and binding on
Borrower in the absence of manifest error. Absent manifest error, a certificate
or statement signed by an authorized officer of Agent shall be conclusive
evidence of the amount of the Obligations due and unpaid as of the date of such
certificate or statement.
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2.12 PAYMENTS TO BE FREE OF DEDUCTIONS. Each payment to be made by
Borrower under this Agreement, any Note, or any of the other Loan Documents
shall be made in accordance with SECTION 2.11 hereof, without set-off, deduction
or counterclaim whatsoever, and free and clear of taxes, levies, imposts,
duties, charges, fees, deduction, withholdings, compulsory loans, restrictions
or conditions of any nature now or hereafter imposed or levied by any
governmental or taxing authority, unless Borrower is compelled by law to make
any such deduction or withholding. In the event that any such obligation to
deduct or withhold is imposed upon Borrower with respect to any such payment:
(a) Borrower shall be permitted to make the deduction or withholding required by
law in respect of the said payment, and (b) there shall become and be absolutely
due and payable by Borrower to Agent or such Lender on the date on which the
said payment shall be due and payable, and Borrower hereby promises to pay to
Agent or such Lender on such date, such additional amount as shall be necessary
to enable Agent or such Lender to receive the same net amount which Agent or
such Lender would have received on such due date had no such obligation been
imposed by law. Notwithstanding any provision of this SECTION 2.12 to the
contrary, the foregoing provisions of this SECTION 2.12 shall not apply in the
case of any deductions or withholding made (y) in respect of taxes charged upon
or by reference to the overall net income, profits or gains of Agent or any
Lender, or (z) failure by a Lender to comply with SECTION 2.22.
2.13 USE OF PROCEEDS. Borrower represents, warrants and covenants to
Agent and to each Lender that all proceeds of the Advances shall be used by
Borrower only for the following purposes: (i) working capital needs, (ii)
Acquisitions, to the extent expressly permitted under this Agreement and (iii)
except as expressly limited in this Agreement, general corporate purposes.
2.14 LIBOR BREAK FUNDING COST. Borrower shall pay to Agent, for the
ratable benefit of each Lender, the LIBOR Break Funding Costs that Agent
determines are attributable to:
(a) any payment (including, without limitation, any payment resulting
from the acceleration of the Loans pursuant to this Agreement or any Loan
Document), repayment, mandatory or optional prepayment, or conversion of a LIBOR
Rate Loan for any reason on a date other than the last day of the LIBOR Interest
Period for such Loan; or
(b) any failure by Borrower for any reason to borrow a LIBOR Rate Loan
on the date for such borrowing specified in the relevant notice of borrowing or
Borrowing Notice.
2.15 ADDITIONAL COSTS.
(a) Notwithstanding any conflicting provisions of this Agreement to the
contrary, if any applicable law, rule or regulation not in effect as of the date
hereof shall (i) subject
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Agent or any Lender to any tax, levy, impost, duty, charge, fee, deduction or
withholding of any nature with respect to any Loan, or Letter of Credit, this
Agreement, any Note, or any of the other Loan Documents or the payment by
Borrower of any amounts payable to Agent or any Lender hereunder or thereunder
(other than taxes charged upon or by reference to the overall net income,
profits or gains of Agent or any Lender or taxes charged with respect to any
Lender's failure to comply with SECTION 2.22 hereof); or (ii) materially change,
in the reasonable opinion of the party so affected, the basis of taxation (other
than changes in tax rates applicable to taxes charged upon or by reference to
the overall net income, profits or gains of Agent or any Lender or taxes charged
with respect to any Lender's failure to comply with SECTION 2.22 hereof) of
payments to Agent or any Lender of the principal of or the interest on any Note
or any other amounts payable to Agent or any Lender under this Agreement, or any
of the other Loan Documents; or (iii) impose or increase or render applicable
any special or supplementary special deposit or reserve or similar requirements
(whether or not having the force of law) against assets held by, or deposits in
or for the account of, or any eligible liabilities of, or loans by any office or
branch of, Agent or any Lender; or (iv) impose on Agent or any Lender any other
condition or requirement with respect to this Agreement, any Note, or any of the
other Loan Documents, and if the result of any of the foregoing is (A) to
increase the cost to Agent or any Lender of making, funding or maintaining all
or any part of the principal of the Loans or of issuing, maintaining or making
draws or disbursements under the Letters of Credit, or (B) to reduce the amount
of principal, interest or any other sum payable by Borrower to Agent or any
Lender under this Agreement, any Note, or any of the other Loan Documents, or
(C) to require Agent or any Lender to make any payment or to forego any interest
or other sum payable by Borrower to Agent or any Lender under this Agreement,
any Note, or any of the other Loan Documents, the amount of which payment or
foregone interest or other sum is measured by or calculated by reference to the
gross amount of any sum receivable or deemed received by Agent or any Lender
from Borrower under this Agreement, any Note, or any of the other Loans
Documents, then, and in each such case, Borrower will pay to Agent for Agent or
the account of a Lender, as the case may be, within sixty (60) days of written
notice by Agent or such Lender, such additional amounts as will (in the
reasonable opinion of Agent or such Lender, as the case may be) be sufficient to
compensate Agent or such Lender for such sum.
(b) If any present or future applicable law, rule or regulation shall
make it unlawful for Borrower to perform any one or more of its agreements or
Obligations under this Agreement, any Note, or any of the other Loan Documents,
then the obligations of Lenders under their respective Commitment shall
terminate immediately. If any present or future applicable law, rule or
regulation shall make it unlawful for Borrower to perform any one or more of its
agreements or obligations under this Agreement, any Note, or any of the other
Loan Documents, and Agent, or any Lender
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shall at any time determine (which reasonable determination shall be conclusive
and binding on Borrower) (i) that, as a consequence of the effect or operation
(whether direct or indirect) of any such applicable law, rule or regulation, any
one or more of the rights, remedies, powers or privileges of Agent or any Lender
under or in respect of this Agreement, any Note, or any of the other Loan
Documents shall be or become invalid, unenforceable, or materially restricted;
and (ii) that all or any one or more of the rights, remedies, powers and
privileges so affected are of material importance to Agent or any Lender (as
determined by the party so affected), then Agent shall, at the direction of the
Required Lenders, by giving notice to Borrower, declare all of the Obligations,
including, without limitation, the entire unpaid principal of the Notes, all of
the unpaid interest accrued thereon and any and all other sums due and payable
by Borrower to Agent or Lenders under this Agreement, any Note, and any of the
other Loan Documents, to be immediately due and payable, and, thereupon, such
Obligations shall (if not already due and payable) forthwith become and be due
and payable without further notice or other formalities of any kind, all of
which are hereby expressly waived.
(c) If Agent or any Lender shall reasonably determine that any law, rule
or regulation not in effect as of the date hereof regarding capital adequacy, or
in the event of any change in any existing such law, rule or regulation or in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof or compliance by any Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
such authority, central bank or comparable agency, has or would have the effect
of reducing the rate of return on such Lender's capital, as a consequence of its
obligations hereunder, to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy) by any amount deemed by
such Lender to be material, then Borrower shall pay to such Lender within sixty
(60) days of written notice by such Lender such amount or amounts, in addition
to the amounts payable under the provisions of this Agreement or any other Loan
Document, as will compensate such Lender for such reduction. Determinations by
any Lender of the additional amount or amounts required to compensate such
Lender in respect of the foregoing shall be presumptively correct absent
manifest error. In determining such amount or amounts, each Lender may use in
good faith any reasonable averaging and attribution methods of general
application.
(d) Each Lender agrees, that upon the occurrence of any event giving
rise to the operation of SECTION 2.12, or (a)-(c) of this SECTION 2.15 with
respect to such Lender, it will, to the extent permitted by Applicable Law or by
the relevant Governmental Authority, in consultation with Agent, for a period of
thirty (30) days endeavor in good faith to avoid or minimize the increase in
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costs or reduction in payments resulting from such event (including, but not
limited to, endeavoring to change its Lending Installation); provided, however,
that such avoidance or minimization can be made in such a manner that such
Lender, in its sole determination, suffers no economic, legal or regulatory
disadvantage. If any Lender (an "Affected Lender") shall make a demand for
payment under any of such Sections, and Borrower shall find a Lender or an
assignee which offers in writing to purchase the Commitments and Advances of
such Affected Lender without recourse at par on a specified date, together with
accrued and unpaid interest and facility fees thereon to the date of purchase,
and tenders the purchase price of such Commitments and Advances on such
specified date, and if, in the reasonable opinion of such Affected Lender, its
acceptance of such offer would be permitted under Applicable Law and all
relevant governmental authorities and would not result in its suffering any
economic, legal, or other regulatory disadvantage, then Borrower shall be
excused from the payment of the increased costs claimed by such Affected Lender
under any of such Sections accruing after the first interest payment date
pursuant to SECTION 2.19 for each Advance of such Affected Lender following such
specified date, if the Affected Lender demanding payment under either such
Section declines such purchase offer. If such Affected Lender accepts such
purchase offer, upon consummation of such purchase offer such Affected Lender
shall cease to be a party hereto. Except as provided in the immediately
preceding sentence, nothing in this SECTION 2.15(d) shall affect or postpone the
obligations of Borrower to make payments as provided hereunder. Any reasonable
expenses incurred by such Affected Lender under this SECTION 2.15(d) shall be
paid by Borrower upon delivery by such Affected Lender to Borrower of a
certificate as to the amount of such expenses, which certificate shall be
conclusive and binding, in absence of manifest error.
(e) For purposes of this SECTION 2.15, "laws, rules and regulations not
in effect on the date hereof" or similar words shall be deemed to include future
interpretations of existing laws, rules and regulations.
2.16 INDEMNIFICATION OF LOSSES. Without derogating from any of the other
provisions of this Agreement or any of the other Loan Documents Borrower hereby
absolutely and unconditionally agrees to indemnify Agent and each Lender, upon
demand at any time and as often as the occasion therefor may require, against
any and all claim, demands, suits, actions, damages, losses, costs, expenses and
all other liabilities whatsoever which Agent or any Lender or any of their
respective directors or officers may sustain or incur as a consequence of, on
account of, in relation to or in any way in connection with (a) any failure by
Borrower to pay, punctually on the due date thereof, any amount payable under
this agreement, any Note, or any of the other Loan Documents beyond the
expiration of the period of grace (if any) applicable thereto, or (b) the
acceleration of the maturity of any of the Obligations, or (c) any failure by
any Borrower to perform or comply with any of
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the terms and provisions of this Agreement, any Note or any of the other Loan
Documents. Such claims, demands, suits, actions, damages, losses, costs,
expenses shall include, without limitation (i) any costs incurred by Agent or
any lender in carrying funds to cover any overdue principal, overdue interest or
any other overdue sums payable by Borrower under this Agreement, any Note or any
of the other Loan Documents; (ii) any interest payable by Agent or any Lender in
order to carry the fund referred to in clause (i) of this SECTION 2.16; and
(iii) any losses (but excluding losses of anticipated profit) incurred or
sustained by Agent or any Lender in liquidating or re-employing funds acquired
from third parties to make, fund or maintain all or any part of the Loans.
2.17 STATEMENTS BY AGENT OR ANY LENDER. A certified statement signed by
an officer of Agent or any Lender setting forth any additional amount required
to be paid by Borrower to Agent or such Lender (together with supporting
documentation setting forth in reasonable detail an explanation of the basis for
requesting payment of such amount), respectively, under SECTION 2.15 and 2.16
hereof shall be submitted by Agent or such Lender to Borrower in connection with
each demand made at any time by Agent (with copies thereof delivered to each
other Lender) or such Lender under either of such Sections. A claim by Agent or
any Lender for all or any part of any additional amounts required to be paid by
Borrower under Section 2.15 and 2.16 hereof may be made before or after any
payment to which such claim relates. Each such statement shall, in the absence
of manifest error, constitute presumptive evidence of the additional amount
required to be paid to Agent or such Lender.
2.18 BORROWING NOTICES; TELEPHONIC NOTICES. (a) All requests for draws,
advances, or disbursements of Loan proceeds shall be made by and on behalf of
Borrower in writing on a Borrowing Notice, by Telephonic Notice. All Telephonic
Notices, must be followed by same day (which shall mean prior to 5:00 p.m.,
Cleveland, Ohio, time) written Borrowing Notice delivered to Agent via
facsimile. Borrowing Notices may be transmitted to Agent at its Head Office via
fax or telecopy, PROVIDED that Borrower immediately notifies Agent by telephone
of such transmission. Each Borrowing Notice for Base Rate Loans shall be
transmitted to and received by Agent, or each Telephonic Notice shall be
received by telephone by Agent, not later than 12:00 p.m. Cleveland, Ohio, time
not more than ten (10) Business Days nor less than one (1) Business Day before
the Borrowing Date of each such Loan, and not more than ten (10) Business Days
nor less than three (3) Business Days before the Borrowing Date for each LIBOR
Rate Loan. Each Borrowing Notice for Money Market Line Loans and Swingline Loans
shall be transmitted and received by Agent, not later than 11:00 a.m. Cleveland,
Ohio, time on the Borrowing Date of each such Loan. All Borrowing Notices shall
be accompanied by such documents, reports and other materials as may be
reasonably necessary to enable Agent (and each Lender) to confirm that the
conditions precedent to the disbursement of such requested Loan have been
satisfied.
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(b) Agent shall notify Lenders promptly by telephone of its receipt of
Borrower's Borrowing Notice, but in no event shall Agent notify Lenders later
than 5:00 p.m. Cleveland time, on the day on which Agent actually receives the
applicable Borrowing Notice. In addition, Agent shall provide each Lender with a
copy of each such Borrowing Notice, together with all accompanying materials,
promptly upon Agent's receipt thereof, and shall in addition provide each Lender
with a statement showing Agent's calculation of its respective Pro Rata Share of
the Advance so requested. Each Lender will, upon receiving notice from Agent of
Borrower's Borrowing Notice, become and be obligated to place at the disposal of
Agent, not later than 10:00 a.m., Cleveland time, on the Borrowing Date set
forth on such Borrowing Notice, an aggregate amount in dollars equal to such
Lender's Pro Rata Share multiplied by the amount of the Advance requested. The
payment by each Lender of such aggregate amount shall be made to Agent at
Agent's Head Office in immediately available and freely transferrable funds.
(c) Agent shall disburse the proceeds of each Loan to Borrower, in
immediately available funds not later than noon, Cleveland time, on the
Borrowing Date described therefor, provided that: (x) Borrower shall have
provided Agent with a Borrowing Notice for such Advance as and when provided
above; (y) all of the conditions precedent applicable to such Advance shall be
satisfied as at the Closing Date or such later Borrowing Date as may be
applicable to such Loan; and (z) each Lender shall fund the amount equal to its
Loan as provided in SECTION 2.18(b), above.
2.19 NOTES; TELEPHONIC NOTICES. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its respective Note or Notes, provided, however, that the
failure to so record shall not affect Borrower's obligations under such Note.
