Exhibit 4(i)
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AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 7, 1995
Among
MILGRAY ELECTRONICS, INC.,
THE GUARANTORS NAMED HEREIN,
CHEMICAL BANK,
as Agent and
as a Lender,
FLEET BANK
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Lenders
and
THE OTHER LENDERS NAMED HEREIN
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TABLE OF CONTENTS
Article Section Page
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I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. THE LOANS 18
SECTION 2.01. Revolving Credit Commitments . . . . . . . . . 18
SECTION 2.02. Loans . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.03. Notice of Loans . . . . . . . . . . . . . . . . 20
SECTION 2.04. Notes; Repayment of Loans . . . . . . . . . . . 21
SECTION 2.05. Interest on Loans . . . . . . . . . . . . . . . 22
SECTION 2.06. Rate Adjustments . . . . . . . . . . . . . . . 23
SECTION 2.07. Commitment and Other Fees . . . . . . . . . . . 25
SECTION 2.08. Termination and Reduction of Revolving Credit
Commitments . . . . . . . . . . . . . . . . . . 25
SECTION 2.09. Interest on Overdue Amounts; Alternate Rate of
Interest . . . . . . . . . . . . . . . . . . . 26
SECTION 2.10. Prepayment of Loans . . . . . . . . . . . . . . 27
SECTION 2.11. Reserve Requirements; Change in Circumstances. . 28
SECTION 2.12. Change in Legality . . . . . . . . . . . . . . 30
SECTION 2.13. Indemnity . . . . . . . . . . . . . . . . . . . 31
SECTION 2.14. Pro Rata Treatment . . . . . . . . . . . . . . 32
SECTION 2.15. Sharing of Setoffs . . . . . . . . . . . . . . 32
SECTION 2.16. Taxes . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.17. Payments and Computations . . . . . . . . . . . 36
III. LETTERS OF CREDIT AND ACCEPTANCES . . . . . . . . . . . . . . . 37
SECTION 3.01. Issuance of Letters of Credit . . . . . . . . . 37
SECTION 3.02. Payment in Respect of Letters of Credit;
Reimbursement . . . . . . . . . . . . . . . . . 37
SECTION 3.03. Actions of Agent . . . . . . . . . . . . . . . 40
SECTION 3.04. Payments in Respect of Increased Costs . . . . . 40
SECTION 3.05. Indemnity as to Letters of Credit . . . . . . . 42
SECTION 3.06. Letter of Credit Fees . . . . . . . . . . . . . 43
SECTION 3.07. Acceptance Drafts . . . . . . . . . . . . . . . 43
SECTION 3.08. Payment of Acceptances . . . . . . . . . . . . 45
SECTION 3.09. Ineligibility of Acceptance Drafts . . . . . . 48
SECTION 3.10. Customary Fees . . . . . . . . . . . . . . . . 48
SECTION 3.11. Forms of Drafts . . . . . . . . . . . . . . . . 48
IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 48
SECTION 4.01. Organization, Legal Existence . . . . . . . . . 48
SECTION 4.02. Authorization . . . . . . . . . . . . . . . . . 49
SECTION 4.03. Governmental Approvals . . . . . . . . . . . . 49
SECTION 4.04. Binding Effect . . . . . . . . . . . . . . . . 49
SECTION 4.05. No Default; Material Adverse Change . . . . . . 50
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Article Section Page
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SECTION 4.06. Litigation; Compliance with Laws; etc. . . . . . 50
SECTION 4.07. Financial Statements . . . . . . . . . . . . . 50
SECTION 4.08. Federal Reserve Regulations . . . . . . . . . . 51
SECTION 4.09. Taxes . . . . . . . . . . . . . . . . . . . . . 52
SECTION 4.10. Employee Benefit Plans . . . . . . . . . . . . 52
SECTION 4.11. No Material Misstatements . . . . . . . . . . . 54
SECTION 4.12. Investment Company Act; Public Utility
Holding Company Act . . . . . . . . . . . . . . 54
SECTION 4.13. Use of Proceeds . . . . . . . . . . . . . . . . 55
SECTION 4.14. Subsidiaries and Affiliates . . . . . . . . . . 55
SECTION 4.15. Title to Properties; Possession Under
Leases; Trademarks . . . . . . . . . . . . . . 55
SECTION 4.16. Permits, etc. . . . . . . . . . . . . . . . . . 56
SECTION 4.17. Compliance with Environmental Laws . . . . . . 56
SECTION 4.18. No Change in Credit Criteria or
Collection Policies . . . . . . . . . . . . . . 57
SECTION 4.19. Franchise Agreements . . . . . . . . . . . . . 57
SECTION 4.20. Financing Agreements . . . . . . . . . . . . . 57
SECTION 4.21. No Overdue Obligations . . . . . . . . . . . . 57
V. CONDITIONS OF CREDIT EVENTS . . . . . . . . . . . . . . . . . . . 58
SECTION 5.01. All Credit Events . . . . . . . . . . . . . . . 58
SECTION 5.02. First Borrowing . . . . . . . . . . . . . . . . 58
VI. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 62
SECTION 6.01. Legal Existence . . . . . . . . . . . . . . . . 62
SECTION 6.02. Businesses and Properties . . . . . . . . . . . 62
SECTION 6.03. Insurance . . . . . . . . . . . . . . . . . . . 62
SECTION 6.04. Taxes . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.05. Financial Statements, Reports, etc. . . . . . . 63
SECTION 6.06. Litigation and Other Notices . . . . . . . . . 66
SECTION 6.07. ERISA . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit . . . . . . . . . . 68
SECTION 6.09. Use of Proceeds . . . . . . . . . . . . . . . . 69
SECTION 6.10. Fiscal Year-End . . . . . . . . . . . . . . . . 69
SECTION 6.11. Additional Guarantors . . . . . . . . . . . . . 69
SECTION 6.12. Environmental Laws . . . . . . . . . . . . . . 69
SECTION 6.13. Pay Obligations to Lenders and Perform Other
Covenants . . . . . . . . . . . . . . . . . . . 71
VII. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.01. Liens . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.02. Indebtedness . . . . . . . . . . . . . . . . . 73
SECTION 7.03. Dividends, Distributions and Payments . . . . . 76
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Article Section Page
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SECTION 7.04. Consolidations, Mergers and Sales of Assets. . . 76
SECTION 7.05. Investments . . . . . . . . . . . . . . . . . . 77
SECTION 7.06. Capital Expenditures . . . . . . . . . . . . . 78
SECTION 7.07. Net Worth . . . . . . . . . . . . . . . . . . . 78
SECTION 7.08. Total Unsubordinated Liabilities to Net Worth
Ratio . . . . . . . . . . . . . . . . . . . . . 78
SECTION 7.09. Rental Obligations. . . . . . . . . . . . . . . 78
SECTION 7.10. Consolidated Inventory Ratio. . . . . . . . . . 79
SECTION 7.11. Consolidated Current Ratio. . . . . . . . . . . 79
SECTION 7.12. Interest Coverage Ratio . . . . . . . . . . . . 79
SECTION 7.13. Net Income . . . . . . . . . . . . . . . . . . 79
SECTION 7.14. Business . . . . . . . . . . . . . . . . . . . 79
SECTION 7.15. Sales of Receivables . . . . . . . . . . . . . 79
SECTION 7.16. Use of Proceeds . . . . . . . . . . . . . . . . 79
SECTION 7.17. ERISA . . . . . . . . . . . . . . . . . . . . . 79
SECTION 7.18. Accounting Changes . . . . . . . . . . . . . . 80
SECTION 7.19. Modification of Indebtedness . . . . . . . . . 80
SECTION 7.20. Transactions with Affiliates . . . . . . . . . 80
VIII. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . 81
IX. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
X. GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 11.01. Notices . . . . . . . . . . . . . . . . . . . 90
SECTION 11.02. Survival of Agreement . . . . . . . . . . . . 91
SECTION 11.03. Successors and Assigns;
Participations . . . . . . . . . . . . . . . . 91
SECTION 11.04. Expenses; Indemnity . . . . . . . . . . . . . 95
SECTION 11.05. Applicable Law . . . . . . . . . . . . . . . . 96
SECTION 11.06. Right of Setoff . . . . . . . . . . . . . . . 96
SECTION 11.07. Payments on Business Days . . . . . . . . . . 96
SECTION 11.08. Waivers; Amendments . . . . . . . . . . . . . 96
SECTION 11.09. Severability . . . . . . . . . . . . . . . . . 98
SECTION 11.10. Entire Agreement; Waiver of Jury
Trial, etc. . . . . . . . . . . . . . . . . . 98
SECTION 11.11. Confidentiality . . . . . . . . . . . . . . . 99
SECTION 11.12. Submission to Jurisdiction . . . . . . . . . . 99
SECTION 11.13. Counterparts; Facsimile Signature . . . . . . 100
SECTION 11.14. Headings . . . . . . . . . . . . . . . . . . . 100
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EXHIBITS
EXHIBIT A Form of Revolving Credit Note
EXHIBIT B Form of Opinion of Counsel
EXHIBIT C Form of Assignment and Acceptance
EXHIBIT D Form of Acceptance Drafts
EXHIBIT E Form of Aging of Accounts
EXHIBIT F Form of Schedule of Inventory
EXHIBIT G Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇
EXHIBIT H Form of Notice re: Domestic Shipment Financing
EXHIBIT I Form of Compliance Certificate
SCHEDULES
SCHEDULE 2.01 Revolving Credit Commitments
SCHEDULE 2.02 Lending Offices
SCHEDULE 3.01 Outstanding Letters of Credit
SCHEDULE 4.01 Qualified Jurisdictions
SCHEDULE 4.05 Material Adverse Change
SCHEDULE 4.06(a) Litigation
SCHEDULE 4.06(b) Compliance with Laws, etc.
SCHEDULE 4.09 Taxes
SCHEDULE 4.10 ERISA
SCHEDULE 4.14 Subsidiaries and Affiliates
SCHEDULE 4.17 Environmental Compliance
SCHEDULE 4.20 Financing Agreements
SCHEDULE 6.12 Hazardous Materials
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.02 Existing Indebtedness
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AMENDED AND RESTATED CREDIT AGREEMENT dated as of
November 7, 1995, among MILGRAY ELECTRONICS, INC., a
New York corporation (the "Borrower"), the Guarantors
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named herein and signatories hereto, CHEMICAL BANK, a
New York banking corporation, FLEET BANK, a New York
banking corporation, FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, a North Carolina banking corporation ("First
Union") and the other lenders named in Schedule 2.01
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annexed hereto (collectively, the "Lenders"), and
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CHEMICAL BANK, as agent for the Lenders (in such
capacity, the "Agent").
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The Borrower has applied to the Lenders for Credits (such term
and all other capitalized terms used in this paragraph having the
respective meanings ascribed to such terms above or hereinafter) in the
form of Credits to the Borrower at any time and from time to time prior to
the Revolving Credit Termination Date in an aggregate principal amount not
in excess of $50,000,000 at any time outstanding. The proceeds of the
Credits shall be used to repay all obligations under the Prior Credit
Agreement and for the general working capital requirements of the Borrower
and the Guarantors. The Guarantors are guaranteeing (or in the case of
Guarantors not in existence on the date hereof, will guarantee) the Credits
in accordance with the provisions of this Agreement. The Lenders are
severally, and not jointly, willing to extend such Credits to the Borrower
subject to the terms and conditions hereinafter set forth. Accordingly,
the Borrower, the Guarantors, the Lenders and the Agent hereby agree as
follows:
I. DEFINITIONS
For purposes hereof, the following terms shall have the meanings
specified below:
"Acceptance Date" shall have the meaning set forth in Section
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3.07(b) hereof.
"Acceptance Draft", "Acceptance Drafts" shall have the meanings
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set forth in Section 3.07(a) hereof.
"Acceptance Draft Commission" shall have the meaning set forth in
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Section 3.08 hereof.
"Acceptance Draft Exposure" shall mean at any time the sum of
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(a) the aggregate face amount of Acceptance Drafts outstanding and (b) the
aggregate amount of all payments in
respect of Acceptance Drafts for which the Lenders shall not have been
reimbursed as provided in Section 3.08 hereof.
"Adjusted Eurodollar Rate" shall mean, with respect to any
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Eurodollar Loan for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
product of (i) the Eurodollar Rate in effect for such Interest Period and
(ii) Eurodollar Reserves. For purposes hereof, the term "Eurodollar
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Reserves" means a fraction (expressed as a decimal), the numerator of which
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is the number one and the denominator of which is the number one minus the
applicable statutory reserve requirements (expressed as a decimal) for
Chemical Bank (without duplication, but including, without limitation,
basic, supplemental, marginal and emergency reserves), from time to time in
effect under Regulation D of the Board of Governors of the Federal Reserve
System ("Regulation D") with respect to Eurocurrency funding currently
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referred to as "Eurocurrency liabilities" in Regulation D. It is agreed
that for purposes hereof each Eurodollar Loan shall be deemed to constitute
a "Eurocurrency liability" as defined in Regulation D, and to be subject to
the reserve requirements of Regulation D, without benefit of credit or
proration, exemptions or offsets which might otherwise be available to the
Banks from time to time under Regulation D.
"Affiliate" of any person shall mean any other person other than
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a natural person which, directly or indirectly, controls or is controlled
by or is under common control with such person. For the purposes of this
definition, ▇.▇. ▇▇▇▇▇▇▇▇ Associates, Inc. shall not be deemed an Affiliate
and the term "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to
any applicable person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities
or by contract or otherwise.
"Agreement" shall mean this Credit Agreement, together with all
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schedules and exhibits hereto, as the same may be supplemented, modified,
amended or restated from time to time in the manner provided herein.
"Alternate Base Loan" shall mean a Loan bearing interest based on
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the Alternate Base Rate in accordance with Article II hereof.
"Alternate Base Rate" shall mean, for any day, a rate per annum
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(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greater of (a) the Prime Rate in effect on such day,
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and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of
1%. "Prime Rate" shall mean the rate of interest per annum publicly
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announced from time to time by the Agent in effect at its principal office
in New York City as its prime rate. "Federal Funds Effective Rate" shall
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mean, for any day, 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 on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for the
day of such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the Agent
shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including, the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (b) of the
first sentence of this definition until the circumstances giving rise to
such inability no longer exist. Any change in the Alternate Base Rate due
to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Applicable Lending Office" means, with respect to each Lender,
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such Lender's Domestic Lending Office in the case of a Alternate Base Loan
and such Lender's Eurodollar Lending Office in the case of a Eurodollar
Loan.
"Assignment and Acceptance" means an assignment and acceptance
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entered into by a Lender and an assignee, consented to and accepted by the
Agent, in substantially the form of Exhibit C hereto.
"Availability" shall mean at any time (i) the lesser at such time
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of (x) the Total Revolving Credit Commitment (as such amount may be reduced
or increased in accordance with the provisions of this Agreement) and
(y) the Borrowing Base, minus (ii) the sum at such time of (u) the
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aggregate principal amount of the Revolving Credit Loans outstanding,
(v) the Letter of Credit Exposure and (w) the Acceptance Draft Exposure.
"Benchmark Exposure" shall have the meaning assigned to such term
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in Section 2.05 hereof.
"Board" shall mean the Board of Governors of the Federal Reserve
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System of the United States.
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"Borrower" shall have the meaning assigned to such term in the
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preamble to this Agreement.
"Borrowing Base" shall mean an amount equal to the sum of (i) up
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to 90% of the Net Amount of Eligible Receivables plus (ii) the lesser of
(x) 50% of the Net Amount of Eligible Inventory and (y) $20,000,000.
"Business Day" shall mean any day, other than a Saturday, Sunday
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or legal holiday in the State of New York, on which banks are open for
substantially all their banking business in New York City.
"Capitalized Lease Obligation" shall mean an obligation to pay
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rent or other amounts under any lease of (or other arrangement conveying
the right to use) real and/or personal property which obligation is
required to be classified and accounted for as a capital lease on a balance
sheet prepared in accordance with generally accepted accounting principles,
and for purposes hereof the amount of such obligation shall be the
capitalized amount thereof determined in accordance with such principles.
"Closing Date" shall mean the date on which the Credit Parties,
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the Lenders and the Agent shall have executed and delivered this Agreement,
which date shall not in any event be later than October 31, 1995.
"Code" shall mean the Internal Revenue Code of 1986, as amended
----
from time to time, and the rules and regulations promulgated thereunder.
"Consolidated" shall mean, in respect of any person, as applied
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to any financial or accounting term, such term determined on a consolidated
basis in accordance with generally accepted accounting principles (except
as otherwise required herein) for the person and all consolidated
subsidiaries thereof.
"Contaminant" shall mean all Hazardous Materials and all those
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substances which are regulated by or form the basis of liability under
Federal, state or local environmental, health and safety statutes or
regulations including, without limitation, asbestos, polychlorinated
biphenyls ("PCBs"), and radioactive substances, or any other material or
substance which constitutes a material health, safety or environmental
hazard to any person or property.
"Credit Event" shall mean each extension of Credits hereunder.
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"Credit Parties" shall mean, collectively, the Borrower and the
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Guarantors.
"Credits" shall mean Loans, Letters of Credit or Acceptance
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Drafts, as the case may be.
"Current Assets" shall mean, with respect to any person at any
--------------
date, the aggregate amount of all assets of such person which would be
classified as current assets at such date, computed and calculated in
accordance with generally accepted accounting principles.
"Current Liabilities" shall mean, with respect to any person at
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any date, the aggregate amount of all liabilities of such person (including
tax and other proper accruals) which would be classified as current
liabilities at such date, computed and calculated in accordance with
generally accepted accounting principles consistently applied, but in any
event shall include all Credits (other than Letters of Credit) and the
Indebtedness allowed pursuant to Section 7.02(xviii) hereof.
"Current Ratio" shall mean the ratio of Current Assets to Current
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Liabilities.
"Customer" shall mean and include the account debtor or obligor
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with respect to any of the Receivables.
"Default" shall mean any condition, act or event which, with
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notice or lapse of time or both, would constitute an Event of Default.
"Discount Rate" shall mean a fluctuating annual rate of interest
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in effect from time to time equal to the then current rate established by
the Agent for banker's acceptances of equal face amount and duration
eligible for discount with the Federal Reserve Banks of the United States.
"dollars" or the symbol "$" shall mean dollars in lawful currency
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of the United States of America.
"Domestic Lending Office" means, with respect to any Lender, the
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office of such Lender specified as its "Domestic Lending Office" opposite
its name in Schedule 2.02 hereto, or such other office of such Lender as
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such Lender may from time to time specify to the Borrower and the Agent.
"Eligible Inventory" shall mean Inventory of the Borrower and its
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Consolidated subsidiaries (to the extent such subsidiaries have become
Guarantors) consisting of electronic
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components, semiconductors, electromechanical devices, passive components,
computer products and other related products of the type currently being
distributed by Borrower and the Guarantors; provided, that Eligible
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Inventory shall not include (x) work in process or (y) any raw materials or
finished inventory which (i) is not located in the United States or Canada,
(ii) which has been held more than 15 months unless there exists open
Customer sales orders with respect thereto, (iii) which is damaged,
unsalable or otherwise unfit for use or (iv) is the subject of a purchase
money security interest or similar arrangements.
"Eligible Receivables" shall mean at the time of any
--------------------
determination thereof all Receivables which meet the following criteria at
the time of creation and continue to meet the same at all times relevant to
such determination: (a) all payments due on the Receivable have been
invoiced; (b) the payment due on the Receivable is not more than 120 days
past the invoice date; (c) the payments due on more than 50% of all
Receivables from the same Customer are less than 120 days past the invoice
date; (d) the Receivable arose from a completed, outright and lawful sale
of goods, to which title has passed to the Customer, by or on behalf of the
Borrower or any of the Guarantors; (e) the Receivable is free and clear of
all security interests, liens, charges and encumbrances of any nature
whatsoever; (f) the Receivable constitutes (i) an "account" or "chattel
paper" within the meaning of the Uniform Commercial Code of the state in
which the Receivable is located or (ii) an "instrument" within the meaning
of the Uniform Commercial Code of the state in which the Receivable is
located, but only to the extent that such instrument was received as
payment in respect of an "account" and is payable in full within 120 days
past the invoice date relating to such "account"; (g) the Customer has not
asserted that the Receivable, and neither the Borrower nor any Guarantor is
aware that the Receivable, is subject to any setoff, net-out contract,
offset, deduction, dispute, credit, counterclaim or other defense arising
out of the transactions represented by the Receivables or independently
thereof other than any of same arising in the ordinary course of business
and for which adequate reserves have been established in accordance with
generally accepted accounting principles, and the Customer has finally
accepted the goods from the sale out of which the Receivable arose and has
not objected to its liability thereon or returned, rejected or repossessed
any of such goods, except for complaints made or goods returned in the
ordinary course of business for which, in the case of goods returned, goods
of equal or greater value have been shipped in return; (h) the Receivable
arose in the ordinary course of business of the Borrower or any of the
Guarantors; (i) the Customer is not (x) the United States government or the
government of any state or political subdivision thereof or therein, or any
agency or department of any thereof or (y) an Affiliate of the Borrower or
any subsidiary of any thereof;
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(j) the Customer is a United States, Puerto Rican or Canadian person or an
obligor in the United States, Puerto Rico or Canada; (k) the Receivable
complies with all material requirements of all applicable laws and
regulations, whether Federal, state or local (including, without
limitation, usury laws and laws, rules and regulations relating to truth in
lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy); (l) to the
knowledge of the Borrower or any Guarantor after reasonable investigation,
the Receivable is in full force and effect and constitutes a legal, valid
and binding obligation of the Customer enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and by general equity principles; (m) the
Receivable is denominated in and provides for payment by the Customer in
United States (or in the case of a Receivable where the applicable Customer
is a Canadian person, Canadian or United States) dollars; and (n) the
Receivable has not been and is not required to be charged off or written
off as uncollectible in accordance with generally accepted accounting
principles or the customary business practice of the Borrower or any
Guarantor unless adequate reserves have been established therefor in
accordance with generally accepted accounting principles. Notwithstanding
the foregoing, all Receivables of any single Customer which, in the
aggregate, exceed 10% of the total Eligible Receivables at the time of any
such determination shall be deemed not to be Eligible Receivables to the
extent of such excess.
"Environmental Claim" shall mean any written notice of violation,
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claim, demand, abatement or other order by any governmental authority or
any person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or deed or use restrictions, resulting
from or based upon (i) the existence, or the continuation of the existence,
of a Release (including, without limitation, sudden or non-sudden,
accidental or nonaccidental Releases), of, or exposure to, any substance,
chemical, material, pollutant, contaminant, odor or audible noise or other
release or emission in, into or onto the environment (including, without
limitation, the air, ground, water or any surface) at, in, by or from any
of the properties of the Borrower, any Guarantor or any of their respective
subsidiaries, (ii) the environmental aspects of the transportation,
storage, treatment or disposal of materials in connection with the
operation of any of the properties of the Borrower, any Guarantor or any of
their respective subsidiaries or (iii) the violation, or alleged violation
by the Borrower, any Guarantor or any of their respective subsidiaries, of
any
7
statutes, ordinances, orders, rules, regulations, Permits or licenses of or
from any governmental authority, agency or court relating to environmental
matters connected with any of the properties of the Borrower, any Guarantor
or any of their respective subsidiaries, under any applicable Environmental
Law.
"Environmental Laws" shall mean the Comprehensive Environmental
------------------
Response, Compensation, and Liability Act (42 U.S.C. Sec. 9601 et seq.), the
-- ---
Hazardous Material Transportation Act (49 U.S.C. Sec. 1801 et seq.), the
-- ---
Resource Conservation and Recovery Act (42 U.S.C. Sec. 6901 et seq.), the
-- ---
Federal Water Pollution Control Act (33 U.S.C. Sec. 1251 et seq.), the Oil
-- ---
Pollution Act of 1990 (P.L. 101-380), the Safe Drinking Water Act (42
U.S.C. Sec. 300(f), et seq.), the Clear Air Act (42 U.S.C. Sec. 7401 et seq.),
-- --- -- ---
the Toxic Substances Control Act, as amended (15 U.S.C. Sec. 2601 et seq.),
-- ---
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sec. 136 et
--
seq.), and the Occupational Safety and Health Act (29 U.S.C. Sec. 651 et
--- --
seq.), as such laws have been and hereafter may be amended or supplemented,
---
and any related or analogous present or future Federal, state, local or
foreign statutes, rules, regulations, ordinances, licenses, permits and
interpretations and orders of regulatory and administrative bodies.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended, and the rules and regulations promulgated thereunder, as
in effect from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
---------------
not incorporated) which together with the Borrower or any of its
subsidiaries would be treated as a single employer under the provisions of
Title I or Title IV of ERISA.
"Eurodollar Lending Office" means, with respect to any Lender,
-------------------------
the office of such Lender specified as its "Eurodollar Lending Office"
opposite its name in Schedule 2.02 hereto (or, if no such office is
-------------
specified, its Domestic Lending Office), or such other office of such
Lender as such Lender may from time to time specify to the Borrower and the
Agent.
"Eurodollar Loan" shall mean a Loan bearing interest based on the
---------------
Adjusted Eurodollar Rate in accordance with Article II hereof.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Loan
---------------
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the rate at which United States
dollar deposits approximately equal in principal amount to the Eurodollar
Loan of the Agent and for a maturity equal to the applicable Interest
8
Period are offered in immediately available funds to the Agent by leading
banks in the New York interbank market for Eurodollars at approximately
10:00 a.m. New York City time, two Business Days prior to the first day of
such Interest Period.
"Event of Default" shall have the meaning assigned such term in
----------------
Article VIII hereof.
"Financial Officer" shall mean, with respect to any person, the
-----------------
chief financial officer, Vice-President - Finance, Treasurer or Assistant
Treasurer of such person.
"Fiscal Year" shall mean the fiscal year of the Borrower for
-----------
accounting purposes which ends on September 30 of each year.
"Foreign Subsidiaries" shall mean Milgray/Toronto, Inc., a
--------------------
corporation organized and existing under the laws of Ontario, Canada and
all other direct or indirect subsidiaries or Affiliates of the Borrower or
the Guarantors now or hereafter existing that are incorporated or organized
in a jurisdiction outside of the United States of America.
"Guarantee" shall mean any obligation, contingent or otherwise,
---------
of any person guaranteeing or having the economic effect of guaranteeing
any Indebtedness or obligation of any other person in any manner, whether
directly or indirectly, and including, without limitation, any obligation
of such person, direct or indirect, (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security
for the payment of such Indebtedness, (ii) to purchase property, securities
or services for the purpose of assuring the owner of such Indebtedness of
the payment of such Indebtedness, or (iii) to maintain working capital,
equity capital, available cash or other financial statement condition of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness; provided, however, that the term Guarantee shall not include
-------- -------
endorsements for collection or deposit, in either case in the ordinary
course of business.
"Guarantor" shall mean each subsidiary and Affiliate of a Credit
---------
Party executing and delivering this Agreement or which becomes a Guarantor
after the date hereof pursuant to Section 6.11 hereof.
"Hazardous Material" shall mean any pollutant, contaminant,
------------------
chemical, or industrial or hazardous, toxic or dangerous waste, substance
or material, defined or regulated as such in (or for purposes of) any
Environmental Law and any other
9
toxic, reactive, or flammable chemicals, including (without limitation) any
asbestos, any petroleum (including crude oil or any fraction), any
radioactive substance and any polychlorinated biphenyls; provided, in the
--------
event that any Environmental Law is amended so as to broaden the meaning of
any term defined thereby, such broader meaning shall apply subsequent to
the effective date of such amendment; and provided, further, to the extent
-------- -------
that the applicable laws of any state establish a meaning for "hazardous
material," "hazardous substance," "hazardous waste," "solid waste" or
"toxic substance" which is broader than that specified in any Environmental
Law, such broader meaning shall apply.
"Indebtedness" shall mean, with respect to any person, (a) all
------------
obligations of such person for borrowed money, or with respect to deposits
or advances of any kind, (b) all obligations of such person evidenced by
bonds, debentures, notes or other similar instruments, (c) all obligations
of such person for the deferred purchase price of property or services,
except current accounts payable arising in the ordinary course of business
and not overdue, (d) all obligations of such person under conditional sale
or other title retention agreements relating to property purchased by such
person, (e) all payment obligations of such person with respect to interest
rate or currency protection agreements, (f) all obligations of such person
as an account party under any letter of credit or in respect of bankers'
acceptances, (g) all Indebtedness of any third party secured by property or
assets of such person (regardless of whether or not such person is liable
for repayment of such Indebtedness), (h) all Capitalized Lease Obligations,
(i) all Guarantees of such person and (j) the redemption price of all
redeemable preferred stock issued after the date hereof of such person, but
only to the extent that such stock is redeemable at the option of the
holder or requires sinking fund or similar payments at any time prior to
the Revolving Credit Termination Date.
"Information" shall have the meaning assigned to such term in
-----------
Section 11.11 hereof.
"Interest Coverage Ratio" shall mean, with respect to any person
-----------------------
for any period, the ratio of (i) EBIT for such period, to (ii) the Interest
Expense of such person for such period. For purposes hereof, EBIT shall
mean with respect to any person for any period the sum of (i) Net Income,
(ii) Interest Expense and (iii) federal, state, local and foreign income
taxes, in each case of such person on a Consolidated basis for such period,
computed and calculated in accordance with generally accepted accounting
principles applied on a consistent basis.
"Interest Expense" shall mean, with respect to any person for any
----------------
period, the interest expense of such person during
10
such period determined on a Consolidated basis in accordance with generally
accepted accounting principles consistently applied, and shall in any event
include, without limitation, (i) the amortization of debt discounts, (ii)
the amortization of all fees payable in connection with the incurrence of
Indebtedness to the extent included in interest expense, (iii) the portion
of any Capitalized Lease Obligation allocable to interest expense, (iv) all
fixed or calculable dividend payments on preferred stock and (v) payments
of interest expense in kind.
"Interest Payment Date" shall mean (i) in the case of any Loan,
---------------------
the last Business Day of each month commencing November 30, 1995, and (ii)
with respect to any Eurodollar Loan the last day of the Interest Period
applicable thereto.
"Interest Period" shall mean as to any Eurodollar Loan, the
---------------
period (subject to availability) commencing on the date of commencement of
such Eurodollar Loan and ending on the numerically corresponding day (or,
if there is no numerically corresponding day, on the last day) in the
calendar month that is 1, 2, 3, 4 or 6 months thereafter, as the Borrower
may elect with respect to its Eurodollar Loans; provided, however, that
-------- -------
(w) if an Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless, with respect to Eurodollar Loans, such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period
shall end on the next preceding Business Day, (x) no Interest Period with
respect to any Revolving Credit Loan shall end later than the Revolving
Credit Termination Date and (y) interest shall accrue from and including
the first day of an Interest Period to but excluding the last day of such
Interest Period.
"Inventory" shall mean raw materials, work in process and
---------
finished goods, whether now owned or hereafter acquired.
"Lender" shall have the meaning assigned to such term in the
------
preamble to this Agreement.
"Letter of Credit" shall have the meaning assigned to such term
----------------
in Section 3.01 hereof.
"Letter of Credit Exposure" shall mean at any time the sum of
-------------------------
(a) the aggregate undrawn amount of all outstanding Letters of Credit and
(b) the aggregate amount of all drawings under Letters of Credit for which
the Lenders shall not have been reimbursed as provided in Section 3.02
hereof.
11
"Leverage Ratio" with respect to the Borrower and its
--------------
subsidiaries at the end of any fiscal quarter shall mean the ratio of Total
Unsubordinated Liabilities to Tangible Net Worth.
"Leverage Ratio Level" shall have the meaning assigned to such
--------------------
term in Section 2.06 hereof.
