EXHIBIT 10.04
REVOLVING CREDIT AGREEMENT
DATED AS OF APRIL 27, 1992
THE FIRST NATIONAL BANK OF BOSTON
AND
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
TABLE OF CONTENTS
Section Page
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SECTION I - DEFINITIONS
1.1 General............................................................ 1
1.2 Accounting Terms................................................... 9
SECTION II - DESCRIPTION OF CREDIT
2.1 The Loans.......................................................... 9
2.2 Notice and Manner of Borrowing..................................... 9
2.3 Closing Fee........................................................ 9
2.4 Commitment Fee..................................................... 10
2.5 Commitment Reduction/Early Termination Fee......................... 10
2.6 The Loan Account................................................... 10
2.7 Interest Rates and Payments of Interest............................ 10
2.8 Changed Circumstances.............................................. 11
2.9 Payments and Prepayments of the Loans.............................. 11
2.10 Method of Payment.................................................. 11
2.11 Overdue Payments................................................... 11
2.12 Computation of Interest and Fees................................... 11
2.13 Borrowing Base Availability........................................ 11
2.14 Borrowing Base Excesses............................................ 12
2.15 Promises to Pay.................................................... 12
2.16 Authorization to Debit Loan Account................................ 12
2.17 Capital Adequacy................................................... 12
SECTION III - CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Loan............................... 13
3.2 Conditions Precedent to All Loans.................................. 15
SECTION IV - REPRESENTATIONS AND WARRANTIES
4.1 Organization and Qualification..................................... 15
4.2 Corporate Authority................................................ 16
4.3 Valid Obligations.................................................. 16
4.4 Consents or Approvals.............................................. 16
4.5 Title to Properties; Absence of Encumbrances....................... 16
4.6 Financial Statements............................................... 17
4.7 Changes............................................................ 17
4.8 Defaults........................................................... 17
4.9 Taxes.............................................................. 17
4.10 Litigation......................................................... 17
4.11 Use of Proceeds.................................................... 17
4.12 Subsidiaries....................................................... 18
4.13 Investment Company Act............................................. 18
4.14 Compliance with ERISA.............................................. 18
4.15 Security Interest.................................................. 18
4.16 Application of Proceeds............................................ 18
4.17 Taxes and Charges Relating to the Agreement........................ 18
(i)
SECTION V - AFFIRMATIVE COVENANTS
Section Page
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5.1 Financial Statements and other Reporting Requirements.............. 19
5.2 Conduct of Business................................................ 20
5.3 Maintenance and Insurance.......................................... 20
5.4 Taxes.............................................................. 21
5.5 Inspection by the Bank............................................. 21
5.6 Maintenance of Books and Records................................... 21
5.7 Ratio of EBIT to Interest Expense.................................. 21
5.8 Minimum Total Capital Funds........................................ 21
5.9 Leverage Ratio..................................................... 21
5.10 Ratio Senior Bank Indebtedness to Total Capital Funds.............. 22
5.11 Further Assurances................................................. 22
SECTION VI - NEGATIVE COVENANTS
6.1 Indebtedness....................................................... 22
6.2 Contingent Liabilities............................................. 22
6.3 Encumbrances....................................................... 23
6.4 Capital Expenditures............................................... 24
6.5 ERISA.............................................................. 24
6.6 Merger; Consolidation; Sale or Lease of Assets..................... 24
6.7 Leases............................................................. 24
6.8 Sale and Leaseback................................................. 24
6.9 Investments........................................................ 25
6.10 Change in Terms and Prepayment of Subordinated Indebtedness........ 25
6.11 Dividends and Equity Distributions................................. 25
SECTION VII - SECURITY AGREEMENT
7.1 Creation of Security Interest...................................... 25
7.2 Covenants Pertaining to Collateral................................. 26
7.3 Reports, etc. Pertaining to Collateral............................. 27
7.4 Collection of Accounts and Adjustments............................. 29
7.5 Bank's Rights in Collateral........................................ 29
7.6 Remedies........................................................... 30
7.7 Waivers............................................................ 31
SECTION VIII - DEFAULTS
8.1 Events of Default.................................................. 32
8.2 Remedies........................................................... 34
(ii)
SECTION IX - MISCELLANEOUS
Section Page
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9.1 Notices........................................................... 34
9.2 Expenses.......................................................... 35
9.3 Set-Off........................................................... 36
9.4 Term of Agreement................................................. 36
9.5 No Waivers........................................................ 36
9.6 Governing Law..................................................... 36
9.7 Amendments........................................................ 36
9.8 Binding Effect of Agreement....................................... 36
9.9 Counterparts...................................................... 37
9.10 Severability...................................................... 37
9.11 Captions.......................................................... 37
9.12 Entire Agreement.................................................. 37
9.13 Jury Waiver....................................................... 37
EXHIBITS
EXHIBIT 3.1(j) FORM OF LEGAL OPINION
EXHIBIT 4.1 LOCATIONS
EXHIBIT 4.5 ENCUMBRANCES
EXHIBIT 4.10 LITIGATION
EXHIBIT 5.1(c) FORM OF CHIEF FINANCIAL OFFICER'S REPORT
EXHIBIT 6.1(b) INDEBTEDNESS
EXHIBIT 6.3(f)(iii) FORM OF VENDOR SUBORDINATION LETTER
EXHIBIT 7.3(c) FORM OF BORROWING BASE CERTIFICATE
EXHIBIT 7.5 FORM OF AGENCY ACCOUNT AGREEMENT
(iii)
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (the "Agreement") is made as of April 27,
1992 between ▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a NATIONAL COMPUTER DISTRIBUTORS
(the "Borrower"), a Florida corporation with its chief executive office at
▇▇▇▇-▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and THE FIRST NATIONAL BANK OF
BOSTON, a national banking association having its head office at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION I
DEFINITIONS
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1.1 General.
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All capitalized terms used in this Agreement or in any certificate, report
or other document made or delivered pursuant to this Agreement (unless otherwise
defined therein) shall have the meanings assigned to them below:
Accounts. All of the accounts of the Borrower including, without
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limitation, all rights to payment for goods sold or leased or for services
rendered, all sums of money or other proceeds due or becoming due thereon, all
instruments pertaining thereto, all guarantees and security therefor, all goods
giving rise thereto and all rights pertaining to and interest in such goods
including the right of stoppage in transit; all rights under contracts to
receive money; all other rights and claims to the payment of money, including,
without limitation, chattel paper and amounts due from affiliates of the
Borrower; and insurance proceeds with respect to any of the foregoing.
Agency Account Agreement. See Section 7.5.
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Agreement. This Agreement (including all exhibits, schedules, annexes and
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the like referred to herein) as originally executed, or if amended, varied or
supplemented from time to time, as so amended, varied or supplemented.
Base Rate. The rate of interest announced from time to time by the Bank at
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its head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as its "Base
Rate".
Borrowing Base. An amount equal to the lesser of (i) $20,000,000; or (ii)
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the sum of (x) 85% of the face value of Eligible Accounts due and owing at such
time; plus (y) 50% of Eligible Inventory, not to exceed $12,000,000.
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Borrowing Base Certificate. See Section 7.3(c).
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Business Day. Any day other than a Saturday, Sunday or legal holiday on
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which banks in Boston, Massachusetts are open for the conduct of a substantial
part of their commercial lending business.
Chief Financial Officer's Report. See Section 5.1(c).
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Code. The Internal Revenue Code of 1986 and the rules and regulations
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thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.
Collateral. Any and all property of the Borrower in which the Bank now
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has, by this Agreement acquires or hereafter acquires, a security interest, lien
or encumbrance, including without limitation, the security interest granted
pursuant to Section 7.1 of this Agreement.
Controlled Group. All trades or businesses (whether or not incorporated)
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under common control that, together with the Borrower, are treated as a single
employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.
Default. An event or condition that, with the passage of time or the
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giving of notice, or both, would constitute an Event of Default.
EBIT. At any time that the amount thereof shall be determined, the
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Borrower's Net Income before total interest expense, income tax expense,
expenses attributable to stock bonuses paid to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ under the
Employment Agreement dated March 31, 1992 between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and the
Borrower, as amended and in effect as of the date of this Agreement, expenses
attributable to capitalized transaction costs associated with the transactions
consummated under and in connection with the Purchase Agreement and the
transactions contemplated by this Agreement, the amortization of good will and
noncompete agreements and other intangibles shown on the Borrower's balance
sheet, but after the depreciation of the Borrower's fixed asset expense.
Eligible Account. An Account which meets all of the following
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requirements:
(a) such Account is owned by the Borrower and represents a complete bona
fide transaction which requires no further act under any circumstances on part
of the Borrower to make such Account payable to the account debtor;
(b) such Account is not past due more than 60 days;
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(c) the goods the sale of which gave rise to such Account were shipped or
delivered to the account debtor on an absolute sale as is and not on a ▇▇▇▇ and
hold sale basis, a consignment sale basis, a guaranteed sale basis, a sale or
return basis, or on the basis of any other similar understanding, and no
material part of such goods has been returned or rejected;
(d) such Account is not evidenced by chattel paper or an instrument of any
kind unless such chattel paper or instrument has been delivered to and is in the
possession of the Bank;
(e) the account debtor with respect to such Account is not insolvent or
the subject of any bankruptcy or insolvency proceedings of any kind or of any
other proceeding or action, threatened or pending, which might have a materially
adverse effect on such account debtor and is not, in the reasonable discretion
of the Bank, deemed ineligible for credit or other reasons;
(f) such Account is not owing by an account debtor whose then-existing
accounts owing to the Borrower exceed in face amount 30% of the Borrower's
total Eligible Accounts;
(g) such Account is not owing by an account debtor when 50% of all
then-existing accounts owing to the Borrower by such account debtor are past due
more than 60 days;
(h) if such Account arises from the performance of services, such services
have been fully rendered;
(i) if the account debtor with respect thereto is located outside of the
United States of America (excluding for this purpose the Commonwealth of Puerto
Rico or the United States Virgin Islands), the goods which gave rise to such
Account were shipped after receipt by the Borrower from the account debtor of an
irrevocable letter of credit, which letter of credit has been confirmed by a
financial institution reasonably acceptable to the Bank and is in form and
substance reasonably acceptable to the Bank, payable in the full face amount of
the face value of he Account in Dollars at a place of payment located within the
United States;
(j) the amount owning on the invoice evidencing such Account is a valid,
legally enforceable obligation of the account debtor with respect thereto and is
not subject to any material present, or contingent, and no facts exist which are
the basis for any future, offset, deduction or counterclaim, dispute or other
defense on the part of such account debtor;
(k) such Account is subject to a security interest in favor of the Bank,
which security interest is perfected as to such Account, and is subject to no
other Lien whatsoever other than a Permitted Lien;
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(l) such Account is evidenced by an invoice or other documentation in form
reasonably acceptable to the Bank;
(m) such Account is not subject to the Assignment of Claims Act of 1940,
as amended from time to time, or any applicable law now or hereafter existing
similar in effect thereto, as determined in the reasonable discretion of the
Bank, or to any provision prohibiting its assignment or requiring notice of or
consent to such assignment;
(n) the goods giving rise to such Account were not, at the time of the
sale thereof, subject to any Lien, except the Permitted Liens; and
(o) such Account is not determined by the Bank to be ineligible for any
other reason based upon such credit and collateral considerations as the Bank
may reasonably deem appropriate.
Eligible Inventory. Inventory which meets all of the following
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requirements:
(a) such Inventory is owned by the Borrower, is subject to a security
interest in favor of the Bank, which security interest is perfected as to such
Inventory, and is subject to no other Lien whatsoever other than a Permitted
Lien;
(b) such Inventory consists of finished goods;
(c) such Inventory is in good condition and meets all standards applicable
to such goods, their use or sale imposed by any governmental agency, or
department or division thereof, having regulatory authority over such matters;
(d) such Inventory is currently either usable or saleable, at prices
approximately at least cost, in the normal course of the Borrower's business;
(e) such Inventory is located within the United States at one of the
locations set forth in the most recent Schedule of Inventory;
(f) such Inventory is in the possession of the Borrower and not any third
part, such as warehousers or contractors (unless the Bank has received a waiver
from the applicable warehousers or contractors in form and substance reasonably
satisfactory to the Bank);
(g) such Inventory is of a quality and from a vendor satisfactory to the
Bank;
(h) such Inventory is obtained from a vendor offering stock rotation or
stock balancing privileges to the Borrower; and
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(i) such Inventory is not determined by the Bank to be ineligible for any
other reason based upon such reasonable credit and collateral considerations as
the Bank may deem appropriate.
Inventory immediately loses the status of Inventory if and when the
Borrower sells it, otherwise passes title thereto or consumes it or the Bank
releases or transfers its security interest therein. If and when an Eligible
Account exists by virtue of constituting proceeds of Eligible Inventory, the
Inventory giving rise to the Eligible Account automatically loses its status as
Eligible Inventory.
Encumbrances. See Section 6.3.
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Equipment. All of the Borrower's machinery, equipment and fixtures,
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wherever located, including, without limitation, office furniture, furnishings
and trade fixtures specialty tools and parts, motor vehicles and materials
handling equipment, together with the Borrower's interest in, and right to, any
and all manuals and other materials that contain technical data relating to the
use, operations, or structure of such equipment, and at least one set of copies
of those materials on which then-current information is recorded.
ERISA. The Employee Retirement Income Security Act of 1974 and the rules
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and regulations thereunder, collectively, as the same may from time to time be
supplemented or amended and remain in effect.
Event of Default. Any event described in Section 8.1.
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General Intangibles. All of the general intangibles of the Borrower,
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including, without limitation, tax refunds, rights with respect to trademarks,
service marks, trade names, patens, copyright rights, trade-secrets information,
and rights to prevent others from doing acts that constitute unfair competition
with or misappropriation of the property of the Borrower including, without
limitations, any sums (net of expenses) that the Borrower may receive arising
out of any claim for infringement of its rights in any patent, copyright,
trademark, trade name, trade secret or other proprietary right and all rights of
the Borrower under contracts to enjoy performance by others or to be entitled to
enjoy rights granted by others or to be entitled to enjoy rights granted by
others, including without limitation any licenses.
Guarantees. As applied to the Borrower, all guarantees, endorsements or
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other contingent or surety obligations with respect to obligations of others
whether or not reflected on the balance sheet of the borrower, including any
obligation to furnish funds, directly or indirectly (whether by virtue of
partnership arrangements, by agreement to keep-well or otherwise), through the
purchase of goods, supplies or
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services, or by way of stock purchase, capital contribution, advance or loan, or
to enter into a contract for any of the foregoing, for the purpose of payment of
obligations of any other person or entity.
Indebtedness. As applied to the Borrower, (i) all obligations for borrowed
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money or other extensions of credit, including all obligations representing the
deferred purchase price of property, other than accounts payable arising in the
ordinary course of business, (ii) all obligations evidenced by bonds, notes,
debentures or other similar instruments, (iii) all obligations secured by any
mortgage, pledge, security interest or other lien on property owned or acquired
by the Borrower whether or not the obligations secured thereby shall have been
assumed, (iv) that portion of all obligations arising under capital leases that
is required to be capitalized on the consolidated balance sheet of the Borrower,
and (v) all Guarantees.
Inventory. All inventory of the Borrower wherever located, including,
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without limitation, all goods, merchandise, and other personal property which
are held for sale, lease or other disposition, or held for display or
demonstration, or leased or cosigned or which are raw materials, work in
process, or materials used or consumed or to be used or consumed in the business
of the Borrower. "Inventory" shall include all proprietary rights, patents,
plans, drawings, diagrams, schematics, assembly and display materials relating
to any of the foregoing.
Investments. The purchase or acquisition of any share of capital stock,
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partnership interest, evidence of indebtedness or other equity security of any
other person or entity, any loan, advance or extension of credit to, or
contribution to the capital of, any other person or entity, any real estate held
for sale or investment, any commodities futures contracts held other than in
connection with bona fide hedging transactions, any other investment in any
other person or entity, and the making of any commitment or acquisition of any
option to make an Investment.
Loan. A Loan made to the Borrower by the Bank pursuant to Section II of
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this Agreement.
Loan Account. The general ledger account in the name of the Borrower on the
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books of the Bank in which will be recorded loans and advances made by the Bank
to the Borrower pursuant to this Agreement, payments made on such loans, and
other appropriate debits and credits as provided by this Agreement.
Maximum Commitment. $20,000,000.
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Net Income. At any date as of which the amount thereof shall be determined,
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all amounts that should, in accordance with generally accepted accounting
principles, be included as the net income of the Borrower.
Obligations. Any and all obligations of the Borrower to the Bank of every
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kind and description, direct or indirect, absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising or acquired,
regardless of how they arise or are acquired or by what agreement or instrument,
if any, and including obligations to perform acts and refrain from taking action
as well as obligations to pay money.
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding to
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any or all of its functions under ERISA.
Permitted Encumbrances. See Section 6.3.
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Plan. At any time, an employee pension or other benefit plan that is
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subject to Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group or (ii) if such Plan is established, maintained pursuant to
a collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which the Borrower, or any member of the
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five Plan years made contributions.
Proceeds. Whatever is received upon the sale, lease, exchange, collection
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or other disposition of the Collateral including, but not limited to, all
Accounts, goods, money, checks, deposit accounts, and insurance proceeds.
Purchase Agreement. The Subordinated Note and Warrant Purchase Agreement
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dated as of March 31, 1992 by and among the Borrower, those persons listed on
Schedule A annexed thereto, and C.T. Capital Trust N.V., a Netherlands Antilles
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corporation, as agent and attorney in fact for such persons.
Qualified Investments. Investments in (i) notes, bonds or other obligations
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of the United States of America or any agency thereof that as to principal and
interest constitute direct obligations of or are guaranteed by the United States
of America; (ii) certificates of deposit or other deposit instruments or
accounts of banks or trust companies organized under the laws of the United
States or any state thereof that have capital and surplus of at least
$100,000,000, (iii) commercial paper that is rated not less than prime-one or
A-1 or their equivalents by ▇▇▇▇▇'▇ Investors Service, Inc. or
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Standard & Poor's Corporation, respectively, or their successors, and (iv) any
repurchase agreement secured by any one or more of the foregoing.
Senior Bank Indebtedness. Any and all Indebtedness of the Borrower to the
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Bank whether under this Agreement or otherwise.
Service Fee. See Section 2.3.
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Subordinated Indebtedness. Indebtedness of the Borrower evidenced by the
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Subordinated Notes, as defined in, and issued pursuant to, the Purchase
Agreement and any other Indebtedness of the borrower the payment of principal of
and interest on which is expressly subordinated in right of payment, to the
prior payment in full of the Obligations, by a subordination agreement in a form
and continuing terms approved by the Bank.
Subsidiary. Any corporation, association, joint stock company, business
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trust or other similar organization of which 50% or more of the ordinary voting
power for the election of a majority of the members of the board of directors or
other governing body of such entity is held or controlled by the Borrower; or
any other such organization the management for which is directly or indirectly
controlled by the Borrower through the exercise of voting power or otherwise; or
any joint venture, whether incorporated or note, on which the Borrower has a 50%
ownership interest.
Tangible Net Worth. At any date as of which the amount hereof shall be
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determined, (i) the total assets of the Borrower minus (ii) the sum of any
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amounts attributable to (a) goodwill; (b) intangible items such as unamortized
debt discount and expense, patents, trade and service marks and names,
copyrights and research and development expenses except prepaid expenses; (c)
all reserves not already deducted from assets; (d) any write-up in the book
value of assets resulting from any revaluation thereof subsequent to the date of
the financial statements referred to in Section 4.6; (e) noncompete agreements;
and (f) loans to shareholders of the Borrower including without limitation the
"Senior Management Notes," referred to in Section 3.14 of the Purchase
Agreement, minus (iii) Total Liabilities.
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Termination Date. April 30, 1994.
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Total Capital Funds. At any date as of which the amount thereof shall be
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determined, the sum of Tangible Net Worth and Subordinated Indebtedness.
Total Liabilities. At any date as of which the amount thereof shall be
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determined, all obligations that should, in accordance with generally accepted
accounting principles, be classified as liabilities on the balance sheet of the
Borrower, including in any event all Indebtedness.
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Vendor Subordination Letter. See Section 6.3(f)(ii).
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1.2. Accounting Terms. All terms of an accounting character shall have the
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meanings assigned thereto by generally accepted accounting principles applied on
a basis consistent with the financial statements referred to in Section 4.6 of
this Agreement, modified to the extent, but only to the extent, that such
meanings are specifically modified herein.
