EXHIBIT C
[NORWEST BUSINESS CREDIT LETTERHEAD]
Norwest Business Credit, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-8625
303/863-8593
FAX: 303/▇▇▇-▇▇▇▇
April 2, 1997
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
Vice President - Finance
Ultimate Electronics, Inc.
▇▇▇ ▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: COMMITMENT FOR TERM LOAN
Dear ▇▇▇▇:
Norwest Bank of Colorado, National Association ("Norwest") and Norwest
Business Credit, Inc. ("NBCI") are pleased to present Ultimate Electronics, Inc.
this commitment for the term loan described below. This commitment is expressly
conditioned as set forth in the Conditions Precedent paragraph below.
BORROWER: Ultimate Electronics, Inc.
FACILITY: Committed term loan made in a single
advance equal to $5,000,000 ("Term Loan").
The Term Loan will be participated to
existing participants according to their
pro rata shares. This commitment by Norwest
and NBCI is conditioned upon obtaining
final approval from the participants.
BORROWING BASE: The overall Borrowing Base for the
Borrower's credit facilities, including the
Term Loan, is equal to 70% of Acceptable
Inventory. Acceptable Inventory shall be as
defined in Borrower's current Credit
Agreement dated as of November 21, 1996
with Norwest and NBCI.
PURPOSE: The Term Loan shall be used to fund the
acquisition of Audio King Corporation.
Ultimate Electronics, Inc.
April 2, 1997
Page 2
MATURITY DATE: The maturity date of the Term Loan shall be
two years from the date of closing.
AMORTIZATION: The Term Loan shall amortize in 60 equal
monthly payments of $83,333.33 with a
balloon at maturity of $3,083,333.33.
COLLATERAL: The Term Loan shall be secured by a first
priority interest in all accounts
receivable, inventory and proceeds, general
intangibles, and any unencumbered machinery
and equipment (as defined in the Security
Agreement). The Term Loan shall be
cross-collateralized with Borrower's
existing line of credit as provided for in
the Credit Agreement.
INTEREST RATE: The interest rate on the Term Loan
shall be equal to Norwest's Base Rate plus
0.5%, floating, payable monthly in arrears
and calculated on the basis of actual days
elapsed in a year of 360 days.
The spread over Base Rate shall be adjusted
annually on March 1st of each year based on
the ratio of Funded Debt to EBITDA as of
Borrower's fiscal year-end. The rate
adjustment shall be based initially on
Borrower's internally prepared financial
statements and any change resulting form
any audit adjustments shall be retroactive
to March 1st.
FUNDED DEBT/EBITDA BASE RATE
greater than/
equal to 2.5:1 Base + 0.5%
greater than/
equal to 2.0:1
less than 2.5:1 Base + 0.25%
less than 2.0 Base Rate
The default rate of interest shall
be Norwest's Base Rate plus 5.0%.
Norwest's Base Rate shall mean the
rate of interest publicly announced
by Norwest from time to time as its
Base Rate.
FACILITY FEE: 1/8% of the amount of the Term Loan per
annum.
AGENCY FEE: 1/8% of the amount of the Term Loan per
annum.
Ultimate Electronics, Inc.
April 2, 1997
Page 3
TERMINATION FEE: If the Term Loan is prepaid
prior to the Maturity Date, there
shall be a prepayment fee of 1.5% of
the Term Loan during the first year
and 1% during the second year. The
Termination Fee shall be waived if
the Term Loan is refinanced by a
subsidiary of Norwest Corporation.
COLLATERAL AUDIT AND OTHER EXPENSES: All costs incurred by Norwest and NBCI
for its initial due diligence collateral
audit of Audio King Corporation and
subsequent collateral audit examinations
will be billed on an hourly basis per
analyst (currently $50.00 per hour) plus
actual out-of-pocket expenses. Upon
completion of the initial due diligence
audit, Norwest shall determine the
frequency (anticipated to be quarterly)
and other requirements for future audits.
Provided that the Borrower is not in
Default under its Credit Agreement, Norwest
and NBCI will agree to limit ▇▇▇▇▇▇▇▇'s
obligation to reimburse them for the cost
of the audits to a mutually agreed upon
amount.
In addition to collateral audits,
Borrower shall be responsible for
any and all reasonable expenses of
Norwest and NBCI for documentation
and administration of the loan,
including without limitation, legal
fees and expenses, filing fees,
collateral appraisal costs and costs
for any subsequent amendments or
documentation changes.
BORROWING BASE,
COLLATERAL AND
FINANCIAL REPORTING: Borrowing Base, collateral and financial
reporting requirements are expected to
remain the same as those contained in the
Credit Agreement.
OTHER TERMS AND
CONDITIONS: Borrower will be required to execute and
deliver to Norwest and NBCI such documents,
instructions,
Ultimate Electronics, Inc.
April 2, 1997
Page 4
certifications, opinions and
assurances as may be requested for
the funding of the Term Loan on the
basis outlined above. All
documentation shall be subject to
the approval of Norwest, NBCI, and
its legal counsel as to form and
substance. The Term Loan shall be
documented as an amendment to
Borrower's Credit Agreement and
shall be subject to the conditions
thereof.
CONDITIONS PRECEDENT
TO CLOSING AND FUNDING: 1. Satisfactory due diligence
collateral audit of Audio
King Corporation.
2. Satisfactory completion of an
inventory appraisal of
Audio King Corporation.
3. No material adverse change in
the financial condition of
Borrower since the date of its
most recent financial statement
provided to Norwest.
4. Receipt of current interim
financial statements.
5. Receipt of all Landlord Waivers
acceptable to Norwest and NBCI.
Audio King inventory will not be
included in the Borrowing
Base until all Landlord
Waivers relating to the
Audio King inventory are
received.
6. Execution of Loan Documents as
described above.
7. Approval by Norwest and NBCI of
new financial
covenants which will govern
the credit facilities
following the Audio King
acquisition.
This commitment to extend the Term Loan to the Borrower shall expire if
each condition precedent or the Loan Documents have not been fully executed by
5:00 p.m. (Denver time) on May 30, 1997.
Please indicate your acceptance of this commitment by signing below and
returning it to the attention of ▇▇▇ ▇▇▇▇▇▇▇ by no later than April 15, 1997.
NBCI shall initiate the documentation process upon receipt of this signed
letter. Please contact ▇▇▇
Ultimate Electronics, Inc.
April 2, 1997
Page 5
▇▇▇▇▇▇▇ at (▇▇▇) ▇▇▇-▇▇▇▇ should you have any questions or require additional
information.
Sincerely,
NORWEST BUSINESS CREDIT, INC.
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: /S/ ASSISTANT VICE PRESIDENT
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Assistant Vice President
NORWEST BANK COLORADO, NATIONAL ASSOCIATION
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: /S/ VICE PRESIDENT
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ULTIMATE ELECTRONICS, INC.
By: ----------------------------------
Its: ----------------------------------