Borrower hereby authorizes Lenders and Agent to extend, convert or continue
Loans, effect selections of Types of Advances and to transfer funds based on
telephonic notices made by any person or persons Agent or any Lender in good
faith believes to be acting on behalf of Borrower. Borrower agrees to deliver
promptly to Agent a written confirmation, if such confirmation is requested by
Agent or any Lender, of each telephonic notice signed by an Authorized Officer.
If the written confirmation differs in any material respect from the action
taken by Agent and Lenders, the records of Agent and Lenders shall govern absent
manifest error.
2.20 LENDING INSTALLATIONS. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to Agent and Borrower, designate a Lending Installation through
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which Loans will be made by it and for whose account Loan payments are to be
made.
2.21 NON-RECEIPT OF FUNDS BY AGENT. Unless Borrower or a Lender, as the
case may be, notifies Agent prior to the date on which it is scheduled to make
payment to Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii)
in the case of Borrower, a payment of principal, interest or fees to Agent for
the account of Lenders, that it does not intend to make such payment, Agent may
assume that such payment has been made. Agent may, but shall not be obligated
to, make the amount of such payment available to the intended recipient in
reliance upon such assumption. If such Lender or Borrower, as the case may be,
has not in fact made such payment to Agent, the recipient of such payment shall,
on demand by Agent, repay to Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the date
such amount was so made available by Agent until the date Agent recovers such
amount at a rate per annum equal to (i) in the case of payment by a Lender, the
Federal Funds Rate for such day or (ii) in the case of payment by Borrower, the
interest rate applicable to the relevant Loan.
2.22 WITHHOLDING TAX EXEMPTION. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to each
Borrower and Agent two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, certifying in either case that such Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Lender
which so delivers a Form 1001 or 4224 further undertakes to deliver to each
Borrower and Agent two additional copies of such form (or a successor form) on
or before the date that such form expires (currently, three successive calendar
years for Form 1001 and one calendar year for Form 4224) or becomes obsolete or
after the occurrence of any event requiring a change in the most recent forms so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by Borrower or Agent, in each case certifying
that such Lender is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender advises Borrower and Agent that it is not capable
of receiving payments without any deduction or withholding of United States
federal income tax.
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2.23 The Letters of Credit.
----------------------
(a) ISSUANCE OF LETTERS OF CREDIT; CONDITIONS AND LIMITATIONS. Upon the
terms and conditions set forth in this Agreement, Borrower may request, in
accordance with the provisions of this SECTION 2.23, that the Issuing Bank issue
one or more Letters of Credit for its account from time to time prior to the
Facility Termination Date. If Borrower desires the issuance of a Letter of
Credit, it shall deliver to Agent a Request for Issuance of Letter of Credit in
form substantially similar to that which is attached hereto as EXHIBIT D and
made a part hereof by this reference, no later than 11:00 A.M. (Cleveland time)
at least five Business Days before the proposed Issuance Date therefor. The
Request for Issuance of Letter of Credit shall be accompanied by a Letter of
Credit application, on the Issuing Bank's then-customary form, and shall
contain, among other things, the following information with respect to each
requested Letter of Credit: (i) its proposed Issuance Date (which shall be a
Business Day), (ii) its proposed Face Amount, (iii) its proposed expiration
date, (iv) the name and address of its proposed beneficiary, and (v) a summary
of its purpose and contemplated terms. Borrower shall, in addition, furnish a
precise description of any documents to be presented under, and any other terms
of, the requested Letter of Credit, together with the text of any certificate to
be presented by the beneficiary which, if presented by the beneficiary prior to
the expiration date of the Letter of Credit, would require the Issuing Bank to
make payment under the Letter of Credit. No Letter of Credit shall require
payment against a conforming draft to be made thereunder on the same Business
Day that such draft is presented if such presentation is made after 10:00 A.M.
(Cleveland time) on such Business Day. The minimum Face Amount of any Letter of
Credit shall be One Million Dollars ($1,000,000) or the Dollar Equivalent
thereof. The issuance of each Letter of Credit shall be subject to the
satisfaction, on the Issuance Date for each Letter of Credit, of all of the
conditions precedent set forth in SECTION 3.2 below, and to the following
additional limitations:
(i) Borrower shall not request the issuance of a Letter of Credit if,
after giving effect to the issuance of such Letter of Credit, the Letter
of Credit Usage would equal or exceed Fifteen Million Dollars
($15,000,000);
(ii) Borrower shall not request the issuance of a Letter of Credit if,
after giving effect to the issuance of such Letter of Credit, the
Outstanding Amount would exceed the Aggregate Commitment; and
(iii) In no event shall the Issuing Bank issue any Letter of Credit
having an expiration date later than the first to occur of (x) Facility
Termination Date or (y) one (1) year after the Issuance Date of the
proposed Letter of Credit; PROVIDED that, subject to the foregoing
clause (x), this clause (y) shall not prevent the Issuing
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Bank from agreeing that a Letter of Credit will automatically be renewed
for additional periods not to exceed one (1) year each after the initial
expiry date thereof if the Issuing Bank does not cancel such renewal,
provided that all of the conditions to the issuance of a Letter of
Credit and set forth or referred to in this SECTION 2.23(a) must be
satisfied as at each such renewal date in respect of such renewal and
that the Letter of Credit Commission will be adjusted to the extent that
the then in effect LIBOR Applicable Margin has been adjusted.
(b) ISSUANCE OF LETTERS OF CREDIT: PURCHASE OF PARTICIPATIONS THEREIN.
Upon Agent's receipt of a Request for Issuance of Letter of Credit, Agent shall
promptly so notify each Lender, and shall provide each Lender with a copy of
such Request for Issuance of Letter of Credit. Provided that all of the
conditions precedent to the issuance of the requested Letter of Credit have been
satisfied, the Issuing Bank shall cause each Letter of Credit properly requested
hereunder to be issued in accordance with the terms of the respective Request
for Issuance for Letter of Credit therefor. Immediately upon the issuance of
each Letter of Credit, each Lender (other than the Issuing Bank) shall be deemed
to have irrevocably purchased from the Issuing Bank a participation in such
Letter of Credit and any and all drawings and disbursements thereunder, in an
amount equal to such Lender's Pro Rata Share of the initial Face Amount of such
Letter of Credit, and each Lender hereby covenants and agrees to purchase and
pay for such participation on the terms and subject to the conditions set forth
in this SECTION 2.23.
(c) PAYMENT IN CERTAIN CIRCUMSTANCES. Each Letter of Credit shall
provide that the Issuing Bank may (but shall not be required to) pay the
beneficiary thereof upon the occurrence of an Event of Default and the
acceleration of the maturity of the Loans or, if payment is not then due to the
beneficiary under such Letter of Credit, may provide for the deposit of funds in
an account to secure payment to the beneficiary, and that any funds so deposited
shall be paid to such beneficiary (subject to the satisfaction of all conditions
to such payment), or returned to the Issuing Bank for distribution to Lenders
(or, if all obligations then shall have been indefeasibly paid in full, to
Borrower) if no payment to such beneficiary has been made and if the final date
available for drawings under the Letter of Credit has passed. Each payment or
deposit of funds by the Issuing Bank as provided in this paragraph shall be
treated for all purposes of this Agreement as a drawing duly honored by the
Issuing Bank under the related Letter of Credit.
(d) TERMINATION OF COMMITMENTS. If for any reason the Commitments shall
terminate when any Letter of Credit is outstanding, Borrower shall, on or prior
to the date of such termination: (i) cause each outstanding Letter of Credit to
be cancelled, and an amount equal to all amounts previously drawn
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under Letters of Credit and not theretofore reimbursed by Borrower or converted
into Loans pursuant to SECTION 2.23(e) to be paid immediately to or as directed
by the Issuing Bank; or (ii) deposit, with Agent, immediately available funds in
an amount equal to the Letter of Credit Usage to secure all outstanding Letters
of Credit which are not cancelled as described in the preceding clause.
(e) PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. Upon receipt by
the Issuing Bank of any request for drawing under its Letter of Credit by the
beneficiary thereof, the Issuing Bank shall notify Borrower and Agent promptly
after its receipt of notice of any such request, and in any event at least two
(2) Business Days prior to the date on which the Issuing Bank intends to honor
such drawing (unless under the terms of the Letter of Credit the Issuing Bank is
required to honor a drawing prior to the second Business Day after presentation
of a request for drawing, in which case the Issuing Bank shall provide Borrower
and Agent with such notice of such request as may be practicable under the
circumstances). Agent shall provide each Lender with a true and complete copy
of such notice within one (1) Business Day of Agent's receipt of the same.
Borrower shall, and hereby covenants and agrees to, reimburse the Issuing Bank
on the day on which such drawing is honored in an amount, in immediately
available funds, equal to the amount of such drawing; PROVIDED that (i) unless
Borrower shall have notified Agent prior to 11:00 A.M. (Cleveland time) on the
Business Day immediately prior to the date of such drawing that Borrower intends
to reimburse the Issuing Bank for the amount of such drawing with funds other
than the proceeds of Loans, Borrower shall be deemed to have given a Request for
Advance to Agent requesting a Base Rate Loan on the date on which such drawing
is honored, in the amount of such drawing; and (ii) Lenders shall, on the date
of such drawing, make Loans in the amount of such drawing, the proceeds of which
shall be applied directly by Agent to reimburse the Issuing Bank for the amount
of such drawing; and PROVIDED FURTHER, that if for any reason proceeds of such
Loans are not received by the Issuing Bank on such date in an amount equal to
the amount of such drawing, Borrower shall reimburse the Issuing Bank, on the
next Business Day, in an amount equal to the excess of the amount of such
drawing over the amount of such Loans which are actually received, plus accrued
interest on such amount at the Default Interest Rate.
(f) PAYMENT BY LENDERS. If Borrower shall fail to reimburse the Issuing
Bank as and when required above for the amount of any drawing honored by the
Issuing Bank under a Letter of Credit issued by it, the Issuing Bank shall
promptly notify each Lender of the unreimbursed amount of such drawing and of
such Lender's respective Pro Rata Share thereof. Each Lender shall make
available to the Issuing Bank an amount equal to its respective Pro Rata Share
of such unreimbursed drawing, in immediately available funds, at the office of
the Issuing Bank specified in such notice, not later than 12:00 P.M. (Cleveland
time) on the first Business Day after such Lender's receipt of such notice from
the Issuing
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Bank. If any Lender fails so to make available to the Issuing Bank the amount of
such Lender's Pro Rata Share of such Letter of Credit, the Issuing Bank shall be
entitled to recover such amount on demand from such Lender, together with
interest at the customary rate set by the Issuing Bank for the correction of
errors among banks. Nothing in this provision shall prejudice the right of any
Lender to recover from the Issuing Bank any amounts made available by such
Lender to the Issuing Bank pursuant to this provision in the event that it is
determined by a court of competent jurisdiction that the payment with respect to
a Letter of Credit by the Issuing Bank in respect of which payment was made by
the Issuing Bank constituted gross negligence or willful misconduct on the part
of the Issuing Bank. The Issuing Bank shall, or shall cause Agent to, distribute
to each other Lender which has paid all amounts payable by it under this SECTION
2.23(f) with respect to any Letter of Credit issued by the Issuing Bank such
other Lender's Pro Rata Share of all payments received by the Issuing Bank from
Borrower in reimbursement of drawings honored by the Issuing Bank under such
Letter of Credit when such payments are received.
(g) COMPENSATION. Borrower agrees to pay the following amounts with
respect to each Letter of Credit issued pursuant to this Agreement:
(i) a Letter of Credit Commission payable, in advance, to Agent
for the ratable benefit of Lenders, on the Issuance Date of such Letter
of Credit (and, solely in the case of Letters of Credit which are
renewed after the expiration of the initial period thereof, on each
renewal date for so long as such Letters of Credit remain outstanding);
(ii) a Letter of Credit facing fee (the "Letter of Credit Facing
Fee"), payable to the Issuing Bank, equal to the Face Amount of each
Letter of Credit multiplied by 0.125%; and
(iii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each drawing made thereunder, documentary and
processing charges in accordance with the Issuing Bank's standard
schedule for such charges in effect at the time of such provided for in
this Agreement, Borrower agrees to protect, indemnify, pay and save the
Issuing Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) which the Issuing Bank may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of
any Letter of Credit, other than as a result of the gross negligence or
willful misconduct of the Issuing Bank as determined by a court of
competent jurisdiction, or (ii) the failure of the Issuing Bank to honor
a drawing under any Letter of Credit as a result of
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any act or omission, whether rightful or wrongful, of any present or
future Governmental Authority. As between Borrower and the Issuing Bank,
Borrower assumes all risks of the acts and omissions of, or misuse of
the Letters of Credit issued by the Issuing Bank by the respective
beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, the Issuing Bank shall not be responsible
for: (i) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted by any party in connection with the
application for and issuance of Letters of Credit, even if any of the
foregoing should in fact prove to be invalid, insufficient, inaccurate,
fraudulent or forged in any respect; (ii) the validity or insufficiency
of any instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) the failure of the beneficiary of any
Letter of Credit to comply fully with conditions required in order to
draw upon such Letter of Credit; (iv) the errors, omissions,
interruptions or delays in transmission or delivery of any messages, by
mail, cable, telegraph, telecopy, telex or otherwise, whether or not
they be in cipher; (v) the errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit or any
proceeds thereof; (vii) the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such Letter of
Credit; and (viii) for any consequences arising from causes beyond the
control of the Issuing Bank. None of the above shall affect, impair, or
prevent the vesting of any of the Issuing Bank's rights or powers
hereunder. In determining whether to pay under any Letter of Credit, the
Issuing Bank shall be responsible only to determine that the documents
and certificates required to be delivered under that Letter of Credit
have been delivered and that the same comply on their face with the
requirements of that Letter of Credit. Borrower shall have no obligation
to indemnify the Issuing Bank in respect of any liability incurred by
the Issuing Bank to the extent arising out of the gross negligence or
willful misconduct of the Issuing Bank, as determined by a court of
competent jurisdiction, or out of the wrongful dishonor by the Issuing
Bank of a proper demand for payment made under the Letters of Credit
issued by it.
(h) AMENDMENTS. Borrower may request that the Issuing Bank enter into
one or more amendments of its Letter of Credit by delivering to Agent and the
Issuing Bank a Notice of Issuance of Letter of Credit specifying (i) the Issuing
Bank, (ii) the proposed
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date of the proposed amendment and (iii) the nature of the requested amendment.
The Issuing Bank shall be entitled to enter into amendments with respect to its
Letters of Credit, PROVIDED, that any amendment extending the expiry date or
increasing the stated amount of any Letter of Credit shall be permitted only if
the Issuing Bank would, at the time of the proposed be permitted to issue a new
Letter of Credit having such an expiry date or stated amount under this SECTION
2.23 on the date of the amendment.