"LIBOR Margin" shall have the meaning assigned to such term in
------------
Section 2.05(b) hereof.
"Lien" shall mean, with respect to any asset, (i) any mortgage,
----
lien, pledge, encumbrance, charge or security interest in or on such asset,
(ii) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to
such asset, (iii) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities or (iv) any
other right of or arrangement with any creditor to have his claim satisfied
out of such assets, or the proceeds therefrom, prior to the general
creditors of the owner thereof.
"Loan" shall mean any Revolving Credit Loan.
----
"Loan Documents" shall mean, collectively, this Agreement, the
--------------
Notes, any pledge agreements executed and delivered pursuant to Section
6.11 hereof, any Letter of Credit, any application for any Letter of
Credit, any Acceptance Draft, the Agent's fee letter, and any documents,
agreements or instruments executed and delivered in connection with any
thereof, as each may be supplemented, modified, amended or restated from
time to time in the manner provided herein or therein.
"Margin Stock" shall have the meaning assigned such term in
------------
Regulation U.
"Material Adverse Effect" shall mean any material adverse effect,
-----------------------
individually or in the aggregate, on (i) the business, assets, prospects,
operations or financial or other condition of the Borrower and its
subsidiaries, taken as a whole, (ii) the ability of the Borrower and its
subsidiaries, taken as a whole, to perform or pay the Obligations in
accordance with the terms hereof or (iii) the ability of the Borrower and
its subsidiaries, taken as a whole, to conduct business substantially as
conducted on the Closing Date.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined
------------------
in Section 4001(a)(3) of ERISA.
12
"Net Amount of Eligible Inventory" shall mean, at any time, (i)
--------------------------------
the aggregate value, computed at the lower of cost (on a moving average
cost method, which approximates the FIFO basis) and current market value,
of Eligible Inventory, less (ii) $500,000.
----
"Net Amount of Eligible Receivables" shall mean and include the
----------------------------------
gross amount of Eligible Receivables less (i) sales, excise or similar
taxes and (ii) returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or
claimed.
"Net Income" shall mean, with respect to any person for any
----------
period, the aggregate Consolidated income (or loss) of such person for such
period equal to net revenues and other proper income less the aggregate for
such person of any and all items that are treated as expenses under
generally accepted accounting principles, and less Federal, state and local
income taxes, but excluding any extraordinary gains or any gains from the
sale or disposition of assets other than in the ordinary course of
business, all computed and calculated in accordance with generally accepted
accounting principles applied on a consistent basis.
"Net Worth" shall mean, at any time, the sum of (i) Tangible Net
---------
Worth plus (ii) Consolidated Subordinated Indebtedness of the Borrower, in
----
each case at such time.
"Notes" shall mean the Revolving Credit Notes of the Borrower,
-----
executed and delivered as provided in Section 2.04 hereof.
"Obligations" shall mean all obligations, liabilities and
-----------
indebtedness of the Borrower and the Guarantors to the Lenders and the
Agent, whether now existing or hereafter created, direct or indirect, due
or not, whether created directly or acquired by assignment, participation
or otherwise, with respect to the Loan Documents, the principal of and
interest on the Revolving Credit Loans, reimbursement obligations with
respect to and drawings under any Letter of Credit and any Acceptance
Draft, and the payment or performance of all other obligations,
liabilities, and indebtedness owed by any of them to any Lender or any
Agent under this Agreement or any other Loan Document including, without
limitation, all fees, costs, expenses and indemnity obligations hereunder
and thereunder.
"Other Indebtedness" shall have the meaning assigned to such term
------------------
in Section 7.02(xxi) hereof.
13
"Other Taxes" shall have the meaning assigned to such term in
-----------
Section 2.16(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Pension Plan" shall mean any Plan which is subject to the
------------
provisions of Title IV of ERISA.
"Permits" shall have the meaning assigned to such term in
-------
Section 4.16 hereof.
"person" shall mean any natural person, corporation, business
------
trust, association, company, joint venture, partnership or government or
any agency or political subdivision thereof.
"Plan" shall mean any employee plan within the meaning of
----
Section 3(3) of ERISA and which is maintained (in whole or in part) for
employees of the Borrower, any subsidiary or any ERISA Affiliate.
"Pricing Grid" shall have the meaning set forth in Section 2.06
------------
hereof.
"Prior Credit Agreement" shall mean the Credit Agreement dated as
----------------------
of September 29, 1993 among the Borrower, the Guarantors named therein, the
Agent and the Lenders named therein, as amended from time to time prior to
the Closing Date.
"Puerto Rican Banks" shall have the meaning set forth in Section
------------------
7.02 hereof.
"Puerto Rican Indebtedness Conditions" shall mean the following
------------------------------------
conditions precedent to the incurrence of Indebtedness pursuant to
Section 7.02(xviii) from Puerto Rican Banks: (i) the Agent and the Lenders
shall have given their written consent indicating that the terms and
conditions of all documentation creating, evidencing or governing such
Indebtedness are reasonably satisfactory to the Agent and the Lenders (it
being understood that provisions granting the Puerto Rican Banks a
contractual right of setoff against deposits of the Borrower with such
Banks are acceptable to the Agent and the Lenders), (ii) no intercompany
transactions (other than investments in capital stock and loans and
advances permitted under this Agreement) between the Borrower and Milgray
Electronics/P.R., Inc. shall remain outstanding, (iii) the Agent and the
Banks shall have received an opinion of counsel to the Borrower and Milgray
Electronics/P.R., Inc. (which counsel may be special counsel to such
persons in connection with the subject matter covered thereby) in form and
substance satisfactory to the Agent and the
14
Lenders, to the effect that no Lien exists with respect to any of the cash,
cash equivalents or Puerto Rican Securities of the Borrower or Milgray
Electronics/P.R., Inc. that are on deposit with any of the Puerto Rican
Banks (it being understood that an opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇ in the
form of Exhibit G hereto shall be acceptable to the Agent and the Lenders)
---------
and (iv) the Agent and the Banks shall have received a certificate in form
and substance satisfactory to the Agent and the Banks from a duly
authorized officer of each of the Puerto Rican Banks stating that to the
best of his or her knowledge, such deposits are not subject to any Lien.
"Puerto Rican Securities" shall have the meaning set forth in
-----------------------
Section 7.02 hereof.
"Receivables" shall mean and include all of the Borrower's and
-----------
its Consolidated subsidiaries' (to the extent such subsidiaries have become
Guarantors) accounts, instruments, documents, chattel paper and general
intangibles, whether secured or unsecured, whether now existing or
hereafter created or arising.
"Register" shall have the meaning assigned to such term in
--------
Section 11.03(e) hereof.
"Regulation D" shall mean Regulation D of the Board, as the same
------------
is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation G" shall mean Regulation G of the Board, as the same
------------
is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board, as the same
------------
is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as the same
------------
is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the same
------------
is from time to time in effect, and all official rulings and
interpretations thereunder.
"Release" shall mean any releasing, spilling, leaking, seepage,
-------
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in any
Environmental Law, and shall include any "Threatened Release," as defined
in any Environmental Law.
15
"Remedial Work" shall mean any investigation, site monitoring,
-------------
containment, cleanup, removal, restoration or other remedial work of any
kind or nature with respect to any property of the Borrower or its
subsidiaries (whether such property is owned, leased, subleased or used),
including, without limitation, with respect to Contaminants and the Release
thereof.
"Reportable Event" shall mean a Reportable Event as defined in
----------------
Section 4043(c) of ERISA.
"Required Lenders" shall mean Lenders having 66-2/3% of the Total
----------------
Revolving Credit Commitment.
"Responsible Officer" shall mean, with respect to any person, any
-------------------
vice president or president, or the chief financial officer or controller,
of such person.
"Revolving Credit Commitment" shall mean, with respect to any
---------------------------
Lender, the Revolving Credit Commitment of such Lender as set forth in
Schedule 2.01, as the same may be reduced from time to time pursuant to
Section 2.08 hereof.
"Revolving Credit Commitment Fee" shall have the meaning set
-------------------------------
forth in Section 2.07(a).
"Revolving Credit Loan" shall mean a Revolving Credit Loan made
---------------------
pursuant to Sections 2.01 and 2.02 hereof.
"Revolving Credit Notes" shall mean the Revolving Credit Notes of
----------------------
the Borrower, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit A hereto.
"Revolving Credit Termination Date" shall mean December 31, 1998.
---------------------------------
"Standby Letter of Credit Commission" shall have the meaning
-----------------------------------
assigned to such term in Section 3.06 hereof.
"Subordinated Indebtedness" shall mean, with respect to the
-------------------------
Borrower or any Guarantor, Indebtedness subordinated in right of payment to
such person's monetary obligations under this Agreement, which by its terms
shall not mature or be subject to any mandatory prepayment or amortization
of principal prior to the Revolving Credit Termination Date and all of
whose terms and provisions shall be satisfactory to the Required Lenders as
evidenced by their prior written consent to the creation of such
Indebtedness.
16
"subsidiary" shall mean, with respect to any person (the
----------
"parent"), any corporation, association or other business entity of which
securities or other ownership interests representing more than 50% of the
ordinary voting power are, at the time as of which any determination is
being made, owned or controlled by the parent or one or more subsidiaries
of the parent.
"Swiss Volksbank Guarantee" shall have the meaning assigned such
-------------------------
term in Section 7.02(xx) hereof.
"Tangible Net Worth" shall mean the total of all assets appearing
------------------
on the Consolidated balance sheet of the Borrower prepared in accordance
with generally accepted accounting principles, after deducting therefrom
(without duplication of deductions):
(i) the total of all items which would properly be included as
liabilities on a balance sheet, determined in accordance with generally
accepted accounting principles (including, without limitation, Subordinated
Indebtedness, reserves for liabilities, fixed or contingent, deferred
income taxes, obsolescence, depletion, insurance, and inventory valuation
and all other reserves of any kind); and
(ii) the book value of all assets appearing on such balance
sheet which would be treated as intangibles under generally accepted
accounting principles, including, without limitation, goodwill, long term
deferred taxes, trademarks, trade names, patents, copyrights and licenses.
"Total Revolving Credit Commitment" shall mean the sum of the
---------------------------------
Lenders' Revolving Credit Commitments, as the same may be reduced from time
to time pursuant to Section 2.08 hereof.
"Total Unsubordinated Liabilities" shall mean, with respect to
--------------------------------
any person, the total of all items which would properly be included as
liabilities on a Consolidated balance sheet, determined in accordance with
generally accepted accounting principles consistently applied, excluding
Subordinated Indebtedness, capital stock, additional paid in capital,
capital surplus, retained earnings, minority interests and contingency
reserves.
"Transactions" shall have the meaning assigned such term in
------------
Section 4.02.
Unless otherwise expressly provided herein, each accounting term
used herein shall have the meaning given it under generally accepted
accounting principles in effect from time to
17
time in the United States applied on a basis consistent with those used in
preparing the financial statements referred to in Section 6.05 hereof;
provided, however, that each reference in Article VII hereof, or in the
-------- -------
definition of any term used in Article VII hereof, to generally accepted
accounting principles shall mean generally accepted accounting principles
as in effect on the date hereof.
II. THE LOANS
SECTION 2.01. Revolving Credit Commitments. Subject to the
----------------------------
terms and conditions and relying upon the representations and warranties
herein set forth, each Lender, severally and not jointly, agrees to make
Revolving Credit Loans to the Borrower, at any time and from time to time
from the date hereof to the Revolving Credit Termination Date, or until the
earlier termination of its Revolving Credit Commitment in accordance with
the terms hereof, in an aggregate principal amount at any time outstanding
not to exceed the amount of such Lender's Revolving Credit Commitment set
forth opposite its name in Schedule 2.01 hereto, as such Revolving Credit
-------------
Commitment may be reduced from time to time in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, the sum of
(i) the aggregate principal amount of Revolving Credit Loans outstanding at
any time to Borrower, (ii) the Letter of Credit Exposure and (iii) the
Acceptance Draft Exposure, shall not exceed the lesser of the amount of
Borrowing Base and the Total Revolving Credit Commitment. The Revolving
Credit Commitment of each Lender shall automatically and permanently
terminate on the Revolving Credit Termination Date.
Within the foregoing limits, Borrower may borrow, repay (or,
subject to the provisions of Section 2.10 hereof, prepay) and reborrow, on
and after the date hereof and prior to the Revolving Credit Termination
Date, subject to the terms, provisions and limitations set forth herein,
including, without limitation, the requirement that no Revolving Credit
Loan shall be made hereunder if the amount thereof exceeds the Availability
outstanding at such time.
SECTION 2.02. Loans. (a) The Revolving Credit Loans made by
-----
the Lenders on any date shall be in minimum aggregate principal amounts of
$525,000 and in integral multiples of $100,000 in excess thereof; provided,
--------
however, that, unless otherwise agreed in writing by all of the Lenders,
-------
the Eurodollar Loans made on any date must be in a minimum aggregate
principal amount of $2,100,000.
18
(b) Loans shall be made ratably by the Lenders in accordance
with their respective Revolving Credit Commitments; provided, however, that
-------- -------
the failure of any Lender to make any Loan shall not in itself relieve any
other Lender of its obligation to lend hereunder. The initial Revolving
Credit Loans shall be made by the Lenders against delivery of Revolving
Credit Notes, payable to the order of the Lenders, as referred to in
Section 2.04 hereof.
(c) Each Loan shall be either an Alternate Base Loan or a
Eurodollar Loan as the Borrower may request pursuant to Section 2.03
hereof. Each Lender may fulfill its obligations under this Agreement by
causing its Applicable Lending Office to make such Loan; provided that the
--------
exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the term of the applicable Note. Loans
of more than one type and Interest Period may be outstanding at the same
time.
(d) Subject to the provisions of paragraph (e) below, each
Lender shall make its Revolving Credit Loans on the proposed dates thereof
by paying the amount required to the Agent in New York, New York in
immediately available funds not later than 12:00 noon (or one hour after
Fleet Bank and First Union are both notified of the request for such Loan,
whichever is later), New York City time, and the Agent shall as soon as
practicable, but in no event later than 3:00 p.m., New York City time,
credit the amounts so received to the general deposit account of the
Borrower with the Agent in immediately available funds or, if Loans are not
to be made on such date because any condition precedent to a borrowing
herein specified is not met, return the amounts so received to the
respective Lenders.
(e) The Borrower shall, with respect to any Loan, have the right
at any time upon prior irrevocable written, telex or facsimile notice to
the Agent given in the manner and at the times specified in Section 2.03
hereof with respect to the Loans into which conversion or continuation is
to be made, to convert all or any portion of Eurodollar Loans into
Alternate Base Loans, to convert all or any portion of Alternate Base Loans
into Eurodollar Loans (specifying the Interest Period to be applicable
thereto), to convert the Interest Period with respect to all or any portion
of any Eurodollar Loan to be continued as such to another permissible
Interest Period on the last day of such Interest Period (effective the
following day), and to continue all or any portion of any Loans into a
subsequent Interest Period of the same duration, subject to the terms and
conditions of this Agreement and to the following:
19
(i) in the case of a conversion or continuation of fewer
than all the Loans, the aggregate principal amount of (x) any
portion of a Eurodollar Loan converted into an Alternate Base
Loan shall not be less than $525,000 and in integral multiples of
$100,000 in excess thereof; provided, however, that the remaining
-------- -------
portion of such Eurodollar Loan shall not be less than
$2,100,000, (y) any portion of a Eurodollar Loan continued shall
not be less than $2,100,000 and (z) all or any portion of an
Alternate Base Loan converted into a Eurodollar Loan shall not be
less than $2,100,000 and in integral multiples of $100,000 in
excess thereof;
(ii) each conversion shall be effected by each Lender by
applying the proceeds of the new Loan to the Loan (or portion
thereof) being converted; accrued interest on a Eurodollar Loan
(or portion thereof) being converted or continued shall be paid
by the Borrower at the time of conversion or continuation;
(iii) if any Eurodollar Loan is converted at any time other
than the end of an Interest Period applicable thereto, the
Borrower shall make such payments associated therewith as are
required pursuant to Section 2.13 hereof;
(iv) any portion of the Revolving Credit Loan which is
subject to an Interest Period ending on a date that is less than
one month prior to the Revolving Credit Termination Date may not
be converted into, or continued as, a Eurodollar Loan and shall
be automatically converted at the end of such Interest Period
into an Alternate Base Loan; and
(v) no Default or Event of Default shall have occurred and
be continuing.
The Interest Period applicable to any Eurodollar Loan resulting
from a conversion shall be specified by the Borrower in the irrevocable
notice of conversion delivered pursuant to this Section; provided, however,
-------- -------
that if no such Interest Period shall be specified, the Borrower shall be
deemed to have selected an Interest Period of three months' duration. If
the Borrower shall not have given timely notice to continue any Eurodollar
Loan into a subsequent Interest Period (and shall not otherwise have given
notice to convert such Loan), such Loan (unless repaid or required to be
repaid pursuant to the terms hereof) shall, subject to (iv) and (v) above,
automatically be continued into a new Interest Period of three months'
duration. The Agent shall promptly advise the Lenders of any notice given
pursuant to this
20
Section and of each Lender's portion of the continuation or conversion
hereunder.
SECTION 2.03. Notice of Loans. The Borrower will give the Agent
---------------
irrevocable telephonic notice (immediately confirmed in writing) of each
borrowing (including, without limitation, a refinancing or conversion as
permitted by Section 2.02(e) hereof) not later than (i) in the case of
Eurodollar Loans, 12:00 noon (New York City time) two Business Days before
a proposed borrowing and (ii) in the case of Alternate Base Loans, 12:00
noon (New York City time) on the Business Day of the proposed borrowing or
conversion. Such notice shall specify (w) whether the Loans then being
requested are to be Alternate Base Loans or Eurodollar Loans, (x) the date
of such borrowing (which shall be a Business Day) and the amount thereof
and (y) if such Loans are to be Eurodollar Loans, the Interest Period with
respect thereto. If no election as to the type of Loan is specified in any
such notice, all such Loans shall be Alternate Base Loans. If no Interest
Period with respect to any Eurodollar Loan is specified in any such notice,
then an Interest Period of three months' duration shall be deemed to have
been selected. The Agent shall promptly advise (but in any event, by 12:30
p.m., New York City time, two Business Days before a Eurodollar Loan or by
12:30 p.m., New York City time, on the same Business Day in the case of an
Alternate Base Loan) the Lenders of any notice given pursuant to this
Section 2.03 and of each Lender's portion of the requested borrowing.
SECTION 2.04. Notes; Repayment of Loans. (a) All Revolving
-------------------------
Credit Loans made by a Lender shall be evidenced by a single Revolving
Credit Note, duly executed on behalf of Borrower, dated the Closing Date,
in substantially the form of Exhibit A hereto, delivered and payable to
such Lender in a principal amount equal to its Revolving Credit Commitment
in respect of the Borrower on such date.
(b) The outstanding principal balance of each Revolving Credit
Loan, as evidenced by any such Revolving Credit Note, shall mature and be
due and payable on the Revolving Credit Termination Date. Each Revolving
Credit Note shall bear interest from its date on the outstanding principal
balance thereof, as provided in Section 2.05 hereof.
(c) Each Lender shall, and is hereby authorized by Borrower to,
endorse on the schedule attached to the Revolving Credit Note of such
Lender (or on a continuation of such schedule attached to such Note and
made a part thereof) an appropriate notation evidencing the date and amount
of each Loan to Borrower from such Lender, as well as the date and amount
of each payment and prepayment with respect thereto; provided, however,
-------- -------
that the
21
failure of any person to make such a notation on a Note shall not affect
any obligations of Borrower under such Note. All advances and payments
made pursuant to this Agreement and the other Loan Documents may be
recorded by each Lender on its books and records, and such books and
records shall be conclusive as to the existence and amounts thereof absent
manifest error.
SECTION 2.05. Interest on Loans. (a) Subject to the provisions
-----------------
of Section 2.09 hereof, the portion of each Alternate Base Loan funded by
Chemical Bank, as Lender ("Chemical") commencing (X) prior to January 1,
1997 and (Y) at any time when the sum of (i) the aggregate amount of
Revolving Credit Loans outstanding made by Chemical, (ii) Chemical's
portion of the Letter of Credit Exposure and (iii) Chemical's portion of
the Acceptance Draft Exposure (such sum being referred to hereinafter as
the "Benchmark Exposure") is less than or equal to $18,000,000 shall bear
interest at a rate per annum equal to the Alternate Base Rate less .55% and
the portion of each Alternate Base Loan funded by the Lenders other than
Chemical shall bear interest at a rate per annum equal to the Alternate
Base Rate. Subject to the provisions of Section 2.09 hereof, each
Alternate Base Loan funded by any Lender commencing (X) after December 31,
1996 (whether or not such Loan was funded prior thereto) or (Y) at any time
when the Benchmark Exposure is in excess of $18,000,000 shall bear interest
at a rate per annum equal to the Alternate Base Rate; provided, however,
-------- -------
that those Alternate Base Loans funded by Chemical prior to January 1, 1997
and at a time when the Benchmark Exposure was less than or equal to
$18,000,000 shall continue to bear interest at a rate per annum equal to
the Alternate Base Rate less .55% through December 31, 1996 pursuant to the
previous sentence hereof.
(b) Subject to the provisions of Section 2.09 hereof, the
portion of each Eurodollar Loan funded by Chemical commencing (X) prior to
January 1, 1997 and (Y) at a time when the Benchmark Exposure is less than
or equal to $18,000,000 shall bear interest at a rate per annum equal to the
Adjusted Eurodollar Rate plus .70% and the portion of each Eurodollar Loan
funded by the Lenders other than Chemical shall bear interest at a rate per
annum equal to the Adjusted Eurodollar Rate plus the LIBOR Margin
determined pursuant to the Pricing Grid contained in Section 2.06 hereof
(the "LIBOR Margin"). Subject to the provisions of Section 2.09 hereof,
each Eurodollar Loan funded by any Lender commencing (X) after December 31,
1996 (whether or not such Loan was funded prior thereto) or (Y) at any time
when the Benchmark Exposure is in excess of $18,000,000 shall bear interest
at a rate per annum equal to the Adjusted Eurodollar Rate plus the
applicable LIBOR Margin; provided, however, that those Eurodollar Loans
-------- -------
funded by Chemical prior to January 1, 1997 and at a time when the
Benchmark Exposure was less than or
22
equal to $18,000,000 shall continue to
bear interest at a rate per annum equal to the Adjusted Eurodollar Rate
plus .70% through December 31, 1996 pursuant to the previous sentence
hereof.
(c) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date and on the Revolving Credit Termination
Date, and on demand thereafter. Interest on each Alternate Base Loan and
Eurodollar Loan shall be computed based on the number of days elapsed in a
year of 360 days. The Agent shall determine each interest rate applicable
to the Loans and shall promptly advise the Borrower and the Lenders of the
interest rate so determined.
(d) It is the intention of the Lenders and the Borrower that the
interest (as defined under applicable law) on the Loans, Letter of Credit
advances and Acceptance Drafts that may be charged to, collected from or
received from the Borrower shall not exceed the maximum rate permissible
under applicable law. Accordingly, anything in this Agreement, any Note or
any other Loan Document to the contrary notwithstanding, in the event any
interest (as so defined) is charged to, collected from or received from the
Borrower by the Lenders pursuant hereto or thereto in excess of such
maximum lawful rate, then the excess of such payment over that maximum
shall be applied to the reduction of the outstanding principal balance of
the Loans and the other Obligations (without any prepayment premium or
penalty), and any portion of such excess payment remaining after payment
and satisfaction in full of the Obligations shall be returned by the
Lenders to the Borrower.
SECTION 2.06. Rate Adjustments. Subject to the provisions of
----------------
Section 2.05 hereof, the (a) LIBOR Margin for Revolving Credit Loans,
(b) Standby Letter of Credit Commission (as defined in Section 3.06) for
standby Letters of Credit and (c) Acceptance Draft Commission (as defined
in Section 3.08) for Acceptance Drafts shall be adjusted on a quarterly
basis based upon the Leverage Ratio of the Borrower and its subsidiaries on
a Consolidated basis. On the Closing Date, the applicable LIBOR Margin,
Standby Letter of Credit Commission and Acceptance Draft Commission shall
be .75%, .875%, and .75%, respectively, and thereafter for each fiscal
quarter commencing with the fiscal quarter ending September 30, 1995 shall
be determined pursuant to the grid below (the "Pricing Grid") for the
periods and at the Leverage Ratio Levels (the "Leverage Ratio Levels")
indicated on the Pricing Grid.
23
Pricing Grid
------------
Leverage Ratio Leverage Ratio Leverage Ratio
-------------- -------------- --------------
▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇
------- ------- -------
LIBOR Margin .75% 1.00% 1.25%
Standby Letter of .875% 1.125% 1.375%
Credit Commission
Acceptance Draft .75% 1.00% 1.25%
Commission
Leverage Ratio Leverage Ratio Leverage Ratio
-------------- -------------- --------------
▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇
------- ------- -------
Closing Date - Leverage Ratio Leverage Ratio Leverage Ratio
9/29/96 is less than or is greater than is equal to or
equal to 1.75:1 1.75:1 but less greater than
than 1.90:1 1.90:1
9/30/96-9/29/97 Leverage Ratio Leverage Ratio Leverage Ratio
is less than or is greater than is equal to or
equal to 1.60:1 1.60:1 but less greater than
than 1.75:1 1.75:1
9/30/97 and Leverage Ratio Leverage Ratio Leverage Ratio
thereafter is less than or is greater than is equal to or
equal to 1.50:1 1.50:1 but less greater than
than 1.65:1 1.65:1
Provided that no Event of Default shall have occurred and be continuing,
such adjustments, if applicable, (i) shall become effective (and shall
pertain, as appropriate, to each new Eurodollar Loan funded, each new
standby Letter of Credit issued and each new Acceptance Draft created
thereafter) five (5) business days after the receipt by the Agent and the
Lenders of the financial statements and certificates required to be
delivered pursuant to Sections 6.05(a), (b) and (d) hereof, as applicable,
together with a certificate signed by a Financial Officer of the Borrower
demonstrating the calculation of the Leverage Ratio, all such statements
and certificates to be in form and substance satisfactory to the Agent and
the Lenders, and (ii) shall remain in effect until five (5) Business Days
after the receipt by the Agent and the Lenders of the applicable financial
statements and certificates for the succeeding fiscal period; provided,
--------
however, that if such financial statements
-------
24
together with such certificates are not submitted to the Agent and the
Lenders pursuant to this Section 2.06 and Section 6.05 hereof, the
applicable LIBOR Margin, Standby Letter of Credit Commission and Acceptance
Draft Commission shall be those provided for at Leverage Ratio Level 3
above.
The LIBOR Margin, Standby Letter of Credit Commission
and Acceptance Draft Commission shall be calculated on the basis of the
actual number of days elapsed in a year of 360 days.
SECTION 2.07. Commitment and Other Fees. (a) The Borrower
-------------------------
shall pay each Lender, through the Agent, on each January 1, April 1, July
1 and October 1, and on the Revolving Credit Termination Date, in
immediately available funds, a commitment fee (the "Revolving Credit
Commitment Fee") of 1/4 of 1% per annum on the daily unused amount of the
Revolving Credit Commitment of such Lender (it being understood that for
purposes of calculating such unused amount, the unused amount of such
Lender's Revolving Credit Commitment shall be reduced by an amount equal to
such Lender's pro rata share of the Letter of Credit Exposure and
Acceptance Draft Exposure), during the quarter (or shorter period
commencing with the date hereof or ending with the Revolving Credit
Termination Date) ending on such date. The commitment fees due to each
Lender under this Section 2.07(a) shall commence to accrue on the date
hereof and cease to accrue on the earlier of (i) the Revolving Credit
Termination Date and (ii) the termination of the Revolving Credit
Commitment of such Lender pursuant to Section 2.08 hereof.
(b) The Borrower shall pay each Lender on or before the Closing
Date a facility fee of 1/10 of 1% of such Lender's Revolving Credit
Commitment.
(c) All fees under this Section 2.07 shall be calculated on the
basis of the actual number of days elapsed in a year of 360 days.
SECTION 2.08. Termination and Reduction of Revolving Credit
---------------------------------------------
Commitments. (a) Upon at least three Business Days prior irrevocable
-----------
written, telex or facsimile notice to the Agent, the Borrower may at any
time in whole permanently terminate, or from time to time in part
permanently reduce, the Total Revolving Credit Commitment, ratably among
the Lenders in accordance with the amounts of their respective Revolving
Credit Commitments. Each partial reduction of the Total Revolving Credit
Commitment shall be in a minimum of $1,000,000 and an integral multiple of
$1,000,000.
(b) Simultaneously with any termination or reduction of the
Total Revolving Credit Commitment pursuant to paragraph
25
(a) of this Section 2.08, the Borrower shall pay to each Lender, through
the Agent, the Revolving Credit Commitment Fee on the amount of the
Revolving Credit Commitment of such Lender so terminated or reduced owed to
the date of such termination or reduction.
SECTION 2.09. Interest on Overdue Amounts; Alternate Rate of
----------------------------------------------
Interest. (a) If Borrower shall default in the payment of the principal
--------
of or interest on any Loan or any other amount becoming due hereunder, by
acceleration or otherwise, Borrower shall on demand from time to time pay
interest, to the extent permitted by law, on such defaulted amount up to
the date of actual payment (after as well as before judgment) at a rate per
annum equal to the Alternate Base Rate plus 3%.
(b) In the event, and on each occasion, that on the day two
Business Days prior to the commencement of any Interest Period for a
Eurodollar Loan the Agent shall have determined that dollar deposits in the
amount of each Eurodollar Loan are not generally available in the New York
interbank market, or that the rate at which dollar deposits are being
offered will not adequately and fairly reflect the cost to any Lender of
making or maintaining such Eurodollar Loan during such Interest Period, or
that reasonable means do not exist for ascertaining the Eurodollar Rate,
the Agent shall as soon as practicable thereafter give written, telex or
facsimile notice of such determination to the Borrower and the Lenders, and
any request by Borrower for the making of a Eurodollar Loan pursuant to
Section 2.03 hereof or conversion or continuation of any Loan into a
Eurodollar Loan pursuant to Section 2.02(e) hereof shall, until the
circumstances giving rise to such notice no longer exist, be deemed to be a
request for an Alternate Base Loan except to the extent that the Borrower
shall have notified the Agent in writing that it does not desire such
notice to be deemed as a request for an Alternate Base Loan (in which case
such notice shall be deemed to be cancelled). Each determination by the
Agent made hereunder shall be conclusive absent manifest error.
(c) After notice from the Lenders during the continuance of any
Event of Default prior to maturity, and at all times on or after maturity,
the Loans shall bear additional interest on the unpaid principal balance of
the Loans and the Borrower shall pay to the Lenders additional fees
respecting the Letters of Credit and Acceptance Drafts (in each case
computed on the basis of the actual number of days elapsed and a year of
360 days) outstanding from time to time during such period(s) at a rate
equal to 3.00% per annum, which amounts shall be payable by the Borrower in
addition to the regular interest payments, Letter of Credit fees and
Acceptance Draft discounts required under this Agreement, and shall be paid
at the same times as the regular
26
interest payments on the Loan required pursuant to this Agreement, subject,
however, to the maximum rate permissible by applicable law as provided in
Section 2.05(d).
SECTION 2.10. Prepayment of Loans. (a) Subject to the terms
-------------------
and conditions contained in this Section 2.10 and elsewhere in this
Agreement, Borrower shall have the right to prepay any Loan at any time in
whole or from time to time in part; provided, however, that each such
-------- -------
partial prepayment of a Loan shall be in an integral multiple of $250,000
and in the case of a Eurodollar Loan shall occur only on the last day of an
Interest Period.