SECTION II
DESCRIPTION OF CREDIT
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2.1. The Loans. Subject to the terms and conditions hereof, the Bank will
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make Loans to the Borrower from time to time until the close of business on the
last Business Day preceding the Termination Date, in such amounts as the
Borrower may request, provided that the debit balance of the Loan Account shall
not at any time exceed the amount available under the Borrowing Base. The
Borrower may borrow, repay pursuant to Section 2.8, and reborrow, from the date
of this Agreement until the last Business Day preceding the Termination Date,
any amount available under the borrowing Base as provided in this Agreement. Any
Loan not repaid by the Termination Date shall be due and payable on such date.
2.2 Notice and Manner of Borrowing. (a) Whenever the Borrower desires to
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obtain a Loan hereunder, an officer of the Borrower, certified in writing as
authorized to request Loans hereunder, shall notify the Bank (which notice to
the Bank shall be irrevocable) by telex, telegraph, telecopy or telephone
received no later than 12:00 noon boston time on the day on which the requested
Loan is to be made. Such notice shall specify the effective date and amount of
each Loan subject to the limitations set forth in Section 2.1.
(b) Subject to the terms and conditions hereof, the Bank shall make each
Loan on the effective date specified therefor by debiting the amount of such
Loan to the Loan Account and crediting a like amount to the demand deposit
account of the Borrower with the Bank, or, to such other account as the Borrower
may direct.
(c) Subject to the terms and conditions hereof, the Borrower may obtain
Loans hereunder by writing drafts on any checking account which it may maintain
with the Bank or any of its affiliates. The amount of each such Loan shall be
debited to the Loan Account.
2.3. Closing Fee. The Borrower shall pay to the Bank a non-refundable
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closing fee of $150,000 on the date this Agreement is executed.
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2.4. Commitment Fee. The Borrower shall pay to the Bank, during each month
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or portion thereof, until the Termination Date, a commitment fee computed at the
rate of three-eighths of one percent (3/8%) per annum on the difference between
(a) the Maximum Commitment; and (b) the average daily balance of the Loan
Account during such month.Commitment fees shall be payable monthly in arrears,
and on the Termination Date.
2.5. Commitment Reduction and Early Termination Fee. The Borrower shall
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pay to the Bank three percent (3%) of the amount of any reduction in or
termination of the Maximum Commitment by the borrower in the initial 365 day
period following (and including) the date of this agreement, and two percent
(2%) of the amount of any such reduction or termination in the next succeeding
365 day period. All such amounts shall be payable on the date or dates of such
reductions or terminations.
2.6. The Loan Account. The Loans shall be evidenced by debit entries to
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the Loan Account. The Bank shall also record in the Loan Account all payments
made by the borrower on account of indebtedness evidenced by the Loan Account
and all proceeds of Collateral which are finally paid to the Bank at its office
in cash or solvent credits, and may record therein, in accordance with customary
accounting practice, other debits and credits,including all charges and expenses
properly chargeable to the Borrower and any other Obligation. The debit balance
of the Loan Account shall reflect the amount of the borrower's indebtedness to
the Bank from time to time by reason of Loans and other appropriate charges
hereunder. At least once each month the Bank shall render (i) a statement of
account showing as of its date the debit balance of the Loan Account and charges
to the Loan Account for such month; and (ii) a statement of account showing as
of its date the balance of any deposit account maintained with the Borrower with
the Bank and charges to such deposit account for such month. Each such statement
referred to above shall be considered correct and accepted by the Borrower and
conclusively binding upon it absent manifest error unless, within thirty (30)
days after the date of any such statement, notice to the contrary is received by
the Bank from the Borrower.
2.7. Interest Rate and Payments of Interest. (a) Each Loan shall bear
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interest on the outstanding principal amount thereof at a rate per annum equal
to the Base Rate plus one and one half percent (1 1/2%), which rate shall change
contemporaneously with any change in the Base rate. Such interest shall be
payable on the first day of each month and when such Loan is due (whether at
maturity, by reason of acceleration or otherwise).
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(b) At the option of the Bank, and no sooner than thirty (30) days after
the occurrence of an Event of Default hereunder, the interest rate applicable to
each Loan shall increase to three percent (3%) above the rate of interest
applicable to the Loans. Such interest rate shall change contemporaneously with
any change in the Base Rate.
2.8. Changed Circumstances. Intentionally Omitted.
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2.9. Payments and Prepayments of the Loans. In addition to payments
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required pursuant to Section 7.6 hereof, the Loans may be prepaid at any time,
in whole or in part, without premium or penalty, provided that interest accrued
on the amounts so paid to the date of such payment must be paid at the time of
any such payment. No prepayment of the Loans before the Termination Date shall
impair the right of the Borrower to borrow as set forth in Section 2.1.
2.10. Method of Payment. All payments and prepayments of principal and
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any and all other amounts due hereunder shall be made by the Borrower to the
Bank at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ in immediately available funds
and in United States Dollars, on or before 11:00 a.m. (Boston time) on the due
date thereof, free and clear of, and without any deduction or withholding for,
any taxes or other payments.
2.11. Overdue Payments. Until the provisions of Section 2.7(b) shall
----------------
become applicable, overdue principal (whether at maturity, by reason of
acceleration or otherwise) and, to he extent permitted by applicable law,
overdue interest and fees or any other amounts payable hereunder shall bear
interest from and including the due date thereof until paid, compounded daily
and payable on demand, at a rate per annum equal to 2% above the rate of
interest otherwise applicable to the Loans.
2.12. Computation of Interest and Fees. Interest and all fees payable
--------------------------------
hereunder shall be computed daily on the basis of a year of 360 days and paid
for the actual number of days for which due. If the due date for any payment of
principal is extended by operation of law, interest shall be payable for such
extended time. If any payment required by this Agreement becomes due on a day
that is not a Business Day such payment shall be made on the next succeeding
Business Day, and such extension shall be included in computing interest in
connection with such payment.
2.13. Borrowings Base Availability. The Borrower understands that the Bank
----------------------------
will use the Borrowing Base as a maximum ceiling on Loans. Notwithstanding the
other provisions of this Agreement, in computing Loan availability under the
Borrowing Base, the Bank will subtract from the Borrowing Base the debit balance
of the Loan Account.
-12-
2.14. Borrowing Base Excesses. If at any time or times the debit
-----------------------
balance of the Loan Account exceeds the Borrowing Base, the Borrower shall pay
immediately to the Bank the amount of any such excess to be credited to the Loan
Account.
2.15. Promises to Pay. The Borrower promises to pay to the Bank in
---------------
accordance with the terms of this Agreement and on the dates specified herein,
subject to acceleration under Section VIII, all monetary Obligations hereunder.
2.16. Authorization to Debit Loan Account. The Borrower authorizes the
-----------------------------------
Bank, in the Bank's sole discretion, to charge when due any monetary Obligation,
including, without limitation, all amounts owing for interest, fees, costs and
expenses and other charges provided by this Agreement, including but not limited
to Section 9.2 of this Agreement, to the Loan Account, and such amounts shall be
Loans hereunder and shall be disclosed promptly to the Borrower by way of
written advices of debits to the Loan Account.
2.17. Capital Adequacy. If the Bank shall have determined that the
----------------
adoption of any applicable law, rule, regulation, guideline, directive or
request (whether or not having the force of law) regarding capital requirements
for banks or bank holding companies, or any change therein or in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank with any of the foregoing imposes or
increases a requirement by the Bank to allocate capital resources to the Bank's
commitment to make Loans hereunder which has or would have the effect of
reducing the return on the Bank's capital to a level below that which the Bank
could have achieved (taking into consideration the Bank's then existing policies
with respect to capital adequacy and assuming full utilization of the Bank's
capital) but for such adoption, change or compliance by any amount reasonably
deemed by the Bank to be material, then the Bank may, at its option and by
notice to the Borrower, adjust the Commitment fee charged to the Borrower
pursuant to Section 2.4, which adjustment shall become effective sixty (60) days
from the date of such notice.
Any notice by the Bank to the Borrower shall be accompanied by a certificate
shall set forth the nature of the occurrence giving rise to such compensation,
the additional amount or amounts to be paid to it hereunder and the method by
which such amounts were determined. In determining such amount, the Bank may use
any reasonable averaging and attribution methods. Such certificate and the
determinations set forth therein shall be conclusive in the absence of manifest
error.
Notwithstanding any other provision hereof, at any time following receipt
of a notice from the Bank pursuant to this
-13-
Section 2.17, the Borrower may, upon thirty (30) days notice to the Bank,
terminate this Agreement without payment of any penalty or premium including the
early termination fee otherwise payable under Section 2.5 hereof.
SECTION III
CONDITIONS OF LOANS
-------------------
3.1. Conditions Precedent to Initial Loan. The obligation of the Bank to
------------------------------------
make its initial Loan is subject to the condition precedent that the Bank shall
have received, in form and substance reasonably satisfactory to the Bank and its
counsel, the following:
(a) this Agreement duly executed by the Borrower;
(b) a Certificate of Corporate Borrowing Resolutions signed by the
Secretary of the Borrower;
(c) a Certification of Titles signed by the Secretary of the Borrower
regarding the officers of the Borrower;
(d) a Certificate of Legal Existence of the Borrower of reasonably recent
date issued by the Secretary of State of Florida;
(e) a Certificate of Good Standing and Authority regarding the Borrower's
qualification to transact business as a foreign corporation in Georgia and
Texas;
(f) a Certificate signed by the Secretary of the Borrower as to the truth,
correctness and completeness of copies of (i) Certificate of Incorporation filed
with the Secretary of State of the Borrower's jurisdiction of incorporation
together with all amendments thereto; and (ii) By-laws of the Borrower.
(g) Receipt of evidence, in form and substance satisfactory to the Bank, of
the filing of UCC-1 financing statements in favor of the Bank, for filing in all
offices necessary to perfect the Bank's security interest in the Collateral.
(h) an agency account agreement, substantially in the form of Exhibit 7.5
-----------
attached hereto duly executed by the Borrower, the Bank and ▇▇▇▇▇▇▇ Bank of
South Florida, N.A.
(i) Landlord Waivers for following premises leased by the Borrower:
▇▇▇▇-▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(Dade County)
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▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(Dallas County)
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(Gwinett County)
Computer Image
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Computer Image
North ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(j) favorable opinions addressed to the Bank from (i) the Borrower's
counsel, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, III, Esquire, and (ii)
counsel to the institutional holders of the Subordinated Indebtedness issued
under the Purchase Agreement, opining as to the matters covered by the form of
opinion attached hereto as Exhibit 3.1(j);
(k) insurance certificates required by Section 5.3 hereof;
(l) Vendor Subordination Letters, substantially in the form of Exhibit
6.3(f)(ii) hereto, or the "notice" letters referred to in Section 6.3(f)(ii)(B)
as appropriate, executed by all vendors having, as of the date of this
Agreement, a written security interest grant covering any of the Collateral
included in the Borrowing Base Certificate delivered pursuant to Section 7.3(c)
hereof.
(m) Borrowing Base Certificate dated April 24, 1992 as to: (i) Schedule of
Accounts Receivable as of April 23, 1992, and (ii) Schedule of Inventory as of
April 23, 1992.
(n) Chief Financial Officer's Report dated April 24, 1992 covering the
period of the most recent financial statements referenced in Section 4.6 hereof.
(o) a copy of the audited financial statements for the Borrower's fiscal
year ending December 31, 1991 with copies of the report and statement required
by Section 5.1(a) hereof.
(p) a copy of the financial statements of the Borrower reviewed by Coopers
& ▇▇▇▇▇▇▇ and the "cold comfort" accountants letter delivered by Coopers &
▇▇▇▇▇▇▇ to the agent under the Purchase Agreement covering the period January 1,
1992 to the date of such letter.
(q) such other documents, and completion of such other matters, as counsel
for the Bank may reasonably deem necessary or appropriate.
-15-
3.2. Conditions Precedent to All Loans. The obligation of the Bank to
---------------------------------
make each Loan, including the initial Loan, is further subject to the following
conditions:
(a) the representations and warranties contained in Section IV shall be
true and accurate in all material respects on and as of the effective date of
each Loan as though made at and as of each such date (except to the extent that
such representations and warranties expressly relate to an earlier date), and no
Default shall have occurred and be continuing, or would result from such Loan;
(b) the resolutions referred to in Section 3.1(b) shall remain in full
force and effect; and
(c) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for the Bank, would make
it illegal or against the policy of any governmental agency or authority for the
Bank to make Loans hereunder.
The making of each Loan shall be deemed to be a representation and warranty
by the Borrower on the date of such Loan as to the accuracy of the facts
referred to in subsection (a) of this Section 3.2.
SECTION IV
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Bank to enter into this Agreement and to make Loans
hereunder, the Borrower represents and warrants to the Bank that:
4.1. Organization and Qualification. The Borrower (a) is a corporation
-------------------------------
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has all requisite corporate power to own
its property and conduct its business as now conducted and as presently
contemplated, (c) is duly qualified and in good standing as a foreign
corporation and is duly authorized to do business in each jurisdiction where the
nature of its properties or business requires such qualification, except where
the failure to be so qualified would not have a material adverse effect on the
business, financial condition, assets or properties of the Borrower on a
consolidated basis, (d) has its chief executive office located at the address of
the Borrower shown in the preamble to this Agreement and (e) has an office,
manufacturing facility, warehouse or occupies space in the states and at the
locations specified in Exhibit 4.1 hereto.
-----------
-16-
4.2. Corporate Authority. The execution, delivery and performance of this
-------------------
Agreement and the transactions contemplated hereby are within the corporate
power and authority of the Borrower and have been authorized by all necessary
corporate proceedings, and do not and will not:
(a) require any consent or approval of the stockholders of the Borrower
other than those consents and approvals, if any, previously obtained;
(b) contravene any provision of the charter documents or by-laws of the
Borrower or any law, rule or regulation applicable to the Borrower;
(c) contravene any provision of, or constitute an event of default or
event that, but for the requirement that time elapse or notice be given, or
both, would constitute an event of default under, any other agreement,
instrument, order or undertaking binding on the Borrower; or
(d) result in or require the imposition of any Encumbrance on any of the
properties, assets or rights of the Borrower, except Encumbrances permitted
hereunder.
4.3. Valid Obligations. This Agreement and all of its terms and
-----------------
provisions are the legal, valid and binding obligations of the Borrower,
enforceable in accordance with its terms except as limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally, and except as the remedy of specific performance
or of injunctive relief is subject to the discretion of the court before which
any proceeding therefor may be brought.
4.4. Consents or Approvals. The execution, delivery and performance of
---------------------
this Agreement and the transactions contemplated herein do not require any
approval or consent of, or filing or registration with, any governmental or
other agency or authority, or any other party.
4.5. Title to Properties; Absence of Encumbrances. The Borrower has good
--------------------------------------------
and marketable title to all of the properties, assets and rights of every name
and nature now purported to be owned by it, including, without limitation, such
properties, assets and rights as are reflected in the financial statements
referred to in Section 4.6 (except such properties, assets or rights as have
been disposed of in the ordinary course of business since the date thereof),
free from all Encumbrances except Permitted Encumbrances or those Encumbrances
disclosed in Exhibit 4.5 thereto, and, except as so disclosed, free from all
-------
defects of title that might materially adversely affect such properties, assets
or rights, taken as a whole.
-17-
4.6. Financial Statements. The Borrower has furnished the Bank with its
--------------------
balance sheet as of December 31, 1991 and with its statements of income, changes
in stockholders' equity and cash flow as of such date, and related footnotes,
audited and unqualified by Coopers & ▇▇▇▇▇▇▇. The Borrower has also furnished
the Bank its balance sheet and its statements of income, as of December 31,
1991. All such financial statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods specified and present fairly the financial position of the Borrower as
of such dates and the results of the operations of the Borrower for such
periods. The Borrower has also furnished the Bank with certain financial
statements covering the period January 1, 1992 to the date of the "cold comfort"
accountants' letter delivered to the agent under the Purchase Agreement. There
are no liabilities, contingent or otherwise, not disclosed in such financial
statements that involve a material amount.
4.7. Changes. Other than as disclosed in Schedules 8.4 and 8.27 of the
-------
Purchase Agreement, since the date of the most recent financial statements
referred to in Section 4.6, there have been no changes in the assets,
liabilities, financial condition, business or prospects of the Borrower other
than changes in the ordinary course of business, the effect of which has not, in
the aggregate, been materially adverse.
4.8. Defaults. As of the date of this Agreement, no Default exists.
--------
4.9. Taxes. The Borrower has filed all federal, state and other tax
-----
returns which were due prior to the date of this Agreement, and all taxes,
assessments and other governmental charges due from the Borrower prior to or as
of the date hereof have been fully paid. The Borrower has established and will
maintain on its books reserves adequate for the payment of all federal, state
and other tax liabilities.
4.10. Litigation. Except as set forth on Exhibit 4.10 hereto, there is no
---------- ------------
litigation, arbitration, proceeding or investigation pending, or, to the
knowledge of the officers of the Borrower threatened, against the Borrower that,
if adversely determined, would result in a material judgment not fully covered
by insurance or would otherwise have a material adverse effect on the assets,
business or prospects of the Borrower.
4.11. Use of Proceeds. No portion of any Loan is to be used for the
---------------
"purpose of purchasing or carrying" any "margin stock" as such terms are used in
Regulations G, U and X of the Board of Governors of the Federal Reserve System,
12 C.F.R. 221 and 224, as amended; and following the application of the proceeds
of each Loan, the value of all "margin stock" of the
-18-
Borrower will not exceed 25% of the value of the total assets of the Borrower
that are subject to the restrictions set forth in Section 6.3.
4.12. Subsidiaries. As of the date of this Agreement, the Borrower has no
------------
Subsidiaries.
4.13. Investment Company Act. The Borrower is not subject to regulation
----------------------
under the Investment Company Act of 1940, as amended.
4.14. Compliance with ERISA. The Borrower and each member of the
---------------------
Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the applicable provisions of ERISA and the Code,
and have not incurred any liability to the PBGC or a Plan under Title IV of
ERISA; and no "prohibited transaction" or "reportable event" (as such terms are
defined in ERISA) has occurred with respect to any Plan.
4.15. Security Interest. This Agreement creates and continues in favor of
-----------------
the Bank a security interest in the Collateral identified in Section 7.1 hereof.
All financing statements with respect to the Collateral have been executed and
will be filed on or before the date of the initial loan hereunder in all offices
necessary to perfect a security interest in the Collateral, and such security
interest constitutes a first priority perfected security interest in the
Collateral, except in Collateral (if any) in which a security interest cannot be
perfected by filing under the Uniform Commercial Code.
4.16. Application of Proceeds. The proceeds of Loans made hereunder
-----------------------
shall be used for general working capital purposes.
4.17. Taxes and Charges Relating to the Agreement. All state and local
-------------------------------------------
recording, franchise, stamp, documentary and other governmental charges and
assessments required to be paid in connection with the execution, delivery,
filing or recordation of, or as a condition to, the enforcement of this
Agreement, or the Bank's lien on or security interest in the Collateral, have
been duly paid.
SECTION V
AFFIRMATIVE COVENANTS
---------------------
So long as the Bank has any commitment to lend hereunder or any Loan or
other Obligation remains outstanding, the Borrower covenants as follows:
-19-
5.1 Financial Statements and other Reporting Requirements. The Borrower
------------------------------------------------------
shall furnish to the Bank:
(a) as soon as available to the Borrower, but in any event within 90 days
after the end of each of its fiscal years, a balance sheet as of the end of, and
a related statement of income, changes in stockholders' equity and cash flow
for, such year, audited and unqualified by Coopers & ▇▇▇▇▇▇▇ (or other
independent certified public accountants acceptable to the Bank); and,
concurrently with such financial statements, a copy of said certified public
accountants' management report and a written statement by such accountants that,
in the making of the audit necessary for their report and opinion upon such
financial statements they have obtained no knowledge of any Default or, if in
the opinion of such accountants any such Default exists, they shall disclose in
such written statement the nature and status thereof;
(b) as soon as available to the Borrower, but in any event within 45 days
after the end of each fiscal quarter, a balance sheet as of the end of, and a
related statement of income for the period then ended;
(c) concurrently with the delivery of each financial statement pursuant to
subsections (a) and (b) of this Section 5.1, a report in substantially the form
of Exhibit 5.1(c) hereto signed on behalf of the Borrower by its chief financial
--------------
officer;
(d) promptly after the receipt thereof by the Borrower copies of any
reports submitted to the Borrower by independent public accountants in
connection with any interim review of the accounts of the Borrower made by such
accountants;
(e) if and when the Borrower gives or is required to give notice to the
PBGC of any "Reportable Event" (as defined in Section 4043 of ERISA) with
respect to any Plan that might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that any member of the Controlled Group or the
plan administrator of any Plan has given or is required to give notice of any
such Reportable Event, a copy of the notice of such Reportable Event given or
required to be given to the PBGC;
(f) immediately upon becoming aware of the existence of any condition or
event that constitutes a Default, written notice thereof specifying the nature
and duration thereof and the action being or proposed to be taken with respect
thereto;
(g) promptly upon becoming aware of any litigation or of any investigative
proceedings by a governmental agency or authority commenced or threatened
against the Borrower of which it has notice, the outcome of which would or might
have a
-20-
materially adverse effect on the assets, business, prospects or financial
condition of the Borrower, written notice thereof and the action being or
proposed to be taken with respect thereto; and
(h) from time to time, such other information about the Borrower as the
Bank may reasonably request.