ARTICLE III
CONDITIONS PRECEDENT
--------------------
3.1 INITIAL ADVANCE. Lenders shall not be required to make the Initial
Advance hereunder unless (a) Borrower has paid all fees due and payable to
Lenders and Agent hereunder, (b) the initial Borrowing Notice is delivered to
Agent on or before March 24, 1998, (c) the proceeds of the Initial Advance
together with the net proceeds of the Preferred Securities Offering are
sufficient to and are used for the payoff and termination of the Existing
Facilities, (d) the gross proceeds of the Preferred Securities Offering shall be
equal to or greater than $125 million and the net proceeds thereof shall have
been received by Borrower, (e) the consummation of the Preferred Securities
Offering shall have occurred on or before the date hereof, in accordance with
the terms and conditions of documents and instruments (the "Preferred Securities
Offering Documents") that have been reviewed and approved by Agent and Agent's
counsel, (f) the execution of an agreement by and between Borrower and Xxxxxxx
Data Systems, Inc. ("Xxxxxxx") whereby Borrower will agree to acquire a
controlling interest in the capital stock of Xxxxxxx at a cash purchase price
not to exceed $121,025,000, plus assumption of certain liabilities, and plus
payments of certain other consideration not to exceed $17,000,000 (the
"Merger"), in accordance with the terms and conditions of documents and
instruments (the "Merger Documents") that have been reviewed and approved by
Agent and Agent's counsel, and (g) Borrower shall have furnished to Agent, with
sufficient copies for Lenders, the following:
(i) The duly executed originals of the Loan Documents, including the
Notes, payable to the order of each of Lender, and this
Agreement and a Non-Borrowing and Non-Pledge Agreement executed
by Maryland, Illinois, the Limited Partnership, Minnesota and
Canada;
(ii) A certificate of good standing for Borrower and each of its
Substantial Subsidiaries, certified by the appropriate
governmental officer, and foreign qualification certificates,
certified by the appropriate governmental officer, for each
jurisdiction where the failure to so qualify or be
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licensed (if required) could reasonably be expected to result in
a Material Adverse Change;
(iii) Copies, certified by an officer of Borrower of each of
Borrower's and each of its Substantial Subsidiaries formation
documents (including by-laws or code of regulations), together
with all amendments thereto;
(iv) An incumbency certificate, executed by an officer of Borrower
and each Substantial Subsidiary, which shall identify by name
and title and bear the signature of the Persons authorized to
sign the Loan Documents or the Non-Borrowing and Non-Pledge
Agreement, as the case may be, and to make borrowings hereunder
on behalf of Borrower, upon which certificate Agent and Lenders
shall be entitled to rely until informed of any change in
writing by Borrower or such Substantial Subsidiary;
(v) Copies, certified by the Secretary or Assistant Secretary, of
Borrower's and each Substantial Subsidiaries' Board of
Directors' resolutions, which shall provide either a shareholder
or Board of Directors resolution (and resolutions of other
bodies, if any are deemed necessary by counsel for any Lender)
authorizing, as the case may be, the Advances PROVIDED for
herein and the execution, delivery and performance of the Loan
Documents or the Non-Borrowing and Non-Pledge Agreement to be
executed and delivered by Borrower and each Subsidiary
hereunder;
(vi) A written opinion of Borrower's, and each Substantial
Subsidiaries' counsel, addressed to Lenders in substantially the
form of EXHIBIT I and EXHIBIT J hereto;
(vii) A certificate, signed by an officer of Borrower, stating that on
the initial Borrowing Date no Default or Unmatured Default has
occurred and is continuing and that all representations and
warranties of Borrower are true and correct as of the initial
Borrowing Date;
(viii) The most recent financial statements of Borrower and a
certificate from an officer of Borrower stating that no Material
Adverse Change in Borrower's financial condition has occurred
since December 31, 1997 that has not been publicly announced;
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(ix) UCC financing statement, judgment, and tax lien searches with
respect to Borrower from the State of Ohio, from the state of
Illinois with respect to Illinois, from the State of Maryland
with respect to Maryland and from the province of Ontario with
respect to Canada, from the State of Minnesota with respect to
Minnesota, from the State of Texas with respect to the Limited
Partnership and from the State of Georgia with respect to
Xxxxxxx;
(x) A certificate, signed by an officer of Borrower, stating that
all judgments against Borrower have been satisfied, and that all
liens or encumbrances on any Property of Borrower have been
released, other than liens permitted pursuant to SECTION 5.15;
(xi) Written money transfer instructions, in substantially the form
of EXHIBIT K hereto, addressed to Agent and signed by an
Authorized Officer, together with such other related money
transfer authorizations as Agent may have reasonably requested;
(xii) A true, correct and complete copy of the fully executed
Agreement for Inventory Financing;
(xiii) A copy of Borrower's Private Placement Memorandum, and any
amendments or supplements thereto, relating to the Preferred
Securities and any other documents or instruments relating
thereto requested by Agent or any Lender, and a certificate of
an Authorized Financial Officer stating that the Preferred
Securities Offering has been consummated; and
(xiv) Such other documents as any Lender or its counsel may have
reasonably requested, the form and substance of which documents
shall be acceptable to the parties and their respective counsel.
3.2 EACH ADVANCE. Lenders shall not be required to make any Advance, or
honor any Request for Issuance of such Letter of Credit, as the case may be,
unless on the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default;
(ii) The representations and warranties contained in ARTICLE IV are
true and correct in all material respects as of such Borrowing
Date with respect to Borrower and to any Subsidiary in existence
on such Borrowing Date, except to the extent any such
representation or warranty is stated to relate
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solely to an earlier date, in which case such representation or
warranty shall be true and correct in all material respects on
and as of such earlier date;
(iii) All legal matters incident to the making of such Advance shall
be satisfactory to Lenders and their counsel; and
(iv) Borrower has provided to Lenders, Borrower's latest audited
annual financial statement and unaudited partial year financial
statement (all such financial statements to be prepared with the
specified detail required in SECTION 5.1 hereof).
Each Borrowing Notice with respect to each such Advance shall constitute
a representation and warranty by Borrower that the conditions contained in
SECTIONS 3.2(i) and (ii) have been satisfied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants to Lenders that:
4.1 EXISTENCE. Borrower is a corporation duly organized and validly
existing and in good standing under the laws of the State of Ohio. Borrower's
Subsidiaries are each duly incorporated or duly formed, as the case may be,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or formation, and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted. The principal
place of business of Borrower and each of its Subsidiaries is located in
Garfield Heights, Ohio. Each of Borrower and its Subsidiaries are qualified to
do business in each jurisdiction where the failure to so qualify or be licensed
(if required) could reasonably be expected to result in a Material Adverse
Change.
4.2 AUTHORIZATION AND VALIDITY. Borrower has the power and authority and
legal right to execute and deliver the Loan Documents and to perform its
obligations thereunder. The execution and delivery by Borrower of the Loan
Documents and the performance of its obligations thereunder has been duly
authorized by proper proceedings, and the Loan Documents constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally.
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4.3 NO CONFLICT, GOVERNMENT CONSENT. Neither the execution and delivery
by Borrower of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
any law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on Borrower or any of its Subsidiaries or Borrower's or any Subsidiary's
articles of incorporation, bylaws or partnership agreement, or the provisions of
any material indenture, material instrument or material agreement to which
Borrower or any of its Subsidiaries is a party or is subject, or by which it, or
its Property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the Property of
Borrower or a Subsidiary pursuant to the terms of any such indenture, instrument
or agreement. No order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
any of the Loan Documents.
4.4 FINANCIAL STATEMENTS -- MATERIAL ADVERSE CHANGE. The December 31,
1997 financial statements of Borrower and its Subsidiaries heretofore delivered
to Lenders were prepared in accordance with GAAP in effect on the date such
statements were prepared and fairly present the financial condition and
operations of Borrower and its Subsidiaries at such date and the consolidated
results of their operations for the period then ended. Except for the Merger,
the Preferred Securities Offering and as publicly announced prior to the date
hereof, since December 31, 1997, there has been no change in the business,
Property, prospects, condition (financial or otherwise) or results of operations
of Borrower and its Subsidiaries which could reasonably be expected to result in
a Material Adverse Change.
4.5 TAX. Borrower and its Subsidiaries have filed all United States
federal tax returns and all other tax returns which are required to be filed and
have paid all taxes due pursuant to said returns or pursuant to any assessment
received by Borrower or any of its Subsidiaries except such taxes, if any, as
are being contested in good faith and as to which adequate reserves have been
provided. No tax liens have been filed and no claims are being asserted with
respect to any such taxes. The charges, accruals and reserves on the books of
Borrower and its Subsidiaries in respect of any taxes or other governmental
charges are adequate.
4.6 LITIGATION AND CONTINGENT OBLIGATIONS. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry: pending or, to
the knowledge of any of its officers, threatened against or affecting Borrower
or any of its Subsidiaries which could reasonably be expected to result in a
Material Adverse Change. Borrower and its Subsidiaries have no material
Contingent
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Obligations not provided for or disclosed in the financial statements referred
to in SECTION 5.1 (including reports of the type referred to in SECTION
5.1(ix)).
4.7 SUBSIDIARIES. SCHEDULE 1 hereto contains an accurate list of all of
the presently existing Subsidiaries of Borrower setting forth their respective
jurisdictions of incorporation or formation, as the case may be, and the
percentage of their respective capital stock or partnership interests, as the
case may be, owned by Borrower or other Subsidiaries. All of the issued and
outstanding shares of capital stock or partnership interests, as the case may
be, of such Subsidiaries have been duly authorized and issued and are fully
paid and nonassessable.
4.8 ERISA. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $1,000,000. Neither Borrower nor any other member of the
Controlled Group has incurred, or is reasonably expected to incur, any
withdrawal liability to Multiemployer Plans in excess of $250,000 in the
aggregate. Each Plan complies in all material respects with all applicable
requirements of law and regulations, no Reportable Event has occurred with
respect to any Plan, neither Borrower nor any other member of the Controlled
Group has withdrawn from any Plan or initiated steps to do so, and no steps have
been taken to reorganize or terminate any Plan.
4.9 ACCURACY OF INFORMATION. All factual information heretofore or
contemporaneously furnished by or on behalf of Borrower or any of its
Subsidiaries to Agent or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such factual
information hereafter furnished by or on behalf of Borrower or any of its
Subsidiaries to Agent or any Lender will be, true and accurate in all material
respects (taken as a whole) on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time.
4.10 REGULATION U. Borrower does not hold any margin stock (as defined
in Regulation U).
4.11 MATERIAL AGREEMENTS. Neither Borrower nor any of its Subsidiaries
is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in (i) any agreement to which it
is a party, which default could reasonably be expected to result in a Material
Adverse Change or (ii) any agreement or instrument evidencing or governing
Indebtedness.
4.12 COMPLIANCE WITH LAWS. Borrower and its Subsidiaries have complied
with all applicable statutes, rules, regulations, orders and restrictions of any
domestic or foreign government or any instrumentality or agency thereof, having
jurisdiction over the
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conduct of their respective businesses, and ownership of their respective
Property, the non-compliance with which could reasonably be expected to result
in a Material Adverse Change. Neither Borrower nor any Subsidiary has received
any notice to the effect that its operations are not in material compliance with
any of the requirements of applicable federal, state and local environmental,
health and safety statutes and regulations or the subject of any federal or
state investigation evaluating whether any remedial action is needed to respond
to a release of any toxic or hazardous waste or substance into the environment,
which non-compliance or remedial action could reasonably be expected to result
in a Material Adverse Change.
4.13 OWNERSHIP OF PROPERTIES. Except as set forth on Schedule 2 hereto,
on the date of this Agreement, Borrower and its Subsidiaries will have good
title, free of all Liens other than those permitted by SECTION 5.15, to all of
the Property and assets reflected in the financial statements as owned by it.
4.14 INVESTMENT COMPANY ACT. Neither Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
4.15 PUBLIC UTILITY HOLDING COMPANY ACT. Neither Borrower nor any of its
Subsidiaries is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
4.16 SOLVENCY. (i) Immediately after the Closing Date and immediately
following the making of each Loan and after giving effect to the application of
the proceeds of such Loans, (a) the fair value of the assets of Borrower
individually, and Borrower and its Subsidiaries on a consolidated basis, at a
fair valuation, will exceed the debts and liabilities, subordinated, contingent
or otherwise, of Borrower individually, or Borrower and its Subsidiaries on a
consolidated basis, as the case may be; (b) the present fair saleable value of
the Property of Borrower individually, and Borrower and its Subsidiaries on a
consolidated basis, will be greater than the amount that will be required to pay
the probable liability of Borrower individually, or Borrower and its
Subsidiaries on a consolidated basis on their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) Borrower individually, and Borrower and its
Subsidiaries on a consolidated basis will be able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) Borrower individually, and
Borrower and its Subsidiaries on a consolidated basis will not have unreasonably
small capital with which to conduct the businesses in which they are engaged as
such businesses
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are now conducted and are proposed to be conducted after the date hereof.
(ii) Borrower does not intend to, or to permit any of its Subsidiaries to,
and does not believe that it or any of its Subsidiaries will, incur debts beyond
its ability to pay such debts as they mature, taking into account the timing of
and amounts of cash to be received by Borrower or any such Subsidiary and the
timing of the amounts of cash to be payable on or in respect of its Indebtedness
or the Indebtedness of any such Subsidiary.
4.17 INSURANCE. Borrower and its Subsidiaries carry insurance on their
businesses with financially sound and reputable insurance companies, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses in localities where Borrower
and its Subsidiaries operate, including, without limitation:
(i) Property and casualty insurance (including coverage for flood
and other water damage for any Property located within a
100-year flood plain) in the amount of the replacement cost of
the improvements at the Property;
(ii) Comprehensive general liability insurance in the amount of
$20,000,000 per occurrence.
4.18 ENVIRONMENTAL MATTERS. Each of the following representations and
warranties is true and correct on and as of the Closing Date except to the
extent that the facts and circumstances giving rise to any such failure to be so
true and correct, in the aggregate, could not reasonably be expected to result
in a Material Adverse Change:
(a) To the best knowledge of Borrower, the Property of Borrower and its
Subsidiaries does not contain, and has not previously contained, any
Materials of Environmental Concern in amounts or concentrations which
constitute or constituted a violation of, or could reasonably give rise to
liability under, Environmental Laws.
(b) To the best knowledge of Borrower, the Property of Borrower and its
Subsidiaries and all operations of such Property are in compliance, and
have in the last two years been in compliance, with all applicable
Environmental Laws, and there is no contamination at, under or about the
Property of Borrower and its Subsidiaries, or violation of any
Environmental Law with respect to the Property of Borrower and its
Subsidiaries.
(c) Neither Borrower nor any of its Subsidiaries has received any notice
of violation, alleged violation, non-compliance, liability or potential
liability regarding
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environmental matters or compliance with Environmental Laws with regard to
any of their Property, nor does Borrower or its Subsidiaries have knowledge
or reason to believe that any such notice will be received or is being
threatened.
(d) To the best knowledge of Borrower, Materials of Environmental
Concern have not been transported or disposed of from any Property of
Borrower and its Subsidiaries in violation of, or in a manner or to a
location which could reasonably give rise to liability under, Environmental
Laws, nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Property of
Borrower and its Subsidiaries in violation of, or in a manner that could
give rise to liability under, any applicable Environmental Laws.