(b) Without limiting the generality of the first sentence of
paragraph (c) below, on the date of any termination or reduction of the
Total Revolving Credit Commitment pursuant to Section 2.08(a) hereof,
Borrower shall pay or prepay so much of the Revolving Credit Loans as shall
be necessary in order that the Availability equals or exceeds zero
following such termination or reduction. Any prepayments required by this
paragraph (b) shall be applied to outstanding Alternate Base Loans up to
the full amount thereof before they are applied to outstanding Eurodollar
Loans.
(c) Borrower shall make prepayments of the Revolving Credit
Loans from time to time such that the Availability equals or exceeds zero
at all times. Any prepayments required by this paragraph (c) shall be
applied to outstanding Alternate Base Loans up to the full amount thereof,
to outstanding Eurodollar Loans (provided that no such prepayment shall be
required until the last day of the Interest Period with respect thereto so
--
long as an amount equal to such prepayment is deposited by the Borrower
---- --
into a cash collateral account with the Agent to be held in such account
pursuant to terms satisfactory to the Required Lenders) and then as cash
collateral for outstanding Letters of Credit and Acceptance Drafts up to
the full amount of the Letter of Credit Exposure and Acceptance Draft
Exposure then existing, such cash collateral to be held by the Agent on
terms and pursuant to documents satisfactory in all respects to the
Required Lenders.
(d) When making a prepayment, whether mandatory or otherwise,
pursuant to paragraph (a) or (b) above, the Borrower shall furnish to the
Agent, not later than 12:00 noon (New York City time) on the day of such
prepayment (or in the case of Eurodollar Loans five Business Days prior to
the date of such prepayment), a written, telex or facsimile (or telephonic,
promptly confirmed in writing) notice of prepayment which shall specify the
prepayment date and the principal amount of each Loan (or portion thereof)
to be prepaid, which notice shall be
27
irrevocable and shall commit the Borrower to prepay such Loan by the amount
stated therein on the date stated therein. All prepayments shall be
accompanied by accrued interest on the principal amount being prepaid to
the date of prepayment.
(e) All prepayments and other payments made pursuant to this
Agreement shall be subject to Section 2.13 hereof, whether as a result of
the provisions of this Agreement, miscalculation, consent of the Lenders,
change in circumstance, acceleration of the Obligations or otherwise.
(f) Except as otherwise expressly provided in this Section 2.10,
payments with respect to any paragraph of this Section 2.10 are in addition
to payments made or required to be made under any other paragraph of this
Section 2.10 or any provision of this Agreement or any other Loan Document.
SECTION 2.11. Reserve Requirements; Change in Circumstances.
---------------------------------------------
(a) Notwithstanding any other provision herein, if after the date of this
Agreement (or in the case of any assignee, the date of assignment) any
change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force
of law) shall: (i) subject the Agent or any Lender (which shall for the
purpose of this Section include any assignee or lending office of the Agent
or any Lender) to any tax with respect to any amount paid or to be paid by
either the Agent or any Lender with respect to any Eurodollar Loans made by
a Lender to Borrower (other than (x) taxes imposed on the overall net
income of the Agent or such Lender and (y) franchise taxes imposed on the
Agent or such Lender, in either case by the jurisdiction in which such
Lender or the Agent has its principal office or its lending office with
respect to such Eurodollar Loan or any political subdivision or taxing
authority of either thereof); (ii) change the basis of taxation of payments
to any Lender or the Agent of the principal of or interest on any
Eurodollar Loan or any other fees or amounts payable hereunder (other than
taxes imposed on the overall net income of such Lender or the Agent by the
jurisdiction in which such Lender or the Agent has its principal office or
by any political subdivision or taxing authority therein); (iii) impose,
modify or deem applicable any reserve, special deposit or similar
requirement (other than any change by way of imposition or increase of
reserve requirements, in the case of Eurodollar Loans, included in the
Eurodollar Reserves used to calculate any then applicable Adjusted
Eurodollar Rate) against assets of, deposits with or for the account of, or
loans or loan commitments extended by, such Lender; or (iv) impose on any
Lender or the New York interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender;
28
and the result of any of the foregoing shall be to increase the cost to any
such Lender of making or maintaining any Eurodollar Loan, or to reduce the
amount of any payment (whether of principal, interest or otherwise)
receivable by such Lender or to require such Lender to make any payment in
respect of any Eurodollar Loan, then Borrower shall pay to such Lender or
the Agent, as the case may be, upon such Lender's or the Agent's demand,
such additional amount or amounts as will compensate such Lender or the
Agent for such additional costs or reduction. The Agent and each Lender
agree to give notice to the Borrower and the Agent of any such change in
law, regulation, interpretation or administration with reasonable
promptness after becoming actually aware thereof and of the applicability
thereof to the Transactions. Notwithstanding anything contained herein to
the contrary, nothing in clauses (i) or (ii) of this Section 2.11(a) shall
be deemed to (x) permit the Agent or any Lender to recover any amount
thereunder which would not be recoverable under Section 2.16 hereof or (y)
require the Borrower to make any payment of any amount to the extent that
such payment would duplicate any payment made by the Borrower pursuant to
Section 2.16 hereof.
(b) If, after the date of this Agreement, any Lender shall have
determined that the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein, or any change
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 (or
its lending office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
authority,central bank or comparable agency, has or will 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) then
from time to time, Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender for such reduction. Each Lender
agrees to give notice to Borrower and the Agent of any adoption of, change
in, or change in interpretation or administration of, any such law, rule,
regulation or guideline with reasonable promptness after becoming actually
aware thereof and of the applicability thereof to the Transactions.
(c) A statement of each Lender or the Agent setting forth such
amount or amounts, supported by calculations in reasonable detail, as shall
be necessary to compensate such Lender (or the Agent) as specified in
paragraphs (a) and (b) above shall be delivered to the Borrower and shall
be conclusive
29
absent manifest error. The Borrower shall pay each Lender or the Agent the
amount shown as due on any such statement within 10 days after its receipt
of the same.
(d) Failure on the part of any Lender or the Agent to demand
compensation for any increased costs, reduction in amounts received or
receivable with respect to any Interest Period or reduction in the rate of
return earned on such Lender's capital, shall not constitute a waiver of
such Lender's or the Agent's rights to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction
in rate of return in such Interest Period or in any other Interest Period.
The protection under this Section 2.11 shall be available to each Lender
and the Agent regardless of any possible contention of the invalidity or
inapplicability of any law, regulation or other condition which shall give
rise to any demand by such Lender or the Agent for compensation.
(e) Any Lender claiming any additional amounts payable pursuant
to this Section 2.11 agrees to use reasonable efforts (consistent with
legal and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid the need
for, or reduce the amount of, any such additional amounts and would not, in
the reasonable judgment of such Lender, be otherwise disadvantageous to
such Lender.
SECTION 2.12. Change in Legality. (a) Notwithstanding anything
------------------
to the contrary herein contained, if any change in any law or regulation or
in the interpretation thereof by any governmental authority charged with
the administration or interpretation thereof shall make it unlawful for any
Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations to make Eurodollar Loans as contemplated hereby, then, by
written notice to Borrower and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be
made by such Lender hereunder, whereupon the Borrower shall be
prohibited from requesting Eurodollar Loans from such Lender
hereunder unless such declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans, as the
case may be, made by it be converted to Alternate Base Loans, in
which event (A) all such Eurodollar Loans shall be automatically
converted to Alternate Base Loans as of the effective date of
such notice as provided in paragraph (b) below and (B) all
payments of principal which would otherwise have been
30
applied to repay the converted Eurodollar Loans shall instead be
applied to repay the Alternate Base Loans resulting from the
conversion of such Eurodollar Loans.
(b) For purposes of Section 2.12(a) hereof, a notice to the
Borrower by any Lender shall be effective, if lawful, on the last day of
the then current Interest Period or, if there are then two or more current
Interest Periods, on the last day of each such Interest Period,
respectively; otherwise, such notice shall be effective with respect to
Borrower on the date of receipt by Borrower.
SECTION 2.13. Indemnity. Borrower shall indemnify each Lender
---------
against any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third
parties acquired to effect or maintain any Loan or part thereof as a
Eurodollar Loan or maintain any Acceptance Draft which such Lender may
sustain or incur as a consequence of the following events (regardless of
whether such events occur as a result of the provisions of this Agreement,
the consent of the Lenders, the occurrence of an Event of Default or the
exercise of any right or remedy of the Agent or the Lenders under this
Agreement, any other Loan Document or applicable law): any failure of
Borrower to fulfill on the date of any borrowing hereunder the applicable
conditions set forth in Article V applicable to it, any failure of Borrower
to borrow hereunder after irrevocable notice of borrowing pursuant to
Section 2.03 hereof has been given, any payment, prepayment or conversion
of a Eurodollar Loan on a date other than the last day of the relevant
Interest Period, any repayment of an Acceptance Draft on a date prior to
its maturity, any default in payment or prepayment of the principal amount
of any Eurodollar Loan or Acceptance Draft or any part thereof or interest
accrued thereon, as and when due and payable (at the due date thereof, by
irrevocable notice of prepayment or otherwise). Such loss or reasonable
expense respecting Eurodollar Loans shall include, without limitation, an
amount equal to the excess, if any, of (i) the amount of interest which
would have accrued on the principal amount so paid, prepaid or converted or
not borrowed for the period from the date of such payment, prepayment or
conversion or failure to borrow to the last day of the Interest Period for
such Loan (or, in the case of a failure to borrow, the Interest Period for
such Loan which would have commenced on the date of such failure to
borrow), at the applicable rate of interest for such Loan provided for
herein over (ii) the redeployment rate (bid side) of the Agent for
Eurodollar Loans with comparable maturities for comparable periods. Any
such Lender shall provide to Borrower and the Agent a statement, signed by
an officer of such Lender, explaining any loss or expense and setting
forth, if applicable, the computation
31
pursuant to the preceding sentence, and such statement shall be conclusive
absent manifest error. Borrower shall pay such Lender the amount shown as
due on any such statement within 10 days after the receipt of the same.
SECTION 2.14. Pro Rata Treatment. (a) Except as permitted
------------------
under Section 2.12 hereof, and except for any payment, reimbursement or
other indemnity to any Lender or other indemnified person under Section
2.11, 2.12, 2.13, 2.16, 3.04, 3.05, or 11.04 hereof, each borrowing, each
payment or prepayment of principal of the Notes, each payment of interest
on the Notes, each payment of any fee or other amount payable hereunder and
each reduction of the Total Revolving Credit Commitment shall be made pro
rata among the Lenders in the proportions that their Revolving Credit
Commitments bear to the Total Revolving Credit Commitment.
(b) Unless the Agent shall have been notified in writing by any
Lender prior to the time the Lender is required to fund any proposed
borrowing that such Lender will not make the amount that would constitute
its pro rata share of the borrowing on such date available to the Agent,
the Agent may (assuming that the Agent has furnished such Lender with
notice of the proposed borrowing as required under Section 2.03 hereof)
assume that such Lender has made such amount available by such Lender to
the Agent on such date, and the Agent may, in reliance upon such assump-
tion, make available to the Borrower a corresponding amount. If such
amount is made available by such Lender to the Agent on a date after such
borrowing date, such Lender shall pay to the Agent on demand an amount
equal to the product of (i) the daily average Federal funds rate during
such period as quoted by the Agent, times (ii) the amount of such Lender's
pro rata share of such borrowing, times (iii) a fraction the numerator of
which is the number of days that elapse from and including such borrowing
date to the date on which such Lender's pro rata share of such borrowing
shall have become immediately available to the Agent and the denominator of
which is 360. A certificate of the Agent submitted to any Lender with
respect to any amounts owing under this subsection shall be conclusive in
the absence of manifest error. If such Lender's pro rata share of such
borrowing is not in fact made available to the Agent by such Lender within
three Business Days of such borrowing date, the Agent shall be entitled to
recover such amount with interest thereon at the rate per annum applicable
to the relevant Loans hereunder, on demand, from the Borrower.
SECTION 2.15. Sharing of Setoffs. Each Lender agrees that if it
------------------
shall, through the exercise of a right of banker's lien, setoff or
counterclaim against Borrower or Guarantor, including, but not limited to,
a secured claim under Section 506
32
of Title 11 of the United States Code or other security or interest arising
from, or in lieu of, such secured claim, received by such Lender under any
applicable bankruptcy, insolvency or other similar law or otherwise, obtain
payment (voluntary or involuntary) in respect of a Note held by it as a
result of which the unpaid principal portion of the Notes held by it shall
be proportionately less than the unpaid principal portion of the Notes held
by any other Lender, it shall be deemed to have simultaneously purchased
from such other Lender a participation in the Notes held by such other
Lender with the purchase price payable in cash upon demand by such other
Lender, so that the aggregate unpaid principal amount of the Notes and
participations in Notes held by it shall be in the same proportion to the
aggregate unpaid principal amount of all Notes then outstanding as the
principal amount of the Notes held by it prior to such exercise of banker's
lien, setoff or counterclaim was to the principal amount of all Notes
outstanding prior to such exercise of banker's lien, setoff or
counterclaim; provided, however, that if any such purchase or purchases or
-------- -------
adjustments shall be made pursuant to this Section 2.15 and such other
Lender shall thereafter receive or recover from or respecting the Borrower
or any Guarantor any amount in respect of a Note proportionally greater
than that received by the first Lender, such purchase or purchases or
adjustments shall be repurchased and rescinded to the extent of such
receipt or recovery and the purchase price or prices paid or adjustments
made shall be repaid or restored, as applicable, without interest;
provided, that, if such disproportionate amount received or recovered by
-------- ----
such other Lender exceeds the amount necessary to restore the Lenders'
respective pro rata shares, then this section shall apply to such excess.
The Borrower expressly consents to the foregoing arrangements and agrees
that any Lender holding a participation in a Note deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by Borrower to such
Lender as fully as if such Lender held a Note in the amount of such
participation.
SECTION 2.16. Taxes. (a) Any and all payments by Borrower or
-----
any Guarantor hereunder shall be made, in accordance with Section 2.17
hereof, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings in any
such case imposed by the United States or any political subdivision
thereof, excluding:
(i) in the case of the Agent and each Lender, taxes imposed
or based on its net income, and franchise or capital taxes
imposed on it, (A) if the Agent or
33
such Lender is organized under the laws of the United States or
any political subdivision thereof and (B) if
the Agent or such Lender is not organized under the laws of the
United States or any political subdivision thereof, and its
principal office or Applicable Lending Office is located in the
United States, and in the case of both (A) and (B), withholding
taxes payable with respect to payments to the Agent or such
Lender, in either case by any jurisdiction in which it has at its
principal office or Applicable Lending Office under laws (includ-
ing, without limitation, any treaty, ruling, determination or
regulation) in effect on the date hereof (or in the case of any
assignee, on the date of its assignment), but not any increase in
withholding tax resulting from any subsequent change in such laws
(other than withholding with respect to taxes imposed or based on
its net income or with respect to franchise or capital taxes),
(ii) taxes (including withholding taxes) imposed by reason
of the failure of the Agent or any Lender, in either case that is
organized outside the United States, to comply with Section
2.16(f) hereof (or the inaccuracy at any time of the
certificates, documents and other evidence delivered thereunder),
and
(iii) taxes (including withholding taxes) that would not have
been imposed on the Agent or any Lender but for a connection
between such Agent or Lender and the jurisdiction imposing such
taxes (except to the extent that the liability for such taxes
arises as a result of the fact that such person is a party to
this Agreement)
(all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If
Borrower or any Guarantor shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder to the Lenders or the Agent, (x)
the sum payable shall be increased by the amount necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 2.16) such Lender or the Agent
(as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (y) Borrower or such Guarantor
shall make such deductions and (z) Borrower or such Guarantor shall pay the
full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.
34
(b) In addition, Borrower and the Guarantors agree to pay any
present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement (hereinafter referred to as "Other Taxes").
(c) Borrower and the Guarantors will indemnify each Lender and
the Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction (except as
specified in clause (a)(i), (ii) and (iii)) on amounts payable under this
Section 2.16) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto. This indemnification shall be made within 30 days
from the date such Lender or the Agent (as the case may be) makes written
demand therefor. If any Lender receives a refund in respect of any Taxes
or Other Taxes for which such Lender has received payment from Borrower
hereunder, such Lender shall promptly notify Borrower of such refund and
such Lender shall, within 30 days of receipt of a request by Borrower,
repay such refund to Borrower, provided that Borrower, upon the request of
such Lender, agrees to return such refund (plus any penalties, interest or
other charges) to such Lender in the event such Lender is required to repay
such refund.
(d) Within 30 days after the date of any payment of Taxes or
Other Taxes withheld by a Borrower or Guarantor in respect of any payment
to any Lender, the Borrower will furnish to the Agent, at its address
referred to in Section 11.01 hereof, such certificates, receipts and other
documents as may be reasonably required to evidence payment thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section 2.16
shall survive the payment in full of principal and interest hereunder.
(f) Each Lender that is organized outside of the United States
shall deliver to Borrower on the date hereof (or, in the case of an
assignee, on the date of the assignment) and from time to time as required
for renewal under applicable law duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 (or any successor or additional
forms), as appropriate, indicating in each case that such Lender is
entitled to receive payments under this Agreement without any deduction or
withholding of any United States federal income taxes. The Agent (if the
Agent is an entity organized outside the United States) and each Lender
that is organized outside the United States shall promptly notify Borrower
and the Agent of any change in its
35
Applicable Lending Office and upon written request of Borrower such Lender
shall, prior to the immediately following due date of any payment by
Borrower or any Guarantor hereunder, deliver to Borrower or such Guarantor,
as the case may be (with copies to the Agent), such certificates, documents
or other evidence, as required by the Code or Treasury Regulations issued
pursuant thereto, including without limitation Internal Revenue Service
Form 4224, Form 1001 and any other certificate or statement of exemption
required by Treasury Regulation Section 1.1441-4(a) or Section 1.1441-6(c)
or any subsequent version thereof, properly completed and duly executed by
such Lender establishing that such payment is (i) not subject to
withholding under the Code because such payment is effectively connected
with the conduct by such Lender of a trade or business in the United States
or (ii) totally exempt from United States tax under a provision of an
applicable tax treaty. The Borrower shall be entitled to rely on such
forms in their possession until receipt of any revised or successor form
pursuant to this Section 2.16(f). If the Agent or a Lender fails to
provide a certificate, document or other evidence required pursuant to this
Section 2.16(f), then (i) the Borrower shall be entitled to deduct or
withhold on payments to the Agent or such Lender as a result of such
failure, as required by law, and (ii) the Borrower shall not be required to
make payments of additional amounts with respect to such withheld Taxes
pursuant to clause (x) of Section 2.16(a) hereof to the extent such
withholding is required solely by reason of the failure of the Agent or
such Lender to provide the necessary certificate, document or other
evidence.
(g) Each Lender and Agent shall use reasonable efforts to avoid
or minimize any amounts which might otherwise be payable pursuant to this
Section 2.16 (including seeking refunds of any amounts that are reasonably
believed not to have been correctly or legally asserted); provided,
--------
however, that such efforts shall not include the taking of any actions by
-------
such Lender or Agent that would result in any tax, costs or other expense
to such Lender or Agent (other than a tax, cost or other expense for which
such Lender or Agent shall have been reimbursed or indemnified by the
Borrower pursuant to this Agreement or otherwise) or any action which would
or might in the reasonable opinion of such Lender or Agent have an adverse
effect upon its business, operations or financial condition or otherwise be
disadvantageous to such Lender or Agent.
SECTION 2.17. Payments and Computations. Except as otherwise
-------------------------
provided herein, the Borrower shall make each payment under this Agreement
or any other Loan Document no later than 1:00 p.m. (New York City time) on
the day when due in lawful money of the United States (in freely
transferable dollars) to the Agent at its offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇
▇▇
▇▇▇▇ ▇▇▇▇▇ for the account of the Lenders, in immediately available funds.
The Agent will distribute promptly, and in any event no later than 5:00
p.m. (New York City time) on the same day, to each Lender such Lender's
share (computed in accordance with the provisions of this Agreement) of
each payment received by the Agent.
III. LETTERS OF CREDIT AND ACCEPTANCES
SECTION 3.01. Issuance of Letters of Credit. Upon the request
-----------------------------
of the Borrower, and subject to the conditions set forth in Article V
hereof and such other conditions to the opening of Letters of Credit as the
Agent requires of its customers generally, the Agent shall from time to
time issue documentary or standby letters of credit (each, together with
the letters of credit outstanding on the date hereof and set forth on
Schedule 3.01 annexed hereto, a "Letter of Credit") for the account of the
Borrower, provided that the face amount of any Letter of Credit that the
--------
Borrower may request the Agent to open shall not exceed the Availability
outstanding at such time. The issuance of each Letter of Credit shall be
made on at least one (1) Business Day's prior written notice from the
Borrower to the Agent, at its Domestic Lending Office, which written notice
shall be an application for a Letter of Credit on the Agent's customary
form. The expiration date of any Letter of Credit shall not be later than
one (1) year from the date of issuance thereof nor, in any event, later
than the Revolving Credit Termination Date. The Letters of Credit shall be
issued in respect of any transactions occurring in the Borrower's ordinary
course of business.
SECTION 3.02. Payment in Respect of Letters of Credit;
----------------------------------------
Reimbursement. Upon the issuance of any Letter of Credit, the Agent shall
-------------
notify each Lender of the principal amount, the number, and the expiration
date thereof and the amount of such Lender's participation therein. By the
issuance of a Letter of Credit hereunder and without further action on the
part of the Agent or the Lenders, each Lender hereby accepts from the Agent
a participation (which participation shall be nonrecourse to the Agent) in
such Letter of Credit equal to such Lender's pro rata (based on its
Revolving Credit Commitment) share of such Letter of Credit, effective upon
the issuance of such Letter of Credit. Each Lender hereby absolutely and
unconditionally assumes, as primary obligor and not as a surety, and agrees
to pay and discharge, and to indemnify and hold the Agent harmless from
liability in respect of, such Lender's pro rata share of the amount of any
drawing under a Letter of Credit. Each Lender acknowledges and agrees that
its obligation to acquire participations in each Letter of Credit issued by
the Agent and its obligation to make the payments specified herein, and the
37
right of the Agent to receive the same, in the manner specified herein, are
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance
of an Event of Default hereunder, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever. The
Agent shall review, on behalf of the Lenders, each draft presented under a
Letter of Credit and shall notify each Lender of any such presentment.
Promptly after it shall have ascertained that any draft presented under
such Letter of Credit appears on its face to be in substantial conformity
with the terms and conditions of the Letter of Credit, the Agent shall give
telephonic or facsimile notice to the Lenders and the Borrower of the
receipt and amount of such draft and the date on which payment thereon will
be made. The Borrower shall reimburse the Agent for the amount specified
in such notice by no later than 11:00 a.m. (New York City time) on the date
such payment is scheduled to be made. If the Borrower has not so
discharged such reimbursement obligations and the Agent is unable to
recover the required amount by debiting the Borrower's account (as
hereinafter provided), the Agent shall give each Lender notice of any
amount that remains unreimbursed, and each Lender shall promptly, but in
any event within two hours of the receipt of such notice, pay the amounts
required to the Agent in Woodbury, New York in immediately available funds,
and the Agent, not later than 3:00 p.m. (New York City time) on such day,
shall make the appropriate payment to the beneficiary. If the Lenders
shall pay any draft presented under a Letter of Credit, then the Agent, on
behalf of the Lenders, shall charge the general deposit account of the
Borrower with the Agent for the amount thereof, together with the Agent's
customary overdraft or similar fee in the event the funds available in such
account shall not be sufficient to reimburse the Lenders for such payment.
If the Lenders have not been reimbursed with respect to such drawing as
provided above, the Borrower shall pay to the Agent, for the account of the
Lenders, the amount of the drawing together with interest on such amount at
a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the Alternate Base Rate plus 3%
payable on demand. The obligations of the Borrower under this Section 3.02
to reimburse the Lenders and the Agent for all drawings under Letters of
Credit shall be absolute, unconditional and irrevocable and shall be
satisfied strictly in accordance with their terms, irrespective of:
(a) any lack of validity or enforceability of any Letter of
Credit;
(b) the existence of any claim, setoff, defense or other right
which the Borrower or any other person may at any time have against
the beneficiary under the Letter of
38
Credit, the Agent or any Lender (other than the defense of payment in
accordance with the terms of this Agreement or a defense not otherwise
waived hereunder based on the gross negligence or willful misconduct
of the Agent or any Lender) or any other person in connection with
this Agreement or any other transaction;
(c) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect; provided that payment by the Agent or any Lender under such
--------
Letter of Credit against presentation of such draft or document shall
not have constituted gross negligence or willful misconduct;
(d) payment by the Agent or any Lender under any Letter of
Credit against presentation of a draft or other document which does
not comply with the terms of such Letter of Credit; provided that such
--------
payment shall not have constituted gross negligence or willful
misconduct; and
(e) the existence, character, quantity, quality, condition,
packing, value or delivery of any goods or other property relating to
any Letter of Credit;
(f) the time, place, manner or order in which shipment is made;
(g) the provisions of any insurance policy or any act or
omission of any insurer, shipper, warehouseman, carrier, correspondent
or other person;
(h) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; provided that such other circumstance
--------
or event shall not have been the result of gross negligence or willful
misconduct of the Agent or any Lender.
It is understood that in making any payment under any Letter of
Credit (x) the Agent's and any Lender's exclusive reliance on the documents
presented to it under such Letter of Credit as to any and all matters set
forth therein, including, without limitation, good faith reliance on the
amount of any draft presented under such Letter of Credit, whether or not
the amount due to the beneficiary equals the amount of such draft and
whether or not any document presented pursuant to such Letter of Credit
proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein
39
proves to be inaccurate or untrue in any respect whatsoever and (y) any
noncompliance in any immaterial respect of the documents presented under
such Letter of Credit with the terms thereof shall, in each case, not be
deemed willful misconduct or gross negligence of the Agent or any Lender.
SECTION 3.03. Actions of Agent. Any Letter of Credit may, in
----------------
the discretion of the Agent or its correspondents, be interpreted by them
(to the extent not inconsistent with such Letter of Credit) in accordance
with the Uniform Customs and Practice for Documentary Credits of the
International Chamber of Commerce, as adopted or amended from time to time,
or any other rules, regulations and customs prevailing at the place where
any Letter of Credit is available or the drafts are drawn or negotiated.
The Agent and its correspondents may in good faith accept and act upon the
name, signature, or act of any party purporting to be the executor,
administrator, receiver, trustee in bankruptcy, or other legal
representative of any party designated in any Letter of Credit in the place
of the name, signature, or act of such party.
SECTION 3.04. Payments in Respect of Increased Costs.
--------------------------------------
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or not
having the force of law), or any change in generally accepted accounting
principles or regulatory accounting principles applicable to the Agent or
any Lender, shall (i) impose, modify or make applicable to the Agent or any
Lender any reserve, special deposit or similar requirement with respect to
its obligations under this Article III or any Letter of Credit or
Acceptance Draft, (ii) impose on the Agent or any Lender any other
condition with respect to its obligations under this Article III or any
Letter of Credit or Acceptance Draft, or (iii) subject the Agent or any
Lender to any tax (other than (x) taxes imposed on the overall net income
of the Agent or such Lender and (y) franchise taxes imposed on the Agent or
such Lender, in either case by the jurisdiction in which the Agent or such
Lender has its principal office or lending office or any political
subdivision or taxing authority of any such jurisdiction), charge, fee,
deduction or withholding of any kind whatsoever, and the result of any of
the foregoing shall be to increase the cost to the Agent or such Lender of
maintaining such Letter of Credit or Acceptance Draft or making any payment
under such Letter of Credit or Acceptance Draft or this Article III or to
reduce the amount of principal, interest or any fee or compensation receiv-
able by the Agent or such Lender in respect of this Article III or such
Letter of Credit or Acceptance Draft, then such additional amount or
amounts as will compensate the
40
Agent or such Lender for such additional costs or reduction shall be paid
to the Agent or such Lender by the Borrower. Each Lender agrees to give
notice to the Borrower and the Agent of any such change in law, regulation,
interpretation or administration with reasonable promptness after becoming
actually aware thereof and of the applicability thereof to the transactions
contemplated in this Article III.
(b) If, after the date of this Agreement, any Lender shall have
determined reasonably and in good faith that the adoption of any applicable
law, rule, regulation or guideline regarding capital adequacy, or any
change therein, or any change 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 (or its lending office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of 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 under this Article III 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) then from time to time, the Borrower shall pay to such Lender
such additional amount or amounts as will compensate the Agent or such
Lender for such reduction. Each Lender agrees to give notice to the
Borrower and the Agent of any adoption of, change in, or change in
interpretation or administration of, any such law, rule, regulation or
guideline with reasonable promptness after becoming actually aware thereof
and of the applicability thereof to the transactions contemplated hereby.
(c) A certificate of the Agent or a Lender setting forth such
amount or amounts, supported by calculations in reasonable detail, as shall
be necessary to compensate the Agent or such Lender as specified in
paragraphs (a) and (b) above shall be delivered to the Borrower and shall
be conclusive and binding upon the Borrower absent manifest error. The
Borrower shall pay the Agent or such Lender the amount shown as due on any
such certificate within five (5) Business Days after its receipt of the
same. In the event that such Lender or the Agent, as the case may be,
determines that the Borrower has made a payment pursuant to a statement
that contains a manifest error, and further determines that as a result
thereof the Borrower has paid more than the amount necessary to compensate
such Lender or the Agent as specified in paragraphs (a) and (b) above, such
Lender or the Agent, as the case may be, shall promptly refund such excess
amount to the Borrower. In the event that such Lender or the Agent, as the
case may be, determines that it has received a refund of any additional
costs of the type described in para-
41
graph (a) above, such Lender or the Agent, as the case may be, shall
promptly refund to the Borrower an amount (not to exceed the amount of the
refund received by such Lender or the Agent) equal to the amount of
compensation payments made by the Borrower pursuant to paragraph (a) above
in respect of such additional costs.
(d) Failure on the part of any Lender or the Agent to demand
compensation for any increased costs, reduction in amounts received or
receivable with respect to this Article III or any Letter of Credit or
Acceptance Draft or reduction in the rate of return earned on such Lender's
capital, in each case pursuant to paragraph (a) or (b) above, shall not
constitute a waiver of the Agent's or such Lender's rights to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in rate of return pursuant to paragraph (a) or (b)
above. The protection under this Section 3.04 shall be available to each
Lender and the Agent regardless of any possible contention of the
invalidity or inapplicability of any law, regulation or other condition
which shall give rise to any demand by such Lender or the Agent for
compensation (but if such law, regulation or other condition is finally
determined to be invalid or inapplicable, the Agent or Lenders shall
promptly refund (without interest) all amounts paid under this Section 3.04
arising from such invalid or inapplicable law, regulation or other
condition).
SECTION 3.05. Indemnity as to Letters of Credit. The Borrower
---------------------------------
hereby agrees to indemnify and hold harmless the Agent and the Lenders from
and against any and all claims, damages, losses, liabilities, costs or
expenses whatsoever which the Agent or the Lenders may incur or suffer by
reason of or in connection with the execution and delivery or assignment
of, or payment under, any Letter of Credit, except only if and to the
extent that any such claim, damage, loss, liability, cost or expense shall
be caused by the willful misconduct or gross negligence of the Agent or any
Lender performing its obligations respecting such Letter of Credit under
this Agreement. Without limiting the foregoing, the Borrower further
agrees to indemnify and hold harmless the Agent, its officers and
directors, each person who controls the Agent within the meaning of
Section 15 of the Securities Act of 1933 or any applicable state securities
law and their respective successors and assigns from and against any and
all claims, damages, losses, liabilities, costs or expenses, joint or
several, to which they or any of them may become subject under any federal
or state securities law, rule or regulation, at common law or otherwise,
insofar as such claims, damages, losses, liabilities, costs or expenses
arise out of or are based upon the execution and delivery by the Agent of
any Letters of Credit or the execution and delivery of any other document
in connection
42
therewith (but not including any claims, damages, losses, liabilities,
costs or expenses arising from the gross negligence or willful misconduct
of the Agent). The Borrower upon demand by the Agent at any time, shall
reimburse the Agent for any reasonable legal or other expenses incurred in
connection with investigating or defending against any of the foregoing.