5.2. Conduct of Business. The Borrower shall:
-------------------
(a) duly observe and comply in all material respects with all applicable
laws and valid requirements of any governmental authorities relative to its
corporate existence, rights and franchises, to the conduct of its business and
to its property and assets, and shall maintain and keep in full force and effect
all licenses and permits necessary in any material respect to the proper conduct
of its business;
(b) maintain its corporate existence;
(c) remain engaged substantially in the business of the wholesale
distribution of computer equipment and related software; and
(d) maintain its chief executive office at the address specified in Section
4.1 hereof, unless the Bank shall have first been notified in writing of any
change.
5.3. Maintenance and Insurance. The Borrower shall maintain its
-------------------------
properties in good repair, working order and condition as required for the
normal conduct of its business. The Borrower shall at all times maintain with
financially sound and reputable insurers, liability and casualty insurance
customary for companies engaged in businesses similar to that of the Borrower
including in any event fire and extended coverage and theft, and, with respect
to the Borrower's casualty insurance covering the Collateral, shall, in addition
be in amounts, containing such terms, in such form, and for such periods as may
be reasonably satisfactory to the Bank, such insurance to be payable to the Bank
(as loss payee and additional insured) and the Borrower as their interests may
appear. All such policies of insurance shall provide for no less than thirty
(30) days written minimum cancellation notice to the Bank. In the event the
Borrower fails to provide and maintain insurance as herein required, the Bank
may, at its option, provide such insurance and charge the amount thereof to the
Loan Account which amount shall bear interest at the rate specified in, and in
accordance with, Section 2.11 of this Agreement. The Borrower shall furnish to
the Bank certificates or other evidence reasonably satisfactory to the Bank of
compliance with the foregoing insurance provisions.
-21-
5.4. Taxes. The Borrower shall pay or cause to be paid all taxes,
-----
assessments or governmental charges on or against it or its properties on or
prior to the time when they become due unless any such tax, assessment or charge
is being contested in good faith by appropriate proceedings and with adequate
reserves established and maintained in accordance with generally accepted
accounting principles provided no lien shall have been filed to secure any such
tax, assessment or charge.
5.5. Inspection and Verification of Accounts. The Borrower shall permit
---------------------------------------
the Bank or its designees, at any reasonable time and upon reasonable notice (or
if a Default shall have occurred and is continuing, at any time and without
prior notice), to (i) visit and inspect the properties of the Borrower, (ii)
examine and make copies of and take abstracts from the books and records of the
Borrower, (iii) discuss the affairs, finances and accounts of the Borrower and
its appropriate officers, employees and accountants and (iv) arrange for
verification of Accounts under reasonable procedures directly with the
Borrower's accountants, the account debtors or by other methods.
5.6. Maintenance of Books and Records. The Borrower shall keep adequate
-------------------------------
books and records of account, in which true and complete entries will be made
reflecting all of its business and financial transactions, and such entries will
be made in accordance with generally accepted accounting principles consistently
applied and applicable law.
5.7. Ratio of EBIT to Interest Expense. As of the last day of each of the
---------------------------------
Borrower's fiscal quarters, the Borrower shall have a ratio of (a) EBIT to (b)
total interest expense but excluding imputed interest arising from accretion of
debt discount on the Subordinated Indebtedness issued under the Purchase
Agreement, of not less than the ratio specified for each of the following
periods:
Period Ratio
------ -----
April 1, 1992 - June 30, 1992 1.5:1
July 1, 1992 - March 31, 1993 2.5:1
April 1, 1993 and thereafter 3.0:1
5.8. Minimum Total Capital Funds. The Borrower shall maintain Total Capital
---------------------------
Funds of not less than $3,500,000 until March 31, 1993, and thereafter
$3,500,000 plus seventy-five percent (75%) of the Borrower's Net Income for the
----
immediately preceding year.
5.9. Leverage Ratio. The Borrower shall maintain a ratio of (i) Total
--------------
Liabilities less Subordinated Indebtedness to (ii) Total Capital Funds of not
more than 5:1 until March 31, 1993 and 3.5:1 thereafter.
-22-
5.10. Ratio of Senior Bank Indebtedness to Total Capital Funds. The
--------------------------------------------------------
Borrower shall maintain a ratio of Senior Bank Indebtedness to Total Capital
Funds of not more than 3:1.
5.11. Further Assurances. At any time and from time to time the
------------------
Borrower shall, and shall cause each of its Subsidiaries to, execute and
deliver such further instruments and take such further action as may reasonably
be requested by the Bank to effect the purposes of this Agreement.
SECTION VI
NEGATIVE COVENANTS
------------------
So long as the Bank has any commitment to lend hereunder or any Loan or
other Obligation remains outstanding, the Borrower covenants as follows:
6.1. Indebtedness. The Borrower will not create, incur, assume,
------------
guarantee or be or remain liable with respect to any Indebtedness other than
the following:
(a) Indebtedness of the Borrower to the Bank, any direct or indirect
subsidiary of the Bank or any of the Bank's affiliates;
(b) Indebtedness existing as of the date of this Agreement and disclosed
on Exhibit 6.1(b) hereto or in the financial statements referred to in
--------------
Section 4.6;
(c) Subordinated Indebtedness;
(d) Normal trade Indebtedness and relating to the acquisition of goods
and supplies other than any such Indebtedness not more than sixty (60) days past
due from the due date or any such Indebtedness being contested in good faith and
for which adequate reserves have been established and which shall not exceed in
the aggregate at any time $250,000;
-------
(e) Indebtedness secured by Permitted Encumbrances; and
(f) Other Indebtedness not to exceed $50,000 in the aggregate at any
time.
6.2. Contingent Liabilities. The Borrower shall not create, incur,
----------------------
assume, guarantee or remain liable with respect to any Guarantees other than the
following:
(a) Guarantees in favor of the Bank, or any of its or their affiliates;
-23-
(b) Guarantees existing on the date of this Agreement and disclosed on
Exhibit 6.1(b) hereto or in the financial statements referred to in Section 4.6;
--------------
(c) Guarantees resulting from the endorsement of negotiable instruments for
collection in the ordinary course of business;
(d) Guarantees with respect to surety, appeal performance and
return-of-money and other similar obligations incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money); and
(e) Guarantees of normal trade debt relating to the acquisition of goods
and supplies.
6.3. Encumbrances. The Borrower shall not create, incur, assume or suffer
------------
to exist any mortgage, pledge, security interest, lien or other charge or
encumbrance, including the lien or retained security title of a conditional
vendor upon or with respect to any of its property or assets ("Encumbrances"),
------------
or assign or otherwise convey any right to receive income, including the sale or
discount of accounts receivable with or without recourse, except the following
("Permitted Encumbrances"):
----------------------
(a) Encumbrances in favor of the Bank, or any of the Bank's affiliates;
(b) Liens for taxes, fees, assessments and other governmental charges to
the extent that payment of the same may be postponed or is not required in
accordance with the provisions of Section 5.4;
(c) Landlords' and lessors' liens in respect of rent not in default or
liens in respect of pledges or deposits under workmen's compensation,
unemployment insurance, social security laws, or similar legislation (other
than ERISA) or in connection with appeal and similar bonds incidental to
litigation; mechanics', laborers' and materialmen's and similar liens, if the
obligations secured by such liens are not then delinquent; liens securing the
performance of bids, tenders, contracts (other than for the payment of money);
and statutory obligations incidental to the conduct of its business and that do
not in the aggregate materially detract from the value of its property or
materially impair the use thereof in the operation of its business;
(d) Judgment liens that shall not have been in existence for a period
longer than 60 days after the creation thereof or, if a stay of execution shall
have been obtained, for a period longer than 60 days after the expiration of
such stay;
-24-
(e) Rights of lessors under capital leases; and
(f) Encumbrances in respect of any purchase money obligations for (i) any
equipment used in the business of the Borrower which at any time shall not
exceed $100,000 in the aggregate, and (ii) inventory supplied by a vendor who
has delivered to the Bank either (A) a Vendor Subordination Letter,
substantially in the form of Exhibit 6.3(f)(ii) hereto, or (B) if such vendor's
------------------
security interest in such inventory has not been perfected by the filing of a
Form-1 Uniform Commercial Code Financing Statement, a letter acknowledging that
notices, if any, given by such vendor to the Bank will be delivered to the
address specified in Section 9.1(d) hereof, provided that any such Encumbrance
-------- ----
shall not extend to property and assets not financed by such a purchase money
obligation.
6.4. Capital Expenditures. The Borrower shall not purchase or agree to
--------------------
purchase, or incur any obligations (including that portion of the obligations
arising under any capital lease that is required to be capitalized on the
balance sheet of the Borrower) for, any equipment or other property constituting
fixed assets of greater than $250,000, in the aggregate, during any fiscal year.
6.5. ERISA. Neither the Borrower nor any member of the Controlled Group
-----
shall permit any Plan maintained by it to (i) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code, (ii) incur any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether or
not waived, or (iii) terminate any Plan in a manner that could result in the
imposition of a lien or encumbrance on the assets of the Borrower pursuant to
Section 4068 of ERISA.
6.6. Merger; Consolidation; Sale or Lease of Assets. Other than as
----------------------------------------------
permitted by Section 7.2 of this Agreement, the Borrower shall not sell, lease
or otherwise dispose of assets or properties (valued at the lower of cost or
market), or liquidate, merge or consolidate into or with any other person or
entity.
6.7. Leases. The Borrower shall not, during any fiscal year, have aggregate
------
annual lease payments for real or personal property (whether or not such
payments are termed rent) in excess of $1,000,000.
6.8. Sale and Leaseback. Without the prior written consent of the Bank, the
------------------
Borrower shall not enter into any arrangement, directly or indirectly, whereby
it shall sell or transfer any property owned by it in order to lease such
property or lease other property that the Borrower intends to use for
substantially the same purpose as the property being sold or transferred.
-25-
6.9. Investments. Without the prior written consent of the Bank, the
-----------
Borrower shall not make or maintain any Investments other than (i) Qualified
Investments; or (ii) Investments in any one entity for which the aggregate
purchase price does not exceed $200,000.
6.10. Change in Terms and Prepayment of Subordinated Indebtedness. The
-----------------------------------------------------------
Borrower shall not:
(a) effect or permit any change in or amendment to (i) the terms by which
any Subordinated Indebtedness purports to be subordinated to the payment or
performance of the Obligations, or (ii) the terms relating to the repayment of
any Subordinated Indebtedness; or
(b) directly or indirectly, make any payment of any principal of or in
redemption, retirement or repurchase of Subordinated Indebtedness, except
payments required by the instruments evidencing such Indebtedness.
6.11 Dividends and other Equity Distributions. The Borrower shall not pay
----------------------------------------
any dividends in excess of $150,000 during the calendar year ending December 31,
1992, and zero thereafter, on any class of its capital stock or make any other
distribution or payment on account of or in redemption, retirement or purchase
of such capital stock; provided that this Section shall not apply to (i) the
--------
issuance, delivery or distribution by the Borrower of shares of its common stock
pro rata to its shareholders and (ii) the purchase or redemption by the Borrower
of its capital stock with the proceeds of the issuance of additional shares of
capital stock.
SECTION VII
SECURITY AGREEMENT
------------------
7.1. Creation of Security Interest. As collateral security for the
-----------------------------
payment and performance in full of the Obligations, the Borrower hereby assigns
to the Bank all of its rights, title and interest in, and grants to the Bank a
continuing security interest in, the following personal property: all personal
property of the Borrower including without limitation, Accounts, Inventory,
Equipment and General Intangibles, whether such property is now owned or
existing or is owned, acquired, or arises hereafter, together with all goods,
instruments, documents of title, policies and certificates of insurance,
securities, chattel paper, deposits, cash or other property owned by or in which
it has an interest which are now or may hereafter be in the possession, custody
or control of the Bank or its assigns for any purpose, and any and all
additions, substitutions, replacements, accessions, Proceeds and products
thereof.
-26-
7.2. Covenants Pertaining to Collateral. The Borrower covenants that:
----------------------------------
(a) Other than sales of Inventory or grants of licenses and other rights in
the ordinary course of the Borrower's business for cash or an open account and
on terms of payment ordinarily extended to its customers, the Borrower will not
grant, assign or transfer any interest in, or otherwise encumber, any of the
Collateral other than in favor of the Bank, or any of its affiliates, except as
otherwise permitted herein. So long as no Default has occurred and is
continuing, the Borrower may dispose of any Equipment which as become worn out,
obsolete, unnecessary or has been replaced by other Equipment or been
Temporarily removed for the purposes of repair. The Borrower shall defend the
Collateral against, and take any action reasonably necessary to remove any liens
or encumbrances other than those permitted hereunder and defend the right, title
and interest of the Bank in and to any of the Borrower's rights in the
Collateral.
(b) At the time any Account becomes subject to a security interest in favor
of the Bank, such Account shall be a valid, legal and binding obligation of the
account debtor named therein for goods sold or services theretofore performed by
the Borrower, enforceable in accordance with its terms (which terms shall be
expressly set forth on the face of the invoice applicable thereto).
(c) The Collateral shall remain personal property of the Borrower and shall
not be deemed to be a fixture irrespective of the manner of its attachment to
any real estate, and upon request by the Bank, the Borrower will deliver to the
Bank such disclaimer, waiver, or other document as the Bank requests, executed
by each person having an interest in such real estate.
(d) It will keep the Collateral in good order and repair, subject to
reasonable wear and tear, and will not use the same in violation of law or any
policy of insurance thereon, and will pay promptly when due all taxes and
assessments upon the Collateral or for its use or operation.
(e) It will apply for, and pursue diligently applications for, registration
of its ownership of the General Intangibles for which registration is
appropriate and will use other appropriate measures to preserve its rights in
other such General Intangibles.
(f) Except as disclosed in Exhibit 4.1 hereto, all tangible Collateral
-----------
shall be located at the chief executive office of the Borrower, and the Borrower
will not remove any part thereof (except in connection with dispositions
permitted under Section 7.2(a)) unless and until such time as written consent to
a change of location is obtained from the Bank. The
-27-
Borrower's chief executive office and the place where its records concerning the
Collateral are kept is shown on the first page hereof, and the Borrower will not
change such chief executive office or remove such records without the express
prior written consent of the Bank, which consent shall not be unreasonably
withheld.
(g) At any time and from time to time, upon the written request of the
Bank, and at the sole expense of the Borrower, the Borrower will promptly and
duly execute and deliver any and all such further instruments and documents and
take such further actions as the Bank may reasonably deem desirable in obtaining
the full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or continuation
statement under the Uniform Commercial Code in effect in any jurisdiction with
respect to the liens and security interests granted hereby, transferring
Collateral (other than Inventory and Accounts) to the Bank's possession, and
using its reasonable best efforts to obtain waivers from landlord's and
mortgagees, if necessary. The Borrower also hereby authorizes the Bank to file
any such financing or continuation statement without the signature of the Bank
to the extent permitted by applicable law. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Bank, duly endorsed in a manner
satisfactory to it.
(h) The Borrower will not change its name, identity or corporate structure
in any manner which might make any financing or continuation statement filed
hereunder seriously misleading within the meaning of Section 9-402(7) of the
Uniform Commercial Code (or any other then applicable provision of the Code)
unless the Borrower shall have given the Bank at least 30 days prior written
notice thereof or shall have delivered to the Bank acknowledgement copies of
UCC-3 financing statements reflecting such change duly executed and duly filed
in each jurisdiction in which UCC-1 filings were required in order to perfect
the security interest granted by this Agreement in the Collateral and shall have
taken all action (or made arrangements to take such action concurrently with
such change if it is impossible to take such action in advance) necessary or
reasonably requested by the Bank to amend such financial statement or
continuation statement so that it is not seriously misleading.
7.3. Reports, etc. Pertaining to Collateral. The Borrower will:
--------------------------------------
(a) Schedule of Accounts. Deliver to the Bank on or before the date of
--------------------
the initial Loan hereunder and by the first Business Day following the end of
the last Business Day of each
-28-
week, and at such other intervals and for such periods as the Bank may request,
a schedule of receivables which
(i) shall be reconciled to the Borrowing Base Certificate as of such last
Business Day,
(ii) shall set forth a detailed aged trial balance of all its then
existing Accounts, specifying the names, addresses and balance due for each
account debtor obligated on an Account so listed, and
(iii) shall set forth a detailed report of balances due from and rebates
owing to account debtors, specifying the names and addresses of each
account debtor, the balance due on each account debtor's Account and the
amount of any rebate owned to that account debtor in the ordinary course of
the Borrower's business.
(b) Schedule of Inventory. Deliver to the Bank on or before the date of
---------------------
the initial Loan hereunder and by the 15th day of each month a schedule of
inventory as of the last Business Day of the immediately preceding monthly
account period of the Borrower and at such other intervals and for such periods
as the Bank may request, itemizing and describing the kind, type and quantity of
Inventory and location and the Borrower's cost thereof.
(c) Borrowing Base Certificate. Concurrently with the delivery of the
--------------------------
schedules required by subsections 7.3(a) and (b) deliver to the Bank a Borrowing
Base Certificate, substantially in the form of Exhibit 7.3(c) hereto, prepared
as of the close of business on the last Business Day of the period covered by
such schedules.
(d) Collateral Values. Promptly notify the Bank of any information
-----------------
received by the Borrower relative to any of the Collateral including the
Accounts, the account debtors, or other persons obligated in connection
therewith, which may in any way affect adversely the value of any of its
property or the rights and remedies of the Bank in respect thereto;
(e) Account Debtor Insolvency. Promptly notify the Bank when it obtains
-------------------------
knowledge of actual or imminent bankruptcy or other insolvency proceeding of any
account debtor owing an aggregate of $100,000 or more to the Borrower;
(f) Sales and Shipping Information. Deliver to the Bank, as the Bank may
------------------------------
from time to time require, delivery receipts, customer's purchase orders,
shipping instructions, bills of lading and any other evidence of shipping
arrangements; and
(g) Notice of Diminution in Value. Immediately notify the Bank of any
-----------------------------
return or adjustment in excess of $100,000,
-29-
rejection, repossession and loss or damage of or to merchandise represented by
the Accounts or constituting Inventory, and of any credit adjustment or dispute
arising in connection with the goods or services represented by the Accounts or
constituting Inventory, and the Borrowing Base shall be adjusted accordingly.
7.4. Collection of Accounts and Adjustments. Until the Bank exercises its
--------------------------------------
rights to collect the Accounts pursuant to Sections 7.6 or 7.7, the Borrower
will collect with diligence all of its Accounts, and may continue its present
policies with respect to adjustments.
7.5. Bank's Rights in Collateral. (a) After the occurrence of an Event
---------------------------
of Default and so long as such an Event of Default is continuing, with respect
to any Accounts, (i) the Borrower shall, at the request of the Bank, notify
account debtors of the security interest of the Bank in any Account and that
payment thereof is to be made directly to the Bank, and (ii) the Bank itself
may, without notice to or demand upon the Borrower, so notify account debtors.
The giving of such notification shall not affect the duties of the Borrower,
described below with respect to proceeds of collections of Accounts received by
the Borrower. Until such notice by the Bank, any such collection of Accounts,
whether in the form of cash, checks, notes, or other instruments for the payment
of money (properly endorsed or assigned where required to enable the Bank to
collect same), shall be in trust for the Bank, and the Borrower shall deliver
said collections daily to the Bank, or to such bank as may be approved by the
Bank for deposit to an agency account governed by the terms of an agency account
agreement with such bank, substantially in the form of Exhibit 7.5 attached
-----------
hereto, in the identical form received. The Bank shall credit the proceeds of
collection of Accounts received by the Bank to the Loan Account, such credits to
be entered as soon as practicable upon receipt and in any event within one
Business Day after receipt thereof by the Bank. Such credits shall be
conditional upon final payment in cash or solvent credits of the items giving
rise to them. If any item is not so paid, the Bank, in its discretion, whether
or not the item is returned, may either reverse any credit given for the item or
debit the amount of the item from the deposits or other sums which may be due to
the Borrower from the Bank. Upon elimination of any debit balance of the Loan
Account, proceeds of collection and other receipts may then be credited to any
deposit account which the Borrower may maintain with the Bank, or, if there is
no such account, held pending instructions from the Borrower. After the
occurrence of an Event of Default and with respect to any Accounts, the Bank
may, at its option and at any time, whether or not the Obligations are due,
without notice or demand on the Borrower (i) demand, collect, receipt for,
settle, compromise, adjust, give discharges and releases, all as the Bank may
reasonably determine; (ii) commence and prosecute any actions in any court for
the purposes of collecting any such Accounts and enforcing any other rights in
-30-
respect thereof; (iii) defend, settle or compromise any action brought and, in
connection therewith, give such discharge or release as the Bank may deem
appropriate; (iv) receive, open and dispose of mail addressed to the Borrower
and endorse checks, notes, drafts, acceptances, money orders, or other
instruments or documents evidencing payment, on behalf of and in the name of the
Borrower, or securing, or relating to such Accounts; and (v) sell, assign,
transfer, make any agreement in respect of, or otherwise deal with or exercise
rights in respect of, any such Accounts or the services which have given rise
thereto, as fully and completely as though the Bank were the absolute owners
thereof for all purposes. In taking any action hereunder with respect to the
Collateral, the Bank agrees to use its best efforts to act in a commercially
reasonable manner.