(e) No judicial proceedings or governmental or administrative action is
pending, or, to the knowledge of Borrower or its Subsidiaries, threatened,
under any Environmental Law to which Borrower or any of its Subsidiaries is
or will be named as a party with respect to any Property of Borrower and
its Subsidiaries nor are there any consent decrees or other decrees,
consent orders, administrative order or other orders, or other
administrative of judicial requirements outstanding under any Environmental
Law with respect to any Property of Borrower and its Subsidiaries.
(f) To the best knowledge of Borrower, there has been no release or
threat of release of Materials of Environmental Concern at or from any
Property of Borrower or its Subsidiaries, or arising from or related to the
operations of Borrower and its Subsidiaries in connection with any Property
in violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws.
ARTICLE V
COVENANTS
---------
During the term of this Agreement, unless Lenders shall otherwise consent
in writing:
5.1 FINANCIAL REPORTING. Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with GAAP, and furnish to Lenders:
(i) As soon as available, but in any event not later than 45 days
after the close of each fiscal quarter, for Borrower and its
Subsidiaries, an unaudited consolidated and consolidating
balance sheet as of the close of each such period and the
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related unaudited consolidated and consolidating statements of
income and retained earnings for such period and the portion of
the fiscal year through the end of such period and of year to
date cash flows of Borrower and its Subsidiaries, all certified
by an Authorized Financial Officer;
(ii) As soon as available, but in any event not later than 45 days
after the close of each fiscal quarter, for Borrower and its
Subsidiaries, related reports in form and substance satisfactory
to Lenders, all certified by Borrower's Authorized Financial
Officer, a statement detailing Consolidated Outstanding
Indebtedness;
(iii) As soon as available, but in any event not later than 90 days
after the close of each fiscal year, for Borrower and its
Subsidiaries, (i) audited financial statements, including a
consolidated balance sheet as at the end of such year and the
related consolidated statements of income and retained earnings
and of cash flows for such year, setting forth in comparative
form the figures for the previous year, reported on without a
"going concern" or like qualification or exception, by Ernst &
Young, LLP (or other independent certified public accountants of
nationally recognized standing acceptable to (Agent), and (ii)
unaudited financial statements, including a consolidating
balance sheet as at the end of such year and the related
consolidating statements of income and retained earnings and of
cash flow for such year;
(iv) As soon as available, but in any event not later than 90 days
after the close of each fiscal year, for Borrower and its
Subsidiaries, the following related reports in form and
substance satisfactory to Lenders, all certified by the entity's
Authorized Financial Officer: a statement of Consolidated
Outstanding Indebtedness;
(v) Together with the quarterly and annual financial statements
required hereunder, a compliance certificate in substantially
the form of EXHIBIT L hereto signed by an Authorized Officer
showing the calculations and computations necessary to determine
compliance with the financial covenants set forth in this
Agreement and stating that no Default or Unmatured Default
exists, or if any Default or Unmatured Default exists, stating
the nature and status thereof;
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(vi) As soon as possible and in any event within 10 days after
Borrower knows that any Reportable Event has occurred with
respect to any Plan, a statement, signed by an Authorized
Financial Officer of Borrower, describing said Reportable Event
and the action which Borrower proposes to take with respect
thereto;
(vii) As soon as possible and in any event within 10 days after
receipt by Borrower, a copy of (a) any notice or claim to the
effect that Borrower or any of its Subsidiaries is or may be
liable to any Person as a result of the release by any Borrower,
any of its Subsidiaries, or any other Person of any toxic or
hazardous waste or substance into the environment, which could
reasonably be expected to result in a Material Adverse Change
and (b) any notice alleging any violation of any federal, state
or local environmental, health or safety law or regulation by
Borrower or any of its Subsidiaries, which, in either case,
could reasonably be expected to result in a Material Adverse
Change;
(viii) Promptly upon the furnishing thereof to the shareholders of
Borrower, copies of all financial statements, reports and proxy
statements so furnished;
(ix) Within three (3) business days after due to the SEC, copies of
all registration statements and annual, quarterly, monthly or
other reports and any other public information which Borrower or
any of its Subsidiaries files with the Securities Exchange
Commission; and
(x) Such other information (including, without limitation, financial
statements for Borrower and nonfinancial information) as Agent
may from time to time reasonably request.
5.2 PROHIBITED USES OF PROCEEDS. Borrower will not nor will it permit
any Subsidiary to, use any of the proceeds of the Advances (i) to purchase or
carry any "margin stock" (as defined in Regulation U), or (ii) for any purpose
that shall be a violation of Regulation U, or regulations G, T and X of the
Board of Governors of the Federal Reserve System or for any other purpose
violative of any rule or regulation of such Board.
5.3 NOTICE OF DEFAULT. Borrower will give, and will cause each of its
Subsidiaries to give, notice in writing to Lenders of the occurrence of any
Default or Unmatured Default and of any other development, financial or
otherwise, which could reasonably be expected to result in a Material Adverse
Change,
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promptly upon (but in no event later then ten (10) Business Days after) such
occurrence or development.
5.4 CONDUCT OF BUSINESS. Borrower will do, and will cause its
Subsidiaries to do, all things necessary to remain duly incorporated or duly
qualified, validly existing and in good standing as a corporation, general
partnership, limited partnership or limited liability company, as the case may
be, in its jurisdiction of incorporation/formation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted and to carry on and conduct its business in substantially the same
manner as it is presently conducted and, specifically, neither Borrower nor its
Subsidiaries may undertake any significant business other than the manufacture
or distribution of industrial and consumer electronic products or related
consulting or support services.
5.5 TAXES. Borrower will pay, and will cause its Subsidiaries to pay,
when due all taxes, assessments and governmental charges and levies upon it of
its income, profits or Property, except those which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside.
5.6 INSURANCE. Borrower will, and will cause its Subsidiaries to,
maintain with financially sound and reputable insurance companies, insurance in
such amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses in localities where Borrower
and its Subsidiaries operate, including, without limitation:
(i) Property and casualty insurance (including coverage for flood
and other water damage for any Property located within a
100-year flood plain) in the amount of the replacement cost of
the improvements at the Property; and
(ii) Comprehensive general liability insurance in the amount of
$20,000,000 per occurrence.
5.7 COMPLIANCE WITH LAWS. Borrower will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, the
non-compliance with which could reasonably be expected to result in a Material
Adverse Change.
5.8 MAINTENANCE OF PROPERTIES. Except as permitted pursuant to SECTION
5.11 of this Agreement, Borrower will, and will cause its Subsidiaries to, do
all things necessary to maintain, preserve, protect and keep its Property in
good repair, working order and condition, ordinary wear and tear excepted, and
make all
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necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times.
5.9 INSPECTION. Borrower will, and will cause its Subsidiaries to,
permit Agent and each Lender, by its respective representatives and agents, to
inspect any Property, corporate books and financial records of Borrower and each
of its Subsidiaries, to examine and make copies of the books of accounts and
other financial records of Borrower and each of its Subsidiaries, and to discuss
the affairs, finances and accounts of Borrower and each of its Subsidiaries, and
to be advised as to the same by their respective officers at such reasonable
times and intervals as Agent may designate (provided, however, that any
inspection by a Lender shall be arranged by Agent).
5.10 MAINTENANCE OF STATUS. Borrower shall remain a corporation validly
existing and in good standing in the state of its incorporation and Borrower
shall at all times remain a corporation listed and in good standing on NASDAQ or
other national securities exchange. Borrower shall not permit a Change in
Control of Borrower.
5.11 MERGER; SALE OF ASSETS. Borrower will not, nor will it permit any
of its Subsidiaries to, enter into any merger, consolidation, reorganization or
liquidation or transfer or otherwise dispose of a Substantial Portion of its
Property or business, unless approved in advance by Lenders. The prohibition in
this section shall not apply to (a) the Merger, (b) mergers and consolidations
involving only Borrower and its Subsidiaries, or any of them, in which Borrower
is the survivor, (c) mergers and consolidations involving only Subsidiaries of
Borrower, and (d) transfers of assets to and among Substantial Subsidiaries.
5.12 DELIVERY OF NON-BORROWING AND NON-PLEDGE AGREEMENT. After ten (10)
days following Borrower's acquisition of a Substantial Subsidiary, Borrower
shall cause such Substantial Subsidiary to execute and deliver to Lenders' a
Non-Borrowing and Non-Pledge Agreement and an updated Schedule 1 initialed by
Borrower for identification (together with such other documents as Lenders shall
reasonably request, including, but not limited to, documents of the type
described in SECTION 3.1). The Non-Borrowing and Non-Pledge Agreement and such
other documents each shall be in form and substance satisfactory to Lenders.
5.13 SALE AND LEASEBACK. Borrower will not, nor will it permit its
Subsidiaries to, sell or transfer all or a Substantial Portion of its Property
in order to concurrently or subsequently lease as lessee such or similar
Properties.
5.14 ACQUISITIONS AND INVESTMENTS. Borrower will not, nor will it permit
any Subsidiary to, make or suffer to exist any Investments, or commitments
therefor, or create any Subsidiary or
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become or remain a partner in any partnership or joint venture, or make any
Acquisition of any Person, except for:
(a) Investments in Cash Equivalents;
(b) the Investments in Subsidiaries set forth on Schedule "1"
hereto;
(c) Investments in Persons not to exceed, in the aggregate, at any
time, a value of $35,000,000; provided that any Investment
permitted under this SECTION 5.14(c) may only consist of
Investments in Persons in the business of the manufacturing or
the distributing of industrial and consumer electronic products
or related consulting or support services;
(d) Acquisitions of Persons, PROVIDED, that (i) the Person to be
acquired is in the business of manufacturing or distributing
industrial and consumer electronic products or related
consulting or support services, (ii) the Person to be acquired
has generated positive Target's EBITDA for a minimum of the most
recent preceding four fiscal quarters, and (iii) on a pro-forma
basis, at all times for the preceding four fiscal quarters
(including the fiscal quarter in which the Acquisition would
occur), Borrower and its Subsidiaries shall have had a ratio of
Consolidated Funded Debt to Consolidated EBITDA of no greater
than the ratio then in effect pursuant to Section 5.22 of this
Agreement; and
(e) the Merger, including the creation of Georgia in connection
therewith.
5.15 LIENS. Borrower will not, nor will it permit any of its
Subsidiaries to, create, incur, or suffer to exist any Lien in, of or on any
Property of it or any of its Subsidiaries, except:
(i) with respect to Property consisting of real property under the
laws of the state where such Property is located, any tax lien,
or any lien securing workers' compensation or unemployment
insurance obligations, or any mechanic's, carrier's or
landlord's lien, or any lien arising under ERISA, or any
security interest arising under article four (bank deposits and
collections) or five (letters or credit) of the Uniform
Commercial Code, or any security interest or other lien similar
to the foregoing, EXCEPT that this clause (i) shall apply only
to (A) the extent that the aggregate of such liens on a
consolidated basis does not exceed $1,000,000, and (B) security
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interests and other liens arising by operation of law (whether
statutory or common law) and in the ordinary course of business
and shall not apply to any security interest or other lien that
secures any Indebtedness for Borrowed Money or any Contingent
Obligation or any obligation that is in material default in any
manner (other than any default contested in good faith by timely
and appropriate proceedings effective to stay enforcement of the
security interest or other lien in question);
(ii) zoning or deed restrictions, public utility easements, minor
title irregularities and similar matters having no adverse
effect as a practical matter on the ownership or use of any of
the properties or interfere with use thereof in the business of
Borrower or its Subsidiaries;
(iii) with respect to Property consisting of real property under the
laws of the state where such Property is located, any lien
securing or given in lieu of surety, stay, appeal or performance
bonds, or securing performance of contracts or bids (other than
contracts for the payment of money borrowed), or deposits
required by law or governmental regulations or by any court
order, decree, judgment or rule or as a condition to the
transaction of business or the exercise of any right, privilege
or license, EXCEPT that this clause (iii) shall not apply to (A)
the extent that the aggregate of such liens on a consolidated
basis exceeds $1,000,000, and (B) any lien or deposit securing
any obligation that is in material default in any manner (other
than any default contested in good faith by timely and
appropriate proceedings effective to stay enforcement of the
security interest or than lien in question);
(iv) any mortgage, security, interest or other lien (each a "PURCHASE
MONEY SECURITY INTEREST") which is created or assumed in
purchasing, constructing or improving any real property or
equipment to which any property is subject when purchased,
PROVIDED, that (A) the Purchase Money Security Interest shall be
confined to the aforesaid property, (B) the indebtedness secured
thereby does not exceed the total cost of the purchase,
construction or improvement and (C) any such indebtedness, if
repaid in whole or in part, cannot be reborrowed;
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(v) any lease other than any Capitalized Lease (it being agreed that
a Capitalized Lease is a lien rather than a lease for the
purposes of this Agreement) so long as the aggregate annual
rentals of all such leases do not exceed Ten Million Dollars
($10,000,000) on a consolidated basis;
(vi) any lien in favor of IBM Credit Corporation, subject to Section
5.31 of this Agreement;
(vii) any financing statement perfecting a security interest that
would be permissible under this subsection; and
(viii) liens existing on the date hereof and described on SCHEDULE 2
hereof.
Liens permitted pursuant to this SECTION 5.15 shall be deemed to be "PERMITTED
LIENS".
5.16 AFFILIATES. Except as permitted pursuant to SECTION 5.2, SECTION
5.11, SECTION 5.15 or SECTION 5.17, Borrower will not, nor will it permit any of
its Subsidiaries to, enter into any transaction (including, without limitation,
the purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of Borrower or such Subsidiary's
business and upon fair and reasonable terms no less favorable to that Borrower
or such Subsidiary than that Borrower or such Subsidiary would obtain in a
comparable arm's-length transaction.
5.17 ADDITIONAL INDEBTEDNESS AND FINANCIAL UNDERTAKINGS. Borrower will
not enter into or remain liable upon, any Financial Undertaking, nor will
Borrower incur Indebtedness for Borrowed Money. The prohibition in the preceding
sentence shall not apply to Indebtedness for Borrowed Money which is incurred
under or in connection with (a) this Agreement, (b) the Agreement for Inventory
Financing, provided that such Indebtedness which is incurred under the Agreement
for Inventory Financing shall not exceed $150,000,000, (c) the Convertible
Debentures, (d) Indebtedness for Borrowed Money shown in Borrower's December 31,
1997, financial statements, or (e) Hedge Agreements that in the aggregate, at
any time, do not create an Aggregate Measured Credit Risk in excess of
$7,500,000). Borrower will not permit any of its Subsidiaries to enter into or
remain liable upon, any Financial Undertaking, nor will Borrower permit any of
its Subsidiaries to incur Indebtedness for Borrowed Money (other than loans made
by Borrower that do not exceed the amounts set forth on Schedule 3 attached
hereto).