The indemnities contained herein shall survive the expiration or
termination of the Letters of Credit and this Agreement.
SECTION 3.06. Letter of Credit Fees. The Borrower agrees to pay
---------------------
to the Agent for the ratable benefit of the Lenders a letter of credit fee
with respect to (i) standby Letters of Credit, equal to the product of (A)
the Standby Letter of Credit Commission determined pursuant to the Pricing
Grid contained in Section 2.06 hereof (the "Standby Letter of Credit
Commission") and (B) the face amount of such standby Letter of Credit,
which fee shall be paid at the time of issuance of such standby Letter of
Credit, and (ii) documentary Letters of Credit, equal to 3/8% of the face
amount thereof, which fee shall be paid at the time such documentary Letter
of Credit is negotiated or cancelled.
SECTION 3.07. Acceptance Drafts. (a) Upon the terms and
-----------------
conditions hereof, the Borrower may, from time to time from the date hereof
until the Revolving Credit Termination Date, request the Lenders to accept
drafts in the form of Exhibit D (each an "Acceptance Draft" and,
---------
collectively, the "Acceptance Drafts"), at the Borrower's election,
provided that the face amount of any Acceptance Draft that the Borrower may
request the Agent to create shall not exceed the Availability outstanding
at such time.
(b) The Borrower shall give the Agent telephonic notice
(immediately confirmed in writing) of its request that the Agent accept
such Acceptance Draft no later than 1:00 p.m. (New York City time) on the
same day of such request (the "Acceptance Date"). Such notice shall
contain the aggregate face amount (which shall be in minimum aggregate
principal amounts of $1,000,000 and in integral multiples of $250,000 in
excess thereof) and maturity date of such Acceptance Draft, which maturity
date shall not be later than the earlier of (a) 30, 60, 90 or 120 days
after the Acceptance Date of such Acceptance Draft, as Borrower shall
designate, and (b) the Revolving Credit Termination Date. Such notices
also shall describe the underlying goods and indicate their origin and
destination points or provide other evidence of the underlying transaction
in form and substance as may be acceptable to the Agent (it being
understood that the form of notice attached hereto as Exhibit H is
---------
acceptable to the Agent) to permit it to accurately complete the
appropriate eligibility legend (i.e., "eligibility certificate") on the
face of the Acceptance Draft. The Borrower
43
shall promptly confirm such telephonic notices by telecopy and mailing an
original signed notice. Each draft shall mature on a Business Day, which
shall be at least 30 days after the Acceptance Date. No Acceptance Draft
shall be dated or accepted more than 30 days before or more than 30 days
after the date of the shipment of goods to which it relates. The Borrower
hereby irrevocably authorizes the Agent to complete its Acceptance Draft in
accordance with the instructions given pursuant to this Section 3.07. Any
pre-signed drafts held by the Agent for completion shall not be affected by
the departure of the signer as an authorized signatory of the Borrower,
which drafts shall nevertheless remain valid and binding upon the Borrower
for all purposes as if the signer's authority had continued in effect.
(Such completion and presentment, however, shall not obligate the Agent to
accept any such Acceptance Draft.)
(c) Upon receipt of such notices from the Borrower, the Agent
shall promptly notify each Lender of (i) its pro rata (based on its
Revolving Credit Commitment) share of such Acceptance Draft, (ii) the
maturity date of such Acceptance Draft and (iii) the Discount Rate and
commission applicable to such Acceptance Draft, which shall be computed in
accordance with Section 3.08 hereof. The Agent may decline to create any
such Acceptance Draft if the Agent is not then providing such financing to
its middle market customers with credit standings similar to Borrower's.
(d) The Agent in its discretion at any time or from time to time
may sell, rediscount or otherwise dispose of any Acceptance Draft without
any notice or credit to or consent from the Borrower or any other Lender.
(e) Each Acceptance Draft shall relate to one or more specific
transactions involving the importation or exportation of goods or the
domestic shipment of goods within the United States. The goods relating to
each Acceptance Draft shall have a c.i.f. value equalling or exceeding the
amount of the Acceptance Draft, shall be of good and merchantable quality,
shall be fully insured in accordance with prudent industry practice and
shall not be the subject of any security interest granted by the Borrower
or any subsidiary. No other source shall have financed the transaction
underlying the Acceptance Draft. The Borrower shall have procured all
import, export and other licenses essential to the underlying transaction
and shall have complied with all applicable laws pertaining to the
underlying goods and transaction. Each Acceptance Draft shall qualify
(upon acceptance) in all respects with the requirements for eligibility for
discount of the Federal Reserve Banks of the United States. With regard to
each Acceptance Draft presented, the Borrower represents and warrants to
the Agent and the Lenders that, as of
44
the date of presentment, the Acceptance Draft and underlying goods and
transaction conform to the requirements of this subsection, and the
Borrower covenants and agrees that they will continue to conform to those
requirements for so long as the Acceptance Draft is outstanding.
SECTION 3.08. Payment of Acceptances. The Agent shall notify
----------------------
each Lender of the presentment to the Agent of any draft for acceptance
hereunder, which notice shall include the amount of such draft and the
maturity date thereof. Upon the acceptance of any Acceptance Draft, the
Agent shall: (i) notify each Lender of the net proceeds thereof and the
amount of such Lender's participation therein (acquired pursuant to the
terms hereof) and (ii) credit the net proceeds thereof to the Borrower's
account maintained with the Agent for such purpose. Such net proceeds
shall be in an amount equal to the face amount of such Acceptance Draft
less the applicable discount and commission. With respect to any
----
Acceptance Draft, the Acceptance Date of which is (X) prior to January 1,
1997 and (Y) at a time when the Benchmark Exposure is less than or equal to
$18,000,000, such discount and commission shall be calculated as the
product of (i) the face amount of such Acceptance Draft and (ii) the sum of
(A) the Discount Rate per annum of the Agent in effect on the Acceptance
Date of such Acceptance Draft, and (B) a commission rate per annum equal to
the sum of (i) the product of .70% and 48%, which shall be for the account
of Chemical and (ii) the product of the applicable Acceptance Draft
Commission determined pursuant to the Pricing Grid contained in Section
2.06 hereof (the "Acceptance Draft Commission") and 52%, which shall be for
the accounts of the Lenders other than Chemical. With respect to any
Acceptance Draft, (X) the Acceptance Date of which is later than December
31, 1996 or which matures after December 31, 1996, with respect to each day
after December 31, 1996 or (Y) the Acceptance Date of which is at any time
when the Benchmark Exposure is in excess of $18,000,000, such discount and
commission shall be calculated as the product of (i) the face amount of the
Acceptance Draft and (ii) the sum of (A) the Discount Rate per annum of the
Agent in effect on the Acceptance Date of such Acceptance Draft, and (B)
the applicable Acceptance Draft Commission; provided, however, that with
-------- -------
respect to any Acceptance Draft, the Acceptance Date of which was prior to
January 1, 1997 and at a time when the Benchmark Exposure was less than or
equal to $18,000,000, the discount and commission will continue to be
determined pursuant to the previous sentence hereof through December 31,
1996. The Discount Rate and applicable commission shall be calculated for
each Acceptance Draft on the basis of the actual number of days from the
Acceptance Date to maturity divided by 360. The funds, net of such
discounts and commissions, so credited to the Borrower's account shall be
immediately available to the Borrower, and the
45
Agent shall promptly notify the Borrower as to the amount of the net funds
so credited. By acceptance of an Acceptance Draft and without further
action on the part of the Agent or the Lenders, each Lender hereby accepts
from the Agent a participation (which participation shall be nonrecourse to
the Agent) in such Acceptance Draft equal to such Lender's pro rata (based
on its Revolving Credit Commitment) share of such Acceptance Draft,
effective upon the issuance of such Acceptance Draft. Each Lender hereby
absolutely and unconditionally assumes, as primary obligor and not as a
surety, and agrees to pay and discharge, and to indemnify and hold the
Agent harmless from liability in respect of, such Lender's pro rata share
of the amount of any payment of an Acceptance Draft. Each Lender
acknowledges and agrees that its obligation to acquire participations in
each Acceptance Draft accepted by the Agent and its obligation to make the
payments specified herein, and the right of the Agent to receive the same,
in the manner specified herein, are absolute and unconditional and shall
not be affected by any circumstance whatsoever, including, without
limitation, the occurrence and continuance of an Event of Default
hereunder, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever. The Borrower shall
reimburse the Agent for the amount to be paid on such Draft no later than
11:00 a.m. (New York City time) on the date such payment is scheduled to be
made. If the Borrower has not so discharged such reimbursement obligation
and the Agent is unable to recover the required amount by debiting the
Borrower's account (as hereinafter provided), the Agent shall give each
Lender notice of any amount that remains unreimbursed, and each Lender
shall promptly, but in any event within two hours of receipt of such
notice, pay the amounts required to the Agent in Woodbury, New York in
immediately available funds. If the Lenders shall make any such payment
upon the maturity of an Acceptance Draft, then the Agent, on behalf of the
Lenders, shall charge the general deposit account of the Borrower with the
Agent for the amount thereof, together with the Agent's customary overdraft
or similar fee in the event the funds available in such account shall not
be sufficient to reimburse the Lenders for such payment. If the Lenders
have not been reimbursed with respect to such payment as provided above,
the Borrower shall pay to the Agent, for the account of the Lenders, the
amount of the payment together with interest on such amount at a rate per
annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the Alternate Base Rate plus 3% payable on
demand. The obligations of the Borrower under this Section 3.08 to
reimburse the Lenders and the Agent for all payments made in respect of
Acceptance Drafts shall be absolute, unconditional and irrevocable and
shall be satisfied strictly in accordance with their terms, irrespective
of:
46
(a) any lack of validity or enforceability of any Acceptance
Draft;
(b) the existence of any claim, setoff, defense or other right
which the Borrower or any other person may at any time have against
the beneficiary under the Acceptance Draft, the Agent or any Lender
(other than the defense of payment in accordance with the terms of
this Agreement or a defense not otherwise waived hereunder based on
the gross negligence or willful misconduct of the Agent or any Lender)
or any other person in connection with this Agreement or any other
transaction;
(c) any draft or other document presented in connection with any
Acceptance Draft proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; provided that acceptance of or payment by
--------
the Agent or any Lender of such Acceptance Draft shall not have
constituted gross negligence or willful misconduct;
(d) the existence, character, quantity, quality, condition,
packing, value or delivery of any goods or other property relating to
any Acceptance Draft;
(e) the time, place, manner or order in which shipment is made;
(f) the provisions of any insurance policy or any act or
omission of any insurer, shipper, warehouseman, carrier, correspondent
or other person;
(g) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; provided that such other circumstance
--------
or event shall not have been the result of gross negligence or willful
misconduct of any Agent or any Lender.
It is understood that in making any payment in respect of any
Acceptance Draft (x) the Agent's and any Lender's exclusive reliance on the
documents presented to it in connection with such Acceptance Draft as to
any and all matters set forth therein, including, without limitation,
whether or not any document presented pursuant to such Acceptance Draft
proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Acceptance Draft proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (y) any noncompliance in any immaterial respect of
the documents
47
presented in connection with such Acceptance Draft with the terms thereof
shall, in each case, not be deemed willful misconduct or gross negligence
of the Agent or any Lender.
SECTION 3.09. Ineligibility of Acceptance Drafts. In the event
----------------------------------
that any Acceptance Draft accepted pursuant to this Agreement does not, for
reasons beyond the control of the Agent, comply at the time of its
acceptance with applicable regulations of the Board governing bankers'
acceptances and would not be eligible under such regulations for discount
with a Federal Reserve lender or if for any other reason any Acceptance
Draft is deemed by the Agent not eligible for discount, the Borrower will,
upon receipt of written notice from the Agent, forthwith pay to the Agent
any additional cost or costs, as determined by the Agent, incurred by the
Agent (including, without limitation, any costs resulting from a higher
discount rate upon disposition of such Acceptance Draft by the Agent, any
funding costs resulting from a higher discount rate upon disposition of
such Acceptance Draft by the Agent, reserve requirements or additional
premium liability to the Federal Deposit Insurance Corporation) in
connection with such Acceptance Draft on account of such noncompliance or
ineligibility.
SECTION 3.10. Customary Fees. The Borrower agrees to pay to the
--------------
Agent, solely for the Agent's own account, upon demand, its customary fees,
from time to time in effect, in respect of Letters of Credit issued by the
Agent. Such fees shall include all amendment fees, fees in respect of the
examination of documents and fees for other administrative matters.
SECTION 3.11. Forms of Drafts. Prior to the first presentation
---------------
of drafts for acceptance hereunder the Borrower shall provide the Agent
with a supply of Acceptance Drafts, in the form of Exhibit D each signed
and endorsed, where appropriate, by a duly authorized officer of the
Borrower. Upon request, the Borrower shall furnish a further supply of
such Acceptance Drafts to the Agent.
IV. REPRESENTATIONS AND WARRANTIES
Each of the Credit Parties represents and warrants to each of the
Lenders that:
SECTION 4.01. Organization, Legal Existence. Each Credit Party
-----------------------------
and each of their subsidiaries are legal entities duly organized, validly
existing and in good standing (except for Milgray/Connecticut, Inc., a
Connecticut corporation) under the laws of the jurisdiction of their
respective organization, have
48
the requisite power and authority to own their property and assets and to
carry on their business as now conducted and as currently proposed to be
conducted and are qualified to do business in every jurisdiction where such
qualification is required (all such jurisdictions being listed in Schedule
--------
4.01 hereto). Each of the Credit Parties has the corporate power to
----
execute, deliver and perform its obligations under this Agreement and the
other Loan Documents to which it is a party, and, in the case of the
Borrower, to borrow hereunder and to execute and deliver the Notes.
SECTION 4.02. Authorization. The execution, delivery and
-------------
performance by each of the Credit Parties of this Agreement and each of the
other Loan Documents to which it is a party, the borrowings hereunder by
the Borrower and the execution and delivery by the Borrower of the Notes
(collectively, the "Transactions") (a) have been duly authorized by all
------------
requisite corporate and, if required, stockholder action and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation or the
certificate or articles of incorporation or other applicable constitutive
documents or the by-laws of the Credit Parties, or their subsidiaries, as
the case may be, (B) any order of any court, or any rule, regulation or
order of any other agency of government binding upon the Credit Parties, or
their subsidiaries, or (C) any provisions of any material indenture,
agreement or other instrument to which the Credit Parties, or their
subsidiaries, or any of their respective properties or assets are or may be
bound, (ii) be in conflict with, result in a breach of or constitute (alone
or with notice or lapse of time or both) a default under any material
indenture, agreement or other instrument referred to in (b)(i)(C) above or
(iii) result in the creation or imposition of any Lien of any nature
whatsoever upon any property or assets of the Credit Parties, or their
subsidiaries.
SECTION 4.03. Governmental Approvals. No registration or filing
----------------------
with consent or approval of, or other action by, any Federal, state or
other governmental agency, authority or regulatory body is or will be
required in connection with the Transactions, other than any which have
been made or obtained.
SECTION 4.04. Binding Effect. This Agreement and each of the
--------------
other Loan Documents to which it is a party constitutes a legal, valid and
binding obligation of such Credit Party enforceable in accordance with its
terms. Each of the Notes, when duly executed and delivered, will
constitute a legal, valid and binding obligation of the Borrower
enforceable in accordance with its terms.
49
SECTION 4.05. No Default; Material Adverse Change. No Default
-----------------------------------
or Event of Default has occurred and is continuing. Except as set forth in
Schedule 4.05 hereto, no event has occurred since September 30, 1994 that,
-------------
individually or when taken together with any other event(s), has had or
could reasonably be expected to have a Material Adverse Effect.
SECTION 4.06. Litigation; Compliance with Laws; etc. (a)
-------------------------------------
Except as set forth in Schedule 4.06(a) hereto, there are not any actions,
----------------
suits or proceedings at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority now pending or, to
the knowledge of any Responsible Officer of any Credit Party, threatened
against or affecting the Credit Parties or any of their subsidiaries or the
businesses, assets or rights of the Credit Parties or any of their
subsidiaries (i) which involve any of the Transactions or (ii) as to which
it is probable (within the meaning of Statement of Financial Accounting
Standards No. 5) that there will be an adverse determination and which, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.06(b) hereto, neither the
----------------
Credit Parties nor any of their subsidiaries is in violation of any law, or
in default with respect to any judgment, writ, injunction, decree, rule or
regulation of any court or governmental agency or instrumentality which
violation and/or default could reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
SECTION 4.07. Financial Statements. (a) The Borrower has
--------------------
heretofore furnished to the Agent Consolidated balance sheets and
statements of income and cash flows of the Borrower and its subsidiaries
dated as of September 30, 1994 and for the Fiscal Year then ended audited
by and accompanied by the opinion of independent public accountants. Such
Consolidated balance sheets and statements of income and cash flows present
fairly the Consolidated financial condition and results of operations of
the Borrower and its subsidiaries as of the date and for the period
indicated, and such balance sheets and the notes thereto disclose all
material liabilities, direct or contingent, of the Borrower and its
subsidiaries, as of the date thereof. The financial statements referred to
in this Section 4.07(a) have been prepared in accordance with generally
accepted accounting principles consistently applied.
(b) The Borrower has heretofore furnished to the Agent
Consolidated balance sheets and statements of income and cash flows of the
Borrower and its subsidiaries dated as of July 2, 1995 and for the nine (9)
month period then ended prepared by
50
management of the Borrower. Such balance sheets and statements of income
and cash flows present fairly the Consolidated financial condition and
results of operations of Borrower and its subsidiaries as of the date and
for the period indicated, and such balance sheets and the notes thereto (if
any) disclose all material liabilities direct or contingent to the extent
required to be disclosed in accordance with generally accepted accounting
principles, of the Borrower and its subsidiaries, as of the date thereof.
The financial statements referred to in this Section 4.07(b) have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except that they do not include all the
footnote disclosure required by generally accepted accounting principles
for complete financial statements), subject to normal year-end audit
adjustments.
(c) The Borrower has heretofore furnished to the Agent
comparative consolidating balance sheets and statements of income of the
Borrower and its subsidiaries dated as of September 30, 1994 and for the
Fiscal Year then ended prepared by management of the Borrower and reported
on by the independent public accountants that audited the financial
statements referred to in Section 4.07(a) hereof in the Report of
Independent Certified Public Accountants on Supplementary Information
accompanying the audited financial statements referred to in Section
4.07(a) hereof. Such consolidating balance sheets and statements of income
present fairly the consolidating financial condition and results of
operations of the Borrower and its subsidiaries as of the date and for the
period indicated, and such balance sheets disclose all direct, material
liabilities of the Borrower and its subsidiaries, as of the date thereof.
The financial statements referred to in this Section 4.07(c) have been
prepared in accordance with generally accepted accounting principles
consistently applied (except that they do not include any of the footnote
disclosure required by generally accepted accounting principles for
complete financial statements).
SECTION 4.08. Federal Reserve Regulations. (a) Neither the
---------------------------
Credit Parties nor any of their subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or carry Margin Stock or to extend credit to
others for the purpose of purchasing or carrying Margin Stock or to refund
indebtedness originally incurred for such purpose, or (ii) for any purpose
which entails a violation of, or which is inconsistent with, the provisions
of the Regula-
51
tions of the Board, including, without limitation, Regulation G, T, U or X
thereof. If requested by any Lender, the Credit Parties or any of their
subsidiaries shall furnish to such Lender a statement on Federal Reserve
Form U-1 referred to in said Regulation U.
SECTION 4.09. Taxes. Except as set forth in Schedule 4.09
----- -------------
hereto, the Credit Parties and each of their subsidiaries have filed or
caused to be filed all Federal, state, local and foreign tax returns which
are required to be filed by them, on or prior to the date hereof, other
than tax returns in respect of taxes that (x) are not franchise, capital or
income taxes, (y) in the aggregate are not material and (z) would not, if
unpaid, result in the imposition of any material Lien on any property or
assets of the Credit Parties or any of their subsidiaries. Except as set
forth in Schedule 4.09 hereto, the Credit Parties and their subsidiaries
-------------
have paid or caused to be paid all taxes shown to be due and payable on
such filed returns or on any assessments received by them, other than (i)
any taxes or assessments the validity of which such Credit Party or such
subsidiary is diligently contesting in good faith by appropriate
proceedings, and with respect to which such Credit Party or such subsidiary
shall, to the extent required by generally accepted accounting principles
consistently applied have set aside on its books adequate reserves and
(ii) taxes other than income, capital or franchise taxes that in the
aggregate are not material and which would not, if unpaid, result in the
imposition of any material Lien on any property or assets of the Credit
Parties or any of their subsidiaries. Except as set forth in Schedule 4.09
-------------
hereto, no Federal income tax returns of the Credit Parties or any of their
subsidiaries have been audited by the United States Internal Revenue
Service for any Fiscal Year since the Fiscal Year ended December 31, 1983,
and neither the Credit Parties nor any of their subsidiaries has as of the
date hereof requested or been granted any extension of time to file any
Federal, state, local or foreign tax return. Neither the Borrower nor any
of its subsidiaries is party to or has any obligation under any tax sharing
agreement.
SECTION 4.10. Employee Benefit Plans. (A) With respect to the
----------------------
provisions of ERISA as to any Plan other than a Multiemployer Plan and with
respect to the representations and warranties herein as made on the Closing
Date solely for the eight year period preceding the Closing Date:
(i) Except as disclosed in Schedule 4.10 hereto, no Reportable
-------------
Event has occurred or is continuing with respect to any Pension Plan.
52
(ii) No prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) has occurred with respect to any Plan
subject to Part 4 of Subtitle B of Title I of ERISA.
(iii) Neither the Credit Parties nor any ERISA Affiliate is now,
or has been during the preceding five years, obligated to contribute to a
Pension Plan. Neither the Credit Parties nor any ERISA Affiliate has (A)
ceased operations at a facility so as to become subject to the provisions
of Section 4062(e) of ERISA, (B) withdrawn as a substantial employer so as
to become subject to the provisions of Section 4063 of ERISA, (C) ceased
making contributions to any Pension Plan subject to the provisions of
Section 4064(a) of ERISA to which the Credit Parties, any subsidiary
thereof or any ERISA Affiliate made contributions or (D) been a party to
any transaction or agreement under which the provisions of Section 4204 of
ERISA were applicable.
(iv) No notice of intent to terminate a Pension Plan has been
filed, nor has any Plan been terminated pursuant to the provisions of
Section 4041(e) of ERISA.
(v) The PBGC has not instituted proceedings to terminate (or
appoint a trustee to administer) a Pension Plan and no event has occurred
or condition exists which might constitute grounds under the provisions of
Section 4042 of ERISA for the termination of (or the appointment of a
trustee to administer) any such Plan.
(vi) With respect to each Pension Plan that is subject to the
provisions of Title I, Subtitle B, Part 3 of ERISA, the funding method used
in connection with such Plan is acceptable under ERISA, and the actuarial
assumptions and methods used in connection with funding such Pension Plan
satisfy the requirements of Section 302 of ERISA. The assets of each such
Pension Plan are at least equal to the present value of the greater of (i)
accrued benefits (both vested and non-vested) under such Plan, or (ii)
"benefit liabilities" (within the meaning of Section 4001(a)(16) of ERISA)
under such Plan, in each case as of the latest actuarial valuation date for
such Plan (determined in accordance with the same actuarial assumptions and
methods as those used by the Plan's actuary in its valuation of such Plan
as of such valuation date). No such Pension Plan has incurred any
"accumulated funding deficiency" (as defined in Section 412 of the Code),
whether or not waived.
(vii) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of the Credit Parties or
any ERISA Affiliate, which could reasonably be expected to be asserted,
against any Plan or the assets of any
53
such Plan which could reasonably be expected to have a Material Adverse
Effect. No civil or criminal action brought pursuant to the provisions of
Title I, Subtitle B, Part 5 of ERISA is pending or threatened against any
fiduciary or any Plan. Except as disclosed in Schedule 4.10 hereto, none
-------------
of the Plans or any fiduciary thereof (in its capacity as such) has been
the direct or indirect subject of any audit or investigation by any
governmental or quasi-governmental agency.
(viii) All of the Plans comply currently, and have complied in the
past, both as to form and operation, with their terms and with the
provisions of ERISA and the Code, and all other applicable laws, rules and
regulations; all necessary governmental approvals for the Plans have been
obtained and a favorable determination as to the qualification under
Section 401(a) of the Code of each of the Plans which is an employee
pension benefit plan (within the meaning of Section 3(2) of ERISA) has been
made by the Internal Revenue Service and a recognition of exemption from
federal income taxation under Section 501(a) of the Code of each of the
funded employee welfare benefit plans (within the meaning of Section 3(1)
of ERISA) has been made by the Internal Revenue Service, and nothing has
occurred since the date of each such determination or recognition letter
that would materially adversely affect such qualification.
(B) Except as set forth in Schedule 4.10, as at the Closing Date
-------------
the Credit Parties have not incurred or caused to occur a complete or
partial withdrawal from a Multiemployer Plan.
SECTION 4.11. No Material Misstatements. No information,
-------------------------
report, financial statement, exhibit or schedule prepared or furnished by
or on behalf of any Credit Party to the Agent or any Lender in connection
with any of the Transactions or this Agreement, the Notes or any other Loan
Documents or included therein contained or contains any material
misstatement of fact or omitted or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
SECTION 4.12. Investment Company Act; Public Utility Holding
----------------------------------------------
Company Act. Neither the Credit Parties nor any of their subsidiaries is
-----------
an "investment company" as defined in, or is otherwise subject to
regulation under, the Investment Company Act of 1940. Neither the Credit
Parties nor any of their subsidiaries is a "holding company" as that term
is defined in or is otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935.
54
SECTION 4.13. Use of Proceeds. (a) All proceeds of the Credits
---------------
to be extended on the Closing Date shall be used to refinance existing
Indebtedness under the Prior Credit Agreement.
(b) All proceeds of each Credit extended subsequent to the
Closing Date shall be used to provide for the general working capital
requirements of the Credit Parties.
SECTION 4.14. Subsidiaries and Affiliates. As of the Closing
---------------------------
Date, Schedule 4.14 hereto sets forth each direct and indirect subsidiary
-------------
and each Affiliate of the Borrower and the other Credit Parties, its
jurisdiction of incorporation, its capitalization and each beneficial and
record holder of capital stock of each such subsidiary and Affiliate.
SECTION 4.15. Title to Properties; Possession Under Leases;
---------------------------------------------
Trademarks. (a) The Credit Parties and each of their subsidiaries have
----------
good and marketable title to, or valid leasehold interest in, all of their
respective properties and assets shown on the most recent balance sheet
referred to in Section 4.07(a) hereof and all assets and properties
acquired since the date of such balance sheet, except for such properties
as are no longer used or useful in the conduct of its business or as have
been disposed of in the ordinary course of business, and except for minor
defects in title that do not interfere with the ability of the Credit
Parties or any of their subsidiaries to conduct its business as now
conducted. All such assets and properties are free and clear of all Liens
other than those permitted by Section 7.01 hereof.
(b) The Credit Parties and each of their subsidiaries have
complied with all obligations under all leases to which they are a party
and under which they are in occupancy, and all such leases are in full
force and effect and the Credit Parties and each of their subsidiaries
enjoy peaceful and undisturbed possession under all such leases.
(c) The Credit Parties and each of their subsidiaries own or
control all material trademarks, trademark rights, trade names, trade name
rights, copyrights, patents, patent rights and licenses which are necessary
for the conduct of the business of the Credit Parties and each of their
subsidiaries. Neither the Credit Parties nor any of their subsidiaries is
infringing upon or otherwise acting adversely to any of such trademarks,
trademark rights, trade names, trade name rights, copyrights, patent rights
or licenses owned by any other person or persons. There is no claim or
action by any such other person pending, or to the knowledge of any
Responsible Officer of the Credit Parties or any subsidiary thereof,
threatened, against the Credit Parties
55
or any of their subsidiaries with respect to any of the rights or property
referred to in this Section 4.15(c).
SECTION 4.16. Permits, etc. The Credit Parties and each of
------------
their subsidiaries possess all licenses, permits, approvals and consents,
including, without limitation, all environmental, health and safety
licenses, permits, approvals and consents (collectively, "Permits") of all
-------
Federal, state, local and foreign governmental authorities as required to
conduct properly their business, each such Permit is and will be in full
force and effect, the Credit Parties and each of their subsidiaries are in
compliance in all material respects with all such Permits, and no event
(including, without limitation, any violation of any law, rule or
regulation) has occurred which allows the revocation or termination of any
such Permit or any restriction thereon.
SECTION 4.17. Compliance with Environmental Laws. Except as
----------------------------------
disclosed in Schedule 4.17 hereto: (i) the operations of the Credit
-------------
Parties and their subsidiaries comply in all material respects with all
applicable Environmental Laws; (ii) the Credit Parties and their
subsidiaries and all of their present facilities or operations, as well as
to the knowledge of the Credit Parties and their subsidiaries their past
facilities or operations, are not subject to any judicial proceeding or
administrative proceeding or any outstanding written order or agreement
with any governmental authority or private party respecting (a) any
Environmental Law, (b) any Remedial Work, or (c) any Environmental Claims
arising from the Release of a Contaminant into the environment; (iii) to
the best of the knowledge of the Credit Parties and their subsidiaries,
none of their operations is the subject of any Federal or state
investigation evaluating whether any Remedial Work is needed to respond to
a Release of any Contaminant into the environment in violation of any
Environmental Law; (iv) neither the Credit Parties nor any of their
subsidiaries nor any predecessor of the Credit Parties or any of their
subsidiaries has filed any notice under any Environmental Law indicating
past or present treatment, storage, or disposal of a Hazardous Material or
reporting a spill or Release of a Contaminant into the environment in
violation of any Environmental Law; (v) to the best of the knowledge of the
Credit Parties and their subsidiaries, neither the Credit Parties nor any
of their subsidiaries has any contingent liability in connection with any
Release of any Contaminant into the environment; (vi) none of the
operations of the Credit Parties or any of their subsidiaries involves the
generation, transportation, treatment or disposal of Hazardous Materials;
(vii) neither the Credit Parties nor any of their subsidiaries has disposed
of any Contaminant by placing it in or on the ground or waters of any
premises owned, leased or used by any of them
56
and to the knowledge of the Credit Parties and their subsidiaries neither
has any lessee, prior owner, or other person; (viii) no underground storage
tanks or surface impoundments are on any property of the Credit Parties and
their subsidiaries; and (ix) no Lien in favor of any governmental authority
for (A) any liability under any Environmental Law or regulation, or
(B) damages arising from or costs incurred by such governmental authority
in response to a Release of a Contaminant into the environment, has been
filed or attached to the property of the Credit Parties and their
subsidiaries.
SECTION 4.18. No Change in Credit Criteria or Collection
------------------------------------------
Policies. There has been no material change in credit criteria or
--------
collection policies concerning account receivables of the Credit Parties
since September 30, 1994. All Eligible Receivables of the Credit Parties
are valid, binding and enforceable obligations of account debtors and are
not subject to any claims, defenses or setoffs, except to the extent same
arise in the ordinary course of business and adequate reserves have been
established therefor in accordance with generally accepted accounting
principles.