(b) After the occurrence of an Event of Default and so long as any such
Event of Default is continuing, with respect to any Inventory and Equipment,
make, adjust and settle claims under any insurance policy related thereto.
(c) In addition to the remedies provided for herein or otherwise available
to the Bank, the Bank is hereby granted a license or other right to use, without
charge, the Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, or any property
of a similar nature, as it pertains to the Collateral, in completing production
of, advertising for sale and selling any Collateral and the Borrower's rights
under all licenses and all franchise agreements shall inure to the Bank's
benefit. The Bank shall not exercise any rights provided by this Section 7.5(c)
unless an Event of Default has occurred and is continuing.
Except as otherwise provided herein, the Bank shall have no duty as to the
collection or protection of the Collateral nor as to the preservation of any
rights pertaining thereto.
7.6. Remedies. (a) In any jurisdiction where enforcement of rights
--------
hereunder is sought, the Bank shall have, in addition to all other rights and
remedies, the rights and remedies of a secured party under the applicable
Uniform Commercial Code. Upon the occurrence of an Event of Default or at any
time thereafter (such defaults not having been previously cured to the
reasonable satisfaction of the Bank) and so long as any part of the Obligations
remains unpaid or unperformed, the Bank may, at its option, without notice or
demand, declare all of the Obligations to be immediately due and payable and
take immediate possession of the Collateral, and for that purpose enter upon any
premises on which any of the Collateral is situated and remove the same
therefrom or remain on such premises and in possession of such Collateral for
purposes of conducting a sale or enforcing the rights of the Bank under
this Agreement. The Borrower will, upon demand, make the Collateral available to
the Bank at a place and time designated by the Bank which is reasonably
convenient. After the occurrence of an Event of Default the Bank may collect and
receive all income and proceeds in respect of the Collateral, exercise all
rights of the Borrower with respect thereto, and apply the Collateral and any
and all income and proceeds received by it hereunder to the payment of all
Obligations to the Bank. The Bank may sell, lease or otherwise dispose of the
Collateral at a public or private sale, with or without having the Collateral at
the place of sale, and upon terms and in such manner as the Bank may determine,
and the Bank may purchase any Collateral at any such sale. Unless the Collateral
threatens to decline rapidly in value or is of the type customarily sold on a
recognized market, the Bank shall give to the Borrower at least ten business
days' prior written notice of the time and place of any public sale of the
Collateral or of the time after which any private sales or any other intended
disposition thereof is to be made.
(b) Prior to any disposition of Collateral pursuant to this Agreement, the
Bank may, at its option, cause any of the Collateral to be repaired,
reconditioned, but not upgraded unless mutually agreed, in such manner and to
such extent as to make saleable, and any reasonable sums expended therefor by
the Bank shall be repaid by the Borrower and become part of the Obligations
secured hereby; the Bank shall have the right to enforce one or more remedies
hereunder successively or concurrently, and any such action shall not stop or
prevent the Bank from pursuing any further remedy which it may have hereunder or
by law.
(c) The Bank shall be entitled to retain and to apply the proceeds of such
sale to: (i) all sums secured hereby; and (ii) its reasonable expenses of
retaking, holding, protecting and maintaining, and preparing for sale and
selling the Collateral, together with interest on such expenses at the rate
specified in, and in accordance with, Section 2.11 of this Agreement, including
reasonable attorney's fees and other legal expenses incurred by it in connection
therewith. If a sufficient sum is not realized from any such disposition of
Collateral to pay all Obligations secured by this Agreement, the Borrower hereby
promises and agrees to pay to the Bank any deficiency.
(d) The Bank shall have the right to enforce one or more remedies
hereunder successively or concurrently, and any further remedy which it may have
hereunder or by law.
7.7. Waivers. Except as otherwise provided herein, the Borrower waives
-------
demand, notice, protest, notice of acceptance of this Agreement, notice of loans
made, credit extended, Collateral received or delivered or other action taken in
-32-
reliance hereon and all other demands and notice of any description. With
respect to both the Obligations and the Collateral, the Borrower assents to any
extension or postponement of the time of payment or any other forgiveness or
indulgence, to any substitution, exchange or release of Collateral, to the
addition or release of any party or person primarily or secondarily liable, to
the acceptance of partial payment thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Bank may deem advisable. The Bank may exercise any rights with respect to the
Collateral without resorting, or regard, to other collateral or sources of
reimbursement for the Obligations.
SECTION VIII
DEFAULTS
--------
8.1. Events of Default. There shall be an Event of Default hereunder if
-----------------
any of the following events occurs:
(a) The Borrower shall fail to pay when due (i) any amount of principal of
or interest on any Loans, or (ii) any fees or expenses payable hereunder within
five Business Days of the due date therefor; or
(b) The Borrower shall fail to perform any term, covenant or agreement
contained in Sections 5.1(f), 5.5, 5.7 through 5.9 or 6.1 through 6.5; or
(c) The Borrower shall fail to perform any covenant contained in Sections
5.1(e), 5.1(g) or 5.2, and such failure shall continue for 30 days; or
(d) The Borrower shall fail to perform any term, covenant or agreement
(other than in respect of subsections 8.1(a) through (c) hereof) contained in
this Agreement and such default shall continue for 30 days after notice thereof
has been received by the Borrower from the Bank; or
(e) Any representation or warranty of the Borrower made in this Agreement
or any other documents or agreements executed in connection with the
transactions contemplated by this Agreement or in any certificate delivered
hereunder shall prove to have been false in any material respect upon the date
when made or deemed to have been made; or
(f) There shall occur any material adverse change in the assets,
liabilities, financial condition, business or prospects of the Borrower, as
determined by the Bank acting in good faith which shall be in existence for
thirty (30) days after
-33-
notification by the Bank to the Borrower of such material adverse change; or
(g) The Borrower shall fail to pay at maturity, or within any applicable
period of grace, any Indebtedness or fail to observe or perform any term,
covenant or agreement evidencing or securing such Indebtedness, the result of
which failure is to permit the holder or holders of such Indebtedness to cause
such Indebtedness to become due prior to its stated maturity; or
(h) The Borrower shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee, liquidator or
similar official of itself or of all or a substantial part of its property, (ii)
be generally not paying its debts as such debts become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a voluntary case
under the Federal Bankruptcy Code (as now or hereafter in effect), (v) take any
action or commence any case or proceeding under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts, or
any other law providing for the relief of debtors, (vi) fail to contest in a
timely or appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under such Bankruptcy Code or other law, (vii)
take any action under the laws of its jurisdiction of incorporation or
organization similar to any of the foregoing, or (viii) take any corporate
action for the purpose of effecting any of the foregoing; or
(i) A proceeding or case shall be commenced, without the application or
consent of the Borrower in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution, winding up, or composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial part of its
assets, or (iii) similar relief in respect of it, under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts or any other law providing for the relief of debtors, and such
proceeding or case shall continue undismissed, or unstayed and in effect, for a
period of 30 days; or an order for relief shall be entered in an involuntary
case under such Bankruptcy Code, against the Borrower or action under the laws
of the jurisdiction of incorporation or organization of the Borrower similar to
any of the foregoing shall be taken with respect to the Borrower and shall
continue unstayed and in effect for any period of 60 days; or
(j) A judgment or order for the payment of money not covered by insurance
shall be entered against the Borrower by any court, or a warrant of attachment
or execution or similar process shall be issued or levied against property of
the
-34-
Borrower, which in the aggregate exceeds $200,000 in value and such judgment,
order, warrant or process shall continue undischarged or unstayed for 60 days;
or
(k) The Borrower or any member of the Controlled Group shall fail to pay
when due any amount which it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans
shall be filed under Title IV of ERISA by the Borrowers, any member of the
Controlled Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any such Plan or Plans or a
proceeding shall be instituted by a fiduciary of any such Plan or Plans against
the Borrower and such proceedings shall not have been dismissed within 60 days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated.
8.2. Remedies. Upon the occurrence of an Event of Default described in
--------
subsections 8.1(h) and (i), immediately and automatically, and upon the
occurrence of any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the Bank's option and upon the Bank's
declaration:
(a) The Bank's commitment to make any further Loans hereunder shall
terminate;
(b) The unpaid principal amount of the Loans together with accrued
interest and all other Obligations shall become immediately due and payable
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived; and
(c) The Bank may exercise any and all rights it has under this Agreement
or any other documents or agreements executed in connection herewith, or at law
or in equity, and proceed to protect and enforce the Bank's rights by any action
at law, in equity or other appropriate proceeding.
SECTION IX
MISCELLANEOUS
-------------
9.1. Notices. All notices, requests and demands to or upon the Borrower
-------
or the Bank shall be deemed to have been duly given or made: if by telecopy,
telex, telegram or by hand, immediately upon sending or delivery; if by any
overnight delivery service, one (1) day after dispatch; and if mailed by
certified mail, return receipt requested, five (5) days after
-35-
mailing. All notices, requests and demands are to be given or made to the
respective parties at the following addresses (or to such other address as any
party may designate by notice in accordance with this Section):
(a) If to the Borrower:
▇▇▇▇ ▇▇▇▇▇ Enterprises, Inc., d/b/a
National Computer Distributors
▇▇▇▇-▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) with a copy to
▇▇▇ Capital Holdings
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Bank:
The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
Asset Based Lending, 01-22-08
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(d) With a copy to:
The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
9.2. Expenses. The Borrower shall, on demand, pay or reimburse the Bank
---------
for all reasonable expenses (including attorneys' fees of outside counsel or
allocation costs of in-house counsel) incurred or paid by the Bank in connection
with the preparation, negotiation and closing of this Agreement (whether or not
the transactions contemplated hereby shall be consummated) and all reasonable
expenses (including attorneys'
-36-
fees of outside counsel or allocation costs of in-house counsel) incurred or
paid by the Bank in connection with the administration or amendment of this
Agreement (whether or not the transactions contemplated hereby shall be
consummated) and with the enforcement of any Obligation of the Borrower or
exercise of any right of the Bank hereunder. The Borrower shall, on demand, pay
or reimburse the Bank for all expenses (including the allocation costs of the
Bank's employees) incurred in connection with the commercial finance
examinations of the Borrower's operations conducted by the Bank.
9.3. Set-Off. Regardless of the adequacy of the Collateral, any deposits
-------
or other sums, at any time credited by or due from the Bank to the Borrower may
at any time be applied to or set off against Obligations on which the Borrower
is primarily liable and may at or after the maturity thereof be applied to or
set off against Obligations on which the Borrower is secondarily liable.
9.4. Term of Agreement. This Agreement shall continue in force and effect
-----------------
so long as the Bank has any commitment to make Loans hereunder or any Loan or
any Obligation hereunder shall be outstanding.
9.5. No Waivers. No failure or delay by the Bank in exercising any right,
----------
power or privilege hereunder or under any other documents or agreements executed
in connection herewith shall operate as a waiver thereof; nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided are cumulative and not exclusive of any rights or remedies
otherwise provided by law.
9.6. Governing Law. This Agreement shall be deemed to be a contract made
-------------
under seal and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts (without giving effect to any conflicts of
laws provisions contained therein).
9.7. Amendments. Neither this Agreement nor any provision hereof or
----------
thereof may be amended, waived, discharged or terminated except by a written
instrument signed by the Bank and, in the case of amendments, by the Borrower.
9.8. Binding Effect of Agreement. This Agreement shall be binding upon
---------------------------
and inure to the benefit of the Borrower and the Bank and their respective
successors and assigns; provided that the Borrower may not assign or transfer
its rights hereunder. The Bank may assign all of its rights and obligations
hereunder without the consent of the Borrower. The Bank may sell, transfer or
grant participations in the Loan without the prior written consent of the
Borrower and the Borrower agrees that
-37-
any transferee or participant shall be entitled to the benefits of Sections 2.8,
2.11, 5.5, 9.2 and 9.3 to the same extent as if such transferee or participant
were the Bank hereunder; provided that notwithstanding any such transfer or
participation, the Borrower may, for all purposes of this Agreement, treat the
Bank as the person entitled to exercise all rights hereunder and to receive all
payments with respect thereto.
9.9. Counterparts. This Agreement may be signed in any number of
------------
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument.
9.10. Severability. The invalidity or unenforceability of any one or more
------------
phrases, clauses or sections of this Agreement shall not affect the validity or
enforceability of the remaining portions of it.
9.11. Captions. The captions and headings of the various sections and
--------
subsections of this Agreement are provided for convenience only and shall not be
construed to modify the meaning of such sections or subsections.
9.12. Entire Agreement. This Agreement and the documents and agreements
----------------
executed in connection herewith constitute the final agreement of the parties
hereto and supersede any prior agreement or understanding, written or oral, with
respect to the matters contained herein and therein.
9.13. JURY WAIVER. EACH OF THE BORROWER AND THE BANK AGREE THAT NEITHER
-----------
OF THEM, NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER ACTION BASED UPON, OR ARISING
OUT OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS
OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE
BORROWER AND THE BANK, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.
NEITHER THE BORROWER NOR THE BANK HAS AGREED WITH OR REPRESENTED TO THE OTHER
THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
-38-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as an instrument under seal as of the day and
year first above written.
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
[SIGNATURE APPEARS HERE] By: [SIGNATURE APPEARS HERE]
------------------------ -------------------------------
Witness Title: President
[Seal]
Executed At: Boston, Mass.
----------------------
THE FIRST NATIONAL BANK OF BOSTON
[SIGNATURE APPEARS HERE] By: [SIGNATURE APPEARS HERE]
------------------------ -------------------------------
Witness Its Authorized Officer
[Seal]
Executed At: Boston MA
----------------------
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
AMENDMENT NO. 1
DATED AS OF NOVEMBER 2, 1992
THIS AMENDMENT (this "Amendment") is entered into as of November 2, 1992 by
and between ▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a NATIONAL COMPUTER DISTRIBUTORS,
a Florida corporation having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), and THE FIRST NATIONAL BANK OF BOSTON, a
national banking association with its head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Bank").
Preliminary Statement. The parties have entered into a Revolving Credit
----------------------
Agreement dated as of April 27, 1992 (the "Agreement") providing for the
maintenance by the Borrower of certain financial operating ratios. The Borrower
has delivered financial statements and other reports to the Bank reflecting
increases in sales beyond that previously projected and has requested that
certain of these ratios be amended to allow the Borrower to borrow against the
additional accounts receivable arising from these sales. In exchange for the
Borrower's agreement to lower the inventory cap under the Agreement, the Bank
has agreed to the Borrower's request subject to the Borrower's execution and
delivery of this amendment.
Upon and after the date of this Amendment all references to the Agreement
in that document, or in any related document, shall mean the Agreement as
amended by this Amendment. Except as expressly provided in this Amendment, the
execution and delivery of this Amendment does not and will not amend, modify or
supplement any provision of, or constitute a consent to or a waiver of any
noncompliance with the provisions of the Agreement, and, except as specifically
provided in this Amendment, the Agreement shall remain in full force and effect.
All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement.
-2-
In consideration of the foregoing premises and the mutual benefits to be
derived by the Borrower and the Bank from a continuing relationship under the
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each of the Borrower and the Bank
agrees that the Agreement is hereby amended as follows:
1. The defined term "Borrowing Base" appearing in Section I of the
Agreement is hereby amended in its entirety to read as follows:
Borrowing Base. An amount equal to the lesser of (x) $20,000,000 or (y) the
--------------
sum of (i) 85% of the face value of Eligible Accounts due and owing at such
time, plus (ii) the least of (A) 50% of Eligible Inventory, (B) $12,000,000
----
and (C) the amount available under subset (y)(i) of this definition.
2. Exhibit 7.3(c) to the Agreement, the form of Borrowing Base Certificate
required to be delivered to the Bank by the Borrower pursuant to Section 7.3(c)
of the Agreement, is hereby deleted from the Agreement and the form attached
hereto as Schedule A to this Amendment is hereby substituted in its stead.
----------
3. Section 5.9 of the Agreement is hereby amended in its entirety to read
as follows:
5.9. Leverage Ratio. The Borrower shall maintain a ratio of (i) Total
--------------
Liabilities less Subordinated Indebtedness to (ii) Total Capital Funds of
not more than 5.75:1 for the period commencing November 1, 1992 and ending
December 31, 1992 and 6:1 thereafter.
4. Section 5.10 of the Agreement is hereby amended in its entirety to read
as follows:
5.10. Ratio of Senior Bank Indebtedness to Total Capital Funds. The
--------------------------------------------------------
Borrower shall maintain a ratio of Senior Bank Indebtedness to Total
Capital Funds of not more than 3.5:1 during the period commencing November
1, 1992 and ending December 31, 1992 and 4:1 thereafter.
This Amendment is executed as an instrument under seal and shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts without regard to its conflicts of law rules.
-3-
All parts of the Agreement not affected by this Amendment are hereby
ratified and affirmed in all respects, provided that if any provision of the
-------- ----
Agreement shall conflict or be inconsistent with this Amendment, the terms of
this Amendment shall supersede and prevail.
IN WITNESS WHEREOF, each of the Borrower and the Bank in accordance with
Section 9.7 of the Agreement, has caused this Amendment to be executed and
delivered by their respective duly authorized officers as of the date set forth
in the preamble on page one of this Amendment.
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
By: (SIGNATURE APPEARS HERE)
--------------------------------
Title: President
-----------------------------
[Seal]
THE FIRST NATIONAL BANK OF BOSTON
By: (SIGNATURE APPEARS HERE)
--------------------------------
Title: Vice President
-----------------------------
Signed at: Boston, MA
-------------------------
[Seal]
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
AMENDMENT NO. 2
DATED AS OF APRIL 19, 1993
THIS AMENDMENT (this "Amendment") is entered into as of April 16, 1993 by
and between ▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a NATIONAL COMPUTER DISTRIBUTORS,
a Florida corporation having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), and THE FIRST NATIONAL BANK OF BOSTON, a
national banking association with its head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Bank").
Preliminary Statement. The parties have entered into a Revolving Credit
----------------------
Agreement dated as of April 27, 1992, as previously amended by Amendment No. 1
dated November 2, 1992 and by a letter agreement dated March 18, 1993 (the
"Agreement"). Under the terms of the Agreement, as presently in effect, the
Borrower's Maximum Commitment of $13,500,000 will expire on April 30, 1993. The
Borrower has delivered its financial statements for the period ending March 31,
1993 and revised cash flow projections for the twelve month period ending March
31, 1994 and requested that the Bank increase the Maximum Commitment and
reinstate the original Termination Date of April 30, 1994. The Bank has agreed
to the Borrower's requests subject to the Borrower's execution and delivery of
this amendment.
Upon and after the date of this Amendment all references to the Agreement
in that document, or in any related document, shall mean the Agreement as
amended by this Amendment. Except as expressly provided in this Amendment, the
execution and delivery of this Amendment does not and will not amend, modify or
supplement any provision of, or constitute a consent to or a waiver of any
noncompliance with the provisions of the Agreement, and, except as specifically
provided in this Amendment, the Agreement shall remain in full force and effect.
All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement.
In consideration of the foregoing premises and the mutual benefits to be
derived by the Borrower and the Bank from a continuing relationship under the
Agreement and for other good
-2-
-2-
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each of the Borrower and the Bank agrees that the Agreement is
hereby amended as follows:
1. The following defined terms appearing in Section I of the Agreement are
hereby amended in their entirety to read as follows:
Borrowing Base. An amount equal to the lesser of (x) $15,000,000 or (y)
--------------
the sum of (i) 85% of the face value of Eligible Accounts due and owing at
such time, plus (ii) the least of (A) 50% of Eligible Inventory, (B)
----
$12,000,000 and (C) the amount available under subset (y)(i) of this
definition, minus (from the sum of (i) and (ii)) $500,000.
-----
Maximum Commitment. $15,000,000.
------------------
Termination Date. April 30, 1994.