5.18 LITIGATION. Borrower shall furnish or cause to be furnished to
Agent, promptly (and, in any event, within five (5) Business Days) after any
Borrower or its Subsidiaries shall have
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first become aware of the same, a written notice setting forth full particulars
of and what action Borrower or its Subsidiaries is taking or proposes to take
with respect to (a) any final judgment in an amount exceeding One Million
Dollars ($1,000,000) rendered against Borrower or any Affiliate of Borrower; (b)
the commencement or institution of any legal or administrative action, suit,
proceeding or investigation by or against Borrower in or before any court,
governmental or regulatory body, agency, commission, or official, board of
arbitration or arbitrator, the outcome of which could reasonably be expected to
result in a Material Adverse Change; or (c) the occurrence of any adverse
development not previously disclosed by Borrower to Agent in writing, in any
such action, suit, proceeding or investigation.
5.19 FURTHER ASSURANCES. Borrower will execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, any and all such further
assurances and other agreements or instruments, and take or cause to be taken
all such other action, as shall be reasonably requested by Agent from time to
time in order to give full force and effect to the Loan Documents.
5.20 CONSOLIDATED STOCKHOLDERS EQUITY. Borrower and its Subsidiaries
shall have Consolidated Stockholders Equity of not less than $345,000,000 at
Closing. Thereafter, Borrower and its Subsidiaries shall maintain, at all times,
Consolidated Stockholders Equity equal to $345,000,000 plus (i) 100% of the net
proceeds to Borrower or any of its Subsidiaries of any equity offering; (ii)
100% of the net proceeds to Borrower or any of its Subsidiaries of any
securities sold or distributed by the SECT; and (iii) a minimum of 75% of
positive Consolidated Net Income, if any, per calendar quarter thereafter;
provided, however, that no adjustments shall be made as a consequence of any
loss.
5.21 RATIO OF EBIT TO INTEREST. (a) Borrower and its Subsidiaries shall
have a ratio of Consolidated EBIT to Consolidated Interest Expense of no less
than 3.0 to 1.0 on the Closing Date, and on the last calendar day of each fiscal
quarter thereafter, until December 31, 1998. Thereafter, until the Facility
Termination Date, Borrower and its Subsidiaries shall have a ratio of
Consolidated EBIT to Consolidated Interest Expense of no less than 3.50 to 1.0.
The ratio of Consolidated EBIT to Consolidated Interest Expense shall be
calculated for the most recent preceding four fiscal quarters, including the
fiscal quarter ending on the date of determination.
(b) Borrower shall have a ratio of Borrower EBIT to Borrower Interest
Expense of no less than 1.50 to 1.0 on and after the Closing Date, and on the
last calendar day of each fiscal quarter thereafter, until the Facility
Termination Date. The ratio of Borrower EBIT to Borrower Interest Expense shall
be calculated for the most recent preceding four fiscal quarters, including the
fiscal quarter ending on the date of determination.
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5.22 RATIO OF DEBT TO CASH FLOW. Borrower and its Subsidiaries shall
have a ratio of Consolidated Funded Debt to Consolidated EBITDA of no greater
than 3.75 to 1.0 on the Closing Date, and on the last calendar day of each
fiscal quarter thereafter, until June 30, 1998; and no greater than 3.50 to 1.00
on the last calendar day of each fiscal quarter thereafter, until March 31,
1999; and no greater than 3.00 to 1.00 on the last calendar day of each fiscal
quarter thereafter, until September 30, 1999; and no greater than 2.75 to 1.0 on
the last calendar day of each fiscal quarter thereafter, until the Facility
Termination Date. The ratio of Consolidated Funded Debt to Consolidated EBITDA
shall be calculated for the most recent preceding four fiscal quarters,
including the fiscal quarter ending on the date of determination and shall
exclude any debt relating to the Convertible Debentures or the securities sold
pursuant to the Preferred Securities Offering.
5.23 CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Borrower and its
Subsidiaries shall maintain a Consolidated Fixed Charge Coverage Ratio of no
less than 1.0 to 1.0 on the Closing Date, and on the last calendar day of each
fiscal quarter thereafter until December 31, 1998; and no less than 1.1 to 1.0
on the last calendar day of each fiscal quarter thereafter, until the Facility
Termination Date. The Consolidated Fixed Charge Coverage Ratio shall be
calculated for the most recent preceding four fiscal quarters, including the
fiscal quarter ending on the date of determination.
5.24 CURRENT RATIO. Borrower and its Subsidiaries shall maintain a
Current Ratio of no less than 1.0 to 1.0 on and after the Closing Date, and on
the last calendar day of each fiscal quarter thereafter, until the Facility
Termination Date.
5.25 ENVIRONMENTAL MATTERS. Borrower and its Subsidiaries shall:
(a) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities regarding
Environmental Laws, except to the extent that (i) the same are being
contested in good faith by appropriate proceedings and the pendency of
such proceedings could not be reasonably expected to result in a
Material Adverse Change, or (ii) that Borrower has determined in good
faith that contesting the same is not in the best interests of Borrower
and its Subsidiaries and the failure to contest the same could not be
reasonably expected to result in a Material Adverse Change.
(b) Defend, indemnify and hold harmless Agent and each Lender,
and their respective employees, agents, officers and directors from and
against any claims, demands, penalties,
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fines, liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under any
Environmental Laws applicable to the operations of Borrower, its Subsidiaries or
its Property, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, attorney's and consultant's
fees, investigation and laboratory fees, response costs, court costs and
litigation expenses, except to the extent that any of the foregoing arise out of
the gross negligence or willful misconduct of the party seeking indemnification
therefor. This indemnity shall continue in full force and effect regardless of
the termination of this Agreement.
5.26 SUBSIDIARIES TANGIBLE NET WORTH. Each Substantial Subsidiary of
Borrower, shall at all times maintain a Tangible Net Worth equal to or greater
than One Million Dollars ($1,000,000).
5.27 TANGIBLE ASSETS; ASSETS. As of the Closing Date, and at all times
thereafter until the Facility Termination Date, Borrower's Tangible Assets shall
be equal to or greater than forty (40%) percent of Assets of Borrower, based on
the equity method of accounting.
5.28 AGREEMENT FOR INVENTORY FINANCING. As of the Closing Date, and at
all times thereafter, Borrower shall perform and observe in all material
respects each term, covenant, and condition of the Agreement for Inventory
Financing.
5.29 XXXXXXX, LLC. Borrower shall not, without prior written consent of
Agent, amend the Operating Agreement, Articles of Organization or other
governing documents of Xxxxxxx, LLC so as to limit Borrower's ability to consent
to Xxxxxxx LLC's incurring Indebtedness for Borrowed Money or Liens (other than
Permitted Liens). Borrower will not, and will not permit its employees or
agents, in their capacity as managers of Xxxxxxx, LLC, to consent to or
otherwise permit to occur, the incurrence by Xxxxxxx, LLC of Indebtedness for
Borrowed Money, or the granting by Xxxxxxx, LLC of any Liens with respect to its
assets, other than Liens that are Permitted Liens under this Agreement.
5.30 DELIVERY OF MERGER DOCUMENTS. Within five (5) Business Days of the
consummation thereof, Borrower will deliver copies of the executed Merger
Documents and any other documents or instruments relating thereto requested by
Agent or any Lender.
5.31 LIENS TO IBM CREDIT CORPORATION. In the event that Borrower or any
Subsidiary grants any Lien or security interest in favor of IBM Credit
Corporation, then Borrower and each Subsidiary will xxxxx x Xxxx in favor of
Lenders on all of their assets, and will deliver to Agent all documents, stock
certificates, security agreements, pledges, financing statements and other
instruments or
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documents deemed necessary or advisable by Agent to fulfill the requirements of
this Section. Without limiting Borrower's obligations under this Section,
Borrower hereby appoints Agent as its attorney-in-fact with irrevocable
authority to execute and deliver on behalf of Borrower, at any time after
Borrower grants a Lien or security interest in favor of IBM Credit Corporation,
all documents, stock certificates, security agreements, pledges, financing
statements and other instruments or documents deemed necessary or advisable by
Agent to fulfill the requirements of this Section.
5.32 YEAR 2000 COMPLIANCE. Borrower shall use commercially reasonable
efforts to ensure that Borrower's and each Subsidiary's internal operating
systems and hardware, during and after the calendar year 2000 A.D., include
design, function and performance capabilities such that the internal operating
systems and hardware shall not abnormally end and/or have invalid and/or
incorrect results from and/or performance or functional degradation because of
the then current date. Borrower shall use commercially reasonable efforts to
ensure that the design and function of Borrower's and each Subsidiary's internal
operating systems and hardware contain year 2000 A.D. functionality and include,
but not be limited to, date data century recognition, calculations that
accommodate same century and multicentury formulas and date values, and date
data interface values that reflect the century.
5.33 INVENTORY FINANCE LIMITATION. Borrower and its Subsidiaries shall
have a ratio of Consolidated Funded Debt plus Indebtedness for Borrowed Money
arising under the Agreement for Inventory Financing to Consolidated EBITDA of no
greater than 4.75 to 1.0 on the Closing Date, and on the last calendar day of
each fiscal quarter thereafter, until June 30, 1998; and no greater than 4.50 to
1.00 on the last calendar day of each fiscal quarter thereafter, until March 31,
1999; and no greater than 4.00 to 1.00 on the last calendar day of each fiscal
quarter thereafter, until September 30, 1999; and no greater than 3.75 to 1.0 on
the last calendar day of each fiscal quarter thereafter, until the Facility
Termination Date. The ratio of Consolidated Funded Debt plus Indebtedness for
Borrowed Money arising under the Agreement for Inventory Financing to
Consolidated EBITDA shall be calculated for the most recent preceding four
fiscal quarters, including the fiscal quarter ending on the date of
determination and shall exclude any debt relating to the Convertible Debentures
or the securities sold pursuant to the Preferred Securities Offering.
5.34 AMENDMENTS TO THE AGREEMENT FOR INVENTORY FINANCING.
Notwithstanding anything in this Agreement or the Agreement for Inventory
Financing to the contrary, Borrower shall not amend or modify the definition of
"Termination Date" set forth in the Agreement for Inventory Financing without
the prior written approval of the Required Lenders.
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ARTICLE VI
DEFAULTS
--------
The occurrence of any one or more of the following events shall
constitute a Default:
6.1 NONPAYMENT OF PRINCIPAL. Nonpayment of any principal payment on any
Note when due.
6.2 NONPAYMENT OF OTHER OBLIGATIONS. Nonpayment of interest upon any
Note or of any Facility Fee or other payment Obligations under any of the Loan
Documents within three (3) Business Days after the same becomes due.
6.3 CERTAIN BREACHES. The breach of any of the terms or provisions of
SECTIONS 5.2, 5.6, 5.7 and 5.9 through 5.34, or the breach by any Substantial
Subsidiary of its Non-Borrowing and Non-Pledge Agreement.
6.4 REPRESENTATIONS AND WARRANTIES. Any representation or warranty made
or deemed made by or on behalf of Borrower or any of its Subsidiaries to Lenders
or Agent under or in connection with this Agreement, any Loan, or any
certificate or information delivered in connection with this Agreement or any
other Loan Document shall be materially false on the date as of which made.
6.5 OTHER BREACHES. The breach by any Borrower (other than a breach
which constitutes a Default under any other section of this ARTICLE VI) which
constitutes a Default under any of the terms or provisions of this Agreement
which is not remedied within fifteen (15) days after written notice from Agent
or any Lender.
6.6 DEFAULTS ON INDEBTEDNESS. Failure of Borrower or any of its
Subsidiaries to pay any of its respective Indebtedness when due; or the default
by Borrower or any of its Subsidiaries in the performance of any term, provision
or condition contained in any agreement, or any other event shall occur or
condition exist which causes or permits any Indebtedness of Borrower or any of
its Subsidiaries to be due and payable or required to be prepaid (other than by
a regularly scheduled payment) prior to the stated maturity thereof; provided,
however, that it shall not be a default under this SECTION 6.6 if (i) Borrower
shall be in default with respect to Indebtedness arising from Indebtedness other
than Indebtedness for Borrowed Money in an aggregate amount not exceeding Five
Million Dollars ($5,000,000), (ii) Borrower fails to pay the interest payable on
the Convertible Debentures, to the extent that such interest is deferable by the
terms of the Convertible Debentures, or (iii) Borrower shall be in default with
respect to Indebtedness arising under the Agreement for Inventory Financing;
provided that if such default causes any Indebtedness of Borrower or any of its
Subsidiaries to be due and payable or required to be prepaid (other than by a
regularly scheduled payment) prior to the
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stated maturity, then such default shall constitute a default hereunder.
6.7 BANKRUPTCY, ETC. Borrower or any of its Subsidiaries shall (i) have
an order for relief entered with respect to it under the Federal bankruptcy laws
as now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any of its Property, (iv) institute any proceeding for an order for relief
under the Federal bankruptcy laws as now or hereafter in effect or to adjudicate
it as a bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any corporate
action to authorize or effect any of the foregoing actions set forth in this
SECTION 6.7, (vi) fail to contest in good faith any appointment or proceeding
described in SECTION 6.8 or (vii) not pay, or admit in writing its inability to
pay, its debts generally as they become due.
6.8 APPOINTMENT OF RECEIVER. A receiver, trustee, examiner, liquidator
or similar official shall be appointed for Borrower or any of its Subsidiaries
or any of their respective Property, or a proceeding described in SECTION
6.7(iv) shall be instituted against Borrower or any Subsidiary and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of thirty (30) consecutive days.
6.9 CONDEMNATION. Any court, government or governmental agency shall
condemn, seize or otherwise appropriate, or take custody or control of (each a
"CONDEMNATION"), all or any portion of the Property of Borrower and its
Subsidiaries which, when taken together with all other Property of such Person
so condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such Condemnation occurs,
could reasonably be expected to result in a Material Adverse Change on Borrower
or Subsidiary.
6.10 JUDGMENTS. Borrower or any of its Subsidiaries shall fail within
sixty (60) days to pay, bond or otherwise discharge any judgments or orders for
the payment of money in an amount which, when added to all other judgments or
orders outstanding against Borrower and any of its Subsidiaries would exceed
$1,000,000 in the aggregate, which have not been stayed on appeal or otherwise
appropriately contested in good faith.
6.11 ERISA WITHDRAWAL. Borrower or any other member of the Controlled
Group shall have been notified by the sponsor of a Multiemployer Plan that it
has incurred withdrawal liability to
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such Multiemployer Plan in an amount which, when aggregated with all other
amounts required to be paid to Multiemployer Plans by Borrower or any other
member of the Controlled Group as withdrawal liability (determined as of the
date of such notification), exceeds $250,000 or requires payments exceeding
$100,000 per annum.
6.12 ERISA REORGANIZATION. Borrower or any other member of the
Controlled Group shall have been notified by the sponsor of a Multiemployer Plan
that such Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of Borrower and the other members
of the Controlled Group (taken as a whole) to all Multiemployer Plans which are
then in reorganization or being terminated have been or will be increased over
the amounts contributed to such Multiemployer Plans for the respective plan
years of each such Multiemployer Plan immediately preceding the plan year in
which the reorganization or termination occurs by an amount exceeding $250,000.