SECTION 4.19. Franchise Agreements. Neither the Credit Parties
--------------------
nor any of their subsidiaries or, to the knowledge of the Credit Parties,
any other person is in default under any material provision of any
franchise agreement or any other material agreement to which it is a party
except, (x) in the case of any franchise agreement, a default resulting
from payments to a supplier by a Credit Party beyond (but not later than 60
days beyond) the terms specified in such franchise agreement and (y) in the
case of contracts with its customers which constitute material agreements,
defaults the results of which when taken in the aggregate would not
materially adversely effect the ability of the Borrower and its
subsidiaries, taken as a whole, to conduct business substantially as
conducted prior to the occurrence of such defaults.
SECTION 4.20. Financing Agreements. Schedule 4.20 hereto sets
-------------------- -------------
forth all promissory notes, debentures and similar instruments and all
credit, loan and similar financing agreements evidencing, creating or
governing Indebtedness for borrowed money to which the Credit Parties or
any of their subsidiaries is a party, and the Credit Parties have furnished
to the Agent true and complete copies of all such instruments and
agreements.
SECTION 4.21. No Overdue Obligations. There exists no unpaid
----------------------
and overdue Indebtedness of the Credit Parties or any of their subsidiaries
other than: Indebtedness (A) the payment of which the Credit Parties or
such subsidiary is diligently contesting in good faith by appropriate
proceedings and with
57
respect to which the Credit Parties or such subsidiary shall, to the extent
required by generally accepted accounting principles consistently applied,
have set aside on its books adequate reserves and (B) which, if unpaid,
could not reasonably be expected to have a Material Adverse Effect.
V. CONDITIONS OF CREDIT EVENTS
The obligation of each Lender to extend Credits hereunder shall
be subject to the following conditions precedent:
SECTION 5.01. All Credit Events. On each date on which a Credit
-----------------
Event is to occur:
(a) The Agent shall have received a notice of borrowing required
by Section 2.03 hereof, application for a Letter of Credit required by
Section 3.01 hereof or a notice of Borrower's request that Agent
accept an Acceptance Draft required by Section 3.07 hereof.
(b) The representations and warranties set forth in Article IV
hereof and in any documents delivered herewith, including, without
limitation, the Loan Documents, shall be true and correct in all
material respects with the same effect as though made on and as of
such date (except insofar as such representations and warranties
relate expressly to an earlier date).
(c) The Borrower shall be in compliance with all the terms and
provisions contained herein on its part to be observed or performed,
and at the time of and immediately after such Credit Event no Default
or Event of Default shall have occurred and be continuing.
(d) The Agent and the Lenders shall have received a certificate
signed by the Financial Officer of the Borrower as to the compliance
with (b) and (c) above.
SECTION 5.02. First Borrowing. The obligations of the Lenders
---------------
in respect of the first Credit Event hereunder is subject to the following
additional conditions precedent:
(a) Each Lender shall have received the favorable written
opinion of counsel for each Credit Party, substantially in the form of
Exhibit B hereto, dated the Closing Date, addressed to the Lenders and
---------
satisfactory to the Agent.
58
(b) The Agent shall have received (i) a certificate as to the
good standing of each Credit Party from the Secretary of State or
other appropriate official of the state or county of its organization
or location, as appropriate, in each case dated as of a recent date;
provided, however, that with respect to Milgray/Connecticut, Inc., a
-------- -------
certificate of good standing certified by an appropriate state
official shall be delivered to the Agent by said Guarantor as soon as
practicable and in any event within 30 Business Days following the
first Credit Event instead of at the time of the first Credit Event;
(ii) a certificate of the Secretary, Assistant Secretary or a
Financial Officer of each Credit Party, dated as of the date hereof
and certifying (A) that its certificate or articles of incorporation
and its By-laws have not been amended since September 29, 1993 or, in
the case of Credit Parties incorporated after September 29, 1993,
since the date of incorporation thereof (or if there has been any such
amendment, attaching a certified copy thereof), (B) that attached
thereto is a true and complete copy of a resolution adopted by such
person's Board of Directors authorizing the execution, delivery and
performance of this Agreement, the Notes, the other Loan Documents and
the Credit Events hereunder, as applicable, and that such resolution
has not been modified, rescinded or amended and is in full force and
effect and (C) as to the incumbency and specimen signature of each of
such person's officers executing this Agreement, the Notes, or any
other Loan Document delivered in connection herewith or therewith, as
applicable; (iii) a certificate of another of such person's officers
as to incumbency and signature of its Secretary, Assistant Secretary
or Financial Officer, as applicable; and (iv) such other documents as
the Agent or any Lender may reasonably request.
(c) The Agent shall have received a certificate, dated the
Closing Date and signed by a Financial Officer of the Borrower,
confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 5.01 hereof, the conditions set
forth in this Section 5.02 and that no Event of Default presently
exists and no event (including, without limitation, any Credit Event
hereunder) has occurred and is continuing which would constitute a
Default.
(d) Each Lender shall have received its Revolving Credit Note
duly executed by the Borrower, payable to its order and otherwise
complying with the provisions of Section 2.04 hereof and the Agent
shall have received each other applicable Loan Document, each duly
executed by the parties thereto.
59
(e) The Agent shall have received for the benefit of the
Lenders, and each Lender shall have had the opportunity to review and
determined to be in form and substance satisfactory to them:
(i) the aging of accounts of each Credit Party and a
consolidated schedule of Inventory of the Credit Parties listed
by manufacturer, each dated within 40 days of the Closing Date;
(ii) evidence of the compliance by the Borrower with Section
6.03 hereof;
(iii) the financial statements described in Section 4.07(b)
hereof (each certified by a Financial Officer of the Borrower)
and each of the agreements and instruments listed in
Schedule 4.20 hereto and Schedule 7.02 hereto;
------------- -------------
(iv) all shareholder agreements to which the Borrower or any
other Credit Party is a party to the extent such agreements
relate to such shareholder's interests in the Borrower or any
other Credit Party;
(v) the three largest (based on sales revenues) franchise
agreements to which the Borrower is a party, and any other
franchise agreements that the Agent may in its reasonable
discretion designate;
(vi) a schedule listing all franchise agreements to which
the Borrower or any of its subsidiaries is a party; and
(vii) if requested by the Agent or any Lender, copies of the
most recent annual reports that were filed with the Internal
Revenue Service on Treasury Form 5500 with respect to any Plan,
together with certified financial statements (if any) for the
Plan and any actuarial statements on Schedule B to such
Form 5500.
(f) Intentionally Omitted
---------------------
(g) Messrs. ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, counsel to
the Agent, shall have received payment in full for all legal fees
charged, and all costs and expenses incurred, by such counsel through
the Closing Date in connection with the transactions contemplated
under this Agreement and the other Loan Documents and instruments in
connection herewith and therewith.
60
(h) All legal and other matters in connection with the
Transactions shall be satisfactory to the Agent, the Lenders and their
respective counsel in their sole discretion. Without limiting the
generality of the foregoing, the Agent, the Lenders and their
respective counsel shall be satisfied that:
(i) the Transactions are in compliance with all
applicable laws and regulations;
(ii) all requisite third party consents (including,
without limitation, consents with respect to the Credit Parties)
to the Transactions have been received;
(iii) there has been no material adverse change in the
business, assets, operations, prospects or financial condition of
the Credit Parties and their subsidiaries since September 30,
1994; and
(iv) there are no actions, suits or proceedings at law or
in equity or by or before any governmental instrumentality or
other agency or regulatory authority now pending or threatened
against or affecting the Borrower or any of its subsidiaries or
any of their respective businesses, assets or rights which
involve any of the Transactions.
(i) The Borrower shall have executed and delivered to the Agent
a disbursement authorization letter with respect to the disbursement
of the proceeds of any Credits extended on the Closing Date, in form
and substance satisfactory to the Agent.
(j) The Lenders shall have received a certificate demonstrating
compliance as of September 30, 1995 with the Borrowing Base in form
satisfactory to the Lenders.
(k) The Agent shall have received such other documents as the
Lenders or the Agent or their respective counsel shall reasonably deem
necessary.
(l) The Agent and the Lenders shall have received payment of all
fees owed to them by the Credit Parties under the Prior Credit
Agreement, this Agreement or otherwise.
61
VI. AFFIRMATIVE COVENANTS
Each Credit Party covenants and agrees with each Lender that, so
long as this Agreement shall remain in effect or the principal of or
interest on any Note, any amount under any Letter of Credit or Acceptance
Draft or any fee, expense or amount payable hereunder or in connection with
any of the Transactions shall be unpaid, it will, and will cause each of
its subsidiaries and, with respect to Section 6.07 hereof, each ERISA
Affiliate, to:
SECTION 6.01. Legal Existence. Do or cause to be done all
---------------
things necessary to preserve, renew and keep in full force and effect its
legal existence.
SECTION 6.02. Businesses and Properties. At all times do or
-------------------------
cause to be done all things necessary to: preserve, renew and keep in full
force and effect the rights, licenses, Permits, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its
businesses; maintain and operate such businesses in the same general manner
in which they are presently conducted and operated; comply with all laws,
rules, regulations and governmental orders (whether Federal, state or
local) applicable to the operation of such businesses whether now in effect
or hereafter enacted (including, without limitation, all applicable laws,
rules, regulations and governmental orders relating to public and employee
health and safety and all Environmental Laws) and with any and all other
applicable laws, rules, regulations and governmental orders the lack of
compliance with which could reasonably be expected to have a Material
Adverse Effect, except to the extent that such Credit Party is diligently
contesting the applicability or content thereof in good faith by
appropriate proceedings and has established adequate reserves therefor to
the extent required in accordance with generally accepted accounting
principles; take all actions which may be required to obtain, preserve,
renew and extend all Permits and other authorizations which are material to
the operation of such businesses; and at all times maintain, preserve and
protect all property material to the conduct of such businesses and keep
such property in good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that
the business carried on in connection therewith may be properly conducted
at all times.
SECTION 6.03. Insurance. (a) Keep its insurable properties
---------
adequately insured at all times by financially sound and reputable
insurers, (b) maintain such other insurance, to such extent and against
such risks, including fire, business
62
interruption and other risks insured against by extended coverage, as is
customary with companies similarly situated and in the same or similar
businesses, provided, however, that such insurance shall insure the
-------- -------
property of the Borrower and its subsidiaries against all risk of physical
damage, including, without limitation, loss by fire, explosion, theft,
business interruption, fraud and such other casualties as may be reasonably
satisfactory to the Agent and the Required Lenders, but in no event at any
time in an amount less than replacement value, (c) maintain in full force
and effect public liability insurance against claims for personal injury or
death or property damage occurring upon, in, about or in connection with
the use of any properties owned, occupied or controlled by the Borrower or
any of its subsidiaries, in such amount as the Agent and the Required
Lenders shall reasonably deem necessary, and (d) maintain such other
insurance as may be required by law or as may be reasonably requested by
the Agent for purposes of assuring compliance with this Section 6.03,
including, without limitation, insurance against risk of casualties caused
by any Release of any Hazardous Materials to the extent required by law.
All insurance covering tangible personal property of the Borrower or any
subsidiary thereof shall provide that the Agent and each of the Lenders is
an additional insured.
SECTION 6.04. Taxes. Pay and discharge promptly when due all
-----
taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its property before the same
shall become delinquent or in default, as well as all lawful claims for
labor, materials and supplies or otherwise, which, if unpaid, might give
rise to Liens upon such properties or any part thereof, except to the
extent that such taxes, assessments, governmental charges, levies or claims
are being diligently contested in good faith by appropriate proceedings and
as to which adequate reserves have been established in accordance with
generally accepted accounting principles.
SECTION 6.05. Financial Statements, Reports, etc. Furnish to
----------------------------------
the Agent and each of the Lenders:
(a) within 90 days after the end of each Fiscal Year, (i) a
comparative Consolidated balance sheet and comparative Consolidated
income statement showing the financial condition of the Borrower and
its subsidiaries as of the close of such Fiscal Year and the results
of their operations during such year, and (ii) a comparative
Consolidated statement of shareholders' equity (with respect only to a
Fiscal Year in which there is a change in shareholders' equity
resulting from any reason other than earnings) and a comparative Con-
solidated statement of cash flow for the year
63
then ended, all the foregoing financial statements to be audited by
independent public accountants of nationally recognized standing
acceptable to the Agent and the Lenders (which report shall not
contain any qualification except with respect to new accounting
principles mandated by the Financial Accounting Standards Board), and
to be in form and substance acceptable to the Agent; and comparative
consolidating balance sheets and consolidating income statements
showing the financial condition of the Borrower and its subsidiaries
as of the close of such Fiscal Year and the results of their opera-
tions during such year prepared by management of the Borrower and
reported on by the independent public accountants referred to above;
(b) within 45 days after the end of each of the first three (3)
fiscal quarters of the Borrower, an unaudited condensed Consolidated
balance sheet and an unaudited condensed Consolidated income statement
showing the financial condition and results of operations of the
Borrower and its subsidiaries as of the end of each such quarter, an
unaudited condensed Consolidated statement of shareholders' equity
(such statement of shareholders' equity shall only be required to be
submitted to the Agent and each of the Lenders to the extent there is
a change in shareholders' equity from the prior fiscal quarter end
arising as a result of any reason other than the addition of the
earnings or substraction of the losses of the Borrower and its
subsidiaries) and an unaudited condensed Consolidated statement of
cash flow for such fiscal quarter, in each case prepared by management
of the Borrower under the supervision and direction of the chief
financial officer of the Borrower and accompanied by a letter stating
that such financial statements were prepared under the supervision and
direction of the chief financial officer of the Borrower and
confirming that such financial statements present fairly the financial
condition and the results of operations of the Borrower and its
subsidiaries in accordance with generally accepted accounting
principles, consistently applied, except that they do not include all
of the information and footnote disclosure required by generally
accepted accounting principles for complete financial statements, in
each case subject to normal year-end audit adjustments;
(c) promptly after the same become publicly available, copies of
such registration statements, annual, periodic and other reports, and
such proxy statements and other information, if any, as shall be filed
by the Borrower or any subsidiaries with the Securities and Exchange
Commission
64
pursuant to the requirements of the Securities Act of 1933 or the
Securities Exchange Act of 1934;
(d) concurrently with any delivery under (a) or (b) above, a
certificate of the chief financial officer (in the form of the
certificate attached hereto as Exhibit I or another form acceptable
----------
to the Agent) certifying that to the best of his or her knowledge no
Default or Event of Default has occurred (including calculations
demonstrating compliance, as of the dates of the financial statements
being furnished at such time, with the covenants set forth in
Sections 7.06, 7.07, 7.08, 7.09, 7.10, 7.11, 7.12 and 7.13 hereof and,
if such a Default or Event of Default has occurred, specifying the
nature and extent thereof and any corrective action taken or proposed
to be taken with respect thereto;
(e) as soon as available and in any event within 15 days after
receipt by the Borrower or any subsidiary thereof, each management
letter prepared by the independent public accountants who reported on
the financial statements delivered under (a) above;
(f) within 30 days of the end of each month, an aging schedule
of the Receivables of each Credit Party in the form of Exhibit E
---------
hereto, and a schedule of Inventory of each Credit Party in the form
of Exhibit F hereto;
---------
(g) no later than December 31 of each calendar year, financial
projections (including, without limitation, with respect to capital
expenditures) for the Borrower and its subsidiaries for the then
current Fiscal Year (including quarterly Consolidated balance sheets,
statements of income and of cash flow), in form, substance and detail
(including, without limitation, principal assumptions) satisfactory to
the Agent, prepared by management of the Borrower under the
supervision and direction of the chief financial officer of the
Borrower and accompanied by a letter from the chief financial officer
of the Borrower stating that such projections were prepared under the
supervision and direction of the chief financial officer of the
Borrower;
(h) as soon as practicable, copies of all reports, forms,
filings, loan documents and financial information submitted to its
shareholders generally and/or the Securities and Exchange Commission;
(i) within 30 days after the end of each month, a certificate,
in form, substance and detail satisfactory to the Agent, of the chief
financial officer of each Credit
65
Party demonstrating compliance as at the end of such month with the
Borrowing Base;
(j) within ten (10) days after a request made by the Agent or
any Lender to receive (a) a copy of any franchise agreement to which
the Borrower or any of its subsidiaries is a party, a true and
complete executed copy of such franchise agreement and (b) a schedule
of all franchise agreements to which the Borrower or any of its
subsidiaries is a party, a true and complete listing of all franchise
agreements to which the Borrower or any of its subsidiaries is a
party;
(k) immediately upon becoming aware thereof, notice of (i) with
respect to material agreements to which any Credit Party is a party
that are not franchise agreements, the material breach by any party of
any such agreement and (ii) with respect to franchise agreements to
which any Credit Party is a party, the termination of any such
agreement should the sales pursuant to such franchise agreement be
equal to or greater than 5% of consolidated sales of the Borrower and
its subsidiaries over the immediately prior twelve (12) months, on a
rolling twelve (12) month basis; and
(l) as soon as practicable, such other information and documents
regarding the operations and affairs of the Borrower or any of its
subsidiaries as the Agent or any Lender may reasonably request.
SECTION 6.06. Litigation and Other Notices. Give the Agent and
----------------------------
each Lender prompt written notice of the following:
(a) the issuance by any court or governmental agency or
authority of any injunction, order, decision or other restraint
prohibiting, or having the effect of prohibiting, the making of the
Loans or occurrence of other Credit Events, or invalidating, or having
the effect of invalidating, any provision of this Agreement, the Notes
or the other Loan Documents, or the initiation of any litigation or
similar proceeding seeking any such injunction, order, decision or
other restraint;
(b) the filing or commencement of any action, suit or proceeding
against the Borrower or any of its subsidiaries, whether at law or in
equity or by or before any court or any Federal, state, municipal or
other governmental agency or authority, (i) which is brought by or on
behalf of any governmental agency or authority, or in which injunctive
or other equitable relief is sought, and which if adversely
66
determined could reasonably be expected to have a Material Adverse
Effect or (ii) as to which it is probable (within the meaning of
Statement of Financial Accounting Standards No. 5) that there will be
an adverse determination and which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect;
(c) any Default or Event of Default, specifying the nature and
extent thereof and the action (if any) which is proposed to be taken
with respect thereto; and
(d) any development in the business or affairs of the Borrower
or any of its subsidiaries or any other event of which such Credit
Party becomes aware which has had, or could reasonably be expected to
have, a Material Adverse Effect.
SECTION 6.07. ERISA. (a) Other than with respect to a
-----
Multiemployer Plan, pay and discharge promptly any liability imposed upon
it pursuant to the provisions of Title IV of ERISA, provided, however, that
-------- -------
neither the Borrower nor any ERISA Affiliate shall be required to pay any
such liability if (1) the amount, applicability or validity thereof shall
be diligently contested in good faith by appropriate proceedings, and (2)
to the extent required under generally accepted accounting principles, such
person shall have set aside on its books reserves which, in the opinion of
the chief financial officer of such person, are adequate with respect
thereto; and maintain and administer each Pension Plan and continue its
qualifications under and in compliance with ERISA and the Code, except
where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(b) Other than with respect to a Multiemployer Plan, deliver to
the Agent, promptly, and in any event within 30 days, after: (i) the
occurrence of any Reportable Event, a copy of the materials that are filed
with the PBGC, or the materials that would have been required to be filed
if the 30-day notice requirement to the PBGC was not waived; (ii) the
Borrower or any ERISA Affiliate or an administrator of any Pension Plan
files with participants, beneficiaries or the PBGC a notice of intent to
terminate any such Plan, a copy of any such notice; (iii) the receipt of
notice by the Borrower or any ERISA Affiliate or an administrator of any
Pension Plan from the PBGC of the PBGC's intention to terminate any Pension
Plan or to appoint a trustee to administer any such Plan, a copy of such
notice; (iv) if requested by the Agent or any Lender, the filing thereof
with the Internal Revenue Service, copies of each annual report that is
filed on Treasury Form 5500 with respect to any Plan, together with
certified financial statements (if any) for the Plan and any
67
actuarial statements on Schedule B to such Form 5500; (v) the Borrower or
any ERISA Affiliate knows or has reason to know of any event or condition
which might constitute grounds under the provisions of Section 4042 of
ERISA for the termination of (or the appointment of a trustee to
administer) any Pension Plan, an explanation of such event or condition;
(vi) the Borrower or any ERISA Affiliate knows or has reason to know of any
event or condition which might cause any one of them to incur a liability
under Section 4062, 4063, 4064 or 4069 of ERISA or Section 412(n) or 4971
of the Code, an explanation of such event or condition; and (vii) the
Borrower or any ERISA Affiliate knows or has reason to know that an
application is to be, or has been, made to the Secretary of the Treasury
for a waiver of the minimum funding standard under the provisions of
Section 412 of the Code, a copy of such application; and in each case
described in clauses (i) through (iii) and (v) through (vi) together with a
statement signed by the Financial Officer setting forth details as to such
Reportable Event, notice, event or condition and the action which the
Borrower or such ERISA Affiliate proposes to take with respect thereto.
(c) With respect to a Multiemployer Plan, deliver to the Agent,
promptly, and in any event within 30 days after the receipt by the Borrower
or any ERISA Affiliate of an assessment of withdrawal liability under
Section 4201 of ERISA from a Multiemployer Plan, a copy of such assessment.
SECTION 6.08. Maintaining Records; Access to Properties and
---------------------------------------------
Inspections; Right to Audit. Maintain financial records in accordance with
---------------------------
accepted financial practices and, upon reasonable notice (which may be
telephonic), at all reasonable times and as often as any Lender may
reasonably request, permit any authorized representative designated by such
Lender to visit and inspect the properties and financial records of the
Borrower and its subsidiaries and to make extracts from such financial
records at such Lender's expense, and permit any authorized representative
designated by such Lender to discuss the affairs, finances and condition of
the Borrower and its subsidiaries with the appropriate Financial Officer
and such other officers as the Borrower shall deem appropriate and the
Borrower's independent public accountants, as applicable. The Agent agrees
that it shall schedule any meeting with any such independent public
accountant through the Borrower and a Responsible Officer of the Borrower
shall have the right to be present at any such meeting. Each of the Agent
and each Lender shall have the right to audit, as often as it may request,
the existence and condition of the Receivables, Inventory, books and
records of the Borrower and its subsidiaries and to review their compliance
with the terms and conditions of this Agreement and the other Loan
Documents. The first such audit that is conducted by the Agent in each
calendar
68
year shall be at the expense of the Borrower and, unless a Default or Event
of Default shall have occurred and be continuing, each other such audit
shall be at the expense of the person conducting such audit. Each audit
conducted during the continuance of a Default or an Event of Default shall
be at the expense of the Borrower.
SECTION 6.09. Use of Proceeds. Use the proceeds of the Credits
---------------
only for the purposes set forth in Section 4.13 hereof.
SECTION 6.10. Fiscal Year-End. Cause its Fiscal Year to end on
---------------
September 30 in each year.
SECTION 6.11. Additional Guarantors. Promptly inform the Agent
---------------------
and each Lender of the creation or acquisition by it of any direct or
indirect subsidiary or Affiliate (subject to the provisions of Section 7.04
hereof) and (i) with respect to any such subsidiary or Affiliate that is
not a Foreign Subsidiary, cause such person to execute this Agreement as a
Guarantor and (ii) with respect to any such subsidiary or Affiliate that is
a Foreign Subsidiary, at the Borrower's option, (A) cause the direct parent
of such person to pledge and deliver in form satisfactory to the Agent at
least 65% of the capital stock of such person to the Agent (for the ratable
benefit of itself and the Lenders) pursuant to such agreements and
instruments as the Agent deems reasonably necessary or advisable or (B)
cause such person to execute this Agreement as a Guarantor.
SECTION 6.12. Environmental Laws. (a) Comply, and cause each
------------------
of its subsidiaries to comply, in all material respects with the provisions
of all Environmental Laws, and shall keep its properties and the properties
of its subsidiaries free of any Lien imposed pursuant to any Environmental
Law; not cause or suffer or permit, the property of the Borrower or its
subsidiaries to be used for the generation, production, processing,
handling, storage, transporting or disposal of any Hazardous Material,
except for Hazardous Materials used in the ordinary course of business of
the Borrower or its subsidiaries and disclosed in Schedule 6.12 hereto, in
-------------
which case such Hazardous Materials shall be used, stored, generated,
treated and disposed of only in compliance with Environmental Law, and
except for Remedial Work in response to Hazardous Materials on or about the
properties owned, operated, leased or occupied by the Borrower or any of
its subsidiaries.
(b) At the request of the Agent or any Lender, supply to the
Agent and each Lender copies of all submissions by the Borrower or any of
its subsidiaries to any governmental body and of the reports of all
environmental audits and of all other
69
environmental tests, studies or assessments (including the data derived
from any sampling or survey of asbestos, soil, or subsurface or other
materials or conditions) that may be conducted or performed (by or on
behalf of the Borrower or any of its subsidiaries) on or regarding the
properties owned, operated, leased or occupied the Borrower or any of its
subsidiaries or regarding any conditions that might have been affected by
Hazardous Materials on or Released or removed from such properties; permit
and authorize the consultants, attorneys or other persons that prepare such
submissions or reports or perform such audits, tests, studies or
assessments to discuss such submissions, reports or audits with the Agent
and the Lenders.
(c) Promptly (and in no event more than two Business Days after
the Borrower becomes aware or is otherwise informed of such event) provide
oral and written notice to the Agent and each Lender upon the happening of
any of the following:
(i) the Borrower, any subsidiary of the Borrower, or any
tenant or other occupant of any property of the Borrower or such
subsidiary receives notice of any claim, complaint, charge or
notice of a violation or potential violation of any Environmental
Law;
(ii) there has been a spill or other Release of Hazardous
Materials upon, under or about or affecting any of the properties
owned, operated, leased or occupied by the Borrower or any of its
subsidiaries, or Hazardous Materials at levels or in amounts that
may have to be reported, remedied or responded to under
Environmental Law are detected on or in the soil or groundwater;
(iii) the Borrower or any of its subsidiaries is or may be
liable for any costs of cleaning up or otherwise responding to a
Release of Hazardous Materials;
(iv) any part of the properties owned, operated, leased or
occupied by the Borrower or any of its subsidiaries is or may be
subject to a Lien under any Environmental Law; or
(v) the Borrower or any of its subsidiaries undertakes any
Remedial Work with respect to any Hazardous Materials.
(d) Timely undertake and complete any Remedial Work required by
any Environmental Law.
70
(e) Without in any way limiting the scope of Section 11.04
hereof and in addition to any obligations thereunder, the Borrower hereby
indemnifies and agrees to hold the Agent and the Lenders harmless from and
against any liability, loss, damage, suit, action or proceeding arising out
of its business or the business of its subsidiaries pertaining to Hazardous
Materials, including, but not limited to, claims of any governmental body
or any third person arising under any Environmental Law or under tort,
contract or common law. To the extent laws of the United States or any
applicable state or local law in which property owned, operated, leased or
occupied by the Borrower or any of its subsidiaries is located provide that
a Lien upon such property of the Borrower or such subsidiary may be
obtained for the removal of Hazardous Materials which have been or may be
Released, no later than sixty days after notice is given by the Agent to
the Borrower or such subsidiary, the Borrower or such subsidiary shall
deliver to the Agent a report issued by a qualified third party engineer
certifying as to the existence of any Hazardous Materials located upon or
beneath the specified property. To the extent any Hazardous Materials
located therein or thereunder either subject the property to Lien or
require removal to safeguard the health of any persons, the removal thereof
shall be an affirmative covenant of the Borrower hereunder.
(f) In the event that any Remedial Work is required to be
performed by the Borrower or any of its subsidiaries under any applicable
Environmental Law, any judicial order, or by any governmental entity,
commence all such Remedial Work at or prior to the time required therefor
under such Environmental Law or applicable judicial orders and thereafter
diligently prosecute to completion all such Remedial Work in accordance
with and within the time allowed under such applicable Environmental Laws
or judicial orders.
SECTION 6.13. Pay Obligations to Lenders and Perform Other
--------------------------------------------
Covenants. (a) Make full and timely payment of the Obligations, whether
---------
now existing or hereafter arising and (b) duly comply with all the terms
and covenants contained in this Agreement (including, without limitation,
the borrowing limitations and mandatory prepayments in accordance with
Article II hereof) and in each of the other Loan Documents, all at the
times and places and in the manner set forth therein.
VII. NEGATIVE COVENANTS
Each Credit Party covenants and agrees with each Lender that, so
long as this Agreement shall remain in effect or the principal of or
interest on any Note, any amount under any Letter
71
of Credit or any Acceptance Draft, or any fee, expense or amount payable
hereunder or in connection with any of the Transactions shall be unpaid, it
will not and will not cause or permit any of its subsidiaries and, in the
case of Section 7.17 hereof, any ERISA Affiliate to, either directly or
indirectly:
SECTION 7.01. Liens. Incur, create, assume or permit to exist
-----
any Lien on any of its property or assets (including the stock of any
direct or indirect subsidiary or Affiliate), whether owned at the date
hereof or hereafter acquired, or assign or convey any rights to or security
interests in any future revenues, except:
(a) Liens incurred and pledges and deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security
benefits (not including any lien described in Section 412(m) of the
Code);
(b) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens and other similar liens,
incurred in good faith in the ordinary course of business and securing
obligations which are not overdue for a period of more than 15 days or
which are being contested in good faith by appropriate proceedings as
to which the Borrower or any of its subsidiaries, as the case may be,
shall, to the extent required by generally accepted accounting princi-
ples consistently applied, have set aside on its books adequate
reserves;
(c) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent or are being
diligently contested in good faith by appropriate proceedings and as
to which adequate reserves have been established in accordance with
generally accepted accounting principles;
(d) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of
property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased
property, with or without consent of the lessee) which do not in the
aggregate materially detract from the value of its property or assets
or materially impair the use thereof in the operation of its business;
72
(e) Liens upon any equipment acquired through the purchase or
lease by the Borrower or any of its subsidiaries which are created or
incurred contemporaneously with such acquisition to secure or provide
for the payment of any part of the purchase price of, or lease
payments on, such equipment (but no other amounts and not in excess of
90% the purchase price or aggregate lease payments); provided,
--------
however, that any such Lien shall not apply to any other property of
-------
the Borrower or any of its subsidiaries; and provided, further, that
-------- -------
the same may be incurred only so long as no Event of Default or
Default then exists or would result therefrom, with the various
financial measurements and covenants set forth in sections 7.06
through 7.12 of this Agreement being recalculated on a pro forma basis
(from the then most recent quarterly or subsequent pro forma
calculations) to include the effects of the proposed indebtedness and
Capitalized Leases;
(f) Liens existing on the date of this Agreement and set forth
in Schedule 7.01 hereto but not the extension, renewal or refunding of
-------------
the Indebtedness secured thereby;
(g) Liens created in favor of the Agent for the benefit of the
Lenders;
(h) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety, customs and appeal bonds and other obligations of
like nature, incurred as an incident to and in the ordinary course of
business;
(i) Liens constituting statutory landlord's liens;
(j) the Lien imposed under a Special Deed of Pledge (a copy of
such executed Special Deed of Trust having been previously provided to
the Agent) by Milgray/International, Inc. in favor of Swiss Volksbank
with respect to the SFR 35,000 held in an account or accounts in the
name of Milgray/International, Inc. at Swiss Volksbank; or
(k) Liens securing Other Indebtedness.