----------------
2. Exhibit 7.3(c) to the Agreement, the form of Borrowing Base Certificate
required to be delivered to the Bank by the Borrower pursuant to Section 7.3(c)
of the Agreement, is hereby deleted from the Agreement and the form attached
hereto as Schedule A to this Amendment is hereby substituted in its stead.
----------
3. Section 5.1(b) of the Agreement is hereby amended in its entirety to
read as follows:
(b) as soon as available, but in any event within 15 days after the end of
each month, a balance sheet as of the end of, and a related statement of
income for, the month then ended;
4. Section 5.7 of the Agreement is hereby amended in its entirety to read
as follows:
5.7. Ratio of EBIT to Interest Expense. As of the last day of each month,
---------------------------------
the Borrower shall have a ratio of (a) EBIT to (b) total interest expense
(excluding imputed interest arising from accretion of debt discount on the
Subordinated Indebtedness issued under the Purchase Agreement) of not less
than 2:1.
This Amendment is executed as an instrument under seal and shall be
governed by the construed in accordance with the laws of The Commonwealth of
Massachusetts without regard to its conflicts of law rules.
-3-
All parts of the Agreement not affected by this Amendment are hereby
ratified and affirmed in all respects, provided that if any provision of the
-------- ----
Agreement shall conflict or be inconsistent with this Amendment, the terms of
this Amendment shall supersede and prevail.
IN WITNESS WHEREOF, each of the Borrower and the Bank in accordance with
Section 9.7 of the Agreement, has caused this Amendment to be executed and
delivered by their respective duly authorized officers as of the date set forth
in the preamble on page one of this Amendment.
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
By: [SIGNATURE APPEARS HERE]
-----------------------------
Title: President
--------------------------
[Seal]
THE FIRST NATIONAL BANK OF BOSTON
By:
------------------------------
Title:
---------------------------
Signed at:
[Seal] -----------------------
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
AMENDMENT NO. 3
THIS AMENDMENT (this "Amendment") is entered into as of May 26, 1993 by and
between ▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a NATIONAL COMPUTER DISTRIBUTORS, a
Florida corporation having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), and THE FIRST NATIONAL BANK OF BOSTON, a
national banking association with its head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Bank").
Preliminary Statement. The parties have entered into a Revolving Credit
----------------------
Agreement dated as of April 27, 1992, as previously amended by Amendment No. 1
dated November 2, 1992, a letter agreement dated March 18, 1993, and by
Amendment No. 2 dated as of April 19, 1993 (the "Agreement"). The Borrower has
delivered its financial statements for the period ending April 30, 1993 and
requested that the Bank increase the Maximum Commitment under the Agreement and
make certain other modifications to the Agreement. The Bank has agreed to the
Borrower's requests subject to the Borrower's execution and delivery of this
amendment.
Upon and after the date of this Amendment all references to the Agreement
in that document, or in any related document, shall mean the Agreement as
amended by this Amendment. Except as expressly provided in this Amendment, the
execution and delivery of this Amendment does not and will not amend, modify or
supplement any provision of, or constitute a consent to or a waiver of any
noncompliance with the provisions of the Agreement, and, except as specifically
provided in this Amendment, the Agreement shall remain in full force and effect.
All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement.
In consideration of the foregoing premises and the mutual benefits to be
derived by the Borrower and the Bank from a continuing relationship under the
Agreement and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each of the Borrower and the Bank agrees that the Agreement is
hereby amended as follows:
1. The following defined terms appearing in Section I of the Agreement are
hereby amended in their entirety to read as follows:
Borrowing Base. An amount equal to the lesser of (x) $20,000,000 or (y) the
--------------
sum of (i) 85% of the face value of Eligible Accounts due and owing at such
time, plus (ii) the least of (A) 50% of Eligible Inventory, (B) $12,000,000
----
and (C) the amount available under subset (y)(i) of this definition, minus
-----
(from the sum of (i) and (ii)) $500,000, or if on the date of any
determination, the amount available hereunder shall exceed $17,500,000,
$750,000.
Maximum Commitment. $20,000,000.
------------------
2. Sections 5.7 through 5.10 of the Agreement are hereby amended in their
entirety to read as follows:
5.7. Ratio of EBIT to Interest Expense. As of May 31, 1993 for the two
---------------------------------
month period then ending, and June 30, 1993 for the three month period then
ending, and thereafter as of the last day of each fiscal quarter, the
Borrower shall have a ratio of (a) EBIT to (b) total interest expense
(excluding imputed interest arising from accretion of debt discount on the
Subordinated Indebtedness issued under the Purchase Agreement) of not less
than 1.5:1 with respect to any such period on the last day of which the
balance of the Loan Account is less than $17,500,000, and 1.75:1 for all
other such periods.
5.8. Minimum Total Capital Funds. The Borrower shall maintain Total
---------------------------
Capital Funds of not less than the amounts set forth below for the periods
specified:
Period Amount
------ ------
May 26, 1993 - June 29, 1993.............................. $3,800,000
June 30, 1993 - September 29, 1993........................ $3,900,000
September 30, 1993 - December 30, 1993.................... $4,050,000
December 31, 1993 - March 30, 1994........................ $4,250,000
March 31, 1994 and thereafter............................. $4,525,000
5.9. Leverage Ratio. The Borrower shall maintain a ratio of (i) Total
--------------
Liabilities less Subordinated Indebtedness to (ii) Total Capital Funds of
not more than 7:1.
-2-
5.10. Ratio of Senior Bank Indebtedness to Total Capital Funds. The
--------------------------------------------------------
Borrower shall maintain a ratio of Senior Bank Indebtedness to Total
Capital Funds of not more than 5:1.
3. Section 5.11 of the Agreement is hereby renumbered as Section 5.12 and
the following new Section 5.11 is added to the Agreement:
5.11. Accounts Payable Average Turnover. As at the end of each of the
---------------------------------
Borrower's fiscal months, the quotient of the Borrower's cost of goods sold
divided by the Borrower's accounts payable arising from the sale of finished
goods to the Borrower when divided into the number "31" shall equal "25" or
less.
4. Exhibit 7.3(c) to the Agreement, the form of Borrowing Base Certificate
required to be delivered to the Bank by the Borrower pursuant to Section 7.3(c)
of the Agreement, is hereby deleted from the Agreement and the form attached
hereto as Schedule A to this Amendment is hereby substituted in its stead.
----------
This Amendment is executed as an instrument under seal and shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts without regard to its conflicts of law rules.
All parts of the Agreement not affected by this Amendment are hereby
ratified and affirmed in all respects, provided that if any provision of the
-------- ----
Agreement shall conflict or be inconsistent with this Amendment, the terms of
this Amendment shall supersede and prevail.
IN WITNESS WHEREOF, each of the Borrower and the Bank in accordance with
Section 9.7 of the Agreement, has caused this Amendment to be executed and
delivered by their respective duly authorized officers as of the date set forth
in the preamble on page one of this Amendment.
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
By: (SIGNATURE APPEARS HERE)
----------------------------------
Title: President
-------------------------------
[Seal]
THE FIRST NATIONAL BANK OF BOSTON
By: (SIGNATURE APPEARS HERE)
----------------------------------
Title: Vice President
-------------------------------
Signed at: Boston, MA
---------------------------
[Seal]
-3-
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
AMENDMENT NO. 4
THIS AMENDMENT (this "Amendment") is entered into as of October 15, 1993
by and between ▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a NATIONAL COMPUTER
DISTRIBUTORS, a Florida corporation having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), and THE FIRST NATIONAL
BANK OF BOSTON, a national banking association with its head office at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Bank").
Preliminary Statement. The parties have entered into a Revolving Credit
---------------------
Agreement dated as of April 27, 1992, as previously amended by Amendment No. 1
dated november 2, 1992, by a letter agreement dated March 18, 1993, by Amendment
No. 2 dated as of May 26, 1993 and by Amendment No. 3 dated as of May 26, 1993,
(the "Agreement"). Under the terms of the Agreement, the Borrower has a Maximum
Commitment of $20,000,000 which expires on April 30, 1994. The Borrower has
delivered its financial statements for its most recent fiscal period ending
September 30, 1993 and requested that the Bank increase the Maximum Commitment
under the Agreement, extend the expiration date, and make certain other
modifications to the Agreement. The Bank has agreed to the Borrower's requests
subject to the Borrower's execution and delivery of this amendment.
Upon and after the date of this Amendment all references to the Agreement
in that document, or in any related document, shall mean the Agreement as
amended by this Amendment. Except as expressly provided in this Amendment, the
execution and delivery of this Amendment does not and will not amend, modify or
supplement any provision of, or constitute a consent to or a waiver of any
noncompliance with the provisions of the Agreement, and, except as specifically
provided in this Amendment, the Agreement shall remain in full force and effect.
All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement.
In consideration of the foregoing premises and the mutual benefits to be
derived by the Borrower and the bank from a continuing relationship under the
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are
hereby acknowledged, each of the Borrower and the Bank agrees that the Agreement
is hereby amended as follows:
1. The following defined terms appearing in Section I of the Agreement are
hereby amended in their entirety to read as follows:
Borrowing Base. An amount equal to the lesser of (x) $25,000,000 or (y)
--------------
the sum of (i) 85% of the face value of Eligible Accounts due and owing at
such time, plus (ii) the least of (A) 50% of Eligible Inventory, (B)
----
$12,000,000 and (C) the amount available under subset (y)(i) of this
definition, minus (from the sum of (i) and (ii)) the amount specified
-----
below for the range of availability hereunder calculated as of the date of
any determination:
Loan Availability Amount
----------------- ------
Under $17,500,000 ........................ $500,000
$17,500,000 - $20,000,000 ................ $750,000
$Over $20,000,000 ........................ $1,000,000
Maximum Commitment. $25,000,000.
------------------
Termination Date. July 31, 1994.
----------------
2. Section 5.8 of the Agreement is hereby amended in its entirety to read
as follows:
5.8. Minimum Total Capital Funds. The Borrower shall maintain Total
---------------------------
Capital Funds of not less than the amounts set forth below for the periods
specified:
Period Amount
------ ------
September 30, 1993 - December 30, 1993 ....... $4,200,000
December 31, 1993 - March 30, 1994 ........... $4,600,000
March 31, 1994 and thereafter ................ $5,000,000
3. Section 9.2 of the Agreement is hereby amended in its entirety to read
as follows:
9.2 Expenses. The Borrower shall, on demand, pay or reimburse the Bank
--------
for all reasonable expenses (including attorneys' fees of outside counsel or
allocation costs of in-house counsel) incurred or paid by the Bank or any
Assignee, as defined in Section 9.14 of this Agreement, in connection with this
Agreement, any amendments thereof (including without limitation the amended and
restated form of this
-2-
Agreement contemplated by Section 9.14 of this Agreement), the Bank's
administration of this Agreement (including without limitation any waivers,
approvals and consents relating thereto), its enforcement of any
Obligation, and the exercise of any rights of the Bank hereunder. The
Borrower shall, on demand, also pay or reimburse the Bank for all expenses
(including without limitation the allocation costs of the Bank's employees)
incurred in connection with the commercial finance examinations of the
Borrower's operations conducted by the Bank.
4. The Agreement is hereby further amended by the addition of the
following new Section 9.14:
9.14. Assignments and Participations.
------------------------------
(a) Assignments. The Bank may at any time assign all, or a portion,
-----------
of its rights, interests and duties with respect to its commitment to make
Loans hereunder to one or more banks or other financial institutions, or
any affiliate thereof, (each, an "Assignee") on such terms, as between the
Bank and each Assignee, as the Bank may deem appropriate, and such Assignee
shall assume such rights, interests and duties pursuant to an instrument
executed by such Assignee and the Bank, or, in the case of a partial
assignment by the Bank, pursuant to an amended and restated form of this
Agreement, and for this purpose the Bank may make available to each of its
potential Assignees such information relating to the Borrower, this
Agreement and the transactions contemplated hereby as the Bank may deem
necessary or desirable. Upon notice to the Borrower of an assignment in
full of the Bank's rights, interests and duties hereunder to an Assignee,
such Assignee shall have all the rights, interests and duties of the Bank
hereunder with a commitment to make Loans as set forth in herein, and the
Bank shall be released from its obligations hereunder in full without the
requirement of any further consent or action by the Borrower.
(b) Participations. In addition to its rights to assign all or any
--------------
portion of its commitment hereunder pursuant to the foregoing subsection
(a) of this Section 9.14, the Bank may sell participations in the Loans to
one or more banks or other financial institutions, or any affiliate
thereof, on such terms as the Bank may deem appropriate, and for this
purpose the Bank may make available to each potential participant such
information relating to the Borrower, this Agreement and the transactions
contemplated hereby as the Bank may deem necessary or desirable.
-3-
5. Exhibit 7.3(c) to the Agreement, the form of Borrowing Base Certificate
required to be delivered to the Bank by the Borrower pursuant to Section 7.3(c)
of the Agreement, is hereby deleted from the Agreement and the form attached
hereto as Schedule A to this Amendment is hereby substituted in its stead.
----------
6. Conditions Precedent to Effectiveness of this Amendment. This
-------------------------------------------------------
Amendment shall take effect on the date of receipt by the Bank of the last item
specified below (other than any item the delivery of which is expressly deferred
or waived in writing by the Bank):
(a) This Amendment duly executed by the Borrower;
(b) A certificate of the Secretary or an Assistant Secretary of the
Borrower with respect to resolutions, of its Board of Directors
authorizing the execution and delivery of this Amendment, identifying
the officer(s) authorized to execute, deliver and take all other
actions required under this Amendment, or the Agreement and providing
specimen signatures of such officer(s), and confirming that the
Borrower's Articles of Organization and By-Laws previously delivered
and certified to the Bank have not been amended, substituted,
rescinded or otherwise modified in any way since the date of said
prior certification;
(c) a certificate of the president or chief financial officer of the
Borrower with respect to representations and warranties under the
Agreement, the absence of Defaults, and the locations and value of the
Borrower's inventory together with such additional UCC Financing
Statements, landlord waivers and insurance certificates as the Bank
may deem necessary or desirable, based on the Borrower's locations
shown in the schedule attached thereto;
(d) a copy of a fully executed amendment to the Subordinated Note and
Warrant Purchase Agreement dated as of March 31, 1992 among the
Borrower, the Purchasers named therein and C.T. Capital Trust, N.V.,
as agent for the Purchasers, reflecting modifications to the
Borrower's financial covenants under that agreement in conformity with
the Borrower's financial covenants under the Agreement after giving
effect to this Amendment;
(e) such other documents and evidence of completion of such other matters,
as the Bank reasonably may deem necessary or desirable.
-4-
This Amendment is executed as an instrument under seal and shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts without regard to its conflicts of law rules.
All parts of the Agreement not affected by this Amendment are hereby
ratified and affirmed in all respects, provided that if any provision of the
-------- ----
Agreement shall conflict or be inconsistent with this Amendment, the terms of
this Amendment shall supersede and prevail.
IN WITNESS WHEREOF, each of the Borrower and the Bank in accordance with
Section 9.7 of the Agreement, has caused this Amendment to be executed and
delivered by their respective duly authorized officers as of the date set forth
in the preamble on page one of this Amendment.
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
By: (SIGNATURE APPEARS HERE)
-----------------------------------
Title: Chairman
--------------------------------
[Seal] Signed at: Boston, MA
----------------------------
THE FIRST NATIONAL BANK OF BOSTON
By: (SIGNATURE APPEARS HERE)
-----------------------------------
Title: Vice President
--------------------------------
Signed at: Boston, MA
----------------------------
[Seal]
-5-
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
AMENDMENT NO. 5
THIS AMENDMENT (this "Amendment") is entered into as of March 1, 1994 by
and between ▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a NATIONAL COMPUTER DISTRIBUTORS,
a Florida corporation having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), and THE FIRST NATIONAL BANK OF BOSTON, a
national banking association with its head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Bank").
Preliminary Statement. The parties have entered into a Revolving Credit
----------------------
Agreement dated as of April 27, 1992, as previously amended by Amendment No. 1
dated November 2, 1992, by a letter agreement dated March 18, 1993, by Amendment
No. 2 dated as of May 26, 1993, by Amendment No. 3 dated as of May 26, 1993, and
by Amendment No. 4 dated as of October 15, 1993 (the "Agreement"). Under the
terms of the Agreement, the Bank has a Maximum Commitment of $25,000,000.
Subsequent to the delivery by the Borrower to the Bank of its preliminary
financial statements for its third fiscal quarter ending December 31, 1993, the
Borrower has advised the Bank that certain adjustments to these statements may
be appropriate. In view of the uncertainty of the resolution of the matters
underlying these adjustments, the Bank has requested and the Borrower has agreed
to amend the Agreement so as to provide for certain reductions in the Bank's
Maximum Commitment under the Agreement.
Upon and after the date of this Amendment all references to the Agreement
in that document, or in any related document, shall mean the Agreement as
amended by this Amendment. Except as expressly provided in this Amendment, the
execution and delivery of this Amendment does not and will not amend, modify or
supplement any provision of, or constitute a consent to or a waiver of any
noncompliance with the provisions of the Agreement, and, except as specifically
provided in this Amendment, the Agreement shall remain in full force and effect.
All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement.
In consideration of the foregoing premises and the mutual benefits to be
derived by the Borrower and the Bank from a continuing relationship under the
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each of the
-2-
Borrower and the Bank agrees that the Agreement is hereby amended as follows:
The following defined terms appearing in Section I of the Agreement are
hereby amended in their entirety to read as follows:
Borrowing Base. An amount equal to the lesser of (x) $23,500,000 during the
--------------
period March 1, 1994 through and including March 14, 1994, and $22,500,000
thereafter or (y) the sum of (i) 85% of the face value of Eligible Accounts
due and owing at such time, plus (ii) the least of (A) 50% of Eligible
----
Inventory, (B) $12,000,000 and (C) the amount available under subset (y)(i)
of this definition, minus (from the sum of (i) and (ii)) the amount
-----
specified below for the range of availability hereunder calculated as of
the date of any determination:
Loan Availability Amount
----------------- ------
Under $17,500,000.............................. $500,000
$17,500,000 - $20,000,000...................... $750,000
Over $20,000,000............................... $1,000,000
Maximum Commitment. $23,500,000 during the period March 1, 1994 through
------------------
and including March 14, 1994, and $22,500,000 thereafter.
This Amendment is executed as an instrument under seal and shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts without regard to its conflicts of law rules.
All parts of the Agreement not affected by this Amendment are hereby
ratified and affirmed in all respects, provided that if any provision of the
-------- ----
Agreement shall conflict or be inconsistent with this Amendment, the terms of
this Amendment shall supersede and prevail.
IN WITNESS WHEREOF, each of the Borrower and the Bank in accordance with
Section 9.7 of the Agreement, has caused this Amendment to be executed and
delivered by their respective duly authorized officers as of the date set forth
in the preamble on page one of this Amendment.
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
By: [SIGNATURE APPEARS HERE]
--------------------------------
Title: Chairman, Board of Directors
-----------------------------
[Seal] Signed at: Boston, Massachusetts
-------------------------
THE FIRST NATIONAL BANK OF BOSTON
By: [SIGNATURE APPEARS HERE]
--------------------------------
Title: Vice President
-----------------------------
Signed at: Boston, MA
-------------------------
[Seal]
FORBEARANCE AGREEMENT
This Forbearance Agreement (this "Agreement") is entered into as of April
25, 1994 by and between ▇▇▇▇ ▇▇▇▇▇ Enterprises, Inc., d/b/a National Computer
Distributors, a Florida corporation with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower") and The First National Bank of Boston,
a national banking association with offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Bank"). All capitalized terms herein shall have the
meanings ascribed to them in the Bank Credit Agreement, as defined below.
In consideration of the mutual promises and agreements contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which the parties hereby acknowledge, the parties hereby agree as follows:
SECTION 1. RECITALS, ACKNOWLEDGMENT, ADMISSION AND STIPULATION OF FACTS.
-------------------------------------------------------------
The parties hereto stipulate, admit, acknowledge and agree that the following
facts are true, correct and accurate:
1.1 The Borrower and the Bank have entered into a Revolving Credit
Agreement dated as of April 27, 1992, as amended by Amendment No. 1 dated
November 2, 1992, by a letter agreement dated March 18, 1993, by Amendment No. 2
dated as of May 26, 1993, by Amendment No. 3 dated as of May 26, 1993, by
Amendment No. 4 dated as of October 15, 1993, and by Amendment No. 5 dated as of
March 1, 1994 (collectively, the "Bank Credit Agreement") providing for a
working capital line of credit secured by all assets of the Borrower with a
Maximum Commitment of $22,500,000.