6.13 OTHER DEFAULTS. The occurrence of any default under any Loan
Document or the breach of any of the terms or provisions of any Loan Document,
which default or breach continues beyond any period of grace therein provided.
6.14 TERMINATION OF THE AGREEMENT FOR INVENTORY FINANCING. The receipt
by Borrower and Agent of a notice of termination from IBM Credit Corporation
relating to the Agreement for Inventory Financing that is not revoked within
sixty days; provided, however, upon the receipt by Borrower and Agent of a
notice of termination from IBM Credit Corporation relating to the Agreement for
Inventory Financing, Lender's obligation to make advances to Borrower under the
Loan Documents shall immediately terminate.
6.15 IBM SHIPPING POLICY CHANGE. A Material Adverse Change resulting
from a modification in International Business Machines Corporation's policies or
procedures relating to shipments to Borrower.
ARTICLE VII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
7.1 ACCELERATION. If any Default described in SECTION 6.7 or 6.8 occurs
with respect to Borrower, the obligations of Lenders to make Loans hereunder
shall automatically terminate and the Obligations shall immediately become due
and payable without any election or action on the part of Agent or any Lender.
If any other Default occurs, Agent may, with the concurrence of the Required
Lenders, terminate or suspend the obligations of Lenders to make Loans
hereunder, or declare the
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Obligations to be due and payable or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which Borrower hereby expressly waives.
If, within ten (10) days after acceleration of the maturity of the
Obligations or termination of the obligations of Lenders to make Loans hereunder
as a result of any Default (other than any Default as described in SECTION 6.7
or 6.8 with respect to any Borrower) and before any judgment or decree for the
payment of the Obligations due shall have been obtained or entered, each Lender
(in their sole discretion) shall so direct, Agent shall, by notice to Borrower,
rescind and annul such acceleration and/or termination.
7.2 AMENDMENTS & WAIVERS. Subject to the provisions of this ARTICLE VII,
the Required Lenders (or Agent with the consent in writing of the Required
Lenders) and Borrower may enter into agreements and waivers supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of Lenders or Borrower hereunder or waiving
any Default hereunder; provided, however, that no such supplemental agreement or
waiver shall, without the consent of each Lender affected thereby:
(i) Extend the Facility Termination Date or forgive all or any
portion of the principal amount of any Loan or accrued interest
thereon or the Facility Fee, reduce the Applicable Margins or
the underlying interest rate options or extend the time of
payment of such interest or Facility Fees.
(ii) Release any Substantial Subsidiary from its Non-Borrowing and
Non-Pledge Agreement.
(iii) Increase the amount of the Commitment of any Lender hereunder.
(iv) Permit Borrower to assign its rights under this Agreement.
(v) Amend this SECTION 7.2.
(vi) Amend the definition of Required Lenders.
(vii) Amend the Intercreditor Agreement.
No amendment of any provision of this Agreement relating to Agent shall be
effective without the written consent of Agent.
7.3 PRESERVATION OF RIGHTS. No delay or omission of Lenders or Agent to
exercise any right under the Loan Documents shall impair such right or be
construed to be a waiver of any
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Default or an acquiescence therein, and the making of a Loan notwithstanding the
existence of a Default or the inability of Borrower to satisfy the conditions
precedent to such Loan shall not constitute any waiver or acquiescence. Any
single or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment or
other variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by Lenders required pursuant
to SECTION 7.2, and then only to the extent in such writing specifically set
forth. All remedies contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to Agent and Lenders jointly until the
Obligations have been paid in full.
7.4 RECEIPT OF A NOTICE OF TERMINATION OF THE AGREEMENT FOR INVENTORY
FINANCING. Upon receipt by Borrower of a notice of termination relating to the
Agreement for Inventory Financing, Borrower will not incur any additional
Indebtedness under the Agreement for Inventory Financing without the prior
written approval of Agent, which approval may be withheld in the sole discretion
of Agent.
ARTICLE VIII
GENERAL PROVISIONS
------------------
8.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties of
Borrower contained in this Agreement shall survive delivery of the Notes and the
making of the Loans herein contemplated.
8.2 GOVERNMENTAL REGULATION. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
8.3 TAX. Any taxes (excluding federal income taxes on the overall net
income of any Lender and taxes resulting from a Lenders failure to comply with
SECTION 2.22) or other similar assessments or charges made by any governmental
or revenue authority in respect of the Loan Documents shall be paid by Borrower,
together with interest and penalties, if any.
8.4 HEADING. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
8.5 ENTIRE AGREEMENT. The Loan Documents embody the entire agreement and
understanding among Borrower, Agent and Lenders and supersede all prior
commitments, agreements and understandings among Borrower, Agent and Lenders
relating to the subject matter thereof.
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8.6 SEVERAL OBLIGATIONS BENEFITS OF THIS AGREEMENT. The respective
obligations of Lenders hereunder are several and not joint and no Lender shall
be the partner or agent of any other (except to the extent to which Agent is
authorized to act as such). The failure of any Lender to perform any of its
obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.
8.7 EXPENSES; INDEMNIFICATION. Borrower shall reimburse Agent for any
costs, internal charges and out-of-pocket expenses (including, without
limitation, all expenses of Agent's due diligence investigation of Borrower,
syndication expenses, travel expenses, reasonable fees for consultants and fees
and reasonable expenses for attorneys for Agent, which attorneys may be
employees of Agent) paid or incurred by Agent in connection with the amendment,
modification, and administration of the Loan Documents. Borrower also agrees to
reimburse Agent and Lenders for any costs, internal charges and out-of-pocket
expenses (including, without limitation, all fees and reasonable expenses for
attorneys for Agent and Lenders, which attorneys may be employees of Agent or
Lenders) paid or incurred by Agent or any Lender in connection with the
collection and enforcement of the Loan Documents (including, without limitation,
any workout). Borrower further agrees to indemnify Agent and each Lender, its
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not Agent or any
Lender is a party thereto) which any of them may pay or incur arising out of or
relating to this Agreement, the other Loan Documents, any Property, the
transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Loan hereunder. The obligations of
Borrower under this Section shall survive the termination of this Agreement.
8.8 NUMBERS. All statements, notices, closing documents, and requests
hereunder shall be furnished to Agent with sufficient counterparts so that Agent
may furnish one to each of Lenders.
8.9 ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP, except that any
calculation or determination which is to be made on a consolidated basis shall
be made for Borrower and all its Subsidiaries, including those Subsidiaries, if
any, which are unconsolidated on Borrower's official financial statements.
8.10 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be
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inoperative, unenforceable, or invalid without affecting the remaining
provisions in that jurisdiction or the operation, enforceability, or validity of
that provision in any other jurisdiction, and to this end the provisions of all
Loan Documents are declared to be severable.
8.11 NONLIABILITY OF LENDERS. The relationship between Borrower, on the
one hand, and Lenders and Agent, on the other, shall be solely that of borrower
and lender. Neither Agent nor any Lender shall have any fiduciary
responsibilities to Borrower. Neither Agent nor any Lender undertakes any
responsibility to Borrower to review or inform Borrower of any matter in
connection with any phase of any Borrower's business or operations.
8.12 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF OHIO, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
8.13 CONSENT TO JURISDICTION. BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR OHIO STATE COURT
SITTING IN CUYAHOGA COUNTY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS AND BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT
OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL IMPAIR THE
RIGHT OF AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS
OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY BORROWER AGAINST AGENT OR
ANY LENDER OR ANY AFFILIATE OF Agent OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CUYAHOGA COUNTY, OHIO.
8.14 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH LENDER HEREBY WAIVE TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
ARTICLE IX
AGENT
-----
9.1 APPOINTMENT. National City Bank is hereby appointed Agent hereunder
and under each other Loan Document, and each of Lenders irrevocably authorizes
Agent to act as the agent of such Lender. Agent agrees to act as such upon the
express conditions
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contained in this ARTICLE IX. Agent shall not have a fiduciary relationship in
respect of Borrower or any Lender by reason of this Agreement.
9.2 POWERS. Agent shall have and may exercise such powers under the Loan
Documents as are specifically delegated to Agent by the terms of each thereof,
together with such powers as are reasonably incidental thereto. Agent shall have
no implied duties to Lenders, or any obligation to Lenders to take any action
thereunder except any action specifically provided by the Loan Documents to be
taken by Agent.
9.3 GENERAL IMMUNITY. Neither Agent nor any of its directors, officers,
agents or employees shall be liable to Borrower, Lenders or any Lender for any
action taken or omitted to be taken by it or them hereunder or under any other
Loan Document or in connection herewith or therewith except for its or their own
gross negligence or willful misconduct.
9.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in ARTICLE IV, except
receipt of items required to be delivered to Agent; (iv) the validity,
effectiveness or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith; or (v) the value, sufficiency,
creation, perfection or priority of any interest in any collateral security.
Agent shall have no duty to disclose to Lenders information that is not required
to be furnished by Borrower to Agent at such time, but is voluntarily furnished
by Borrower to Agent (either in its capacity as Agent or in its individual
capacity).
9.5 ACTION ON INSTRUCTIONS OF LENDERS. Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other
Loan Document in accordance with written instructions signed by the Required
Lenders, and such instructions and any action taken or failure to act pursuant
thereto shall be binding on all of Lenders and on all holders of Notes. Agent
shall be fully justified in failing or refusing to take any action hereunder and
under any other Loan Document unless it shall first be indemnified to its
satisfaction by Lenders pro rata against any and all liability, cost and expense
that it may incur by reason of taking or continuing to take any such action.
9.6 EMPLOYMENT OF AGENTS AND COUNSEL. Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and
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shall not be answerable to Lenders, except as to money or securities received by
it or its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Agent shall be entitled
to advice of counsel concerning all matters pertaining to the agency hereby
created and its duties hereunder and under any other Loan Document.
9.7 RELIANCE ON DOCUMENTS; COUNSEL. Agent shall be entitled to rely upon
any Note, notice, consent, certificate, affidavit, letter, telegram, statement,
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by Agent, which counsel may be
employees of Agent.
9.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. Lenders agree to
reimburse and indemnify Agent ratably in proportion to their respective
Commitments (i) for any amounts not reimbursed by Borrower for which Agent is
entitled to reimbursement by Borrower under the Loan Documents, (ii) for any
other expenses incurred by Agent on behalf of Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents and (iii) for any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against Agent in any way relating to or arising out of the Loan Documents or any
other document delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms thereof or of any
such other documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of Agent. The obligations of Lenders under this SECTION 9.8 shall
survive payment of the Obligations and termination of this Agreement.
9.9 RIGHTS AS A LENDER. In the event Agent is a Lender, Agent shall have
the same rights and powers hereunder and under any other Loan Document as any
Lender and may exercise the same as though it were not Agent, and the term
"Lender" or "Lenders" shall, at any time when Agent is a Lender, unless the
context otherwise indicates, include Agent in its individual capacity. Agent may
accept deposits from, lend money to, and generally engage in any kind of trust,
debt, equity or other transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with Borrower or any of its Subsidiaries
in which Borrower or such Subsidiary is not restricted hereby from engaging with
any other Person. Agent, in its individual capacity, is not obligated to remain
a Lender.
9.10 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the financial statements prepared by Borrower and such other documents and
information as it has deemed
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73
appropriate, made its own credit analysis and decision to enter into this
Agreement and the other Loan Documents. Each Lender also acknowledges that it
will, independently and without reliance upon Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents.
9.11 SUCCESSOR AGENT. Agent may resign at any time by giving written
notice thereof to Lenders and Borrower, such resignation to be effective upon
the appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, Lenders shall have the right to
appoint, on behalf of Borrower and Lenders, a successor Agent. If no successor
Agent shall have been so appointed by Lenders within thirty days after the
resigning Agent's giving notice of its intention to resign, then the resigning
Agent may appoint, on behalf of Borrower and Lenders, a successor Agent. If
Agent has resigned and no successor Agent has been appointed, Lenders may
perform all the duties of Agent hereunder and Borrower shall make all payments
in respect of the Obligations to the applicable Lender and for all other
purposes shall deal directly with Lenders. No successor Agent shall be deemed to
be appointed hereunder until such successor Agent has accepted the appointment.
Any such successor Agent shall be a commercial bank having capital and retained
earnings of at least $50,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning Agent. Upon the effectiveness of the resignation of Agent, the
resigning Agent shall be discharged from its duties and obligations hereunder
and under the Loan Documents. After the effectiveness of the resignation of an
Agent, the provisions of this ARTICLE IX shall continue in effect for the
benefit of such Agent in respect of any actions taken or omitted to be taken by
it while it was acting as Agent hereunder and under the other Loan Documents.
ARTICLE X
SETOFF; RATABLE PAYMENTS
------------------------
10.1 SETOFF. In addition to, and without limitation of, any rights of
Lenders under applicable law, if Borrower becomes insolvent, however evidenced,
or any Default occurs, any and all deposits (including all account balances,
whether provisional or final and whether or not collected or available) and any
other Indebtedness at any time held or owing by any Lender to or for the credit
or account of Borrower may be offset and applied toward the payment of the
Obligations owing to such Lender, whether or not the Obligations, or any part
hereof, shall then be due.
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74
10.2 RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans in a greater proportion than that received
by any other Lender, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their Loans. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall
be made.
ARTICLE XI
BENEFIT OF AGREEMENT; ASSIGNMENT; PARTICIPATION
-----------------------------------------------
11.1 SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of Borrower and Lenders
and their respective successors and assigns, except that (i) Borrower shall not
have the right to assign their rights or obligations under the Loan Documents
and (ii) any assignment by any Lender must be made in compliance with SECTION
11.3. Notwithstanding clause (ii) of this Section, any Lender may at any time,
without the consent of Borrower or Agent, assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank; provided,
however, that no such assignment shall release the transferor Lender from its
obligations hereunder. Agent may treat the payee of any Note as the owner
thereof for all purposes hereof unless and until such payee complies with
SECTION 11.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with Agent. Any assignee or
transferee of a Note agrees by acceptance thereof to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
11.2 PARTICIPATION.
11.2.1 PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time
sell to one or more banks, financial institutions, pension funds, or any
other funds or entities participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such
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75
Lender or any other interest of such Lender under the Loan Documents. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall
remain the holder of any such Note for all purposes under the Loan
Documents, all amounts payable by Borrower under this Agreement shall be
determined as if such Lender had not sold such participating interests, and
Borrower and Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under the
Loan Documents.
11.2.2 VOTING RIGHTS. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees payable
with respect to any such Loan or Commitment or postpones any date fixed for
any regularly scheduled payment of principal of, or interest or fees on,
any such Loan or Commitment or releases any Subsidiary from a Non-Borrowing
and Non-Pledge Agreement.
11.2.3 BENEFIT OF SETOFF. Borrower agrees that each Participant shall be
deemed to have the right of Setoff provided in SECTION 10.1 in respect of
its participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing
directly to it as a Lender under the Loan Documents, provided that each
Lender shall retain the right of setoff provided in SECTION 10.1 with
respect to the amount of participating interests sold to each Participant.