SECTION 7.02. Indebtedness. Incur, create, assume or permit to
------------
exist any Indebtedness other than:
(i) Indebtedness (including, without limitation,
Guarantees) existing on the date hereof and listed in Schedule
--------
7.02 hereto, but not the extension, renewal or refunding thereof
----
subject to compliance with clauses (xiii) through (xxi);
73
(ii) Indebtedness incurred under this Agreement or any
other Loan Document;
(iii) Guarantees of the Borrower of Indebtedness or rental
obligations of any Guarantor permitted hereunder and Guarantees
of any Guarantor of Indebtedness or rental obligations of the
Borrower permitted hereunder;
(iv) Indebtedness to trade creditors incurred in the
ordinary course of business;
(v) Guarantees constituting the endorsement of negotiable
instruments for deposit or collection in the ordinary course of
business;
(vi) Guarantees of the Obligations;
(vii) purchase money Indebtedness and Capitalized Lease
Obligations to the extent permitted by Sections 7.01(e) and 7.06
hereof;
(viii) Subordinated Indebtedness;
(ix) Guarantees existing on the date hereof, and set forth
in Schedule 7.02 hereof, of Indebtedness existing on the date
-------------
hereof, but not Guarantees of any extension, renewal or refunding
of any such Indebtedness;
(x) progress payments made in the ordinary course of
business by the Borrower or any of its subsidiaries;
(xi) Indebtedness of the Borrower owing to any of its
subsidiaries;
(xii) (A) Indebtedness of any Guarantor other than Milgray
Electronics/P.R., Inc. and Milgray/Toronto, Inc. owing to the
Borrower or any other Guarantor and (B) Indebtedness of Milgray
Electronics/P.R., Inc. owing to the Borrower, provided that the
aggregate outstanding amount of such Indebtedness shall not at
any time exceed $10,000,000;
(xiii) Indebtedness of Milgray/Toronto, Inc. owing to the
Borrower, provided that the aggregate outstanding amount of such
Indebtedness shall not at any time exceed $5,000,000;
74
(xiv) INTENTIONALLY OMITTED;
(xv) Indebtedness of Milgray/International, Inc. and
Milgray/Toronto, Inc. owing under overdraft lines of credit,
provided that the aggregate outstanding amount of such
Indebtedness shall not at any time exceed $1,000,000 and
$1,000,000, respectively;
(xvi) Indebtedness of Milgray/International, Inc. owing
under customs guarantee lines of credit, provided that the
aggregate outstanding amount of such Indebtedness shall not at
any time exceed $75,000;
(xvii) Indebtedness of Milgray Electronics, Inc.,
Milgray/International, Inc. and Milgray/Toronto, Inc. owing under
foreign exchange lines of credit, provided that the aggregate
outstanding amount of such Indebtedness shall not at any time
exceed $4,000,000 in the aggregate for Milgray Electronics, Inc.
and Milgray/International, Inc. and (Canadian) $10,000,000 in the
case of Milgray/Toronto, Inc.;
(xviii) unsecured Indebtedness of the Borrower owing to
commercial banks that are located in the United States or Puerto
Rico (such banks in Puerto Rico referred to herein as the "Puerto
Rican Banks"), provided that the aggregate outstanding amount of
such Indebtedness shall not exceed $5,000,000, the proceeds of
such Indebtedness are used by Milgray Electronics/P.R., Inc. to
purchase tax exempt Puerto Rican Securities rated A or better by
Standard and Poor's or ▇▇▇▇▇'▇ Investor Service (the "Puerto
Rican Securities") in connection with a transaction entered into
for the purpose of reducing the Borrower's or Milgray
Electronics/P.R., Inc.'s tax liability to Puerto Rico and the
terms and conditions of such Indebtedness are reasonably
satisfactory to the Agent and the Lenders in the case of a
borrowing from a United States bank or if such Indebtedness is
incurred from Puerto Rican Banks, the Puerto Rican Indebtedness
Conditions have been fulfilled to the satisfaction of the Agent
and the Lenders;
(xix) a Guarantee of Milgray Electronics/P.R., Inc. of the
Indebtedness incurred pursuant to subsection (xviii) above if
incurred from Puerto Rican Banks [or United States banks],
provided that the Agent and Lenders shall have given the Borrower
their prior written consent indicating that the terms and
conditions of such Guarantee are reasonably satisfactory to them
in all respects;
75
(xx) a Guarantee (a copy of such executed Guaranty having
been previously provided to the Agent) of Milgray/ International,
Inc. in favor of Swiss Volksbank in the amount of SFR 35,000 (the
"Swiss Volksbank Guarantee"); and
(xxi) (i) other Indebtedness (including, without limitation,
Guarantees) in an aggregate amount not in excess of $250,000 less
(ii) the United States dollar equivalent of the Swiss Volksbank
Guarantee plus the aggregate amounts actually paid thereunder
(the "Other Indebtedness").
SECTION 7.03. Dividends, Distributions and Payments. Declare or
-------------------------------------
pay, directly and indirectly, any cash dividends or make any other
distribution, whether in cash, property, securities or a combination
thereof, with respect to (whether by reduction of capital or otherwise) any
shares of its capital stock, or directly or indirectly redeem, purchase,
retire or otherwise acquire for value (or permit any subsidiary to purchase
or acquire) any shares of any class of its capital stock or any options,
warrants or other rights with respect thereto, or set aside any amount for
any such purpose, except for (i) the cancellation or retirement of
outstanding treasury stock, (ii) dividends or other distributions payable
by or to the Borrower or any subsidiary thereof solely in shares of common
stock, (iii) cash dividends or distributions by any subsidiary of the
Borrower to the Borrower, (iv) cash dividends payable in lieu of any
issuance of fractional shares of capital stock permitted under clause (ii)
above and (v) the acquisition by the Borrower of shares of its capital
stock from employees of the Borrower in exchange for the issuance to such
employees of shares of the Borrower's capital stock in accordance with the
provisions of a stock option plan of the Borrower existing on the Closing
Date.
SECTION 7.04. Consolidations, Mergers and Sales of Assets.
-------------------------------------------
Consolidate with or merge into any other person, or sell, lease, transfer
or assign to any persons or otherwise dispose of (whether in one
transaction or a series of transactions) any capital stock of any of its
subsidiaries (whether now owned or hereafter acquired), or any portion of
any of its other assets or properties other than in the ordinary course of
business (whether now owned or hereafter acquired), or any of its inventory
other than in the ordinary course of business, or permit another person to
merge into it, or acquire all or substantially all the capital stock or
assets of any other person, except (i) that upon not less than thirty (30)
days' prior written notice to the Agent and the Lenders, (A) any Guarantor
or Foreign Subsidiary may merge with and into the Borrower, provided that
the Borrower is the sole surviving entity
76
of such merger, (B) any Guarantor may merge with and into another
Guarantor, (except no domestic Guarantor may merge into Milgray/Toronto,
Inc. or any other Guarantor which is a Foreign Subsidiary or Milgray
Electronics/P.R., Inc.), and (C) any Foreign Subsidiary (other than
Milgray/Toronto, Inc.) may merge with and into another Foreign Subsidiary,
(ii) that any Guarantor may sell, lease, transfer or otherwise dispose of
all or any portion of its business or assets to the Borrower or another
Guarantor (other than a Guarantor which is a Foreign Subsidiary or Milgray
Electronics/P.R., Inc.) and (iii) that any Foreign Subsidiary may sell,
lease, transfer or otherwise dispose of all or any portion of its business
or assets to the Borrower, any Guarantor or another Foreign Subsidiary.
SECTION 7.05. Investments. Own, purchase or acquire any stock,
-----------
obligations, assets or securities of, or any interest in, or make any
capital contribution or loan or advance to, any other person, or make any
other investments, except:
(a) investments in checking and interest bearing deposit
accounts and certificates of deposit in dollars of any Lender, or any
other commercial banks registered to do business in any state of the
United States (i) having capital and surplus in excess of
$1,000,000,000 and (ii) whose long-term debt rating is at least
investment grade as determined by either Standard & Poor's Corporation
or ▇▇▇▇▇'▇ Investor Service, Inc.;
(b) readily marketable direct obligations of the United States
government or any agency thereof which are backed by the full faith
and credit of the United States;
(c) investments in money market mutual funds having assets in
excess of $2,500,000,000;
(d) commercial paper of any Lender or commercial paper, at the
time of acquisition, having the highest rating obtainable from either
Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investor Service, Inc.;
(e) federally tax exempt securities rated A or better by either
Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investor Service, Inc.;
(f) loans and advances by it to other persons constituting
Indebtedness permitted under clauses (xi), (xii) or (xiii) of
Section 7.02 hereof;
(g) investments in interest bearing deposit accounts made in the
ordinary course of business in banks located in
77
Puerto Rico which have been identified in writing by the Agent and the
Lenders as acceptable;
(h) investments in the stock of any subsidiary or Affiliate;
(i) loans and advances to employees of any Credit Party so long
as the aggregate outstanding amount of all such loans and advances to
employees of all the Credit Parties does not at any time exceed
$300,000; and
(j) Puerto Rican Securities to the extent permitted by
Section 7.02 (xviii);
provided that, in each case mentioned in (a), (b), (d) and (e) above, such
--------
obligations shall mature not more than one year from the date of
acquisition thereof.
SECTION 7.06. Capital Expenditures. Permit or suffer the
--------------------
aggregate amount of payments made for capital expenditures, including,
without limitation, Capitalized Lease Obligations and Indebtedness secured
by Liens permitted under Section 7.01(e) hereof, to exceed $2,000,000 in
any Fiscal Year.
SECTION 7.07. Net Worth. Permit or suffer Net Worth at any time
---------
to be less than (i) $30,000,000 at any time from the Closing Date through
and including September 29, 1995; (ii) $31,000,000 at any time from
September 30, 1995 through and including September 29, 1996; and (iii)
during each subsequent twelve month period commencing on September 30 in
any year and ending on September 29 of the subsequent year, the sum of (a)
the minimum Net Worth required pursuant to this Section 7.07 to be
maintained during the immediately preceding twelve month period plus (b)
$3,000,000.
SECTION 7.08. Total Unsubordinated Liabilities to Net Worth
---------------------------------------------
Ratio. Permit or suffer the ratio of (x) Total Unsubordinated Liabilities
-----
of the Borrower and its subsidiaries to (y) Net Worth, at any time to be
greater than 2.25:1.00.
SECTION 7.09. Rental Obligations. Incur, create, assume or
------------------
permit or suffer to exist, in respect of leases of real and personal
property (other than Capitalized Lease Obligations), rental obligations or
other commitments thereunder to make any direct or indirect payment,
whether as rent or otherwise, for fixed or minimum rentals, percentage
rentals, property taxes, or insurance premiums, in an aggregate amount for
the Borrower and its subsidiaries which shall exceed: (i) $1,500,000 for
the Fiscal Year ending September 30, 1995; and (ii) for any Fiscal Year
ending thereafter, the sum of (A) the maximum amount of such
78
obligations permitted under this Section 7.09 for the immediately preceding
Fiscal Year plus (B) $500,000.
SECTION 7.10. Consolidated Inventory Ratio. Permit or suffer
----------------------------
the ratio of (x) Inventory of the Borrower on a Consolidated basis to (y)
Current Assets of the Borrower on a Consolidated basis, at any time to
exceed 0.65:1.00.
SECTION 7.11. Consolidated Current Ratio. Permit or suffer the
--------------------------
Consolidated Current Ratio of the Borrower at any time to be less than
1.20:1.00.
SECTION 7.12. Interest Coverage Ratio. Permit or suffer the
-----------------------
Interest Coverage Ratio of the Borrower at the end of any Fiscal Year to be
less than 2.00:1.00.
SECTION 7.13. Net Income. Permit or suffer Borrower's Net
----------
Income to be less than zero for any Fiscal Year.
SECTION 7.14. Business. Alter the nature of its business as
--------
operated on the date of this Agreement in any material respect.
SECTION 7.15. Sales of Receivables. Sell, assign, discount,
--------------------
transfer, or otherwise dispose of any accounts receivable, promissory
notes, drafts or trade acceptances or other rights to receive payment held
by it, with or without recourse, except for the purpose of collection or
settlement in the ordinary course of business.
SECTION 7.16. Use of Proceeds. Permit or suffer the proceeds of
---------------
any Credit to be used for any purpose which entails a violation of, or is
inconsistent with, Regulation G, T, U or X of the Board, or for any purpose
other than those set forth in Section 4.13 hereof.
SECTION 7.17. ERISA. (a) Engage in any transaction in
-----
connection with which the Borrower or any ERISA Affiliate could be subject
to either a material civil penalty assessed pursuant to the provisions of
Section 502 of ERISA or a material tax imposed under the provisions of
Section 4975 of the Code.
(b) Terminate any Pension Plan in a "distress termination" under
Section 4041 of ERISA, or take any other action which could result in a
material liability of the Borrower or any ERISA Affiliate to the PBGC.
(c) Other than with respect to a Multiemployer Plan, fail to
make payment when due of all amounts which, under the provisions of any
Plan, the Borrower or any ERISA Affiliate is
79
required to pay as contributions thereto, or, with respect to any Pension
Plan, permit to exist any material "accumulated funding deficiency" (within
the meaning of Section 302 of ERISA and Section 412 of the Code), whether
or not waived, with respect thereto.
(d) Adopt an amendment to any Pension Plan requiring the
provision of security under Section 307 of ERISA or Section 401(a)(29) of
the Code.
(e) With respect to a Multiemployer Plan, incur or cause to
occur a complete or partial withdrawal so as to incur withdrawal liability
in an amount that could reasonably be expected to have a Material Adverse
Effect.
SECTION 7.18. Accounting Changes. Make, or permit or suffer any
------------------
subsidiary to make any change in their accounting treatment or financial
reporting practices except as required or permitted by generally accepted
accounting principles in effect from time to time.
SECTION 7.19. Modification of Indebtedness. Modify, amend or
----------------------------
otherwise alter the terms and provisions of any Subordinated Indebtedness
or prepay or acquire any Indebtedness outstanding thereunder other than as
scheduled thereunder.
SECTION 7.20. Transactions with Affiliates. Except as otherwise
----------------------------
specifically set forth in this Agreement, directly or indirectly purchase,
acquire or lease any property from, or sell, transfer or lease any property
to, or enter into any other transaction with, any stockholder, officer,
director, Affiliate or agent of the Borrower or any of its subsidiaries, or
▇.▇. ▇▇▇▇▇▇▇▇ Associates, Inc., or any relative of any thereof, except at
prices and on terms not less favorable to it than that which would have
been obtained in an arm's-length transaction with a non-affiliated third
party, provided that this Section 7.20 shall not be deemed to prohibit any
Credit Party from paying performance related bonuses to any of its
employees or from making loans or advances to employees that are permitted
under Section 7.05(i) hereof, and further provided that, subject to the
provisions of Article 7 hereof, this Section 7.20 shall not be deemed to
prohibit the Borrower or any domestic Guarantor or Canadian Guarantor
(provided that for any such Canadian Guarantor the Agent shall have
received an opinion of counsel in form and substance satisfactory to the
Agent and the Lenders that the Guarantee of such Guarantor is enforceable
against such Guarantor at least to the same extent as exists with respect
to a domestic Guarantor) from directly or indirectly purchasing, acquiring
or leasing any property from, or selling, transferring or leasing any
property to, or entering into any other transaction with the
80
Borrower or any domestic Guarantor or qualifying Canadian Guarantor whether
or not such transaction is at arm's-length.
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein
called "Events of Default"):
-----------------
(a) any representation or warranty made or deemed made in or in
connection with this Agreement, the Notes or any other Loan Documents
or any Credit Events hereunder, shall prove to have been incorrect in
any material respect when made or deemed to be made;
(b) default shall be made in the payment of any principal of any
Note when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any
Note, any Revolving Credit Commitment Fee or any fee or any other
amount payable hereunder, or under the Notes, Letters of Credit,
Acceptance Drafts or any other Loan Document, or in connection with
any other Credit Event or the Transactions, when and as the same shall
become due and payable;
(d) (i) default shall be made in the due observance or
performance of any covenant, condition or agreement to be observed or
performed on the part of the Borrower or any of its subsidiaries
pursuant to the terms of Article II or III, hereof, Sections 6.05,
6.06, 6.08 and 6.13 hereof, or Articles VII, X or XI hereof or
pursuant to any other Loan Document; or (ii) default shall be made in
the due observance or performance of any other covenant, condition or
agreement to be observed or performed pursuant to the terms hereof and
such default shall continue unremedied for thirty (30) or more
consecutive days from the date any Credit Party becomes aware or
should have become aware of such default (but in any event from a date
that a Credit Party has been advised by the Agent or any Lender (such
person being under no duty to so advise) of such default);
(e) the Borrower, any Guarantor or any subsidiary of any thereof
shall (i) voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code or any other
Federal, state or foreign bankruptcy, insolvency, liquidation or
similar law,
81
(ii) consent to the institution of, or fail to contravene in a timely
and appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator or similar official for the Borrower,
such Guarantor or such subsidiary or for a substantial part of its
property or assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally
to pay its debts as they become due or (vii) take corporate action for
the purpose of effecting any of the foregoing;
(f) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower, any
Guarantor or any subsidiary of any thereof, or of a substantial part
of the property or assets of the Borrower, any Guarantor or any
subsidiary of any thereof, under Title 11 of the United States Code or
any other Federal state or foreign bankruptcy, insolvency, receiver-
ship or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator or similar official for the Borrower, any
Guarantor or any subsidiary of any thereof or for a substantial part
of the property of the Borrower, any Guarantor or any subsidiary of
any thereof or (iii) the winding-up or liquidation of the Borrower,
any Guarantor or any subsidiary of any thereof; and such proceeding or
petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall continue unstayed and
in effect for 60 days;
(g) default shall be made with respect to any Indebtedness of
the Borrower, any Guarantor or any subsidiary of any thereof in excess
of $250,000 (excluding Indebtedness outstanding hereunder) if the
effect of any such default shall be to accelerate, or to permit the
holder or obligee of any such Indebtedness (or any trustee on behalf
of such holder or obligee) at its option to accelerate, the maturity
of such Indebtedness or obligations under a capitalized lease;
(h) (i) a Reportable Event shall have occurred with respect to a
Pension Plan, (ii) the filing by the Borrower, any ERISA Affiliate, or
an administrator of any Plan of a notice of intent to terminate such a
Plan in a "distress termination" under the provisions of Section 4041
of ERISA, (iii) the receipt of notice by the Borrower, any ERISA
Affiliate, or an administrator of a Plan that the PBGC has
82
instituted proceedings to terminate (or appoint a trustee to adminis-
ter) such a Pension Plan, (iv) any other event or condition exists
which might, in the reasonable opinion of the Agent, constitute
grounds under the provisions of Section 4042 of ERISA for the
termination of (or the appointment of a trustee to administer) any
Pension Plan by the PBGC, (v) a Pension Plan shall fail to maintain
the minimum funding standard required by Section 412 of the Code for
any plan year or a waiver of such standard is sought or granted under
the provisions of Section 412(d) of the Code, (vi) the Borrower or any
ERISA Affiliate has incurred, or is likely to incur, a liability under
the provisions of Section 4062, 4063, 4064 or 4201 of ERISA, (vii) the
Borrower or any ERISA Affiliate fails to pay the full amount of an
installment required under Section 412(m) of the Code, (viii) the
occurrence of any other event or condition with respect to any Plan
which would constitute an event of default under any other agreement
entered into by the Borrower or any ERISA Affiliate, and in each case
in clauses (i) through (viii) of this subsection (h), such event or
condition, together with all other such events or conditions, if any,
could subject the Borrower or any ERISA Affiliate to any taxes,
penalties or other liabilities which, in the reasonable opinion of the
Agent, could have a Material Adverse Effect;
(i) the Borrower or any ERISA Affiliate (i) shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
any withdrawal liability to such Multiemployer Plan which could
reasonably be expected to have a Material Adverse Effect and (ii) does
not have reasonable grounds for contesting such withdrawal liability
and is not in fact contesting such withdrawal liability in a timely
and appropriate manner;
(j) a judgment (to the extent not reimbursed by insurance
policies of the Borrower, any Guarantor or any subsidiary of any
thereof) or decree for the payment of money, a fine or penalty which
when taken together with all other such judgments, decrees, fines and
penalties shall exceed $150,000 shall be rendered by a court or other
tribunal against the Borrower, any Guarantor or any subsidiary of any
thereof and (i) shall remain undischarged or unbonded for a period of
45 consecutive days during which the execution of such judgment,
decree, fine or penalty shall not have been stayed effectively or
(ii) any judgment creditor or other person shall legally be
prosecuting an unstayed action to collect on or enforce such judgment,
decree, fine or penalty;
83
(k) this Agreement, any Note or any other Loan Document shall
for any reason cease to be, or shall be asserted by the Borrower, any
Guarantor or any subsidiary of any thereof not to be, a legal, valid
and binding obligation of the Borrower, such Guarantor or such
subsidiary, as applicable, enforceable in accordance with its terms,
or the security interest or Lien purported to be created by any Loan
Document shall for any reason cease to be, or be asserted by the
Borrower, any Guarantor or any subsidiary of any thereof not to be, a
valid, first priority perfected security interest in any collateral
covered thereby (except to the extent otherwise permitted under this
Agreement; or
(l) any person shall legally commence proceedings to foreclose
upon any Lien (other than any Lien of the type described in Section
7.01(d) hereof) on any property of the Borrower or any subsidiary
thereof except to the extent that such proceedings shall have been
stayed or a surety bond satisfactory to the Agent and the Lenders in
connection with such proceedings shall have been obtained by the
Borrower or such subsidiary;
then, and in any such event (other than an event described in paragraph (e)
or (f) above), and at any time thereafter during the continuance of such
event, the Agent with the written consent of the Required Lenders may, and
upon the written request of the Required Lenders shall, by written notice
(or facsimile notice promptly confirmed in writing) to the Borrower, take
any or all of the following actions at the same or different times:
(i) terminate forthwith all or any portion of the Revolving Credit
Commitment and the obligations of the Lenders to issue Letters of Credit
and accept Acceptance Drafts; (ii) demand that the Borrower and the
Guarantors provide to the Lenders, and the Borrower and the Guarantors upon
such demand agree to provide, cash collateral in an amount equal to the
aggregate Letter of Credit Exposure then existing plus the aggregate
Acceptance Draft Exposure then outstanding, to be held by the Agent for the
ratable benefit of the Lenders on terms and pursuant to documents and
agreements satisfactory in all respects to the Agent; and (iii) declare the
Notes and any amounts then owing to the Lenders on account of drawings
under any Letters of Credit and Acceptance Drafts to be forthwith due and
payable, and the Borrower shall provide such cash collateral to secure the
aggregate Letter of Credit Exposure then existing plus the Acceptance Draft
Exposure then existing, whereupon the principal of such Notes, together
with accrued interest and fees thereon and any amounts then owing to the
Lenders on account of drawings under any Letters of Credit and acceptance
of Acceptance Drafts and other liabilities of the Borrower accrued
hereunder, shall become forthwith due and payable both as to principal and
interest, without presentment,
84
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower, anything contained herein or in the Notes
to the contrary notwithstanding; provided, however, that with respect to a
-------- -------
default described in paragraph (e) or (f) above, the Revolving Credit
Commitment and the obligation of the Lenders to issue Letters of Credit and
accept Acceptance Drafts shall automatically terminate and the principal of
the Notes, together with accrued interest and fees thereon and any amounts
then owing to the Lenders on account of drawings under any Letters of
Credit and Acceptance Drafts and any other liabilities of the Borrower
accrued hereunder shall automatically become due and payable, both as to
principal and interest, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in the Notes to the contrary
notwithstanding.
IX. AGENT
In order to expedite the transactions contemplated by this
Agreement, Chemical Bank is hereby appointed to act as Agent on behalf of
the Lenders. Each of the Lenders and each subsequent holder of any Note or
issuer of any Letter of Credit or acceptor of any Acceptance Draft by its
acceptance thereof, irrevocably authorizes the Agent to take such action on
its behalf and to exercise such powers hereunder and under the Loan
Documents as are specifically delegated to or required of the Agent by the
terms hereof and the terms thereof together with such powers as are
reasonably incidental thereto. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable as such for any action taken
or omitted to be taken by it or them hereunder or under any of the Loan
Documents or in connection herewith or therewith (a) at the request or with
the approval of the Required Lenders (or, if otherwise specifically
required hereunder or thereunder, the consent of all the Lenders) or (b) in
the absence of its or their own gross negligence or willful misconduct.
The Agent is hereby expressly authorized on behalf of the
Lenders, without hereby limiting any implied authority, (a) to receive on
behalf of each of the Lenders any payment of principal of or interest on
the Notes outstanding hereunder and all other amounts accrued hereunder
paid to the Agent, and promptly to distribute to each Lender its proper
share of all payments so received, (b) to distribute to each Lender copies
of all notices, agreements and other material as provided for in this
Agreement or in the other Loan Documents as received by such Agent and
(c) to take all actions with respect to this Agreement
85
and the other Loan Documents as are specifically delegated to the Agent.
In the event that (a) the Borrower fails to pay when due the
principal of or interest on any Note, any amount payable under any Letter
of Credit or Acceptance Draft, or any fee payable hereunder or (b) the
Agent receives written notice of the occurrence of a Default or an Event of
Default, the Agent within a reasonable time shall give written notice
thereof to the Lenders, and shall take such action with respect to such
Event of Default or other condition or event as it shall be directed to
take by the Required Lenders; provided, however, that, unless and until the
-------- -------
Agent shall have received such directions, the Agent may take such action
or refrain from taking such action hereunder or under any other Loan
Documents with respect to a Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
The Agent shall not be responsible in any manner to any of the
Lenders for the effectiveness, enforceability, perfection, value, genui-
neness, validity or due execution of this Agreement, the Notes or any of
the other Loan Documents or any other agreements or certificates, requests,
financial statements, notices or opinions of counsel or for any recitals,
statements, warranties or representations contained herein or in any such
instrument or be under any obligation to ascertain or inquire as to the
performance or observance of any of the terms, provisions, covenants,
conditions, agreements or obligations of this Agreement or any of the other
Loan Documents or any other agreements on the part of the Borrower and,
without limiting the generality of the foregoing, the Agent shall, in the
absence of knowledge to the contrary, be entitled to accept in good faith
any certificate furnished pursuant to this Agreement or any of the other
Loan Documents as conclusive evidence of the facts stated therein and shall
be entitled to rely in good faith on any note, notice, consent,
certificate, affidavit, letter, telegram, teletype message, statement,
order or other document which it believes in good faith to be genuine and
correct and to have been signed or sent by the proper person or persons.
It is understood and agreed that the Agent may exercise its rights and
powers under other agreements and instruments to which it is or may be a
party, and engage in other transactions with the Borrower, as though it
were not Agent of the Lenders hereunder.
The Agent shall promptly give notice to the Lenders of the
receipt or sending of any notice, schedule, report, projection, financial
statement or other document or information pursuant to this Agreement or
any of the other Loan Documents and shall promptly forward a copy thereof
to each Lender.
86
Neither the Agent nor any of its directors, officers, employees
or agents shall have any responsibility to the Borrower on account of the
failure or delay in performance or breach by any Lender other than the
Agent of any of its obligations hereunder or to any Lender on account of
the failure of or delay in performance or breach by any other Lender or the
Borrower of any of their respective obligations hereunder or in connection
herewith.
The Agent may consult with legal counsel selected by it in
connection with matters arising under this Agreement or any of the other
Loan Documents and any action taken or suffered in good faith by it in
accordance with the opinion of such counsel shall be full justification and
protection to it. The Agent may exercise any of its powers and rights and
perform any duty under this Agreement or any of the other Loan Documents
through agents or attorneys.
The Agent and the Borrower may deem and treat the payee or most
recent assignee pursuant to Section 11.03(e) hereof, as applicable, of any
Note as the holder thereof until written notice of transfer shall have been
delivered as provided in Section 11.03(e) hereof by such payee to the Agent
and the Borrower.
With respect to the Loans made hereunder, the Notes issued to it
and any other Credit Event applicable to it, the Agent in its individual
capacity and not as an Agent shall have the same rights, powers and duties
hereunder and under any other Agreement executed in connection herewith as
any other Lender and may exercise the same as though it were not the Agent,
and the Agent and its affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Borrower or other
affiliate thereof as if it were not the Agent.
Each Lender agrees (i) to reimburse the Agent in the amount of
such Lender's pro rata share (based on its Revolving Credit Commitment
hereunder) of any expenses incurred for the benefit of the Lenders by the
Agent, including counsel fees and compensation of agents and employees paid
for services rendered on behalf of the Lenders, not reimbursed by the
Borrower and (ii) to indemnify and hold harmless the Agent and any of its
directors, officers, employees or agents, on demand, in the amount of its
pro rata share, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against it in its capacity as the Agent or any of
them in any way relating to or arising out of this Agreement or any of the
other Loan Documents or any action taken or omitted by it or
87
any of them under this Agreement or any of the other Loan Documents, to the
extent not reimbursed by the Borrower; provided, however, that no Lender
-------- -------
shall be liable to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgment, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent or any of its directors, officers, employees or
agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and any other Loan Document to which
such Lender is party. Each Lender also acknowledges that it will,
independently and without reliance upon the 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 decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document, any related
agreement or any document furnished hereunder.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders
and the Borrower. Upon any such resignation, the Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been
so appointed by such Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent which shall be a bank with an office (or an affiliate with an office)
in New York, New York, having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor bank, such successor shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent and the retiring Agent shall be discharged from its duties and
obligations hereunder and under each of the other Loan Documents. After
any Agent's resignation hereunder, the provisions of this Article shall
continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
The Lenders hereby acknowledge that the Agent shall be under no
duty to take any discretionary action permitted to be taken by the Agent
pursuant to the provisions of this Agreement or any of the other Loan
Documents unless it shall be requested in writing to do so by the Required
Lenders.
88
X. GUARANTEES
Each Guarantor unconditionally guarantees, as a primary obligor
and not merely as a surety, jointly and severally with each other
Guarantor, the due and punctual payment of the principal of and interest on
each of the Notes, when and as due, whether at maturity, by acceleration,
by notice of prepayment or otherwise, and the due and punctual performance
of all other Obligations. Each Guarantor further agrees that the
Obligations may be extended and renewed, in whole or in part, without
notice to or further assent from it, and that it will remain bound upon its
guarantee notwithstanding any extension or renewal of any Obligations.
Each Guarantor waives presentment to, demand of payment from and
protest to the Borrowers of any of the Obligations, and also waives notice
of acceptance of its guarantee and notice of protest for nonpayment. The
obligations of a Guarantor hereunder shall not be affected by: (a) the
failure of any Lender or the Agent to assert any claim or demand or to
enforce any right or remedy against the Borrower or any other Guarantor
under the provisions of this Agreement, the Notes, any Letter of Credit,
any Acceptance Draft, any Loan Document or any other document or instrument
executed and delivered in connection herewith or therewith, or otherwise;
(b) any rescission, waiver, amendment or modification of any of the terms
or provisions of this Agreement, the Notes, any Letter of Credit, any
Acceptance Draft, any Loan Document or any other document or instrument
executed and delivered in connection herewith or therewith; (c) the release
or impairment of any security held by the Agent for the Obligations or any
of them; or (d) the failure of any Lender to exercise any right or remedy
against any other Guarantor of the Obligations.
Each Guarantor further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right
to require that any resort be had by any Lender to any collateral security
held for payment of the Obligations or to any balance of any deposit
account or credit on the books of any Lender in favor of any Borrower or
any other person.