1.2 The Borrower has also entered into a Subordinated Note and Warrant
Purchase Agreement dated as of March 31, 1992, as amended by Amendment No. 1
dated as of October 27, 1993 (collectively, the "Note Purchase Agreement") among
the Borrower, the persons named therein as "Purchasers" (the "Purchasers") and
C.T. Capital Trust N.V., a Netherlands Antilles corporation, as agent and
attorney-in-fact for the Purchasers ("Capital Trust") pursuant to which the
Borrower issued its 12% Subordinated Notes due March 31, 1997, each dated March
31, 1992 in an amount equal to $3,000,000 in the aggregate (the "Subordinated
Debt").
-2-
1.3 By letter dated March 28, 1994, the Bank acknowledged the Event of
Default existing under the Bank Credit Agreement as a result of the Borrower's
failure to comply with its leverage covenant under Section 5.9 of the Bank
Credit Agreement and the Borrower's further disclosure of an as then
undetermined amount of a charge to be taken against the Borrower's fiscal year
1993 Tangible Net Worth.
1.4 Subsequently, the Borrower has advised the Bank that it expects the
charge to Tangible Net Worth to approximate $2,300,000 on a pre-tax basis and
$1,200,000 after-tax, with a corresponding negative adjustment to the amount of
the Borrower's Tangible Net Worth shown in the Borrower's financial statements
previously delivered to the Bank for the Borrower's 1993 fiscal year end.
1.5 As reflected in the Borrower's financial statements for the period
ending March 31, 1994, the Borrower continues to be in default of its leverage
covenant under Section 5.9 of the Bank Credit Agreement. Moreover, based on the
Borrower's disclosures to the Bank regarding the charge it expects to take to
Tangible Net Worth, on a pro-forma basis after giving effect to the $1,200,000
after-tax charge, the Borrower is also in default of its Minimum Total Capital
Funds covenant under Section 5.8 of the Bank Credit Agreement and the maximum
Senior Bank Indebtedness to Total Capital Funds ratio permitted under Section
5.10 of the Bank Credit Agreement. The Borrower is also in default of these
covenants under the Note Purchase Agreement. The Borrower does not contest the
nature or existence of said defaults, and failures or breaches incidental
thereto, or the enforceability of the Bank's rights under the Bank Credit
Agreement and related loan documents, including but not limited to the Agency
Account Agreement.
1.6 Pursuant to the terms of the Bank Credit Agreement, the Bank has
specific rights and remedies, including but not limited to the right to
accelerate the Obligations and to ▇▇▇ for the total amount of principal and
accrued interest due thereunder and costs and expenses, including but not
limited to reasonable attorneys fees in accordance with Section 9.2 of the Bank
Credit Agreement.
1.7 (a) The Bank Credit Agreement and the related loan documents set forth
the legal, valid, binding and continuing obligation of the Borrower to the Bank
and are enforceable in accordance with their respective terms and conditions;
(b) all actions taken by the Bank to the date of this Agreement, pursuant to its
rights under the Bank Credit Agreement and the
-3-
related loan documents have been commercially reasonable; (c) the Borrower has
no cause of action, claim, defense, setoff or reduction against the Bank in any
way regarding or related to the Bank Credit Agreement or any related loan
document and the sums due thereunder; (d) the Bank properly satisfied and
performed in a timely and reasonable manner all obligations to the Borrower
under the Bank Credit Agreement and the related loan documents; and the
Borrower's Obligations are secured by all assets of the Borrower.
1.8 The Borrower has requested that the Bank refrain from exercising its
rights and remedies under the Bank Credit Agreement and the related loan
documents.
1.9 The Borrower acknowledges, agrees and confirms that except for this
Agreement, the Bank is not required, bound, or obligated in any way to refrain
from exercising its rights and remedies, but the Bank has agreed to the
forbearance requested in consideration of the covenants, representations,
warranties and agreements contained in this Agreement.
SECTION 2. BANK'S AGREEMENT TO FORBEAR. Conditional upon the receipt by
----------------------------
the Bank of the document required by Section 3.4 of this Agreement and so long
as no default under Section 14.1 of this Agreement has occurred, the Bank agrees
to forbear from exercising its rights and remedies under the Bank Credit
Agreement (but not its right to make demand prior to, for payment on, the
Termination Date and to refuse to make loans to the Borrower at any time and
from time to time prior to the Termination Date in accordance with Section 3.1
of this Agreement) until July 31, 1994 in accordance with the provisions of this
Agreement.
SECTION 3. BORROWER'S AGREEMENTS. In consideration of the Bank's
----------------------
agreement to forbear its rights and remedies as stated in Section 2 above, the
Borrower agrees that so long as this Agreement is in effect, all provisions of
the Bank Credit Agreement shall remain in full force and effect except as
follows:
3.1 Notwithstanding Section 2 of the Bank Credit Agreement or any other
provision thereof which either expressly or impliedly commits the Bank to lend
to the Borrower until the Termination Date, all advances to the Borrower under
the Bank Credit Agreement shall be in the Bank's sole and absolute discretion up
to a maximum principal amount of $22,500,000 subject to availability under the
Borrowing Base at the percentages and dollar limitations stated therein, or at
such other percentages and dollar limitations (including zero) as
-4-
the Bank shall in its sole and absolute discretion determine, and the Bank shall
have no commitment whatsoever to make loans or extend credit or other financial
accommodations to the Borrower. All Obligations are demandable by the Bank at
any time prior to the Termination Date and shall be due and payable in full
without demand on the Termination Date, notwithstanding any provision in the
Bank Credit Agreement to the contrary.
3.2 Notwithstanding Section 2.7 of the Bank Credit Agreement, effective as
of April 21, 1994 and retroactive thereto, the Borrower shall pay interest on
the outstanding amount of each Loan at a rate per annum equal to the Base Rate
plus three percent (3%), which rate shall change contemporaneously with any
change in the Base Rate. The Bank's right to change the higher default rate of
interest specified by the second sentence of said Section 2.7 shall continue.
3.3 On or before June 30, 1994 either (a) the Borrower shall deliver to
the Bank a balance sheet of the Borrower certified by the Borrower's chief
financial officer, as evidence of, and reflecting, the infusion of a minimum of
$1,000,000 in additional equity in the form of additional common stock of the
Borrower, which stock shall be validly issued, fully paid and non-assessable, or
(b) if by the close of business on June 30, 1994 the Borrower shall not have
delivered the balance sheet required by the foregoing 3.3(a), the Bank shall
charge the Borrower's Loan Account a non-refundable fee equal to $350,000.
3.4 Simultaneously with the delivery of this Agreement to the Bank by the
Borrower, the Borrower shall cause to be delivered to the Bank a copy of a
letter addressed to the Borrower and signed by Capital Trust, or such other
document as shall be satisfactory in form and substance to the Bank,
acknowledging the agreement of Capital Trust to forbear its exercise of its
rights and remedies under the Note Purchase Agreement so long as this Agreement
is in effect.
SECTION 4. BANK'S AGREEMENTS. In consideration of the Borrower's
-----------------
agreements set forth in Section 3 above, the Bank agrees that so long as this
Agreement is in effect:
4.1 The commitment fees and early termination fees otherwise due the Bank
under Sections 2.4 and 2.5 of the Bank Credit Agreement are hereby waived.
4.2. The financial covenants set forth in sections 5.7, 5.8, 5.9 and 5.10
are hereby waived.
-5-
SECTION 5. REPRESENTATIONS. The Borrower agrees and acknowledges that its
----------------
obligations to the Bank under the Bank Credit Agreement and the related loan
documents, except as otherwise expressly modified by this Agreement, are, by the
execution of this Agreement, ratified and confirmed in all respects.
SECTION 6. ACKNOWLEDGMENTS. The Borrower acknowledges and agrees that its
----------------
duly authorized officer executing this Agreement has (a) read and understands
the contents of this Agreement, (b) had opportunity to consult with counsel of
choice regarding same, (c) acted voluntarily and without duress in connection
with the execution and delivery of this Agreement.
SECTION 7. RELEASE, INDEMNITY, WAIVER. The Borrower hereby releases,
---------------------------
covenants not to ▇▇▇, waives and forever discharges and relieves the Bank and
its agents, attorneys and employees (the "Releasees") of, from, regarding,
and/or on account of any and all rights, benefits, interest, liabilities,
claims, demands, actions, causes of action, suits, debts, covenants,
obligations, accounts due, contracts, rights to payment, damages, lost profits,
costs, fees, counterclaims, attorneys' fees, interest penalties, offsets,
setoffs, losses, and claims and defenses of every nature and kind whatsoever,
whether at common law (contract, tort or other theory) or pursuant to federal,
state or local statute, rule, ordinance, or regulation, whether vested or
contingent, whether known or unknown, whether liquidated or unliquidated,
whether matured or unmatured, whether disputed or undisputed, which the Borrower
ever had or may now have against the Releases, upon or by reason of any matter,
cause or thing whatsoever arising from the Bank Credit Agreement or any related
loan document.
SECTION 8. NO MODIFICATION OR WAIVER. None of the terms or provisions of
--------------------------
the Bank Credit Agreement or the other loan documents or this Agreement may be
changed, waiver, modified, discharged, or terminated except by instrument in
writing executed by the parties hereto, or the party against whom or which
enforcement of the change, waiver, modification, discharge or termination is
asserted. None of the terms or provisions of the Bank Credit Agreement or any of
the related loan documents or this Agreement shall be deemed to have been
abrogated or waived by reason of any failure or failures to enforce the same. In
the event of any inconsistency between the Bank Credit Agreement or any related
loan document and this Agreement, the terms of this Agreement shall prevail.
-6-
SECTION 9. COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, each of which shall be considered an original for all purposes,
provided that all such counterparts shall together constitute one and the same
-------------
instrument.
SECTION 10. APPLICABLE LAW. This Agreement shall be governed by and
--------------
construed, interpreted and enforced, in accordance with and pursuant to the laws
of The Commonwealth of Massachusetts without regard to its conflicts of law
rules.
SECTION 11. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
----------------------
shall be binding upon, and shall inure to the benefit of, the respective
successors, assigns, and participants of the Bank, and the respective heirs,
successors and assigns of the Borrower (but such reference is not intended, nor
shall it be construed as, a consent to an assignment by the Borrower).
SECTION 12. ENTIRE AGREEMENT. The Bank Credit Agreement and the related
----------------
loan documents, as confirmed and affected by this Agreement, constitute the
entire agreement between the parties hereto relating to or connected with the
loan transactions and other matters contemplated thereby. Any other agreements
or understandings related to or connected with such loan transactions or other
matters not expressly set forth in the Bank Credit Agreement and related loan
documents as confirmed or affected hereby, are null and void and superseded in
their entirety.
SECTION 13. INTENTION OF THE PARTIES. It is intended by the parties
------------------------
hereto that this Agreement shall become a part of the loan documentation files
of the Borrower.
SECTION 14. DEFAULTS AND REMEDIES.
---------------------
SECTION 14.1 DEFAULTS: The following shall constitute a default under
--------
this Agreement:
(a) the occurrence of a further material adverse change in the financial
condition or affairs of the Borrower;
(b) the giving of a notice of intent to accelerate the Subordinated Debt
by Capital Trust;
(c) the occurrence of any event described in subsection 8.1(h) or 8.1(i)
of the Bank Credit Agreement or any other Event of Default (other than the
Events of Default identified in Section 1.5 of this Agreement);
-7-
(d) failure by the Borrower to abide by and/or comply with all terms or
conditions set forth herein or in the Bank Credit Agreement or other loan
documents as confirmed or affected hereby, or the failure by Capital Trust or
any Purchaser to abide by and/or comply with all terms or conditions set forth
in the letter or other document referred to in Section 3.4 of this Agreement or
in Section 6 of the Note Purchase Agreement.
SECTION 14.2 REMEDIES. In the event of any default by the Borrower under
---------
this Agreement as set forth in subsection 12.1 above, this Agreement shall
terminate as to any matter not already consummated and the Bank may exercise any
or all rights and remedies available to it under the Bank Credit Agreement or
any other loan document, or applicable law. The Borrower shall remain
responsible to pay all costs and expenses, including reasonable attorney's fees
associated with the collection of payments due under this Agreement, the Bank
Credit Agreement and/or other loan documents, as provided in section 9.2 of the
Bank Credit Agreement.
IN WITNESS WHEREOF, The parties have executed this Agreement as an
instrument under seal as of the date first written above.
WITNESS: ▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC.
[SIGNATURE APPEARS HERE] 5-4-94 By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: President
------------------------------
THE FIRST NATIONAL BANK OF BOSTON
[SIGNATURE APPEARS HERE] By: [SIGNATURE APPEARS HERE]
--------------------------------- ---------------------------------
Name: [NAME APPEARS HERE]
-------------------------------
Title: Vice President
------------------------------
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
AMENDMENT NO. 6
THIS AMENDMENT (this "Amendment") is entered into as of August 11, 1994 by
and between ▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a NATIONAL COMPUTER DISTRIBUTORS,
a Florida corporation having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), and THE FIRST NATIONAL BANK OF BOSTON, a
national banking association with its head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Bank"). All capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Credit Agreement, as
defined below.
R E C I T A L S
---------------
WHEREAS, The Borrower and the Bank have entered into a Revolving Credit
Agreement dated as of April 27, 1992, as previously amended by the various
documents listed on Schedule A hereto (the "Credit Agreement");
----------
WHEREAS, under the terms of the Credit Agreement, the Bank has agreed to
extend credit to the Borrower until the Termination Date (August 31, 1994) on a
demand discretionary basis up to a maximum principal amount of $22,500,000
subject to availability under the Borrowing Base;
WHEREAS, the Borrower has also entered into a Subordinated Note and Warrant
Purchase Agreement dated as of March 31, 1992, as amended (collectively, the
"Note Purchase Agreement") among the Borrower, the persons named therein as
"Purchasers" (the "Purchasers") and C.T. Capital Trust N.V., a Netherlands
Antilles corporation, as agent and attorney-in-fact for the Purchasers ("Capital
Trust") pursuant to which the Borrower issued its 12% Subordinated Notes due
March 31, 1997 (the "Maturity Date"), each dated March 31, 1992 in an amount
equal to $3,000,000 in the aggregate (the "Capital Trust Subordinated Debt");
WHEREAS, the Capital Trust Subordinated Debt is presently demandable at any
time prior to August 31, 1994 and, absent a reinstatement of the Maturity Date,
may be accelerated and declared due and payable on August 31, 1994 by Capital
Trust;
WHEREAS, the Borrower has advised the Bank that the Purchasers have agreed
to reinstate the Maturity Date and to
-2-
further amend the Note Purchase Agreement to the extent necessary to conform the
financial ratios under the Note Purchase Agreement to levels equal to or more
lenient than the ratios under the Credit Agreement after giving effect to the
amendments effected hereby;
WHEREAS, the Borrower has requested that the Bank's commitment under the
Credit Agreement be reinstated and the Termination Date be extended, and in
reliance upon the foregoing and the representations, warranties, covenants and
other agreements contained herein and in the Credit Agreement, the Bank has
agreed to the Borrower's request, subject to the terms hereof;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
benefits to be derived by the Borrower and the Bank from a continuing
relationship under the Credit Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, each
of the Borrower and the Bank agrees that the Credit Agreement is hereby amended
as follows:
1. The following new defined term is hereby added to Section I of the
Credit Agreement:
"Applicable Margin" shall mean the applicable percentage specified below
-----------------
based on the Borrower's ratio of (i) Total Liabilities less Subordinated
Indebtedness to (ii) Total Capital Funds ("Leverage Ratio") as determined
as of the last day of each month commencing with the month ending August
31, 1994, to be effective on a prospective basis as of the first day of the
next succeeding month:
--------------------------------------------
Leverage Ratio Applicable Percentage
--------------------------------------------
(Greater Than) 7:1 3%
--------------------------------------------
(Less Than) 7:1 1 1/2%
--------------------------------------------
2. The definition of "Eligible Inventory" appearing in Section I of the
Credit Agreement is hereby amended by deleting the "and" at the end of subclause
(h), relettering subclause (i) to become subclause (j) and by the addition of
the following additional exclusion therefrom to be inserted immediately
following subclause (h) thereof:
(i) such Inventory is not more than 180 days from date of purchase; and
-3-
3. The following defined term appearing in Section I of the Credit
Agreement is hereby amended in its entirety to read as follows:
Termination Date. December 31, 1995, or such earlier date on which the
----------------
Bank's commitment hereunder is reduced to zero or otherwise terminated in
accordance with the terms of this Agreement.
4. Section 2.5 of the Credit Agreement is hereby amended to read in its
entirety as follows:
2.5. Early Termination Fee. In the event of a termination by the Borrower
---------------------
of the Bank's commitment hereunder prior to the Termination Date, the
Borrower shall pay to the Bank three percent (3%) of the Maximum Commitment
on the effective date of any such termination, which termination may be
effected only upon thirty (30) days prior written notice delivered by the
Borrower to the Bank.
5. Subclause (a) of Section 2.7 of the Credit Agreement is hereby amended
in its entirety to read as follows:
(a) Each Loan shall bear interest on the outstanding principal amount
thereof at a rate per annum equal to the Base Rate plus the Applicable
----
Margin, which rate shall change contemporaneously with any change in the
Base Rate. Such interest shall be payable on the first day of each month
and when such Loan is due (whether at maturity, by reason of acceleration
or otherwise).
6. Exhibit 5.1(c), the form of Chief Financial Officer Report required to
be delivered to the Bank by the Borrower pursuant to Section 5.1(c) of the
Credit Agreement, is hereby deleted from the Credit Agreement and the form
attached hereto as Schedule B to this Amendment is hereby substituted in its
stead. ----------
7. Section 5.7 of the Credit Agreement is hereby amended in its entirety
to read as follows:
5.7. Ratio of EBIT to Interest Expense. As of the last day of each month,
---------------------------------
the Borrower shall have ratio of (a) EBIT to (b) total interest expense of
not less than 1.75:1, excluding from such calculation any inputed interest
arising from accretion of debt discount on the Subordinated Indebtedness
issued under the Purchase Agreement.
-4-
8. Section 5.8 of the Credit Agreement is hereby amended in its entirety
to read as follows:
5.8. Minimum Total Capital Funds. The Borrower shall maintain Total
---------------------------
Capital Funds of not less than the amounts set forth below for the periods
specified, plus on a cumulative basis, an additional $250,000 for each
----
quarter ending after October 31, 1994:
Period Amount
------ ------
June 30, 1994 - September 29, 1994............. $2,700,000
September 30, 1994 - October 30, 1994.......... $2,950,000
October 31, 1994 and thereafter................ $5,000,000
9. Sections 5.9, 5.10 and 5.11 of the Credit Agreement are hereby deleted
and intentionally omitted.
10. The $250,000 dollar limit on capital expenditures appearing in Section
6.4 of the Credit Agreement is hereby amended to "$500,000."
11. Exhibit 7.3(c) to the Credit Agreement, the form of Borrowing Base
Certificate required to be delivered to the Bank by the Borrower pursuant to
Section 7.3(c) of the Credit Agreement, is hereby deleted from the Credit
Agreement and the form attached hereto as Schedule C to this Amendment is hereby
----------
substituted in its stead.
12. The Forbearance Agreement dated as of April 25, 1994, as amended, is
hereby terminated and all modifications to the Credit Agreement effected
thereby, including but not limited to, those set forth in Sections 3 and 4
thereof, shall be of no further force or effect.
13. Conditions Precedent to Effectiveness of this Amendment. This
-------------------------------------------------------
Amendment shall take effect on the date of receipt by the Bank of the last item
specified below (other than any item the delivery of which is expressly deferred
or waived in writing by the Bank):
(a) This Amendment duly executed by the Borrower;
(b) A certificate of the Secretary or an Assistant Secretary of the
Borrower with respect to resolutions, of its Board of Directors
authorizing the execution and delivery of this Amendment, identifying
the officer(s) authorized to execute, deliver and take all other
actions required under this Amendment, or the Credit Agreement;
-5-
(c) a certificate of the president or chief financial officer of the
Borrower with respect to representations and warranties under the
Credit Agreement, the absence of Defaults, and the locations and value
of the Borrower's inventory together with such additional UCC
Financing Statements, landlord waivers and insurance certificates as
the Bank may deem necessary or desirable, based on the Borrower's
locations shown in the schedule attached thereto;
(d) a copy of a fully executed amendment to the Subordinated Note and
Warrant Purchase Agreement dated as of March 31, 1992 among the
Borrower, the Purchasers named therein and C.T. Capital Trust, N.V.,
as agent for the Purchasers, reflecting modifications to the
Borrower's financial covenants under that agreement in conformity with
the Borrower's financial covenants under the Credit Agreement after
giving effect to this Amendment and the reinstatement of the Maturity
Date;
(e) such other documents and evidence of completion of such other matters,
as the Bank reasonably may deem necessary or desirable.
Upon and after the date of this Amendment all references to the Credit
Agreement in that document, or in any related document, shall mean the Credit
Agreement as amended by this Amendment. Except as expressly provided in this
Amendment, the execution and delivery of this Amendment does not and will not
amend, modify or supplement any provision of, or constitute a consent to or a
waiver of any noncompliance with the provisions of the Credit Agreement, and,
except as specifically provided in this Amendment, the Credit Agreement shall
remain in full force and effect.