Lenders agree to share with each Participant, and each Participant, by
exercising the right of setoff provided in SECTION 10.1, agrees to share
with each Lender, any amount received pursuant to the exercise of its right
of setoff, such amounts to be shared in accordance with SECTION 10.2 as if
each Participant were a Lender.
11.3 ASSIGNMENTS.
11.3.1 PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time assign to
one or more banks, financial institutions, pension funds, or any other
funds or entities ("PURCHASERS") all or any portion of its rights and
obligations under the Loan Documents; provided, however, each such
assignment must be in an amount equal to no less than Five Million Dollars
($5,000,000). Such assignment shall be substantially in the form of EXHIBIT
M hereto or in such other
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76
form as may be agreed to by the parties thereto. The consent of Agent shall
be required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender or an Affiliate thereof. Such consent shall
not be unreasonably withheld.
11.3.2 PRIOR CONSENT. Notwithstanding SECTION 11.3.1, Lenders may not
assign rights and obligations under the Loan Documents to a Purchaser
without the prior written consent of Borrower if any of the following would
occur: (i) an assignment of less than five (5%) of the Aggregate Commitment
as of the date of such assignment, (ii) the proposed purchaser is a
financial institution not organized under the laws of a state or of the
United States (unless such institution is an affiliate of the transferring
Lender), or (iii) such transfer would result in Borrower incurring
increased payments pursuant to SECTION 2.11; PROVIDED, HOWEVER, that, if at
the time of the proposed assignment Borrower is the subject of a proceeding
referenced in SECTION 6.7 or 6.8, or any Default shall have occurred,
Borrower consent shall not be required and any Lender may consummate an
assignment notwithstanding the requirements of clauses (i), (ii) or (iii)
of this SECTION 11.3.2.
11.3.3 EFFECTIVE DATE. Upon (i) delivery to Agent of a notice of
assignment, substantially in the form attached as EXHIBIT A to EXHIBIT M
hereto (a "Notice of Assignment"), together with any consents required by
Section 11.3.2, and (ii) payment of a $3,000 fee to Agent for processing
such assignment (PROVIDED, HOWEVER, that if such assignment shall be made
to an Affiliate of Lender, then Lender shall not be required to pay such
fee to Agent), such assignment shall become effective on the effective date
specified in such Notice of Assignment. The Notice of Assignment shall
contain a representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Loans under
the applicable assignment agreement are "plan assets" as defined under
ERISA and that the rights and interests of the Purchaser in and under the
Loan Documents will not be "plan assets" under ERISA. On and after the
effective date of such assignment, such Purchaser shall for all purposes be
a Lender party to this Agreement and any other Loan Document executed by
Lenders and shall have all the rights and obligations of a Lender under the
Loan Documents, to the same extent as if it were an original party hereto,
and no further consent or action by Borrower, Lenders or Agent shall be
required to release the transferor Lender with respect to the percentage of
the Aggregate Commitment and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this SECTION
11.3.2, the transferor Lender, Agent and Borrower shall make appropriate
arrangements so that replacement Notes are issued to such transferor Lender
and new Notes or, as appropriate,
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77
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Commitment, as adjusted pursuant to such
assignment.
11.4 DISSEMINATION OF INFORMATION. Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of Borrower and its Subsidiaries.
11.5 TAX TREATMENT. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction
other-than the United States or any State thereof, the transferor Lender shall
cause such Transferee, concurrently with the effectiveness of such transfer, to
comply with the provisions of SECTION 2.22.
ARTICLE XII
NOTICES; NATURE OF OBLIGATIONS
------------------------------
12.1 GIVING NOTICE. Except as otherwise permitted by SECTION 2.18 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted (answerback confirmed in the log of telexes).
12.2 CHANGE OF ADDRESS. Borrower, Agent and any Lender may change the
address for service of notice upon it by a notice in writing to the other
parties hereto.
12.3 NATURE OF BORROWER'S OBLIGATIONS AND MODIFICATION THEREOF. The
obligations of Borrower under this Agreement are absolute and unconditional and
shall be irrevocable. Borrower agrees that its obligations hereunder shall not
be impaired, modified, changed, released or limited in any manner whatsoever by
any impairment, modification, change, release or limitation of the liability of
Borrower by any bankruptcy case or by any stay or other legal impediment in or
arising from the operation of any present or future provision of the Bankruptcy
Code or other similar state or federal statute, or from the decision of any
court. Borrower agrees that Lenders may, in their discretion, (i) release,
discharge, compromise or settle with, or grant indulgences to, refuse to proceed
or take action against, Borrower with respect to
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78
its respective obligations under this Agreement, (ii) release, surrender,
modify, impair, exchange, substitute or extend the period or duration of time
for the performance, discharge or payment of, refuse to enforce, compromise or
settle its respective lien, security interest, pledge or assignment against, any
and all deposits or other property or assets on which Lenders may have a lien,
security interest, pledge or assignment or which secures any of the obligations
of Borrower under this Agreement, and (iii) amend, modify, alter or restate, in
accordance with their respective terms, this Agreement or any of the Loan
Documents or otherwise, accept deposits or other property from, or enter into
transactions of any kind or nature with, Borrower. Borrower confirms that it
will be directly or indirectly benefitted by the Loan and any and all other
Advances under this Agreement or any of the Loan Documents.
ARTICLE XIII
COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by Borrower, each
Subsidiary of Borrower, Agent and Lenders and each party has notified Agent by
telex or telephone, that it has taken such action.
-78-
79
IN WITNESS WHEREOF, Borrower, Lenders and Agent have executed this
Agreement as of the date first above written.
PIONEER-STANDARD ELECTRONICS, INC.
By: /s/ Xxxx X. Xxxxxxx
Print Name: Xxxx X. Xxxxxxx
Title: Vice President
0000 Xxxx 000xx Xxxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
phone: 000 000-0000
facsimile: 216 587-3563
Attention: Xxxx X. Xxxxxxx
-79-
80
Commitments
-----------
$95,000.00 NATIONAL CITY BANK,
Individually and as
Agent
By: /s/ Xxxxxxx X. XxXxxx
Print Name: Xxxxxxx X. XxXxxx
Title: Senior Vice President
Via Hand Delivery
National City Bank
National City Center, 10th
Floor
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Via U.S. Mail
National City Bank
Location No. 2104
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 000000-0000
Attention: Xxxxxxx X. XxXxxx
Senior Vice President
-80-
81
$45,000.00 KEYBANK NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxx
Print Name: Xxxxxxx X. Xxxxx
Title: Vice President
Via Hand Delivery
KeyBank National Association
Large Corporate Group
Mail Code OH-01-27-0606
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Via U.S. Mail
KeyBank National Association
Large Corporate Group
Mail Code OH-01-27-0606
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention:
Xxxxxxx X. Xxxxxx
-81-
82
$35,000.00 MELLON BANK, N.A.
By: /s/ Xxxx X. Xxxxxxxx
Print Name: Xxxx X. Xxxxxxxx
Title: AVP
Via Hand Delivery
Mellon Bank, N.A.
Three Mellon Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Loan Administration
Xxxxxxx Xxxxxxxxxxx
Via U.S. Mail
Mellon Bank, N.A.
Three Mellon Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Loan Administration
Xxxxxxx Xxxxxxxxxxx
With a Copy To:
Via Hand Delivery
Mellon Bank, N.A.
Xxx Xxxxxx Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxxx 0000
Xxxxxxxxxx, XX 00000-0000
Via U.S. Mail
Mellon Bank, N.A.
One Mellon Bank Center
Grant Street, Room 4530
Xxxxxxxxxx, XX 00000-0000
Attention:
Xxxx X. Xxxxxxxx
-82-
83
$20,000.00 STAR BANK, N.A.
By: /s/ Xxxx X. Xxxxxxx
Print Name: Xxxx X. Xxxxxxx
Title: Sr. Vice President
Via Hand Delivery
Star Bank, N.A.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Via U.S. Mail
Star Bank, N.A.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Mail Location 4432
Xxxxxxxxx, Xxxx 00000
Attention :
Xxxx X. Xxxxxxx
-83 -
84
$25,000.00 NBD Bank
By: /s/ Xxxx X. XxXxxx
Print Name: Xxxx X. XxXxxx
Title: Vice President
NBD Bank
000 Xxxxxxxx Xxx.
Xxxxxxx, XX 00000
Attention: Xxxx X. XxXxxx
Vice President
-84-
85
$20,000.00 COMERICA BANK
By: /s/ Xxxxxxx X. Judge
Print Name: Xxxxxxx X. Judge
Title: Vice President
Comerica Bank
000 Xxxxxxxx Xxx.
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Judge
Account Officer
-85-
86
$20,000.00 ABN AMRO Bank N.V.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxxxxxx X. Xxxxxxx
Print Name: Xxxxxxx X. Xxxxxxx Print Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Vice President Title: Vice President
ABN AMRO Bank N.V.
Xxx XXX Xxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx
Vice President
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SCHEDULE 1
----------
Subsidiaries of Borrower
Subsidiary Incorporation Investment
---------- ------------- ----------
1. Pioneer-Standard of Maryland, Inc. Maryland Pioneer-Standard Electronics,
Inc. (100%)
2. Pioneer-Standard Canada Inc. Canada Pioneer-Standard Electronics,
Inc. (100%)
3. Pioneer-Standard FSC, Inc. Virgin Islands Pioneer-Standard Electronics,
Inc. (100%)
4. Pioneer-Standard Illinois, Inc. Delaware Pioneer-Standard Electronics,
Inc. (100%)
5. Pioneer-Standard Minnesota, Inc. Delaware Pioneer-Standard Electronics,
Inc. (100%)
6. Pioneer-Standard Electronics, Ltd. Delaware Pioneer-Standard Electronics,
Inc. (1%) (General Partner)
Pioneer-Standard Illinois, Inc.
(99%) (Limited Partner)
7. Pioneer-Standard Georgia, Inc.(1) Georgia Pioneer-Standard Electronics,
Inc. (100%)
8. Xxxxxxx Data Systems, Inc.(2) Georgia Pioneer-Standard Electronics,
Inc. (100%)
9. The Xxxxxxx Services Group, a Delaware Pioneer-Standard Electronics,
Pioneer-Standard Company, LLC(3) Inc. (51%)
10. Pioneer-Standard Financial Trust Delaware Pioneer-Standard Electronics,
Inc. (100% of Common Stock)
(1) To be merged into Xxxxxxx Data Systems, Inc., effective March 31, 1998.
(2) To become a Subsidiary of Borrower, effective March 31, 1998.
(3) To become a Subsidiary of Borrower, effective March 31, 1998.
88
SCHEDULE 2
----------
Permitted Liens
[See attached table]
89
Prepared by co Pioneer-Standard Electronics, Inc.
UCC-11 All-Lien Search Summary
March 23, 1998
DEBTOR SECURED PARTY PLACE OF FILING DATE OF FILING FILE # COLLATERAL
------ ------------- --------------- -------------- ------ ----------
Pioneer-Standard Electronics, Inc. California Sec State as of 3-4-98 no UCC financing
statements, state or
federal tax liens, or
judgments on file
Pioneer-Standard Electronics, Inc. Alameda County, CA as of 3-19-98 no UCC financing
statements, state or
federal tax liens,
or judgments on file
Pioneer-Standard Electronics, Inc. Alameda County as of 3-13-98 no judgments or
Superior Court, CA pending suits on file
Pioneer-Standard Electronics, Inc. Orange County, CA as of 3-18-98 no UCC financing
statements, state or
federal tax liens, or
judgments on file
Pioneer-Standard Electronics, Inc. Orange County as of 3-18-98 no judgments on file
Superior Court, CA
one (1) pending suit
- Sidon Data Systems,
Inc. v. Pioneer
Standard Electronics,
Inc., Case No. 791407,
filed 3-9-98
Pioneer-Standard Electronics, Inc. CA - U.S. Northern as of 3-17-98 no judgments on file
District Court
two (2) pending suits
(1) Maxim Integrated
Products, Inc. v.
Analog Devices, Inc.,
Case No.92-20716
filed 11-10-92; and
(2) Maxim Integrated
Products, Inc. v.
Pioneer-Standard
Electronics, Inc.,
Case No.96-20723,
filed 9-6-96
Pioneer-Standard Electronics, Inc. CA - U.S. Central as of 2-12-98 no judgments or
District Court pending suits on file
Pioneer Standard Electronics Second Generation Massachusetts Sec 3-2-98 532391 all rentals in the
Technologies, Inc. State property, additions,
proceeds
Pioneer-Standard Electronics, Inc. Massachusetts Sec as of 2-25-98 one lien (#038082)
State filed on 5-22-97 by
Department of Revenue
90
DEBTOR SECURED PARTY PLACE OF FILING DATE OF FILING FILE # COLLATERAL
------ ------------- --------------- -------------- ------ ----------
Pioneer-Standard Electronics, Inc. MA - U.S. District as of 3-17-98 No federal tax liens,
Court judgments, or pending
suits on file
Pioneer-Standard Electronics, Inc. Lexington Town as of 3-18-98 no UCC financing
Clerk, MA statements on file
Pioneer-Standard Electronics, Inc. Middlesex County,
MA
Pioneer-Standard Electronics, Inc. Pitney Xxxxx Xxxxxx Xxxx Xxx Xxxxx 0-0-00 XX00000 leased equipment,
products, proceeds
Pioneer-Standard Electronics, Inc. Deutsche Credit Xxxx Xxx Xxxxx 0-0-00 XX00000 listed leased equipment
Corporation (original filing
AB67460 filed 2-6-90
lapsed)
Pioneer-Standard Electronics, Inc. Deutsche Credit Xxxx Xxx Xxxxx 0-0-00 XX00000 listed equipment
Corporation (original filing
AB26256 filed 8-4-89
lapsed)
Pioneer-Standard Electronics, Inc. Alcatel Friden Leasing Xxxx Xxx Xxxxx 0-00-00 XX00000 leased mailing,
shipping, computing,
and other equipment
Pioneer-Standard Electronics, Inc. Amplicon, Inc.
ASSIGNED TO: Cuyahoga County 8-2-90 1173901 listed equipment
Deutsche Credit Recorder, OH
Corporation
Pioneer-Standard Electronics, Inc. Deutsche Credit Cuyahoga County 6-10-91 1198973 amendment to 1173901
Corporation Recorder, OH
Pioneer-Standard Electronics, Inc. Deutsche Credit Cuyahoga County 7-12-91 1201411 amendment to 1173901
Corporation Recorder, OH
Pioneer-Standard Electronics, Inc. Deutsche Credit Cuyahoga County 7-17-95 1318244 continuation of 1173901
Corporation Recorder, 0H
Pioneer-Standard Electronics, Inc. Deutsche Credit Cuyahoga County 3-28-95 1307916 listed computer
Corporation Recorder, OH equipment (original
filing 1139124 filed
8-14-89 lapsed)
Pioneer-Standard Electronics, Inc. Deutsche Credit Cuyahoga County 3-28-95 1307913 listed computer
Corporation Recorder, OH equipment (original
filing 1155898 filed
2-5-90 lapsed)
Pioneer-Standard Electronics, Inc. Cuyahoga County as of 3-18-98 No federal tax liens
Recorder, OH on file
-2-
91
DEBTOR SECURED PARTY PLACE OF FILING DATE OF FILING FILE # COLLATERAL
------ ------------- --------------- -------------- ------ ----------
Pionneer-Standard Electronics, Inc. Cuyahoga County as of 3-13-98 no state liens, or
Court of Common judgments, on file
Pleas, OH
one (1) pending suit -
Xxxxxxx X. Xxxxxxxx v.