The obligations of each Guarantor hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each
Guarantor hereunder shall not be discharged or impaired or
89
otherwise affected by the failure of the Agent or any Lender to assert any
claim or demand or to enforce any remedy under this Agreement, the Notes,
any Letter of Credit, any Acceptance Draft, any other Loan Document or any
other document or instrument executed and delivered in connection herewith
or therewith, by any waiver or modification of any term or provision
thereof, by any default, failure or delay, willful or otherwise, (i) in the
performance of the Obligations, (ii) in the exercise or enforcement of any
right, power, privilege, remedy or interest of the Agent or any Lender
under this Agreement, any other Loan Document or applicable law, or (iii)
by any other act or omission which may or might in any manner or to any
extent vary the risk of such Guarantor or otherwise operate as a discharge
of such Guarantor as a matter of law or equity.
Each Guarantor further agrees that its guarantee shall continue
to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation
is rescinded or must otherwise be returned by the Agent or any Lender upon
the bankruptcy or reorganization of any Borrower or otherwise.
Each Guarantor hereby waives and releases all rights of
subrogation against the Borrower and its property and all rights of
indemnification, contribution and reimbursement from the Borrower and its
property, in each case in connection with this guarantee and any payments
made hereunder, and regardless of whether such rights arise by operation of
law, pursuant to contract or otherwise.
XI. MISCELLANEOUS
SECTION 11.01. Notices. Notices, consents and other
-------
communications provided for herein shall be in writing and shall be
delivered or mailed (or in the case of telex or facsimile communication,
delivered by telex, graphic scanning, telecopier or other
telecommunications equipment, with receipt confirmed) addressed,
(a) if to the Borrower, any Guarantor or any of their respective
subsidiaries at Milgray Electronics, Inc., ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
- Finance, with a copy to ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
(b) if to the Agent, at Chemical Bank, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Milgray Account Officer, with a
copy to Kaye, Scholer, et al., at
90
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq.;
(c) if to Fleet Bank, at Fleet Bank, Corporate Banking Division,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇, Vice President; and
(d) if to First Union, at First Union National Bank of North
Carolina, Capital Markets Group, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇;
and
(e) if to any other Lender, at the address set forth below its
name in Schedule 2.01 hereto.
-------------
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have
been given on the date of receipt if hand delivered or three Business Days
after being sent by registered or certified mail, postage prepaid, return
receipt requested, if by mail, or upon receipt during normal business hours
on any Business Day (or otherwise the next Business Day) if by any telex,
facsimile or other telecommunications equipment, in each case addressed to
such party as provided in this Section 11.01 or in accordance with the
latest unrevoked direction from such party.
SECTION 11.02. Survival of Agreement. All covenants,
---------------------
agreements, representations and warranties made by the Borrower or any of
its subsidiaries herein and in the certificates or other instruments
prepared or delivered in connection with this Agreement or any other Loan
Document, shall be considered to have been relied upon by the Lenders and
shall survive the making by the Lenders of the Loans and the execution and
delivery to the Lenders of the Notes and occurrence of any other Credit
Event and shall continue in full force and effect as long as the principal
of or any accrued interest on the Notes or any other fee or amount payable
under the Notes or this Agreement or any other Loan Document is outstanding
and unpaid and so long as any Lender's Revolving Credit Commitment has not
been terminated.
SECTION 11.03. Successors and Assigns; Participations.
--------------------------------------
(a) Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of
such party; and all covenants, promises and agreements by or on behalf of
the Borrower, any Guarantor, any ERISA Affiliate, any subsidiary of any
thereof, the Agent or the Lenders, that are contained in this Agreement
shall bind and inure to the benefit of their respective successors and
assigns. Without limiting the generality of the foregoing, the Borrower
specifically confirms that the Agent and each Lender may at any
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time and from time to time assign or pledge or otherwise grant a security
interest in any Loan or any Note or Acceptance Draft (or any part thereof)
to any Federal Reserve Bank. The Borrower may not assign or transfer any
of its rights or obligations hereunder without the written consent of all
the Lenders.
(b) Each Lender, without the consent of the Borrower, may sell
participations to one or more banks or other entities in all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Revolving Credit Commitment) and the
Loans owing to it and undrawn Letters of Credit and Acceptance Drafts and
the Notes held by it); provided, however, that (i) such Lender's
-------- -------
obligations under this Agreement (including, without limitation, its
Revolving Credit Commitment) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the banks or other entities buying
participations shall be entitled to the cost protection provisions
contained in Sections 2.11(a) (except to the extent that application of
such Section 2.11(a) to such banks and entities would cause the Borrower to
make duplicate payments thereunder), 2.12 and 2.13 hereof, and (iv) the
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement; provided, further, however, that each
-------- ------- -------
Lender shall retain the sole right and responsibility to enforce the
obligations of the Borrower and the Guarantors relating to the Loans,
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement, other than
amendments, modifications or waivers with respect to any fees payable
hereunder or the amount of principal or the rate of interest payable on, or
the dates fixed for any payment of principal of or interest on, the Loans.
(c) Each Lender may assign by novation as of the date of
assignment, to any one or more banks or other entities without the consent
of the Borrower but with the consent of the Agent which will not be
unreasonably withheld (except that in the case of an assignment by a Lender
to one of its Affiliates, to another Lender or to any Federal Reserve Bank
no such consent of the Agent shall be required), all or a portion of its
interests, rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, all or a portion of its Revolving
Credit Commitment and the same portion of the Loans and undrawn Letters of
Credit and Acceptance Drafts at the time owing to it and the Note or Notes
held by it), provided, however, that (i) each such assignment shall be of a
-------- -------
constant, and not a varying, percentage of all of the assigning Lender's
rights and obligations under this Agreement, which shall include the same
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percentage interest in the Loans, Letters of Credit, Acceptance Drafts and
Notes, (ii) the amount of the Revolving Credit Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of
the date the Assignment and Acceptance with respect to such assignment is
delivered to the Agent) shall be in a minimum principal amount of
$2,000,000 Revolving Credit Commitment of such Lender and (iii) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register (as defined below), an Assignment
and Acceptance, together with any Note subject to such assignment and a
processing and recordation fee of $2,000. Upon such execution, delivery,
acceptance and recording and after receipt of the written consent of the
Agent, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days
after the execution thereof, (x) the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Lender hereunder and under the other Loan
Documents and (y) the Lender which is assignor thereunder shall, to the
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement and the other Loan Documents (and, in the
case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto and thereto).
(d) By executing and delivering an Assignment and Acceptance,
the Lender which is assignor thereunder and the assignee thereunder confirm
to, and agree with, each other and the other parties hereto as follows:
(i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereunder free and clear
of any adverse claim, such Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, perfection, genuineness,
sufficiency or value of this Agreement, the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; (ii)
such Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower, any
Guarantor or any subsidiary of any thereof or the performance or observance
by the Borrower, any Guarantor or any subsidiary of any thereof of any of
their respective obligations under this Agreement or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee confirms that it has received a copy of this
Agreement, and the other Loan Documents, together with copies of financial
statements and such other documents and
93
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such
Lender 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; (v) such
assignee appoints and authorizes the Agent to take such action as the Agent
on its behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (vi) such assignee agrees that it
will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(e) The Agent shall maintain at its address referred to in
Section 11.01 hereof a copy of each Assignment and Acceptance delivered to
it and a register for the recordation of the names and addresses of the
Lenders and the Revolving Credit Commitment of, and principal amount of the
Loans owing to, each Lender from time to time (the "Register"). The
--------
entries in the Register shall be conclusive, in the absence of manifest
error or written notice to the contrary delivered in accordance with this
Agreement, and the Borrower, the Agent and the Lenders may treat each
person whose name is so recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee together with any Note or Notes subject
to such assignment and the written consent to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is
substantially in the form of Exhibit C hereto, (i) accept such Assignment
---------
and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Lenders and the
Borrower. Within five (5) Business Days after receipt of such notice, the
Borrower, at its own expense, shall execute and deliver to the Agent in
exchange for each surrendered Note or Notes a new Note or Notes to the
order of such assignee in an amount equal to the Revolving Credit
Commitment assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Lender has retained any Revolving Credit Commitment
hereunder, a new Note or Notes to the order of the assigning Lender in an
amount equal to the Revolving Credit Commitment retained by it hereunder.
Such new Note or Notes shall be in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Note or
94
Notes, shall be dated the effective date of such Assignment and Acceptance
and shall otherwise be in substantially the form of Exhibit A hereto.
---------
Notes surrendered to the Borrower shall be cancelled by the Borrower.
(g) Notwithstanding any other provision herein, any Lender may,
in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 11.03, disclose to the assignee
or participant or proposed assignee or participant, any information,
including, without limitation, any Information, relating to the Borrower
furnished to such Lender by or on behalf of the Borrower in connection with
this Agreement; provided, however, that prior to any such disclosure, each
-------- -------
such assignee or participant or proposed assignee or participant shall
agree to preserve the confidentiality of any confidential Information
relating to the Borrower received from such Lender.
(h) Nothing in this Section shall limit or restrict the ability
of any Lender to sell, rediscount or otherwise dispose of any Acceptance
Draft.
SECTION 11.04. Expenses; Indemnity. (a) The Borrower agrees to
-------------------
pay all reasonable out-of-pocket expenses incurred by the Agent in
connection with the preparation of this Agreement, the Notes and the other
Loan Documents or with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or incurred by the Agent or any of the
Lenders in connection with the enforcement, adjudication or protection of
its rights in connection with this Agreement or any of the other Loan
Documents or with the Loans made or the Notes or Letters of Credit or
Acceptance Drafts issued hereunder, or in connection with any pending or
threatened action, proceeding, or investigation relating to the foregoing,
including but not limited to the reasonable fees and disbursements of
counsel for the Agent and, in connection with such enforcement or
protection, the reasonable fees and disbursements of counsel for the
Lenders. The Borrower further indemnifies the Lenders from and agrees to
hold them harmless against any documentary taxes, assessments or charges
made by any governmental authority by reason of the execution and delivery
of this Agreement or the Notes.
(b) The provisions of this Section 11.04 shall remain operative
and in full force and effect regardless of the expiration of the term of
this Agreement, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the invalidity or unenforceability of
any term or provision of this Agreement or the Notes, or any investigation
made by or on behalf of the Agent or any Lender. All amounts due
95
under this Section 11.04 shall be payable on written demand therefor.
SECTION 11.05. Applicable Law. THIS AGREEMENT AND THE NOTES
--------------
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE
OF NEW YORK (OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
SECTION 11.06. Right of Setoff. If an Event of Default shall
---------------
have occurred and be continuing, upon the request of the Required Lenders
each Lender shall and is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower or any Guarantor against any
and all of the obligations of the Borrower now or hereafter existing under
this Agreement and the Notes held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or the
Notes and although such obligations may be unmatured. Each Lender agrees
to notify promptly the Agent and the Borrower and any applicable Guarantor
after any such setoff and application made by such Lender, but the failure
to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section are in addition
to other rights and remedies (including, without limitation, other rights
of setoff) which may be available to such Lender.
SECTION 11.07. Payments on Business Days. Should the principal
-------------------------
of or interest on the Notes or any fee or other amount payable hereunder
become due and payable on other than a Business Day, payment in respect
thereof may be made on the next succeeding Business Day (except as
otherwise specified in the definition of "Interest Period"), and such
extension of time shall in such case be included in computing interest, if
any, in connection with such payment.
SECTION 11.08. Waivers; Amendments. (a) No failure or delay of
-------------------
any Lender in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such
right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Lenders hereunder are cumulative and not exclusive of any rights or reme-
dies which they may otherwise have. No waiver of any provision of this
Agreement or the Notes nor consent to any departure by the Borrower there-
from shall in any event be effective unless the same shall be authorized as
provided in paragraph (b) below, and
96
then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on
the Borrower in any case shall entitle it to any other or further notice or
demand in similar or other circumstances. Each holder of any of the Notes
shall be bound by any amendment, modification, waiver or consent authorized
as provided herein, whether or not such Note shall have been marked to
indicate such amendment, modification, waiver or consent.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements
in writing entered into by the Borrower and the Required Lenders; provided,
--------
however, that no such agreement shall (i) change the principal amount of,
-------
or extend or advance the maturity of or the dates for the payment of
principal of or interest on, any Note or reduce the rate of interest on any
Note, without the consent of each holder affected thereby, (ii) change the
Revolving Credit Commitment of any Lender or amend or modify the provisions
of this Section, Section 2.05, 2.06, 2.07, 2.09, 2.10, 2.12, 2.13 or 2.14,
Section 3.02, 3.04, 3.06, 3.07 or 3.10, Section 4.13, Article V, Article
VIII (except action with respect to affirmative and negative covenants
shall only need be taken by the Required Lenders) or Section 11.04 hereof
or the definition of "Required Lenders," or (iii) amend or modify any other
provision of this Agreement or of any of the other Loan Documents that
would have the effect of reducing the security, if any, for the Loans, in
each case without the prior written consent of each Lender affected thereby
and provided, further, however, that no such agreement shall amend, modify
-------- ------- -------
or otherwise affect the rights or duties of the Agent under this Agreement
or the other Loan Documents without the written consent of the Agent. Each
Lender and holder of any Note shall be bound by any modification or
amendment authorized by this Section regardless of whether its Notes shall
be marked to make reference thereto, and any consent by any Lender or
holder of a Note pursuant to this Section shall bind any person
subsequently acquiring a Note from it, whether or not such Note shall be so
marked.
(c) In the event that the Borrower requests, with respect to
this Agreement or any other Loan Document, an amendment, modification or
waiver and such amendment, modification or waiver would require the
unanimous consent of all of the Lenders in accordance with Section 11.08(b)
above, and such amendment, modification or waiver is agreed to in writing
by the Borrower and the Required Lenders but not by all of the Lenders,
then notwithstanding anything to the contrary in Section 11.08(b) above,
with the written consent of the Borrower and such Required Lenders, the
Borrower and Required Lenders may, but shall not be obligated to, amend
this Agreement without the consent of the Lender or Lenders who did not
agree to the
97
proposed amendment, modification or waiver (the "Minority Lenders") solely
----------------
to provide for each and all of (i) the termination of the Revolving Credit
Commitment of each Minority Lender, (ii) the assignment in accordance with
Section 11.03 hereof to one or more persons of each Minority Lender's
interests, rights and obligations under this Agreement (including, without
limitation, all of such Minority Lender's Revolving Credit Commitment as
well as its portion of all outstanding Loans and the Note or Notes held by
such Minority Lender) and the other Loan Documents and/or an increase in
the Revolving Credit Commitment of one or more Required Lenders, in each
case so that after giving effect thereto the Total Revolving Credit
Commitment shall be in the same amount as prior to the events described in
this paragraph, (iii) the repayment to the Minority Lenders in full of all
Loans made by such Minority Lenders outstanding and accrued interest
thereon at the time of the assignment and/or increase in Revolving Credit
Commitments described in clause (ii) above with the proceeds of Loans made
by such persons who are to become Lenders by assignment or with the
proceeds of Loans made by Required Lenders who have agreed to increase
their Revolving Credit Commitment, (iv) the payment to the Minority Lenders
by the Borrower of all fees and other compensation due and owing such
Minority Lenders under the terms of this Agreement and the other Loan
Documents and (v) such other modifications as the Required Lenders and
Borrower shall deem necessary in order to effect to changes specified in
clauses (i) through (iv) hereof.
SECTION 11.09. Severability. In the event any one or more of
------------
the provisions contained in this Agreement or in the Notes should be held
invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc. (a)
-------------------------------------------
This Agreement, the Notes and the other Loan Documents constitute the
entire contract between the parties hereto relative to the subject matter
hereof. Any previous agreement among the parties hereto with respect to
the Transactions is superseded by this Agreement, the Notes and the other
Loan Documents. Except as expressly provided in this Agreement, the Notes
or the other Loan Documents, nothing in this Agreement, the Notes or in the
other Loan Documents is intended to confer upon any party, other than the
parties hereto, any rights, remedies,
98
obligations or liabilities under or by reason of this Agreement, the Notes
or the other Loan Documents.
(b) Except as prohibited by law, each party hereto hereby waives
any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with this
Agreement, the Notes, any of the other Loan Documents or the Transactions.
(c) Except as prohibited by law, each party hereto hereby waives
any right it may have to claim or recover in any litigation referred to in
paragraph (b) of this Section 11.10 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.
(d) Each party hereto (i) certifies that no representative,
agent or attorney of any Lender has represented, expressly or otherwise,
that such Lender would not, in the event of litigation, seek to enforce the
foregoing waivers and (ii) acknowledges that it has been induced to enter
into this Agreement, the Notes or the other Loan Documents, as applicable,
by, among other things, the mutual waivers and certifications herein.
SECTION 11.11. Confidentiality. The Agent and the Lenders agree
---------------
to keep confidential (and to cause their respective officers, directors,
employees, agents and representatives to keep confidential) all
information, materials and documents furnished to the Agent or any Lender
(the "Information"). Notwithstanding the foregoing, the Agent and each
-----------
Lender shall be permitted to disclose Information (i) to such of its
officers, directors, employees, agents, attorneys and representatives as
need to know such Information in connection with its participation in any
of the Transactions or the administration of this Agreement or the other
Loan Documents; (ii) to the extent required by applicable laws and regula-
tions or by any subpoena or similar legal process, or requested by any
governmental agency or authority; (iii) to the extent such Information (A)
becomes publicly available other than as a result of a breach of this
Agreement, (B) becomes available to the Agent or such Lender on a
non-confidential basis from a source other than the Borrower, any Guarantor
or any of their respective subsidiaries or (C) was available to the Agent
or such Lender on a non-confidential basis prior to its disclosure to the
Agent or such Lender by the Borrower, any Guarantor or any of their
respective subsidiaries; (iv) to the extent the Borrower, any Guarantor or
any of their respective subsidiaries shall have consented to such
disclosure in writing; (v) in connection with the sale of any collateral
pursuant to the provisions of any of the other Loan Documents; or (vi)
pursuant to Section 11.03(g) hereof.
99
SECTION 11.12. Submission to Jurisdiction. (a) Any legal
--------------------------
action or proceeding with respect to this Agreement or the Notes or any
other Loan Document may be brought in the courts of the State of New York
or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Agreement, the Borrower and each of
the Guarantors hereby accept for themselves and in respect of their
property, generally and unconditionally, the jurisdiction of the aforesaid
courts.
(b) The Borrower and each of the Guarantors hereby irrevocably
waive, in connection with any such action or proceeding, any objection,
including, without limitation, any objection to the laying of venue or
based on the grounds of forum non conveniens, which they may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(c) The Borrower and each of the Guarantors hereby irrevocably
consent to the service of process of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to each such person, as the
case may be, at its address set forth in Section 11.01 hereof.
(d) Nothing herein shall affect the right of the Agent or any
Lender to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Borrower or any
Guarantor in any other jurisdiction.
SECTION 11.13. Counterparts; Facsimile Signature. This
---------------------------------
Agreement and each of the other Loan Documents may be executed in
counterparts of the entire document, or of signature pages to the document,
each of which shall constitute an original but all of which when taken
together shall constitute but one contract, and shall become effective when
copies which, when taken together, bear the signatures of each of the
parties hereto or thereto shall be delivered to the Agent and the Borrower.
Delivery of an executed counterpart of a signature page to this Agreement
or any other Loan Document by telecopier shall be effective as delivery of
a manually executed signature page hereto or thereto.
SECTION 11.14. Headings. Article and Section headings and the
--------
Table of Contents used herein are for convenience of reference only and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
100
IN WITNESS WHEREOF, the Borrower, Guarantors, the Agent and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
MILGRAY ELECTRONICS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President-Finance
MILGRAY/ATLANTA, INC.
▇▇▇▇▇▇▇▇ COMPANY, INC.
MILGRAY/CALIFORNIA, INC.
MILGRAY/CHICAGO, INC.
MILGRAY/CLEVELAND, INC.
MILGRAY/COLORADO, INC.
MILGRAY/COMPUTER PRODUCTS, INC.
MILGRAY/CONNECTICUT, INC.
MILGRAY/DALLAS, INC.
MILGRAY/DELAWARE VALLEY, INC.
MILGRAY/FLORIDA, INC.
MILGRAY/HOUSTON, INC.
MILGRAY/HUNTSVILLE, INC.
MILGRAY/INDIANA, INC.
MILGRAY/INTERNATIONAL, INC., a New York
corporation
MILGRAY/KANSAS CITY, INC.
MILGRAY LTD.
MILGRAY/NEW ENGLAND, INC.
MILGRAY/NEW JERSEY, INC.
MILGRAY/NEW YORK, INC.
MILGRAY/NORTHERN CALIFORNIA, INC.
MILGRAY/ORANGE COUNTY, INC.
MILGRAY/OREGON, INC.
MILGRAY ELECTRONICS/P.R., INC.
MILGRAY/RALEIGH, INC.
MILGRAY/SAN DIEGO, INC.
MILGRAY/UPSTATE NEW YORK, INC.
U.S. COMPUTER SUPPLY, INC.
MILGRAY/UTAH, INC.
MILGRAY/WASHINGTON, INC.
VIEWTEK, INC.
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
As Vice President-Finance
of and on behalf of each of the
foregoing corporations.
101
MILGRAY/TORONTO, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Secretary
CHEMICAL BANK, as Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
CHEMICAL BANK, as Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
FLEET BANK
By: /s/ ▇▇▇▇▇▇ ▇. Milacharek
--------------------------
Name: ▇▇▇▇▇▇ ▇. Milacharek
Title: Senior Vice President
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
102
SCHEDULE 2.01
Revolving Credit Commitments
----------------------------
Approximate
Revolving Percentage of
Credit Total Revolving
Lender Commitment Credit Commitment
------ ---------- -----------------
Chemical Bank $24,000,000 48%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Milgray Account Officer
Fleet Bank $14,000,000 28%
Corporate Banking Division
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, V.P.
First Union Bank of North $12,000,000 24%
Carolina
Capital Markets Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
SCHEDULE 2.02
Lending Offices
---------------
Lender Domestic and Eurodollar Lending Offices
------ ---------------------------------------
Chemical Bank Chemical Bank
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Milgray Account Officer
Fleet Bank Fleet Bank
Corporate Banking Division
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, V.P.
First Union National First Union National
Bank of North Carolina Bank of North Carolina
Capital Markets Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
SCHEDULE 3.01
Outstanding Letters of Credit
-----------------------------
None.
SCHEDULE 4.01
Qualified Jurisdictions
-----------------------
Milgray Electronics, Inc. is qualified in California.
SCHEDULE 4.05
-------------
MATERIAL ADVERSE CHANGE
-----------------------
None
SCHEDULE 4.06(a)
----------------
LITIGATION
----------
None
SCHEDULE 4.06(b)
----------------
COMPLIANCE WITH LAWS, ETC.
--------------------------
None
SCHEDULE 4.09
-------------
Taxes
------
Borrower's Federal income tax returns were audited for Borrower's
fiscal years ended December 31, 1983, December 31, 1985, December 31, 1986,
December 31, 1987 and December 31, 1988. Total adjustments in the amount of
approximately $8,000 were paid by the Borrower.
Borrower's Federal income tax returns were audited for Borrower's
fiscal years during the period from October 1, 1991 to September 30, 1994. Total
adjustments in the amount of approximately $40,381 were paid by the Borrower.
Borrower's New York State income tax returns for the period from
October 1, 1990 to September 30, 1993 have been audited and New York State is
claiming an additional amount due for said period of $48,312. This is being
contested by Borrower.
SCHEDULE 4.10
-------------
ERISA
-----
1. In 1988, the assets of a frozen trust under Borrower's
previously terminated Pension and Profit Sharing Plans were transferred to
Borrower's 1984 Profit Sharing Plan. This event was reported on Borrower's Form
5500 for 1988. Following said transfer, the aforementioned assets were held
within the Borrower's 1984 Profit Sharing Plan as a segregated self-directed
account for the beneficiary of said frozen trust. In December 1994, in
connection with the amendment of the Borrower's 1984 Profit Sharing Plan, said
account was distributed in full and rolled over to an ▇▇▇ for such beneficiary.
2. Borrower's Profit Sharing Plan was amended effective as of
January 1995 by adopting Fidelity Corporate Plan for Retirement (the Profit
Sharing/401(k) Plan) and all of the Plan's assets (not distributed to
beneficiaries) were transferred to the newly adopted Plan. This will be reported
in the annual report covering the period January 1, 1994 through January 5, 1995
accompanying Borrower's Form 5500.
3. In 1988, Borrower's Profit Sharing Plan was the subject of an
audit with respect to its 1985 year. No change resulted from the audit.
4. Borrower and a Guarantor (▇▇▇▇▇▇▇▇ Company, Inc.) make
contributions to a multiemployer plan pursuant to a collective bargaining
agreement. In 1994, pursuant to a collective bargaining agreement, the Fund
to which said contributions are made by Borrower and said Guarantor was changed.
Schedule 4.14
-------------
Subsidiaries and Affiliates
---------------------------
Outstanding
Shares*
-------
Jurisdiction of No. of Par
Name of Subsidiary Incorporation Shares Value
-----------------------------------------------------------------
Milgray/Atlanta, Inc. Georgia 1,000 $1.00
▇▇▇▇▇▇▇▇ Company, Inc. New York 120 No Par
Milgray/California, Inc. California 1,000 $1.00
Milgray/Chicago, Inc. Illinois 1,000 $1.00
Milgray/Cleveland, Inc. Ohio 100 $1.00
Milgray/Colorado, Inc. Colorado 1,000 $1.00
Milgray/Computer Products, Inc. Delaware 1,000 $1.00
Milgray/Connecticut, Inc. Connecticut 1,000 $1.00
Milgray/Dallas, Inc. Texas 1,000 $1.00
Milgray/Delaware Valley, Inc. New Jersey 500 No Par
Milgray/Florida, Inc. Florida 500 $1.00
Milgray/Houston, Inc. Texas 1,000 $1.00
Milgray/Huntsville, Inc. Alabama 1,000 $1.00
Milgray/Indiana, Inc. Indiana 100 No Par
Milgray/International, Inc. New York 2,500 $1.00
Milgray/Kansas City, Inc. Kansas 500 $1.00
Milgray Ltd. ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇/▇▇▇ ▇▇▇▇▇▇▇, Inc. Massachusetts 100 $1.00
Milgray/New Jersey, Inc. New Jersey 1,000 $1.00
Milgray/New York, Inc. New York 100 No Par
Milgray/Northern California, Inc. California 1,000 $1.00
Milgray/Orange County, Inc. California 1,000 $1.00
Milgray/Oregon, Inc. Oregon 1,000 $1.00
Milgray Electronics/P.R., Inc. Delaware 1,000 $1.00
Milgray/Raleigh, Inc. North Carolina 1,000 $1.00
Milgray/San Diego, Inc. California 1,000 $1.00
Milgray/Toronto, Inc. Ontario 20 $1.00
Milgray/Upstate New York, Inc. New York 1,000 $1.00
U.S. Computer Supply, Inc. New York 1,000 $1.00
Milgray/Utah, Inc. Utah 100 $10.00
Viewtek, Inc. New York 1,000 $1.00
Milgray/Washington, Inc. Maryland 100 $1.00
-----------------
*Milgray Electronics, Inc. is the record and beneficial owner of
all of the outstanding shares of the Subsidiaries listed below
unless otherwise indicated.
SCHEDULE 4.17
------------
Environmental Compliance
------------------------
1. See Schedule 6.12 regarding two fuel oil tanks at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, and regarding storage, use and disposal of
acetone, waste acetone and toluene by Borrower and regarding storage and use of
acetone by Milgray Electronics/P.R., Inc.
2. In December 1994, a fuel oil spill occurred on Borrower's
premises which was reported to the New York State Department of Environmental
Conservation. In May 1995, Borrower was removed from the active spill list of
said Department.
SCHEDULE 4.20
MILGRAY ELECTRONICS, INC.
FINANCING AGREEMENTS
AS OF NOVEMBER 7, 1995
Chemical Bank loan due December 31, 1996
Eurodollar Loans - [Eurodollar rate plus .70%] $17,025,000
Alternate Base Loans [Alternate Base Rate less .55%] 1,065,000*
Fleet Bank loan due December 31, 1996
Eurodollar Loans -[Eurodollar rate plus 1.25%] 11,350,000
Alternate Base Loans [Alternate Base Rate] 710,000*
Swiss Volksbank Special Deed of Pledge [SFR 35,000]
Guarantee by Milgray/International, Inc. in favor
of Swiss Volksbank [SFR 35,000]
Overdraft Line of Credit of Milgray/International, Inc.
[$600,000] current balance 27,473
Customs Guarantee Line of Credit not to exceed $75,000
Overdraft Line of Credit of Milgray/Toronto, Inc.
[Canadian $1,000,000]
Foreign Exchange Line of Credit of Milgray Electronics, Inc.
in the amount of $2,000,000
Foreign Exchange Line of Credit of Milgray/Toronto, Inc.
in the amount of Canadian $4,000,000
Equipment Loan due to CIT Group/Equipment
Financing, collateralized by computer equipment,
payable in 60 monthly installments of $4167 plus interest
at 3/4% over prime, due November 1996. 58,333
4.90% IBM Installment Payment Master Agreement
collateralized by computer equipment, payable
in monthly installments of $2,573 including
interest due October 1998 85,668
* To be repaid from proceeds of Credit Agreement
SCHEDULE 6.12
-------------
Hazardous Materials
-------------------
1. Borrower, at its premises at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, has two fuel oil tanks, i.e., a 10,000 gallon tank and a 5,000 gallon
tank, which had a "Full System Test" in June 1992 and passed the test, which is
required by the Suffolk County Department of Health Services. The permit
issued by said Department for the tanks has an expiration date of August 31,
1996.
2. Borrower stores one drum of acetone at its premises at ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇. The acetone is used in assembly and
value-added operations. The waste acetone and toluene are stored in a drum and
when the drum is full, it is disposed of by a transporter. Reports are filed
with the States of New York and New Jersey at the time of the waste acetone
disposal.
3. Milgray Electronics/P.R., Inc. stores acetone on
its premises for use in its manufacturing operations. The acetone is
completely used in the manufacturing process and there is no residue.
SCHEDULE 7.01
-------------
Existing Liens
--------------
Lien held by CIT Group Financing, Inc., covering certain computer
equipment of Borrower, securing balance of Indebtedness ($58,333 as of November
6, 1995) due in connection with this equipment.*
Lien held by IBM Credit Corp., covering certain computer equipment of
Borrower, securing balance of Indebtedness ($85,668 as of November 6, 1995) due
in connection with this equipment.*
Lien under Special Deed of Pledge by Milgray/International, Inc. in
favor of Swiss Volksbank with respect to SFR35,000 held in an account or
accounts in the name of Milgray/International, Inc. at Swiss Volksbank.
--------------------
*For additional information regarding Indebtedness covered by
this lien, see Schedule 7.02.
SCHEDULE 7.02
MILGRAY ELECTRONICS, INC.
INDEBTEDNESS
AS OF NOVEMBER 7, 1995
Chemical Bank loan due December 31, 1996
Eurodollar Loans - [Eurodollar rate plus .70%] $17,025,000**
alternate Base Loans [Alternate Base Rate less .55%] 1,065,000*
Fleet Bank loan due December 31, 1996
Eurodollar Loans - [Eurodollar rate plus 1.25%] 11,350,000**
Alternate Base Loans [Alternate Base Rate] 710,000*
Swiss Volksbank Special Deed of Pledge [SFR 35,000]
Guarantee by Milgray/International Inc. in favor
of Swiss Volksbank [SFR 35,000]
Overdraft Line of Credit of Milgray/International, Inc.