This Amendment is executed as an instrument under seal and shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts without regard to its conflicts of law rules. All parts of the
Credit Agreement not affected by this Amendment are hereby ratified and affirmed
in all respects, provided that if any provision of the Credit Agreement shall
-------------
conflict or be inconsistent with this Amendment, the terms of this Amendment
shall supersede and prevail.
-6-
IN WITNESS WHEREOF, each of the Borrower and the Bank in accordance with
Section 9.7 of the Credit Agreement, has caused this Amendment to be executed
and delivered by their respective duly authorized officers as of the date set
forth in the preamble on page one of this Amendment.
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC.,
WITNESSED: d/b/a/ NATIONAL COMPUTER DISTRIBUTORS
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------------- -------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------------- ----------------------------------------
Print Name Print Name
Address: One International Plaza Title: Chairman
-------------------------- ----------------------------------
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Signed at: Boston, MA
----------------------------------- ------------------------------
[Seal]
WITNESSED: THE FIRST NATIONAL BANK OF BOSTON
By:
----------------------------------- -------------------------------------
----------------------------------- ----------------------------------------
Print Name Print Name
Address: Title:
--------------------------- ----------------------------------
Signed at:
----------------------------------- ------------------------------
[Seal]
-72-
IN WITNESS WHEREOF, each of the Borrower and the Bank in accordance with
Section 9.7 of the Credit Agreement, has caused this Amendment to be executed
and delivered by their respective duly authorized officers as of the date set
forth in the preamble on page one of this Amendment.
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC.,
WITNESSED: d/b/a/ NATIONAL COMPUTER DISTRIBUTORS
By:
----------------------------------- ------------------------------------
----------------------------------- ---------------------------------------
Print Name Print Name
Address: Title:
--------------------------- --------------------------------
Signed at:
----------------------------------- ----------------------------
[Seal]
WITNESSED: THE FIRST NATIONAL BANK OF BOSTON
By:
----------------------------------- -----------------------------------
----------------------------------- --------------------------------------
Print Name Print Name
Address: 100 Title:
--------------------------- --------------------------------
Signed at:
----------------------------------- ----------------------------
[Seal]
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a
NATIONAL COMPUTER DISTRIBUTORS
AMENDMENT NO. 7 AND WAIVER
THIS AMENDMENT NO. 7 AND WAIVER (this "Amendment") is entered into as of
September 8, 1994 by and between ▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC., d/b/a NATIONAL
COMPUTER DISTRIBUTORS, a Florida corporation having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), and THE FIRST NATIONAL
BANK OF BOSTON, a national banking association with its head office at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Bank"). All capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Credit Agreement, as defined below.
R E C I T A L S
---------------
WHEREAS, the Borrower and the Bank have entered into a Revolving Credit
Agreement dated as of April 27, 1992, as previously amended by the various
documents listed on Schedule A hereto (the "Credit Agreement");
----------
WHEREAS, the Borrower has delivered to the Bank a letter requesting
certain waivers from the Bank with respect to the Borrower's failure to comply
with certain covenants and obligations of the Borrower under the Credit
Agreement;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
benefits to be derived by the Borrower and the Bank from a continuing
relationship under the Credit Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, each
of the Borrower and the Bank agrees that the Credit Agreement is hereby amended
as follows:
1. Section 5.7 of the Credit Agreement is hereby amended in entirety to
read as follows:
5.7. Ratio of EBIT to Interest Expense. The Borrower shall have a ratio
----------------------------------
of (i) EBIT to (ii) total interest expense, excluding from such
calculation any imputed interest arising from accretion of debt discount
on the Subordinated Indebtedness issued under the Purchase Agreement, of
not less than (a) 1.75:1 as of the last day of each of the Borrower's
fiscal quarters, and (ii) 1:1 as of the last day of each month ending on
any date other than the last day of any fiscal quarter of the Borrower.
-2-
2. Section 6.7 of the Credit Agreement is hereby amended in its
entirety to read as follows:
6.7. Leases. The Borrower shall not, during any of its fiscal years, have
------
aggregate lease payments for real or personal property (whether or not such
payments are termed rent) in excess of $1,750,000.
In reliance upon the Borrower's representation, which by the Borrower's
signature hereto, the Borrower is hereby deemed to have made, that other than
the Defaults or Events of Defaults identified below, as of the date of this
Amendment, the Borrower is not otherwise in default of any of its obligations
under the Credit Agreement, the Bank hereby waives any Default or Event of
Default existing as a result of the Borrower's failure to comply with the
following covenants and obligations:
A. The Borrower's obligation under Section 5.1(a) of the Credit Agreement
to deliver to the Bank its audited financial statements within ninety days
following its fiscal year ending March 31, 1994, which statements, by its
signature hereto, the Borrower covenants and agrees shall be delivered to
the Bank on or before September 30, 1994 in accordance with the
requirements of Section 5.1(a) (other than the ninety day time period
specified therein), and the failure by the Borrower to so deliver such
statements shall constitute an Event of Default under the Credit Agreement;
B. During any time prior to March 31, 1994, the Borrower's obligation
under:
(i) Section 5.6 of the Credit Agreement to keep adequate books and
records of account in accordance with generally accepted accounting
principles with respect to certain items previously disclosed to the
Bank, which items the Borrower by its acceptance hereof, represents and
warrants to the Bank are now properly reflected in its books and records;
and
(ii) Section 6.4 of the Credit Agreement to maintain capital expenditures
of the type described by said Section 6.4 within the $250,000 maximum
permitted prior to the effective date of Amendment No. 6 dated as of
August 11, 1994 to the Credit Agreement ("Amendment 6").
C. With respect to the months ending March 31, 1994 and July 31, 1994, the
Borrower's obligation under Section 5.7 of the Credit Agreement to maintain
the ratio of EBIT to total interest expense specified by said Section 5.7;
D. During any time prior to June 30, 1994, the Borrower's obligation under
Section 5.8 of the Credit Agreement to maintain Total Capital Funds of not
less than the amount specified by said Section 5.8;
-3-
E. During any time prior to the effective date of Amendment 6, the Borrower's
obligation under:
(i) Section 5.9 of the Credit Agreement to maintain its ratio of Total
Liabilities (less Subordinated Indebtedness) to Total Capital Funds within the
maximum ratio permitted by said Section 5.9;
(ii) Section 5.10 of the Credit Agreement to maintain its ratio of Senior
Bank Indebtedness to Total Capital Funds within the maximum ratio permitted by
said Section 5.10;
(iii) Section 5.11 of the Credit Agreement to maintain an accounts
payable average turnover as required by said Section 5.11; and
(iv) Section 6.1(d) of the Credit Agreement, with respect to Hyundia
Electronics America, not to remain liable for normal trade Indebtedness for more
than sixty days past the due date thereof;
The foregoing waivers are expressly limited to the specific defaults and
Events of Defaults set forth above and are not, nor shall they be construed as,
waivers of any other default or Event of Default under the Credit Agreement,
whether now existing or hereafter occurring. These waivers notwithstanding, all
rights of the Bank with respect to any claims it may have against the Borrower
or any third party arising out of or in any way related to the matters giving
rise to the defaults and Events of Defaults enumerated above are expressly
reserved.
Upon and after the date of this Amendment all references to the Credit
Agreement in that document, or in any related document, shall mean the Credit
Agreement as amended by this Amendment. Except as expressly provided in this
Amendment, the execution and delivery of this Amendment does not and will not
amend, modify or supplement any provision of, or constitute a consent to or a
waiver of any noncompliance with the provisions of the Credit Agreement, and,
except as specifically provided in this Agreement, the Credit Agreement shall
remain in full force and effect.
This Amendment is executed as an instrument under seal and shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts without regard to its conflicts of law rules. All parts of the
Credit Agreement not affected by this Amendment are hereby ratified and affirmed
in all respects, provided that if any provision of the Credit Agreement shall
-------- ----
conflict or be inconsistent with this Amendment, the terms of this Amendment
shall supersede and prevail.
-4-
IN WITNESS WHEREOF, each of the Borrower and the Bank in accordance with
Section 9.7 of the Credit Agreement, has caused this Amendment to be executed
and delivered by their respective duly authorized officers as of the date set
forth in the preamble on page one of this Amendment.
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC.,
WITNESSED: d/b/a NATIONAL COMPUTER DISTRIBUTORS
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇
------------------------------- ----------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇
------------------------------- -------------------------------------
Print Name Print Name
Address: 1 International Place Title: Chairman
----------------------- ------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Signed At Boston, MA
------------------------------- ---------------------------
[Seal]
WITNESSED: THE FIRST NATIONAL BANK OF BOSTON
By:
------------------------------- -------------------------------------
------------------------------- ----------------------------------------
Print Name Print Name
Address: Title:
----------------------- ----------------------------------
Signed At
------------------------------- -------------------------------
[Seal]
-4-
IN WITNESS WHEREOF, each of the Borrower and the Bank in accordance with
Section 9.7 of the Credit Agreement, has caused this Amendment to be executed
and delivered by their respective duly authorized officers as of the date set
forth in the preamble on page one of this Amendment.
▇▇▇▇ ▇▇▇▇▇ ENTERPRISES, INC.
WITNESSED: d/b/a NATIONAL COMPUTER DISTRUBTORS
By:
-------------------------------------- -------------------------------
-------------------------------------- -----------------------------------
Print Name Print Name
Address: Title:
----------------------------- ----------------------------
Signed At
-------------------------------------- -------------------------
[Seal]
WITNESSED: THE FIRST NATIONAL BANK OF BOSTON
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------- -----------------------------------
Print Name Print Name
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇. Title: Vice President
----------------------------- ----------------------------
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Signed At ▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇
-------------------------------------- -------------------------
[Seal]
AMERIQUEST/NCD, INC.
AMENDMENT NO. 8
THIS AMENDMENT NO. 8 (this "Amendment") is entered into as of March ,
--
1995 by and between AMERIQUEST/NCD, INC., a Florida corporation having an
address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"),
and THE FIRST NATIONAL BANK OF BOSTON, a national banking association with its
head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Bank"). All
capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Credit Agreement, as defined below.
RECITALS
--------
WHEREAS, the Borrower and the Bank have entered into a Revolving Credit
Agreement dated as of April 27, 1992, as previously amended by the various
documents listed on Schedule A hereto (as amended, the "Credit Agreement");
----------
WHEREAS, the Borrower has requested certain amendments to the Credit
Agreement, including, but not limited to, an increase in the Maximum Commitment
from $22,500,000 to $30,000,000;
WHEREAS, the Bank is, on the terms and conditions stated below, willing to
grant the request of the Borrower;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
benefits to be derived by the Borrower and the Bank from a continuing
relationship under the Credit Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, each
of the Borrower and the Bank agrees that the Credit Agreement is hereby amended
as follows:
1. The following definitions appearing in Section 1.1 of the Credit
Agreement are each hereby amended respectively in their entirety to read as
follows:
(a) "Borrowing Base. An amount equal to the lesser of (x) $30,000,000
--------------
and (y) the sum of (i) 85% of the face value of Eligible Accounts due
and owing at such time, plus (ii) the least of (A) 50% of Eligible
----
Inventory, (B) $15,000,000 and (C) the amount available under
subset (y) (i) of this definition, minus (from the sum of (i) and
-----
(ii)) the amount specified below for the range of availability
hereunder calculated as of the date of any determination:
-2-
Loan Availability Amount Reserve
------------------------ -------
Less than $17,500,000 $ 500,000
$17,500,000 - $19,999,999 $ 750,000
$20,000,000 - $22,499,999 $1,000,000
$22,500,000 - $24,999,999 $1,250,000
25,000,000 or more $1,500,000"
(b) "Maximum Commitment. $30,000,000."
------------------
2. Section 5.7 of the Credit Agreement is hereby amended in its entirety
to read as follows:
"5.7. Ratio of EBIT to Interest Expense. As of the last day of each
---------------------------------
fiscal quarter, the Borrower shall have a ratio of (i) EBIT to (ii) total
interest expense, excluding from such calculation any imputed interest
arising from accretion of debt discount on any Subordinated Indebtedness,
of not less than 1.75:1."
3. Section 5.8 of the Credit Agreement is hereby amended in its entirety
to read as follows:
"5.8. Minimum Total Capital Funds. The Borrower shall maintain at all
---------------------------
times Total Capital Funds of not less than $8,500,000 as of December 31,
1994, plus, on a cumulative basis, an additional $250,000 for each quarter
----
ending after December 31, 1994."
4. Section 5.9 of the Credit Agreement, which was previously deleted and
intentionally omitted from the Credit Agreement, is hereby added to read as
follows:
"5.9. Leverage Ratio. The Borrower shall maintain at all times a ratio
--------------
of (i) Total Liabilities less Subordinated Indebtedness to (ii) Total
----
Capital Funds of not more than 7.5:1."
5. Section 5.10 of the Credit Agreement, which was previously deleted and
intentional omitted from the Credit Agreement, is hereby added to read as
follows:
"5.10. Ratio of Senior Bank Indebtedness to Total Capital Funds. The
--------------------------------------------------------
Borrower shall maintain at all times a ratio of Senior Bank Indebtedness
to Total Capital Funds of not more than 5:1."
6. This Amendment shall become effective when, and only when, the Bank
shall have received the following documents:
(a) This Amendment duly executed by the Borrower and the Bank;
-3-
(b) A certificate of the secretary or assistant secretary of the Borrower
with respect to resolutions of its Board of Directors authorizing the
execution and delivery of this Amendment and the matters contemplated
hereby, identifying the officers authorized to execute, deliver and take
all other actions required under this Amendment or the Credit Agreement,
and confirming that the Borrower's articles of organization and by-laws
previously delivered and certified to the Bank have not been amended,
substituted, rescinded or otherwise modified in any way since the date of
such prior certification;
(c) A certificate of the president or chief financial officer of the
Borrower with respect to representations and warranties under the Credit
Agreement and the absence of any Default or Event of Default under the
Credit Agreement;
(d) Payment by the Borrower of a closing fee in the amount of $37,500; and
(e) Such other documents and evidence of completion of such other matters
as the Bank may reasonable deem necessary or desirable.
7. The Borrower represents and warrants to the Bank as follows:
(a) The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, has all
requisite corporate power to own its property and conduct its business as
now conducted and as presently contemplated, is duly qualified and in good
standing as a foreign corporation, and is duly authorized to do business in
each jurisdiction where the nature of its properties or business require
such qualification, except where the failure to be so qualified would not
have a material adverse affect on the business, financial condition, assets
or properties of the Borrower on a consolidated basis.
(b) The execution, delivery and performance of this Amendment and the
Credit Agreement and the transactions contemplated hereby and thereby are
within the corporate power and authority of the Borrower and had been
authorized by all necessary corporate proceedings, and do not and will not:
(i) require any consent or approval of the stockholders of the
Borrower other than those consents and approvals, if any, previously
obtained;
(ii) contravene any provision of the charter documents or by-laws of
the Borrower or any law, rule or regulation applicable to the
Borrower;
-4-
(iii) contravene any provision of, or constitute an event of default
or event that, but for the requirement that time elapse or notice be
given, or both, would constitute an event of default, under any other
agreement, instrument, order or undertaking binding on the Borrower;
(iv) result in or require the imposition of any Encumbrance on any of
the properties, assets or rights of the Borrower, except Encumbrances
permitted by the Credit Agreement.
(c) This Amendment and the Credit Agreement and all of their terms and
provisions are the legal, valid and binding obligations of the Borrower,
enforceable in accordance with their terms except as limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally, and except as the remedies of
specific performance or of injunctive relief are subject to the discretion
of the court before which any proceeding therefore may be brought.
(d) The execution, delivery and performance of this Amendment and the
Credit Agreement and the transactions contemplated hereby and thereby do
not require any approval or consent of or filing of registration with, any
governmental or other agency or authority, or any other party.
(e) There is no litigation, arbitration, proceeding or investigation
pending, or, to the knowledge of the officers of the Borrower threatened,
against the Borrower that, if adversely determined would result in a
material judgment not fully covered by insurance or would otherwise have a
material adverse affect on the assets, business or prospects of the
Borrower.
8. Upon and after the date of this Amendment all references to the Credit
Agreement in that document, or in any related document, shall mean the Credit
Agreement as amended by this Amendment. Except as expressly provided in this
Amendment, the execution and delivery of this Amendment does not and will not
amend, modify or supplement any provision of, or constitute a consent to or a
waiver of any noncompliance with the provisions of the Credit Agreement, and,
except as specifically provided in this Amendment, the Credit Agreement shall
remain in full force and effect.
9. This Amendment is executed as an instrument under seal and shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts without regard to its conflicts of law rules. All parts of the
Credit Agreement not
-5-
affected by this Amendment are hereby ratified and affirmed in all respects,
provided that if any provision of the Credit Agreement shall conflict or be
-------- ----
inconsistent with this Amendment, the terms of this Amendment shall supersede
and prevail.
IN WITNESS WHEREOF, each of the Borrower and the Bank in accordance with
Section 9.7 of the Credit Agreement, has caused this Amendment to be executed
and delivered by their respective duly authorized officers as of the date set
forth in the preamble on page one of this Amendment.
WITNESSED: AMERIQUEST/NCD, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- -----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- ---------------------------------
Print Name Print Name
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., Title: President
-------------------------- ---------------------------
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Signed At Irvine, California
---------------------------------- -----------------------
[Seal]
WITNESSED: THE FIRST NATIONAL BANK OF BOSTON
By:
---------------------------------- -----------------------------
---------------------------------- ---------------------------------
Print Name Print Name
Address: Title:
-------------------------- ---------------------------
Signed At
---------------------------------- -----------------------
[Seal]
SCHEDULE A TO AMENDMENT NO. 8
-----------------------------
DOCUMENTS EFFECTING PRIOR AMENDMENTS TO AGREEMENT
-------------------------------------------------
1. Amendment No. 1 Dated November 2, 1992
2. Letter Agreement Dated March 18, 1993
3. Amendment No. 2 Dated April 16, 1993
4. Amendment No. 3 Dated May 26, 1993
5. Amendment No. 4 Dated October 15, 1993
6. Amendment No. 5 Dated March 1, 1994
7. Forbearance Agreement Dated April 25, 1994
8. Amendment No. 1 To Forbearance Agreement
Dated June 30, 1994
9. Amendment No. 2 To Forbearance Agreement
Dated July 28, 1994
10. Amendment No. 6 Dated August 11, 1994
11. Amendment No. 7 Dated September 8, 1994
AMERIQUEST/NCD, INC.
AMENDMENT ▇▇. ▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ AND CONSENT
This Amendment ▇▇. ▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and Consent (this "Amendment") is
---------
entered into as of July 11, 1995 by and between The First National Bank of
Boston, a national banking association having a principal place of business at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ("Bank"), and AmeriQuest/NCD, Inc., a
----
Florida corporation having its chief executive office and principal place of
business at MacArthur Place, ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Borrower") and successor by merger to ▇▇▇▇ ▇▇▇▇▇ Enterprises, Inc. ("▇▇▇▇
-------- ----
White"). All capitalized terms used but not otherwise defined herein shall have
-----
the meanings assigned to them in the Credit Agreement, as defined below.
R E C I T A L S
- - - - - - - -
WHEREAS, the Bank and the Borrower have entered into a Revolving Credit
Agreement dated as of April 27, 1992, as amended by Amendment No. 1 dated
November 2, 1992, by a letter agreement dated March 18, 1993, by Amendment No.
2 dated as of May 26, 1993, by Amendment No. 3 dated as of May 26, 1993, by
Amendment No. 4 dated as of October 15, 1993, by Amendment No. 5 dated as of
March 1, 1994, by Amendment No. 6 dated as of August 11, 1994, by Amendment No.