Pioneer Standard
Electronics Inc. et
al., Case No. 349294,
filed 2-19-98
Pioneer-Standard Electronics, Inc. OH - U.S. Northern as of 3-16-98 no judgments or pending
District Court suits on file
Pioneer-Standard Electronics, Inc. Summit County as of 3-13-98 no UCC financing state-
Recorder, OH ments or federal tax
liens on file
Pioneer-Standard Electronics, Inc. Summit County as of 3-13-98 no state tax liens or
Court of Common judgments on file
Pleas, OH
-3-
92
Prepared by co Pioneer-Standard Illinois, Inc.
UCC-11 All-Lien Search Summary
March 23, 1998
DEBTOR SECURED PARTY PLACE OF FILING DATE OF FILING FILE # COLLATERAL
------ ------------- --------------- -------------- ------ ----------
Pionneer-Standard of Illinois Inc. Illinois Sec State as of 3-17-98 no UCC financing state-
ments or federal tax
liens on file
Pioneer-Standard of Illinois Inc. Du Page County, IL as of 3-18-98 no UCC financing state-
ments, state or federal
tax liens, or judgments
on file
Pioneer-Standard of Illinois Inc. Du Page Circuit as of 3-10-98 no judgments or pending
Court, IL suits on file
Pioneer-Standard of Illinois lnc. IL - U.S. Northern as of 3-3-98 no judgments or pending
District Court suits on file
Pioneer-Standard of Illinois Inc. Ohio Sec State as of 2-16-98 no UCC financing state-
ments on file
Pioneer-Standard of Illinois Inc. Cuyahoga County as of 3-13-98 no UCC financing state-
Recorder, OH ments or federal tax
liens on file
Pioneer-Standard of Illinois Inc. Cuyahoga County as of 3-13-98 no state tax liens,
Court of Common judgments, or suits
Pleas, OH on file
Pioneer-Standard of Illinois Inc. OH - U.S. Northern as of 3-16-98 no judgments or pending
District Court suits on file
-4-
93
Prepared by co Pioneer-Standard of Maryland, Inc.
UCC-11 All-Lien Search Summary
March 23, 1998
DEBTOR SECURED PARTY PLACE OF FILING DATE OF FILING FILE # COLLATERAL
------ ------------- --------------- -------------- ------ ----------
Pionneer-Standard of Maryland, Inc. California Sec State as of 3-4-98 no UCC financing state-
ments, state or federal
tax liens, or judgments
on file
Pioneer-Standard of Maryland, Inc. Santa Xxxxx County, as of 3-17-98 no UCC financing state-
CA ments, state or federal
tax liens, or judgments
on file
Pioneer-Standard of Maryland, Inc. Santa Xxxxx County as of 3-17-98 no judgments or pending
Superior Court, CA suits on file
Pioneer-Standard of Maryland, Inc. CA - U.S. Northern as of 3-17-98 no judgments or pending
District Court suits on file
Pioneer-Standard of Maryland, Inc. Maryland Dept. of as of 3-13-98 no UCC financing state-
Assessment and ments on file
Taxation
Pioneer-Standard of Maryland, Inc. Xxxxxxxxxx County, as of 3-11-98 no UCC financing state-
MD ments on file
as of 3-18-98 no state or federal tax
liens, or judgments on
file
Pioneer-Standard of Maryland, Inc. Xxxxxxxxxx County as of 3-18-98 no pending suits on file
Court, MD
Pioneer-Standard of Maryland, Inc. MD - U.S. Southern as of 3-17-98 no judgments or pending
District Court suits on file
Pioneer-Standard of Maryland, Inc. Ohio Sec State as of 2-16-98 no UCC financing state-
ments on file
Pioneer-Standard of Maryland, Inc. Cuyahoga County as of 3-18-98 no UCC financing state-
Recorder, OH ments or federal tax
liens on file
Pioneer-Standard of Maryland, Inc. Cuyahoga County as of 3-13-98 no state or federal tax
Court of Common liens, or suites on
Pleas, OH file
-5-
94
DEBTOR SECURED PARTY PLACE OF FILING DATE OF FILING FILE # COLLATERAL
------ ------------- --------------- -------------- ------ ----------
Pionneer-Standard of Maryland, Inc. OH - U.S. Northern as of 3-16-98 no judgments or pending
District Court suits on file
-6-
95
Prepared by co Pioneer-Standard Canada Inc.
UCC-11 All-Lien Search Summary
March 23, 1998
DEBTOR SECURED PARTY PLACE OF FILING DATE OF FILING FILE # COLLATERAL
------ ------------- --------------- -------------- ------ ----------
Pioneer-Standard Canada Inc. Ohio Sec State as of 2-16-98 no UCC financing state-
ments on file
Pioneer-Standard Canada Inc. Cuyahoga County as of 3-18-98 no UCC financing state-
Recorder, OH ments or federal tax
liens on file
Pioneer-Standard Canada Inc. Cuyahoga County as of 3-13-98 no state tax liens,
Court of Common judgments, or suits on
Pleas, OH file
Pioneer-Standard Canada Inc. OH - U.S. Northern as of 3-16-98 no judgments or pending
District Court suits on file
Pioneer-Standard Canada Inc. Xxxxxxxxxxx, Xxxxxxx,
Xxxxxx
-7-
96
Prepared by co Pioneer-Standard Electronics, Inc.
UCC-11 All-Lien Search Summary
March 23, 1998
DEBTOR SECURED PARTY PLACE OF FILING DATE OF FILING FILE # COLLATERAL
------ ------------- --------------- -------------- ------ ----------
Pioneer-Standard Minnesota, Inc. Minnesota See State as of 3-17-98 no UCC financing
statements, state or
federal tax liens on
file
Pioneer-Standard Minnesota, Inc. Hennepin County, MN as of 3-16-98 no UCC financing
statements, state or
federal tax liens,
or judgments on file
Pioneer-Standard Minnesota, Inc. Hennepin County as of 3-16-98 no pending suits on
District Court, MN file
Pioneer-Standard Minnesota, Inc. MN - U.S. District as of 3-18-98 no judgments or pending
Court suits on file
Pioneer-Standard Minnesota, Inc. Ohio Sec State as of 2-16-98 no UCC financing
statements on file
Pioneer-Standard Minnesota, Inc. Cuyahoga County as of 3-18-98 no UCC financing
Recorder, OH statements, or federal
tax liens on file
Pioneer-Standard Minnesota, Inc. Cuyahoga County as of 3-13-98 no state liens,
Court of Common judgments, or suits on
Pleas, OH file
Pioneer-Standard Minnesota, Inc. OH - U.S. Northern as of 3-16-98 no judgments or pending
District Court suits on file
-8-
97
Prepared by co Pioneer-Standard Electronics, Inc.
UCC-11 All-Lien Search Summary
March 23, 1998
DEBTOR SECURED PARTY PLACE OF FILING DATE OF FILING FILE # COLLATERAL
------ ------------- --------------- -------------- ------ ----------
Pionneer-Standard Electronics Pitney Xxxxx Xxxxxx Xxxx Xxx Xxxxx 0-0-00 XX00000 leased equipment,
Corporation products, proceeds
Pioneer-Standard Electronics, Inc. Deutsche Credit Xxxx Xxx Xxxxx 0-0-00 XX00000 listed leased equipment
Corporation (original filing
AB67460 filed 2-6-90
lapsed)
Pioneer-Standard Electronics, Inc. Deutsche Credit Xxxx Xxx Xxxxx 0-0-00 XX00000 listed equipment
Corporation (original filing
AB26256 filed 8-4-89
lapsed)
Pioneer-Standard Electronics, Inc. Alcatel Friden Ohio See State 5-13-96 AM72741 leased mailing,
Leasing shipping, computing and
other equipment
Pioneer-Standard Electronics, Inc. Cuyahoga County as of 3-18-98 no UCC financing
Recorder, OH statements or federal
tax liens on file
Pioneer-Standard Electronics, Inc. Cuyahoga County as of 3-13-98 no state tax liens,
Court of Common judgments, or suits on
Pleas, OH file
Pioneer-Standard Electronics, Inc. OH - U.S. Northern as of 3-16-98 no judgments or pending
District Court suits on file
Pioneer-Standard Electronics, Inc. Texas Sec State as of 3-8-98 no UCC financing
statements or federal
tax liens on file
Pioneer-Standard Electronics, Inc. Dallas County Clerk, as of 3-12-98 no UCC financing
TX statements, state or
federal tax liens, or
judgments on file
Pioneer-Standard Electronics, Inc. Dallas County as of 3-12-98 no judgments or pending
District Court, TX suits on file
Pioneer-Standard Electronics, Inc. TX - U.S. Northern as of 3-12-98 no judgments or pending
District Court suits on file
Pioneer-Standard Electronics, Ltd. Xxxxxx County Clerk, as of 3-13-98 no UCC financing
TX statements, state or
federal tax liens, or
judgments on file
-9-
98
DEBTOR SECURED PARTY PLACE OF FILING DATE OF FILING FILE # COLLATERAL
------ ------------- --------------- -------------- ------ ----------
Pioneer-Standard Electronics, Ltd. Xxxxxx County as of 3-10-98 no judgments or pending
District Court, TX suits on file
Pioneer-Standard Electronics, Ltd. TX - U.S. Western as of 3-14-98 no judgments or pending
District Court suits on file
-10-
99
SCHEDULE 3
----------
Permitted Loan 3 and Investments to Subsidiaries
Subsidiaries of Pioneer-Standard Electronics, Inc.
Current
-------
Equity Investment Additional Current Loans Maximum
----------------- ---------- ------------- -------
Subsidiary (as of 12/31/97) Equity Investment (as of 12/31/97) Permitted Loans
---------- ---------------- ----------------- ---------------- ---------------
1. Pioneer-Standard of $38,000,000 $1,000,000 $34,000,000 $60 ,000,000
Maryland, lnc.
2. Pioneer-Standard Canada Inc. $4,300,000 $6,000,000(1) $20,000,000 $35,000,000
3. Pioneer-Standard FSC, Inc. Less than $100,000 -0- -0- $1,000,000
4. Pioneer-Standard Illinois, Inc. $4,000,000 $1,000,000 -0- $10,000,000
5. Pioneer-Standard Minnesota, $12,000,000 $1,000,000 ($8,000,000) $10,000,000
Inc.
6. Pioneer-Standard Electronics, $144,000,000 $1,000,000 $7,000,000 $20,000,000
Ltd.
7. Pioneer Standard Georgia, Inc. $125,000,000 -0- -0- -0-
(Projected)(2)
8. Xxxxxxx Data Systems, Inc. $125,000,000 $15,000,000 -0- $115,000,000(4)
(Projected)(3)
9. Xxxxxxx Services Group, a $2,500,000(5) [Part of $35,000,000 -0- $5,000,000
Pioneer-Standard Company, Basket)
LLC
10. Pioneer-Standard Financial $4,500,000(6) -0- -0- -0-
Trust
_____________________
(1) Includes a $3,000,000 equity investment made in March, 1998.
(2) Projected amount of investment necessary to consummate anticipated merger into Xxxxxxx Data Systems. Inc., effective March 31,
1998.
(3) Projected investment necessary to become a Subsidiary of Borrower, effective
March 31, 1998.
(4) Amount does not include that portion of Borrower's Indebtedness for Borrowed
Money under the Agreement for Inventory Financing which is attributable to
Xxxxxxx Data Systems. Inc.
(5) Investment necessary to become a Subsidiary of Borrower, effective March 31, 1998.
(6) Investment made on March 23, 1998
100
SCHEDULE 4
----------
Description of Borrower's Preferred Securities Offering
Pioneer-Standard Financial Trust (the "Trust"), a statutory business trust
created under the laws of the State of Delaware, is issuing 2,500,000 of the
Trust's 6 3/4% Convertible Trust Preferred Securities to qualified institutional
purchasers ("Initial Purchasers"). Additionally, Pioneer-Standard Electronics,
Inc. (the "Borrower") and the Trust are granting the Initial Purchasers an
option for 30 days to purchase up to an additional 375,000 Preferred Securities
at the initial offering price solely to cover overallotments, if any. The
Borrower will directly or indirectly own all of the common securities of the
Trust (the "Common Securities"), representing all of the undivided beneficial
interests in the assets of the Trust represented by common securities. The Trust
exists for the sole purpose of issuing the Preferred Securities and the Common
Securities and investing the proceeds thereof in Series A 6 3/4 Junior
Convertible Subordinated Debentures, due March 31, 2028 to be issued by the
Borrower. The Preferred Securities will have a preference under certain
circumstances with respect to cash distributions and amount payable on
liquidation, redemption or otherwise over the Common Securities held by the
Borrower. Distributions on the Preferred Securities will be cumulative from the
date of the original issuance of the Preferred Securities and will be payable at
the annual rate of 6 3/4% of the liquidation preference of $50.00 per Preferred
Security. Distributions will be made quarterly in arrears on March 31, June 30,
September 30 and December 31 commencing on June 30, 1998 when and to the extent
that funds of the Trust are available thereof. The distribution rate and the
distribution and other payment dates for the Preferred Securities will
correspond to the interest rate and other payment dates for the Debentures,
which will be the sole assets of the Trust. Each Preferred Security is
convertible in the manner specified in the Offering Memorandum, dated March 18,
1998, at the option of the holder at any time into common shares, without par
value, of the Borrower at a rate of 3.1746 Common Shares for each Preferred
Security. The Preferred Securities have been designated for trading in the
Private Offering, Resale and Trading through Automated Linkages Market.
101
SCHEDULE 5
----------
Description of SECT
On July 2, 1996, Pioneer-Standard Electronics, Inc. ("Borrower") established the
Pioneer Stock Benefits Trust (the "Benefits Trust") pursuant to which Wachovia
Bank, N.A., as trustee (the "Trustee"), has subscribed for 5,000,000 Common
Shares of the Borrower to be paid for over the 15-year term of the Benefits
Trust. The proceeds from the sale of the Common Shares will be used to fund
obligations under various employee benefit plans and to pay cash bonuses and
other similar employee related obligations. Under Ohio law, the subscribed for
Common Shares are deemed to be issued and outstanding for voting and dividend
purposes, but will not be fully paid and nonassessable until payment for such is
received as provided in that certain Share Subscription Agreement and Trust
effective as of July 2, 1996 (the "Benefit Trust Agreement"). According to GAAP,
none of the 5,000,000 Common Shares will be deemed outstanding for purposes of
calculating earnings per share until payment is received for the Common Shares
as provided in the Benefits Trust Agreement. As of December 31, 1997, 220,000 of
the Common Shares had been released from the Benefits Trust.