[$600,000] current balance 27,473
Customs Guarantee Line of credit not to exceed $75,000
Equipment Loan, due to CIT Group/Equipment
Financing, collateralized by computer equipment,
payable in 60 monthly installments of $4,167 plus
interest at 3/4% over prime; due November 1996 58,333
4.90% IBM Installment Payment Master Agreement
collateralize by computer equipment, payable in
monthly installments of $2,573
including interest due October 1998 85,668
* To be repaid from proceeds of Amended and Restated Credit Agreement
**To be deemed Eurodollar Loans under the Amended and Restated
Credit Agreement upon effectiveness thereof.
EXHIBIT A
FORM OF [AMENDED AND RESTATED] REVOLVING CREDIT NOTE
$___________ New York, New York
[ August 2, 1995,
as amended and restated,]
November __, 1995
FOR VALUE RECEIVED, the undersigned, MILGRAY ELECTRONICS, INC., a
New York corporation (the "Maker"), hereby promises to pay to the order of
_____________ (the "Lender"), at the office of Chemical Bank (the "Agent"),
at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on the Revolving Credit
Termination Date as defined in the Amended and Restated Credit Agreement
dated as of November __, 1995, among the Maker, the Guarantors named therein,
the Lenders named therein and the Agent (as the same may be amended, modified
or supplemented from time to time in accordance with its terms, the "Credit
Agreement") or earlier as provided for in the Credit Agreement, the lesser of
the principal sum of _____________ Dollars ($___________) or the aggregate
unpaid principal amount of all Revolving Credit Loans to the Maker from the
Lender pursuant to the terms of the Credit Agreement, in lawful money of the
United States of America in immediately available funds, and to pay interest
from the date thereof on the principal amount hereof from time to time
outstanding, in like funds, at said office, at a rate or rates per annum and
payable on such dates as determined pursuant to the terms of the Credit
Agreement.
[ This Amended and Restated Revolving Credit Note is an amendment and
restatement of, and is being issued in replacement of and substitution for,
that certain Replacement Revolving Credit Note dated August 2, 1995 (the
"Original Note"), in the original principal amount of $___________ by Maker
to the order of the Lender. In addition to the indebtedness evidenced by
this Amended and Restated Revolving Credit Note, this Amended and Restated
Revolving Credit Note shall also evidence any accrued and unpaid interest on
the Original Note. ]
The Maker promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their
due dates at a rate or rates determined as set forth in the Credit Agreement.
The Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this [Amended and Restated Revolving
Credit] Note and all payments and prepayments of the
principal hereof and interest hereon and the respective dates thereof shall
be endorsed by the holder hereof on the schedule attached hereto and made a
part hereof, or on a continuation thereof which shall be attached hereto and
made a part hereof, or otherwise recorded by such holder in its internal
records; provided, however, that the failure of the holder hereof to make
-------- -------
such a notation or any error in such a notation shall not in any manner
affect the obligation of the Maker to make payments of principal and interest
in accordance with the terms of this [Amended and Restated Revolving Credit]
Note and the Credit Agreement.
This [Amended and Restated Revolving Credit] Note is one of the
Notes referred to in the Credit Agreement which, among other things, contains
provisions for the acceleration of the maturity hereof upon the happening of
certain events, for optional and mandatory prepayment of the principal hereof
prior to the maturity hereof and for the amendment or waiver of certain
provisions of the Credit Agreement, all upon the terms and conditions therein
specified. THIS [AMENDED AND RESTATED REVOLVING CREDIT] NOTE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
MILGRAY ELECTRONICS, INC.
By:______________________________
Name:
Title:
2
Loans and Payment
-----------------
Unpaid Name of
Principal Person
Amount and Payments Balance of Making
Date Type of Loan Principal and Interest Note Notation
---- ------------ ---------------------- ---------- ------------
EXHIBIT B
---------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
ATTORNEY AT LAW
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
-----
(▇▇▇) ▇▇▇-▇▇▇▇
TELECOPIER (▇▇▇) ▇▇▇-▇▇▇▇
November 7, 1995
Chemical Bank
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fleet Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
First Union National Bank
of North Carolina
Capital Markets Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 282-NC074
Dear Sirs:
I have acted as counsel to Milgray Electronics, Inc., a New York
corporation (the "Borrower") and the Guarantors (other than Milgray/Toronto,
Inc.) executing the Agreement dated as of November 7, 1995 (the "Agreement")
among the Borrower, the Guarantors named in the Agreement, Chemical Bank (the
"Agent"), Fleet Bank, and First Union National Bank of North Carolina in
connection with the execution and delivery of the Agreement. This opinion does
not cover Milgray/Toronto, Inc., which is not included in the term "Guarantors"
as hereinafter used in this opinion.
This opinion is delivered to you pursuant to subsection 5.02 of the
Agreement. Terms used herein which are defined in the Agreement shall have the
respective meanings set forth in the Agreement, unless otherwise defined herein.
In connection with this opinion, I have examined copies of the
Agreement, the Notes, the form of the Acceptance Drafts and such corporate
documents and records of the Borrower and the Guarantors and certificates of
public officials and officers of the Borrower
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chemical Bank, Fleet Bank
and First Union National
Bank of North Carolina - 2 - November 7, 1995
and the Guarantors, and such other documents, as I have deemed necessary or
appropriate for the purposes of this opinion. In stating my opinion, I have
assumed the genuineness of all signatures of, and the authority of, persons
signing the Agreement, the Notes and the Acceptance Drafts, the authenticity of
all documents submitted to me as originals and the conformity to authentic
original documents of all documents submitted to me as certified, conformed or
photostatic copies. The term "knowledge" when used in stating my opinion herein
means actual knowledge on my part.
Based upon the foregoing, I am of the opinion that:
1. Each of the Borrower and the Guarantors (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation except for Milgray/Connecticut, Inc., which is not in good
standing under the laws of Connecticut, the state of its incorporation, (b) has
the corporate power to own its assets, to lease the property it operates under
lease and to transact the business in which in is currently engaged, and (c)
based upon representations by its management (upon which I have relied) as to
its ownership, lease and operation of property and conduct of its business, is
not required to be qualified to do business under the laws of any jurisdiction
other than the jurisdiction of its incorporation, except that the Borrower (in
addition to the jurisdiction of its incorporation) is also required to be, and
is, qualified to do business in California.
2. The Borrower has the corporate power and authority and the legal
right to make, deliver and perform the Agreement, the Notes and the Acceptance
Drafts and to borrow thereunder and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of the Agreement, the Notes
and the Acceptance Drafts. Each of the Guarantors has the corporate power and
authority and the legal right to make, deliver and perform its obligations under
the Agreement and has taken all necessary corporate action to authorize the
obligations of SuCh Guarantor contained in the Agreement. No consent of any
other party (including stockholders of the Borrower), except as expressly
contemplated by the Agreement in connection with the performance thereof, and no
consent,
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chemical Bank, Fleet Bank
and First Union National
Bank of North Carolina - 3 - November 7, 1995
license, approval or authorization of, or registration or declaration with, any
governmental authority, bureau or agency is required in connection with the
execution, delivery, performance, validity or enforceability of the Agreement,
the Notes or the Acceptance Drafts.
3. The execution, delivery and performance of the Agreement, the
Notes and the Acceptance Drafts will not violate any provision of any existing
law or regulation or of any order or decree of any court or governmental
instrumentality binding upon the Borrower or any Guarantor or of the Certificate
of Incorporation or ByLaws of the Borrower or any Guarantor or of any mortgage,
indenture, contract or other agreement, of which I have knowledge, to which the
Borrower or any Guarantor is a party or by which the Borrower or any Guarantor
or any of its or their property or assets may be bound, and will not result in
the creation or imposition of any lien, charge or encumbrance on, or security
interest in, any of its or their properties pursuant to the provisions of any
such mortgage, indenture, contract or other agreement of which I have knowledge.
4. To the best of my knowledge (based upon inquiries made of the
management of the Borrower and the Guarantors upon which I have relied) no
litigation, investigation or administrative proceedings of or before any court,
tribunal or governmental body is presently pending or, to the knowledge of the
Borrower, threatened against the Borrower or any Guarantor or any of its or
their properties or with respect to the Agreement, the Notes or the Acceptance
Drafts, which, if adversely determined, would, in the opinion of the Borrower,
have a Material Adverse Effect.
5. The execution, delivery and performance by the Borrower and each of
the Guarantors of the Agreement, and by the Borrower of the Notes and the
Acceptance Drafts, have been duly authorized. Upon execution and delivery of the
Agreement and the Notes on behalf of the Borrower by the President or any Vice
President of the Borrower, and upon execution and delivery of the Acceptance
Drafts on behalf of the Borrower by the President, singly, or any two other
Responsible Officers of the Borrower, and upon execution and delivery of the
Agreement on behalf of the Guarantors by the President or any Vice President of
each Guarantor, the Agreement, the Notes and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chemical Bank, Fleet Bank
and First Union National
Bank of North Carolina - 4 - November 7, 1995
the Acceptance Drafts will constitute valid obligations of the Borrower legally
binding upon the Borrower and enforceable against the Borrower in accordance
with their terms and the Agreement will constitute a valid obligation of each
Guarantor legally binding upon each Guarantor and enforceable against each
Guarantor in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally.
Very truly yours,
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated _______________, 19__
Reference is made to the Amended and Restated Credit Agreement, dated as of
October __, 1995 (as amended, modified or supplemented from time to time in
accordance with its terms, the "Credit Agreement"), among MILGRAY ELECTRONICS,
INC. (the "Borrower"), the guarantors named therein, the lenders named therein
(collectively, the "Lenders") and CHEMICAL BANK, as agent for the Lenders (in
such capacity, the "Agent"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
____________________________ (the "Assignor") and ____________________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, ___% interest in and to
all the Assignor's rights and obligations under the Credit Agreement as of the
Effective Date (as defined below) (including, without limitation, such
percentage interest in the Revolving Credit Commitment of the Assignor on the
Effective Date and/or such percentage interest in the Revolving Credit Loans
owing to the Assignor outstanding on the Effective Date and/or such percentage
interest in the Letters of Credit and Acceptance Drafts outstanding on the
Effective Date, together with such percentage interest in all unpaid interest
and commitment fees accrued to the Effective Date and such percentage interest
in the Notes held by the Assignor, as defined herein).
2. The Assignor (i) represents that as of the date hereof, its
Revolving Credit Commitment (without giving effect to assignments thereof which
have not yet become effective) is $____________, the outstanding balance of its
Revolving Credit Loans (unreduced by any assignments thereof which have not yet
become effective) is $____________, and the amount of its participation in
Letters of Credit and Acceptance Drafts (unreduced by any assignments thereof
which have not yet become effective) that have been issued and remain undrawn is
$____________, (ii) makes no representation or warranty and assumes no responsi-
bility with respect to any statements, warranties or representations made in or
in connection with the
Credit Agreement or the execution, legality, validity, enforceability, per-
fection, genuineness, sufficiency or value of the Credit Agreement or any other
Loan Documents or any other instrument or document furnished pursuant to any
thereof, other than that it is the legal and beneficial owner of the interest
being assigned by it hereunder and that such interest is free and clear of any
adverse claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
Guarantor, or the performance or observance by the Borrower or any Guarantor, of
its obligations under the Credit Agreement or any other Loan Documents or any
other instrument or document furnished pursuant to any thereof; and (iv)
attaches the Notes referred to in paragraph 1 above and requests that the Agent
exchange such Notes for a new Note [payable to Assignee] [payable to Assignor]
in principal amounts equal to __________ and _________, respectively.
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance and the other documents
executed and delivered in connection therewith; (ii) confirms that it has
received a copy of the Credit Agreement and the other Loan Documents, together
with copies of such financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii) agrees that it
will, independently and without reliance upon the Agent, the Assignor 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 the Credit Agreement; (iv) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (v) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender; and (vi) agrees that it will keep confidential all information with
respect to the Borrower furnished to it by the Borrower or the Assignor (other
than information generally available to the public or otherwise available to the
Assignor on a nonconfidential basis). [; and (vii) attaches the forms prescribed
by the Internal Revenue Service of the United States certifying as to the
Assignee's exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement or such other
documents as are necessary to
2
indicate that all such payments are subject to such tax at a rate reduced by an
applicable tax treaty.]1
4. The effective date for this Assignment and Acceptance shall be
_________________ (the "Effective Date").2 Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance and
recording by the Agent.
5. Upon such acceptance and recording, from and after the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments in respect of the interest assigned
hereby (including payments of principal, interest, fees and other amounts) to
the Assignee. The Assignor and Assignee shall make all appropriate adjustments
in payments for periods prior to the Effective Date by the Administrative Agent
or with respect to the making of this assignment directly between themselves.
--------------------
1 If the Assignee is organized under the laws of a jurisdiction outside the
United States.
2 See Section 11.03. Such date shall be at least five Business Days after
the execution of this Assignment and Acceptance and delivery thereof to the
Agent.
3
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
[NAME OF ASSIGNOR]
By:_________________________________
Name:
Title:
[NAME OF ASSIGNEE]
By:_________________________________
Name:
Title:
Accepted this _____ day
of ______________, 19__
CHEMICAL BANK, as Agent
By:_________________________
Name:
Title:
4
EXHIBIT D
Customer ACCEPTED
No.
-------------------------------
THE TRANSACTION WHICH GIVES RISE TO
-----------------------
THIS INSTRUMENT IS THE EXPORTATION No. CITY
--------------------- ------------------------
IMPORTATION CHEMICAL BANK
OF
--------------------------------
-----------------------
FROM DATE
------------------------------
---------------------------------------------
TO AUTHORIZED SIGNATURE
--------------------------------
$
-----------------------
AFTER PAY TO THE ORDER OF
--------------------------- ----------------------------------------
- OURSELVES -
DOLLARS
-------------------------------------------------------------------------------------------
TO
CHEMICAL
Letter of Credit Dept., Room 1702
------------------------------
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
EXHIBIT E
▇▇▇▇▇▇▇▇ CO. INC. AGED TRIAL BALANCE FOR 9/30/95 PAGE 2 10/03/95
CHARGES
C ACCT AND
CUSTOMER D NUMB CREDITS CURRENT 31-60 61-90 91-120 OVER 120
KELMAR SYSTEMS, INC. K 0447 837.00 837.00 0.00 0.00 0.00 0.00
KSM ELECTRONICS K 1107 179.00 179.00 0.00 0.00 0.00 0.00
KABAR MANUFACTURING CORP K 1371 2,491.00 808.00 1,683.00 0.00 0.00 0.00
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, INC. L 1769 274.00 274.00 0.00 0.00 0.00 0.00
METRO TEL M 0745 2,878.79 00.00 2,878.79 0.00 0.00 0.00
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ M 1227 314.00 314.00 0.00 0.00 0.00 0.00
MEECO M 3287 338.00 179.00 159.00 0.00 0.00 0.00
MID ISLAND INDUSTRIAL M 3495 159.00 159.00 0.00 0.00 0.00 0.00
MASTER DISTRIBUTORS M 5997 104.00 104.00 0.00 0.00 0.00 0.00
NIAGARA MOHAWK POWER CORP. N 3588 106.00 106.00 0.00 0.00 0.00 0.00
OLYMPUS CORP. O 1668 87.00 87.00 0.00 0.00 0.00 0.00
PRECISION MECHANISMS CORP. P 1686 2,602.52 2,602.52 0.00 0.00 0.00 0.00
▇▇▇▇▇▇▇ CORP. P 2108 4,853.50 1,241.50 3,612.00 0.00 0.00 0.00
PCI CABLE P 2533 234.40 234.40 0.00 0.00 0.00 0.00
PROTEK ELEC. P 2667 2,583.16 2,479.16 104.00 0.00 0.00 0.00
REM ELECTRONICS R 1040 1,402.33 682.00 377.50 342.83 0.00 0.00
SIMOONA ELECTRONICS S 1029 85.50CR 85.50CR 0.00 0.00 0.00 0.00
STONE CONTAINER CORP. S 3966 279.00 274.00 0.00 0.00 0.00 0.00
▇▇▇▇▇▇▇▇ CO. INC. AGED TRIAL BALANCE FOR 9/30/95 PAGE 3 10/03/95
3E TECHNOLOGY T 4042 325.50 224.00 101.50 0.00 0.00 0.00
WHOLESALE RADIO W 1070 238.00 0.00 238.00 0.00 0.00 0.00
TOTAL(EXCLUDES COLLECTION ACCTS) 34,613.84 15,780.09 14,030.55 610.83 3,929.43 262.94
MILGRAY ELECTRONICS, INC. AGED TRIAL BALANCE FOR 9/30/95 page 389 10/03/95
**NET LESS INTEP-COMPANY** 41,178,746.76 24,837,866.09 10,424,704.57 2,487,506.45 851,759.76 2,576,909.89
EXHIBIT F
INVAGERPT INVENTORY TURNS REPORT-AS OF 10/02/95 PAGE 1
BASED ON ORDER BACKLOG + SHPMNTS THRU 10/18/95
T U R N S
MFG PART NUMBER BKORD$ INVEnT$ TRNS NEW ITEM 0 -.5 .6 - 1 1.1 - 2 2.1 - 3 OVER 3 ITEM#
ALC ADE04 1,941 - 1,941 291886
ALC ADE06 0 319 - 319 297439
ALC ADE08 0 2,978 - 2,978 290012
ALC ADE10 1,203 - 1,203 297450
ALC ADF04 278 - 278 296892
ALC ADF05 0 416 - 416 292695
ALC ADF06S 0 77 - 77 297472
ALC ADF08 0 661 - 661 290544
ALC ADP04 0 1,600 - 1,600 297502
ALC ADP06 ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ 28 - 28 295176
ALC ASE42G 0 1,680 - 1,680 297910
ALC ASE42RG 0 640 - 640 297915
ALC ASE43RG 0 1,985 - 1,985 297924
ALC ASE62RG 188 .0 188 297931
ALC ASF62 91 - 91 290754
ALC ▇▇▇▇▇▇ ▇ - ▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ 775 .0 775 297963
ALC ATT5600C 1,173 - 1,173 298087
ALC A101SYCQ 210 - 210 297259
ALC A103-J5IZQ-00 0 253 - 253 332165
ALC BPM15320 41 162 1.0 162 291744
ALC BPT15320 91 - 91 298239
ALC BP1900 0 600 - 600 298230
ALC BP5900 106 - 106 298233
▇▇▇ ▇▇▇▇ ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ 3 - 3 298416
ALC DPS8131AK 5 - 5 296952
ALC DPS8400AKLS 0 1,062 - 1,062 298411
ALC DPS9137AK 0 1,738 - 1,738 294096
ALC DRD10C ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ 1,131 - 1,131 298440
ALC DRD16C 0 1,783 - 1,783 292170
ALC DRD16CRA 0 1,171 - 1,171 298443
ALC DRD16RA 428 - 428 298445
ALC DRM10 0 973 - 973 289444
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ 0 1,287 - 1,287 290335
ALC FSM2J 9 - 9 334855
ALC FT1D5M 0 1,674 - 1,674 298526
ALC GDH04S 1,291 - 1,291 298580
ALC GDH08S 880 - 880 290826
ALC GDP02 25 - 25 298587
ALC GDP04 49 - 49 298590
ALC GDP08 125 - 125 298596
ALC ▇▇▇▇▇▇ ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ GDS02 79 - 79 298616
ALC GDS04 391 - 391 298619
ALC GDS06 558 - 558 298621
ALC GDSO6S 0 981 - 981 298622
ALC GDS08 464 - 464 289816
ALC GDS10 227 - 227 298626
ALC G12KA 0 318 - 318 298554
ALC KLN500S1/8 48 - 48 298854
INVAGERPT INVENTORY TURNS REPORT-AS OF 10/02/95 PAGE 2
BASED ON ORDER BACKLOG + SHPMNTS THRU 10/18/95
T U R N S
MFG PART NUMBER BKORD$ INVENT$ TRNS NEW ITEM 0 -.5 .6 - 1 1.1 - 2 2.1 - 3 OVER 3 ITEM#
ALC KLN900S1/4 40 - 40 298860
ALC KU402B1/8 0 3,408 - 3,408 299019
ALC MHS122 0 619 - 619 290658
ALC MHS123 100 - 100 299084
ALC MHS222 606 - 606 299096
ALC MHS223 0 1,254 - 1,254 296979
ALC MHS233RA 255 - 255 299112
ALC MMS12 0 211 - 211 299218
ALC ▇▇▇▇▇▇▇ ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ MPA103F 623 - 623 299230
ALC MPA106D 233 - 233 299231
ALC MPB103B 0 1,854 - 1,854 299241
ALC MPE206N 630 1.0- 630 291743
ALC MPG106D 0 1,954 - 1,954 299250
ALC MPG106F ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ 568 - 568 299266
ALC MSSA104D1 0 69 .0 69 296818
ALC MSS1200G 0 929 - 929 290436
ALC MSS1200R 103 - 103 299482
ALC MSS2200 144 - 144 299490
ALC MSS4200G 258 - 258 299501
ALC MSS4200R 0 275 - 275 299502
ALC MTA106DPC 0 1,305 - 1,305 299614
ALC MTA106F ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ 0 269 - 269 299681
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ 0 280 - 280 290647
ALC MTF106G 846 - 846 299697
ALC MTF206N 81 - 81 299703
ALC MTF206S 96 - 96 299707
ALC MTG206N 0 113 - 113 290255
ALC MTL206P 0 2,195 - 2,195 299740
ALC PH13161/4 36 .0 36 296886
ALC PICOD131AK 417 - 417 299805
ALC PICOD301AK 443 - 443 299809
▇▇▇ ▇▇▇▇▇ ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ PICO131ALULS 0 544 - 544 293985
▇▇▇ ▇▇▇▇▇▇▇▇▇/▇ ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇/▇ 33 - 33 299833
ALC SEIEGPC 0 .0 0 300034
ALC SLS121PC ▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ 155 - 155 300227
ALC SLS131PC 65 .0 65 300228
ALC SSA12G 0 1,553 - 1,553 300298
ALC SSB12R 0 811 - 811 300303
ALC SSB12RG 3,547 - 3,547 300304
ALC SSH02 7 - 7 300313
ALC SSJ12R 12 - 12 292091
ALC SSJ22R 69 - 69 300320
ALC SSV04 0 506 - 506 300357
ALC SSV08 0 426 - 426 300359
ALC ▇▇▇▇▇▇▇▇▇▇ ▇ - ▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ 38 - 38 300562
INVAGERPT INVENTORY TURNS REPORT-AS OF 10/02/95 PAGE 3
BASED ON ORDER BACKLOG + SHPMNTS THRU 10/18/95
T U R N S
MFG PART NUMBER BKORD$ INVENT$ TRNS NEW ITEM 0 -.5 .6 - 1 1.1 - 2 2.1 - 3 OVER 3 ITEM#
3M 923690-14 76 - 76 322080
3M 923690-16 97 - 97 322081
3M 923690-20 155 - 155 322082
3M 924227-32-10-I 0 135 - 135 281464
3M 924227-32-20-I 0 130 - 130 281474
3M 929025-02-20 3 - 3 315339
3M 929400-01-36 9 .0 9 282226
3M 929450-01-36-I 141 - 141 282254
3M 929550-01-36-I 0 365 - 365 282300
3M 929647-01-36-I 69 - 69 294255
3M 929665-01-36I 159 - 159 294062
3M 929715-01-36I 264 - 264 284808
3M 929715-10-36-I 193 - 193 282685
3M 929800-01-36 0 101 - 101 282924
3M 929834-01-03 45 45 4.0 45 282980
3M 929835-01-36 51 - 51 283157
3M 929836-01-08 33 - 33 283236
3M 929836-01-36 41 - 41 283257
3M 929838-01-36 1 - 1 283435
3M 929842-01-14-10 31 - 31 283586
3M 929842-01-30-10 8 - 8 283618
3M 929850-01-18-30 24 - 24 295381
3M 929850-01-23-30 77 - 77 296945
3M 929852-01-15-10 0 38 - 38 283703
3M 929852-01-17-10 0 1,660 - 1,660 283705
3M 929852-01-20-30 0 121 - 121 341112
3M 929950-00-I 0 84 - 84 283802
3M 929952-10 0 525 - 525 294666
3M 929953-30 0 81 - 81 294667
3M 929955-06-I 186 - 186 283807
3M 929974-01-36 3 - 3 283963
3M 929975-01-10 0 26 - 26 283977
3M 929975-01-20 0 26 - 26 283986
3M 929975-01-25 68 - 68 283991
MFG TOTAL -> $2,775 $193,421 $188,032 $2,066 $25 $445 $48 $2,805
FINAL TOTAL -> $645,537 54,380,833 $52,794,956 $767,428 $443,492 $331,906 $4,908 $38,143
EXHIBIT G
DRAFT OF LEGAL OPINION
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇
PUERTO RICO COUNSEL TO MILGRAY ELECTRONICS/P.R., INC.
-------------
-------------
Re: [Opinion Letter]
Milgray Electronics/P.R., Inc.
Gentlemen:
We have acted as Puerto Rico counsel to Milgray Electronics/P.R., Inc., and,
solely for purposes of this opinion, as Puerto Rico counsel to Milgray
Electronics, Inc. We deliver this opinion to you pursuant to the provisions
of [article, section, paragraph] of that certain Loan Agreement dated
---------
199 , by and between [creditor] Milgray Electronics, Inc. and Milgray
------
Electronics/P.R., Inc.
On 199 Milgray Electronics/P.R., Inc., provided us with a
-----------------
certificate signed by its Chief Financial Officer to
---------------------
the effect that as of , 199 Milgray Electronics/P.R.,
------------------
Inc., held the cash, cash equivalents and investments in tax exempt Puerto
Rico securities listed on said certificate which were held by or were on
deposit with the institutions listed on said certificate; and to the best of
his knowledge and belief, these assets were free and clear of all liens and
encumbrances. Further, with regards to Puerto Rico securities on deposit
with the said Financial Officer has certified that Milgray
------------------
Electronics/P.R., Inc. is the sole owner of said securities and does not hold
the same pursuant to a repurchase transaction, or a reverse repurchase
transaction.
On , 199 we were provided with a Certificate executed by
------------------
the Chief Financial Officer of Milgray Electronics, Inc., to the effect that
the cash, cash equivalents and securities listed on the Milgray
Electronics/P.R., Inc., certificate were, to the best of his knowledge and
belief, the sole property of Milgray Electronics/P.R., Inc., and were not
subject to any lien and/or encumbrance in favor of Milgray Electronics, Inc.
or of any third party.
We have also examined the certificates dated 199 issued by
-------------
[those ▇.▇. ▇▇▇▇▇ holding cash, cash equivalents and the P.R. Securities
belonging to Milgray Electronics/P.R., Inc.] to the effect that said items
were, to the best of their knowledge and belief, held by each of them free
and clear of all liens and encumbrances including but not limited to, in the
case of a Puerto Rico Bank, the right of a banker's set off or, in the case
of securities, that said securities are not held by the Bank and/or
Investment Banker pursuant to a repurchase or reverse repurchase agreement.
We have examined or caused to be examined the registry of Factors Liens and
Assignment of Accounts Receivable at the Registry of Property of San ▇▇▇▇,
Puerto Rico [Milgray Electronics/P.R., Inc.'s legal residence according to
the records of the Department of State] and the Municipality of Canovanas
[the site of the Milgray plant].
- 2 -
Puerto Rico does not have the Uniform Commercial Code and there is no place
where pledges, repurchase agreements, or reverse repurchase agreements can be
registered.
In preparing our opinion we have relied upon the certificates issued by the
Chief Financial Officer of Milgray Electronics/P.R., Inc., the Chief
Financial Officer of Milgray Electronics, Inc., as well as the certificates
issued by , , and
------------------------ ----------------- ----------------
the [the banks] all dated , 199 , and on our examination as of
-------------
even date of the registry of factors liens and the assignment of accounts
receivable maintained at the San ▇▇▇▇ and the Canovanas registries of
property; furthermore no opinion is being given as to the type, existence or
amount of the cash, cash equivalents or securities.
Based on the foregoing we are of the opinion that as of the close of business
on 199 , the cash, cash equivalents and/or securities listed
---------------
on the Milgray Electronics/P.R., Inc., certificate are, to the best of our
knowledge and belief, free and clear of liens and encumbrances as of the
close of business on 199 , including liens and encumbrances
------------------
in favor of , [the banks]. It is to be
---------------- ------------------
understood that the opinion expressed herein is as of the close of business
on 199 and is further subject to Judicial discretion,
--------------------- -
the exercise of the sovereign police power of the Commonwealth of Puerto Rico
of the constitutional power of the United States of America and valid
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors rights generally.
No one other than [the creditor] shall be entitled to rely on
----------------
this opinion.
Very truly yours,
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇
By:
----------------------------
EXHIBIT H
FORM OF NOTICE REGARDING
DOMESTIC SHIPMENT FINANCING
Chemical Bank
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, VP
Gentlemen:
We request that you complete one of the pre-signed and pre-endorsed drafts we
have lodged with you in the face amount of $ dated
------------------- ----------
and payable on .
------------ -------------------
We further request that you deliver such draft (the "Draft") to yourselves and
accept and discount it for days subject to the terms of the
---------------
Acceptance Agreement dated November 2, 1989 made by us in your favor.
We certify that the proceeds of your discount of the Draft will be used to
finance our domestic shipment and the sale and purchase of electronic components
shipped from ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ to various points in
the U.S. We further certify that no other financing of any type is or will be
outstanding in respect of such shipment and sale and purchase. We agree to
provide to you upon request copies of shipping and other documents in connection
with such shipment and sale and purchase. We also agree to provide you any other
documents in connection therewith upon your request.
Very truly yours,
MILGRAY ELECTRONICS, INC.
By:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
By:
--------------------------------
EXHIBIT I
FORM OF CERTIFICATE OF COMPLIANCE
To the best of my knowledge, no Default or Event of Default (such terms and all
other capitalized terms used herein having the respective meanings ascribed to
such terms in the Amended and Restated Credit Agreement dated as of November __,
1995 among Milgray Electronics, Inc., the Guarantors named therein the Lenders
named therein and Chemical Bank as Agent for the Lenders) has occurred as of
__________. Calculations demonstrating compliance with the Covenants set forth
in Sections 7.06, 7.07, 7.08, 7.09, 7.10, 7.11, 7.12 and 7.13 as of __________
follow:
Section 7.06. Capital Expenditures
Capital expenditures incurred $
============
Section 7.07. Net Worth
Tangible Net Worth [A] $
============
Consolidated Subordinated
Indebtedness [B] $
============
Net Worth as of [A+B] $
============
Section 7.08. Total Unsubordinated
Liabilities to Net Worth Ratio.
Total Unsubordinated Liabilities [A] $
============
Net Worth [B] $
============
Total Unsubordinated Liabilities
to Net Worth Ratio [A B] $
============
Section 7.09. Rental Obligations $
============
Section 7.10. Consolidated Inventory Ratio
Inventory [A] $
============
Current Assets [B] $
============
Consolidated Inventory Ratio [A B] $
============
Section 7.11 Consolidated Current Ratio
Current Assets [A] $
-----------
Current Liabilities:
Current Liabilities as per
financial statements
Add: Loans and Acceptance Drafts:
Chemical Bank,
Fleet Bank and First Union
Add: Indebtedness allowed under
Section 7.02(xviii)
[B] $
============
Consolidated Current Ratio [A B] $
============
EXHIBIT I
Section 7.12. Interest Coverage Ratio
[This ratio is computed annually]
Net Income before income taxes as
per financial statements [A] $
==============
Add: Interest Expense [B] $
==============
EBIT [A+B] [C] $
==============
Interest Expense [D] $
==============
Interest Coverage Ratio [C D] $
==============
Section 7.13. Net Income
[This ratio is computed annually]
Consolidated Net Income $
==============
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
_________, 19__.
______________________________
As Vice President-Finance of
Milgray Electronics, Inc.
2