7 and Waiver dated as of September 8, 1994, and by Amendment No. 8 dated as of
March 23, 1995, and as modified by an Assignment and Assumption Agreement dated
as of November 14, 1994 (as so amended and modified, the "Credit Agreement")
----------------
pursuant to which, among other things, the Borrower granted to the Bank a
security interest in all of its personal property (the "Collateral"); and
----------
WHEREAS, on the date of the initial Loan to ▇▇▇▇ ▇▇▇▇▇ under the Credit
Agreement, the Bank had established a revolving line of credit for ▇▇▇▇ ▇▇▇▇▇ as
an independent company engaged in the nationwide sale and distribution of
computers and computer peripherals secured by all of ▇▇▇▇ ▇▇▇▇▇'▇ assets,
including but not limited to all inventory and accounts receivable; and
WHEREAS, as a result of the acquisition and consolidation strategy of its
parent company, AmeriQuest Technologies, Inc., a Delaware Corporation (the
"Parent"), the Borrower is now affiliated with a number of companies engaged in
------
similar businesses (the Parent and all such affiliated companies, collectively,
the "Parent Group"), and the Borrower has informed the Bank that it has, and
------------
from time to time intends to, relocate
-2-
certain of its inventory Collateral to locations where goods that are owned
by members of the Parent Group are also warehoused, and pursuant to Section 7.2
of the Credit Agreement has requested that the Bank consent to such relocation;
and
WHEREAS, the Borrower has further requested a sixty day extension of the
time for delivery to the Bank under Section 5.1(a) of the Credit Agreement of
the Borrower's audited balance sheet for the Borrower's fiscal year ending March
31, 1995 and related audited statements of income, changes in stockholders'
equity, and cash flow from June 30, 1995 to August 31, 1995; and
WHEREAS, in reliance on the assurances of the Borrower and the Parent that
notwithstanding the interrelated nature of the Borrower and the Parent Group,
and the consolidation and integration strategies of the Parent, the Parent and
the other members of the Parent Group will conduct their respective dealings
with the Borrower on an independent and arm's-length basis and will observe and
maintain the separate identity of the Borrower, the Bank is willing to consent
to the Collateral being moved and maintained at these shared locations provided
that the Borrower at all time shall segregate the Collateral from goods owned by
the other members of the Parent Group and deliver to the Bank certain
intercreditor agreements with secured creditors of such other members;
WHEREAS, the members of the Parent Group are provided working capital
support by lenders other than the Bank without benefit of an intercorporate
guarantee by the Borrower, and the Bank is providing working capital support to
the Borrower without benefit of an intercorporate guarantee by the Parent or
any other member of the Parent Group; and
WHEREAS, in an effort to monitor on a timely basis the financial results
and prospects of the Borrower, the Bank is requiring that the Borrower provide
the Bank from time to time with certain information relative to the Parent
Group;
WHEREAS, the Bank is further requiring that the Borrower, (i) maintain
financial records and audited financial statements separate from the Parent
Group, (ii) have all corporate actions authorized by the Borrower's board of
directors at properly held and recorded meetings, and (iii) observe all other
corporate formalities with respect to its intercompany purchases and sales of
inventory and other assets;
WHEREAS, the parties are willing to so agree subject to the amendments to
the Credit Agreement and other terms and covenants contained herein;
-3-
NOW THEREFORE, in consideration of the mutual covenants and conditions
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each of the Bank and the Borrower
hereby agrees as follows:
1. The preamble to the Credit Agreement is hereby amended in its entirety
to read as follows:
"THIS REVOLVING CREDIT AGREEMENT (this "Agreement") is made as of April 27,
1992 between AMERIQUEST/NCD, INC. (the "Borrower"), a Florida corporation
having its chief executive office and principal place of business at
MacArthur Place, ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
successor by merger to ▇▇▇▇ ▇▇▇▇▇ Enterprises, Inc., and THE FIRST NATIONAL
SANK OF BOSTON (the "Bank"), a national banking association having its head
office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇."
2. The definition of "Borrowing Base" appearing in Section 1.1 of the
Credit Agreement is hereby amended in its entirety to read as follows:
(a) "Borrowinq Base. An amount equal to the lesser of (x) $27,500,000 until
--------------
the Contingency Date, as defined below, and thereafter, $30,000,000 and (y)
the sum of (i) 85% of the face value of Eligible Accounts due and owing at
such time, plus (ii) the least of (A) 50% of Eligible Inventory, (B)
----
$15,000,000 and (C) the amount available under subset (y)(i) of this
definition, minus (from the sum of (i) and (ii)) the amount specified below
-----
for the range of availability hereunder calculated as of the date of any
determination,
Loan Availability Amount Reserve
------------------------ -------
Less than $17,500,000 $ 500,000
$17,500,000 - $19,999,999 $ 750,000
$20,000,000 - $22,499,999 $1,000,000
$22,500,000 - $24,999,999 $1,250,000
25,000,000 or more $1,500,000
minus from the amount calculated in accordance with the foregoing,
-----
commencing on July 17, 1995, $500,000 and increasing to $1,000,000
commencing on July 24, 1995 through and including the second Business Day
(the "Contingency Date") following receipt by the Bank of unqualified
----------------
audited financial statements of the Borrower in accordance with Section
5.1(a) of this Agreement for the fiscal year ending April 1, 1995
reflecting
-4-
performance by the Borrower under Sections 5.7, 5.8, 5.9 and 5.10 of this
Agreement at a level equal to or better than that shown in the management-
prepared financial statements delivered to the Bank on May 16, 1995 for the
fiscal year ending April 1, 1995."
3. The definition of "Eligible Account" appearing in Section 1.1 of the
Credit Agreement is hereby amended by deleting the "and" at the end of subclause
(n), relettering subclause (o) to become subclause (p), and by adding the
following new subclause (o) to be inserted immediately following subclause (n)
thereof:
"(o) such Account is not owing by an Affiliate of the Borrower; and"
4. The definition of "Eligible Inventory" appearing in Section 1.1 of the
Credit Agreement is hereby amended by deleting the "and" at the end of subclause
(i), relettering subclause (j) to become subclause (k), and by adding the
following new subclause (j) to be inserted immediately following subclause (i)
thereof:
"(j) commencing on August 15, 1995, such Inventory, if located in a
Consolidated Warehouse, (i) has a value not greater than the Consolidated
Warehouse Inventory Cap then in effect for such warehouse, (or, if the
value of such Inventory is in excess of the amount so specified, such
excess is excluded from the calculation of the total value of such
Inventory), (ii) is the subject of an Intercreditor Agreement, in full
force and effect, (iii) is located in a Consolidated Warehouse for which
the Bank has received an executed landlord agreement, substantially in the
form of Exhibit 1.1 (j) (iii) hereto, or Exhibit 1.1 (j) (iv) hereto, as
--------------------- --------------------
appropriate and (iv) if purchased from an Affiliate of the Borrower, such
Affiliate is a party to the Affiliate Subordination Agreement; and"
5. The definition of "Subordinated Indebtedness" appearing in Section I of
the Credit Agreement is hereby amended in its entirety to read as follows:
"Subordinated Indebtedness. Any Indebtedness of the Borrower the payment of
-------------------------
principal of and interest on which is expressly subordinated in right of
payment to the prior payment in full of the Obligations by a subordination
agreement in a form and containing terms approved by the Bank, including
but not limited to Indebtedness subordinated under the Parent Subordination
Agreement and the Affiliate Subordination Agreement."
-5-
6. The following new defined terms are hereby added to Section 1.1 of the
Credit Agreement in proper alphabetical order:
"Affiliate. Any person that now or hereafter directly, or indirectly
---------
through one or more intermediaries, controls, or is controlled by, or is
under common control with, such person. The terms "control," "controlled
by," and "under common control with" means the possession, direct or
indirect, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting
securities or interests, by contract or otherwise."
"Affiliate Subordination Agreement. The Subordination Agreement,
---------------------------------
substantially in the form of Exhibit 1.1(j)(v), as may be amended from
-----------------
time to time, executed by the Borrower and the Affiliates named therein
from time to time in favor of the Bank, pursuant to which any and all
amounts from time to time owing by the Borrower to each such Affiliate is
subordinated to the payment in full of all Indebtedness of the Borrower
owing from time to time to the Bank."
"Consolidated Warehouse. A warehouse at which Collateral owned by the
----------------------
Borrower is located together with goods owned by an Affiliate of the
Borrower."
"Consolidated Warehouse Inventory Cap. The amount shown for each
------------------------------------
Consolidated Warehouse set forth on Exhibit 1.1(j)(i) hereto, as such
-----------------
exhibit may be amended and/or updated from time to reflect such changes in
those amounts as the Borrower and the Bank may agree upon (or, after the
occurrence of an Event of Default which is continuing, as the Bank may, in
its sole discretion, specify from time to time by written notice to the
Borrower,) and/or to add additional Consolidated Warehouses or delete
warehouses no longer constituting a Consolidated Warehouse."
"Intercreditor Agreement. An Intercreditor Agreement in form and substance
-----------------------
satisfactory to the Bank substantially in the form of Exhibit 1.1(j)(ii)
------------------
hereto between the Bank and any secured creditor of an Affiliate of the
Borrower with a security interest in goods of such Affiliate located at a
Consolidated Warehouse."
"Parent. AmeriQuest Technologies, Inc., a Delaware corporation, and any
------
subsequent holder of a majority of the issued and outstanding shares of
common stock of the Borrower."
-6-
"Parent Subordination Agreement. The Subordination Agreement dated as of
------------------------------
November 14, 1994 executed by the Borrower and AmeriQuest Technologies,
Inc. in favor of the Bank, as may be amended from time to time, pursuant to
which any and all Indebtedness of the Borrower from time to time owing to
the Parent is subordinated to the payment in full of all Indebtedness of
the Borrower owing from time to time to the Bank."
7. The following subclauses of Section 5.1 of the Credit Agreement are
hereby amended in their entirety respectively to read as follows:
"(d) promptly after the receipt thereof by the Borrower, any Subsidiary of
the Borrower, the Parent, or any other Affiliate of the Borrower, copies of
any reports submitted to such person by independent public accountants in
connection with any interim review of the accounts of such person made by
such accountants;"
"(f) immediately upon becoming aware of the existence of any condition or
event that constitutes, with respect to the Borrower, a Default hereunder,
or, with respect to any Subsidiary of the Borrower, the Parent or any other
Affiliate of the Borrower, a default under any agreement or instrument
evidencing or securing indebtedness of such person, written notice thereof
specifying the nature and duration thereof and the action being or proposed
to be taken with respect thereto;"
"(g) promptly upon becoming aware of any litigation or of any investigative
proceedings by a governmental agency or authority commenced or threatened
against the Borrower, any Subsidiary of the Borrower, the Parent, or any
other Affiliate of the Borrower of which such person has notice, the
outcome of which would or might have a materially adverse effect on the
assets, business, prospects or financial condition of such person, written
notice thereof and the action being or proposed to be taken with respect
thereto;"
"(h) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports that the Borrower, any
Subsidiary of the Borrower, the Parent, or any other Affiliate of the
Borrower sends to its stockholders, and copies of all regular, periodic and
special reports, and all registration statements, that the Borrower, any
Subsidiary of the Borrower, the Parent, or any other Affiliate of the
Borrower files with the Securities and Exchange Commission or any
governmental authority that may be substituted therefor, or with any
national securities exchange; and
-7-
(i) from time to time, such other information about the Borrower, any
Subsidiary of the Borrower, the Parent, or any other Affiliate of the
Borrower as the Bank may reasonably request."
8. Section V of the Credit Agreement is further amended by
renumbering Section 5.12 thereof as Section 5.14, and by
inserting new Sections 5.12 and 5.13 immediately following
Section 5.11 thereof as follows:
"5.12. Maintenance of Independent and Separate Identity. The Borrower shall
------------------------------------------------
(i) maintain financial records and audited financial statements separate
from the Parent and the other Affiliates, (ii) have all corporate actions
authorized by the Borrower's board of directors (at least two members of
which will at all time be independent directors who are not officers or
employees of the Borrower, the Parent or any other Affiliate of the
Borrower) at properly held and recorded meetings, and (iii) observe all
other corporate formalities with respect to its intercompany purchases and
sales of inventory and other assets;
"5.13. Collateral Located in Consolidated Warehouses. (a) All Collateral
----------------------------------------------
located in a Consolidated Warehouse will be located in a segregated section
of such Consolidated Warehouse clearly delineated with colored tape and
containing therein only Collateral and no goods owned by any entity other
than the Borrower, and each item of Collateral will be marked with a
colored sticker or tag or shall be otherwise identified as property of the
Borrower so as to identify it as the Bank's Collateral;
(b) At any time that an Intercreditor Agreement is not in full force and
effect, or, in the event of a bankruptcy of an Affiliate of the Borrower
with goods located in a Consolidated Warehouse, or any foreclosure action
taken by a creditor against any such Affiliate's goods, the Borrower will,
promptly upon the Bank's request, move the Collateral located in the
related Consolidated Warehouse to another location satisfactory to the
Bank, or take such other or additional actions with respect thereto as the
Bank may reasonably require;
(c) The Borrower will notify the Bank, at least thirty (30) days prior to
the relocation, with such detail as the Bank may request, of any intended
relocation of Collateral to a Consolidated Warehouse (including any
relocation of Collateral from one Consolidated Warehouse to another
Consolidated Warehouse, and will at the same time provide the Bank with two
duplicate originals of an
-8-
updated Exhibit 1.1(j)(i), with Consolidated Warehouse Inventory Caps dated
-----------------
and signed by the Borrower for signature by the Bank, which Exhibit
-------
1.1(j)(i) will replace in its entirety the Exhibit 1.1(j)(i) previously
--------- -----------------
made a part of this Agreement and which the Borrower hereby authorizes the
Bank to substitute therefor; and
(d) Upon request by the Bank, the Borrower will provide the Bank with
copies of any documentation with respect to intercompany receivables
arising from transactions between the Borrower and any Affiliate having
goods located at a Consolidated Warehouse."
9. Section VI is hereby amended to add the following new
Section 6.12:
"6.12. Transactions with Affiliates. (a) The Borrower will not enter into
-----------------------------
or be a party to any transaction or arrangement with any Affiliate
(including, without limitation, the purchase from, sale to or exchange of
property with, or the rendering of any service by or for, any Affiliate),
except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's business, upon fair and reasonable terms no
less favorable to the Borrower than would obtain in a comparable arm's
length transaction with a person other than an Affiliate, and upon
observance of all normal corporate and business formalities with respect to
such transaction; and
(b) The Borrower will not enter into any transaction pursuant to which it
will, or could, owe money to any Affiliate having goods in a Consolidated
Warehouse until such Affiliate has become a party to the Affiliate
Subordination Agreement and delivered to the Bank an original signature
page therefor accompanied by a certificate of the recording officer for
such Affiliate certifying to the authority of the officer executing the
same.
10. Section 7.3(b) of the Credit Agreement is hereby amended in
its entirety to read as follows:
"(b) Schedule of Inventory. Deliver to the Bank weekly a schedule of
---------------------
inventory as of the last Business Day of the immediately preceding weekly
account period of the Borrower and/or at such other intervals and for such
periods as the Bank may request, itemizing and describing for each location
the kind, type and quantity of Inventory by location and the Borrower's
cost thereof."
-9-
11. Section 9.1 of the Credit Agreement is hereby amended by
deleting clauses (a) through (d) therefrom, and by adding the
following new clauses (a) and (b):
"(a) If to the Borrower:
AmeriQuest/NCD, Inc.
MacArthur Place
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, V.P. Finance
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Bank:
The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇/▇▇▇▇▇ St. Clair
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇/6557
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
12. Each of Exhibits 4.1. 4.5, 4.10, and 7.3(c) is hereby
----------------------- ------
amended in its entirety and replaced with the respective Exhibit
attached hereto.
13. Extension Waiver. In reliance upon the Borrower's
----------------
representation, which by the Borrower's signature hereto the
Borrower is hereby deemed to have made, that as of the date of
this Amendment the Borrower is not in default of any of its
obligations under the Credit Agreement, the Bank hereby extends
the time for delivery of the Borrower's audited financial
statements required by Section 5.1(a) of the Credit Agreement
for the fiscal year ending April 1, 1995 to August 31, 1995 and
waives the Borrower's failure to deliver such financial
statements within ninety (90) days following its fiscal year
ending April 1, 1995. By its signature hereto, the Borrower
covenants and agrees that such statements by August 31, 1995
shall be delivered to the Bank on or before August 31, 1995 in
accordance with the requirements of Section 5.1(a) (other than
the ninety day time period specified therein), and the failure
by the Borrower to deliver such statements by August 31, 1995
shall constitute an Event of Default under the Credit
Agreement. The foregoing waiver is expressly limited to the
non-compliance by the Borrower with Section 5.1(a) of the
Credit Agreement and is not, nor shall it be construed as, a
waiver of any other provision of the Credit Agreement.
14. Consent. Subject to the satisfaction of the conditions
-------
precedent set forth herein, the Bank hereby consents to the
relocation of any Collateral to a Consolidated Warehouse.
-10-
15. Effectivess of Amendment. This Amendment, and the extension and waiver
------------------------
and consents contained herein, shall become effective, as of the date first
written above, upon the satisfaction of the following conditions precedent:
(a) receipt by the Bank of this Amendment, executed by an
authorized officer of the Borrower;
(b) receipt by the Bank of a true and correct Exhibit 1.1(j)(i)
as to all Collateral located in a Consolidated Warehouse;
(c) a certificate of the secretary or an assistant secretary of the
Borrower with respect to resolutions of its Board of Directors authorizing
the execution and delivery of this Amendment, confirming the resolutions
previously adopted by the Board of Directors of the Borrower authorizing
the borrowings and other transactions contemplated under the Credit
Agreement, identifying the officer(s) authorized to execute, deliver and
take all other actions required under this Amendment, or the Credit
Agreement, and confirming that the Borrower's Articles of Organization and
By-Laws previously delivered and certified to the Bank have not been
amended, substituted, rescinded or otherwise modified in any way since the
date of said prior certification;
(d) a certificate of the president or chief financial officer of the
Borrower with respect to representations and warranties under the
Agreement, and the absence of any Defaults or Events of Default;
(e) such other items or documents as may be requested by the
Bank.
16. Effect Upon Credit Aqreement. Upon and after the date of
-----------------------------
this Amendment all references to the Credit Agreement in that
document or in any related document, shall mean the Credit
Agreement as amended by this Amendment. Except as expressly
provided in this Amendment, the execution and delivery of this
Amendment does not and will not amend, modify or supplement any
provision of, or constitute a consent to or a waiver of any
non-compliance with the provisions of the Credit Agreement,
and, except as specifically provided in this Amendment, the
Credit Agreement shall remain in full force and effect.
17. No Impairment of Lien. Nothing set forth herein shall
----------------------
affect the priority or extent of the lien of the Credit
Agreement, nor, release or change the liability of any party
who may now be or after the date of this, become liable
primarily or secondarily, thereunder.
-11-
18. Further Assurances. The Borrower hereby agrees to execute
-------------------
and deliver such other instruments, and take such other action,
as the Bank may reasonably request in connection with this
Amendment, including, without limitation, the delivery of all
additional Uniform Commercial Code financing statements which
the Bank may deem appropriate for the perfection, protection
and enforcement of its security interests in the Collateral.
19. Miscellaneous. (a) This Amendment shall be construed
--------------
according to and governed by the laws of The Commonwealth of
Massachusetts without regard to its internal conflicts rules;
(b) if any provision of this Amendment is adjudicated to be
invalid, illegal or unenforceable, in whole or in part, it will
be deemed omitted to that extent and all other provisions of
this Amendment will remain in full force and effect; (c) the
captions contained in this Amendment are for convenience of
reference only and in no event define, describe or limit the
scope of intent or any of the provisions or terms hereof; (d)
this Amendment shall be binding upon and inure to the benefit
of the parties and their respective heirs, legal representatives,
successors and assigns; and (e) this Amendment may be executed in
one or more counterparts.
20. Additional Agreement Regarding Applicable Margin for Period
-----------------------------------------------------------
Commencing January 1. 1995. In light of the Bank's continuing
--------------------------
concern regarding certain matters relative to the Borrower's
leverage ratio for the month ending December 31, 1994 and
thereafter, which the parties have agreed will be resolved upon
delivery of the Borrower's audited April 1, 1995 year-end
financial statements (the "Audited Statements"), the parties
hereby agree that the Applicable Margin will be deemed to have
been (i) 3% for the period January 1, 1995 through May 31,
1995, and (ii) 1 1/2% for the period June 1, 1995 through the
end of the month in which the Audited Statements are delivered
to the Bank, provided that if the Audited Statements are
-------- ----
unqualified, the interest due for the period February 1, 1995
through May 31, 1995 shall be recalculated using an Applicable
Margin of 1 1/2% with the difference rebated to the Borrower by
the Bank in the form of a credit against unpaid accrued
interest due or becoming due under the Credit Agreement after
the Bank's receipt of the Audited Statements, and provided
--------
further that if the Audited Statements are qualified, the
------- ----
interest due for the period June 1, 1995 through the end of the
month in which the Audited Statements are delivered to the
Bank, shall be recalculated using an Applicable Margin of 3%
with the difference to be charged to the Borrower's Loan
Account.
-12-
IN WITNESS WHEREOF, the parties have executed this Amendment
by their duly authorized officers as of the date first above written.
AMERIQUEST/NCD, INC.
By:
---------------------------------
---------------------------------
Print Name
Title: CEO
------------------------------
Executed At: CA
------------------------
THE FIRST NATIONAL BANK OF BOSTON
By:
---------------------------------
---------------------------------
Print Name
Title:
------------------------------
Executed At:
------------------------