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Exhibit 10(bb)
CREDIT AGREEMENT
AMONG
PIONEER-STANDARD ELECTRONICS, INC.,
AS BORROWER,
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
AS LENDERS,
KEY CORPORATE CAPITAL INC.,
AS LEAD ARRANGER, BOOK RUNNER AND ADMINISTRATIVE AGENT,
U.S. BANK NATIONAL ASSOCIATION,
AS SYNDICATION AGENT,
AND
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
AS DOCUMENTATION AGENT
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DATED AS OF
APRIL 16, 2003
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS.......................................................................................... 1
Section 1.1. Definitions..................................................................................... 1
Section 1.2. Accounting Terms................................................................................ 23
Section 1.3. Terms Generally................................................................................. 23
ARTICLE II. AMOUNT AND TERMS OF CREDIT.......................................................................... 23
Section 2.1. Amount and Nature of Credit..................................................................... 23
Section 2.2. Revolving Loans................................................................................. 24
Section 2.3. Letters of Credit............................................................................... 24
Section 2.4. Swing Loans..................................................................................... 26
Section 2.5. Interest........................................................................................ 27
Section 2.6. Evidence of Indebtedness........................................................................ 28
Section 2.7. Notice of Credit Event; Funding of Loans........................................................ 29
Section 2.8. Payment on Notes and Other Obligations.......................................................... 30
Section 2.9. Prepayment...................................................................................... 31
Section 2.10. Facility and Other Fees........................................................................ 31
Section 2.11. Modification to Commitment..................................................................... 32
Section 2.12. Computation of Interest and Fees............................................................... 33
Section 2.13. Mandatory Payment.............................................................................. 33
Section 2.14. Extension of Commitment........................................................................ 33
Section 2.15. Effectiveness of Guaranties.................................................................... 34
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR FIXED RATE LOANS; INCREASED CAPITAL; TAXES................. 34
Section 3.1. Requirements of Law............................................................................. 34
Section 3.2. Taxes........................................................................................... 35
Section 3.3. Funding Losses.................................................................................. 37
Section 3.4. Eurodollar Rate or Alternate Currency Rate Lending Unlawful; Inability to Determine Rate........ 37
ARTICLE IV. CONDITIONS PRECEDENT................................................................................ 38
Section 4.1. Conditions to Each Credit Event................................................................. 38
Section 4.2. Conditions to the First Credit Event............................................................ 39
ARTICLE V. COVENANTS............................................................................................ 40
Section 5.1. Insurance....................................................................................... 41
Section 5.2. Money Obligations............................................................................... 41
Section 5.3. Financial Statements and Information............................................................ 41
Section 5.4. Financial Records............................................................................... 42
Section 5.5. Franchises; Change in Business.................................................................. 42
Section 5.6. ERISA Compliance................................................................................ 42
Section 5.7. Financial Covenants............................................................................. 43
Section 5.8. Borrowing....................................................................................... 43
Section 5.9. Liens........................................................................................... 44
Section 5.10. Regulations U and X............................................................................ 45
Section 5.11. Investments and Loans.......................................................................... 46
Section 5.12. Merger and Sale of Assets...................................................................... 46
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Section 5.13. Acquisitions................................................................................... 47
Section 5.14. Notice......................................................................................... 48
Section 5.15. Environmental Compliance....................................................................... 48
Section 5.16. Affiliate Transactions......................................................................... 49
Section 5.17. Use of Proceeds................................................................................ 49
Section 5.18. Corporate Names................................................................................ 49
Section 5.19. Subsidiary Guaranties.......................................................................... 49
Section 5.20. Restricted Payments............................................................................ 49
Section 5.21. Restrictive Agreements......................................................................... 49
Section 5.22. Other Covenants................................................................................ 50
Section 5.23. Guaranty Under Material Indebtedness Agreement................................................. 50
Section 5.24. Pari Passu Ranking............................................................................. 50
Section 5.25. Restricted Account Funding..................................................................... 50
Section 5.26. Amendment of Organizational Documents.......................................................... 50
Section 5.27. Other Indebtedness............................................................................. 50
ARTICLE VI. REPRESENTATIONS AND WARRANTIES...................................................................... 50
Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification........................................ 50
Section 6.2. Corporate Authority............................................................................. 51
Section 6.3. Compliance with Laws............................................................................ 51
Section 6.4. Litigation and Administrative Proceedings....................................................... 51
Section 6.5. Title to Assets................................................................................. 52
Section 6.6. Liens and Security Interests.................................................................... 52
Section 6.7. Tax Returns..................................................................................... 52
Section 6.8. Environmental Laws.............................................................................. 52
Section 6.9. Continued Business.............................................................................. 52
Section 6.10. Employee Benefits Plans........................................................................ 53
Section 6.11. Consents or Approvals.......................................................................... 53
Section 6.12. Solvency....................................................................................... 53
Section 6.13. Financial Statements........................................................................... 54
Section 6.14. Regulations.................................................................................... 54
Section 6.15. Material Agreements............................................................................ 54
Section 6.16. Intellectual Property.......................................................................... 54
Section 6.17. Insurance...................................................................................... 54
Section 6.18. Accurate and Complete Statements............................................................... 54
Section 6.19. Investment Company; Holding Company............................................................ 55
Section 6.20. Defaults....................................................................................... 55
ARTICLE VII. EVENTS OF DEFAULT.................................................................................. 55
Section 7.1. Payments........................................................................................ 55
Section 7.2. Special Covenants............................................................................... 55
Section 7.3. Other Covenants................................................................................. 55
Section 7.4. Representations and Warranties.................................................................. 55
Section 7.5. Cross Default................................................................................... 55
Section 7.6. ERISA Default................................................................................... 56
Section 7.7. Change in Control............................................................................... 56
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Section 7.8. Money Judgment.................................................................................. 56
Section 7.9. Material Adverse Change......................................................................... 56
Section 7.10. Validity of Loan Documents..................................................................... 56
Section 7.11. Solvency....................................................................................... 56
ARTICLE VIII. REMEDIES UPON DEFAULT............................................................................. 57
Section 8.1. Optional Defaults............................................................................... 57
Section 8.2. Automatic Defaults.............................................................................. 57
Section 8.3. Letters of Credit............................................................................... 58
Section 8.4. Offsets......................................................................................... 58
Section 8.5. Equalization Provision.......................................................................... 58
Section 8.6. Other Remedies.................................................................................. 59
ARTICLE IX. THE AGENT........................................................................................... 59
Section 9.1. Appointment and Authorization................................................................... 59
Section 9.2. Note Holders.................................................................................... 59
Section 9.3. Consultation With Counsel....................................................................... 59
Section 9.4. Documents....................................................................................... 59
Section 9.5. Agent and Affiliates............................................................................ 60
Section 9.6. Knowledge of Default............................................................................ 60
Section 9.7. Action by Agent................................................................................. 60
Section 9.8. Notices, Default................................................................................ 60
Section 9.9. Indemnification of Agent........................................................................ 60
Section 9.10. Successor Agent................................................................................ 60
Section 9.11. Other Agents................................................................................... 61
ARTICLE X. MISCELLANEOUS........................................................................................ 61
Section 10.1. Lenders' Independent Investigation............................................................. 61
Section 10.2. No Waiver; Cumulative Remedies................................................................. 61
Section 10.3. Amendments, Consents........................................................................... 61
Section 10.4. Notices........................................................................................ 62
Section 10.5. Costs, Expenses and Taxes...................................................................... 62
Section 10.6. Indemnification................................................................................ 63
Section 10.7. Obligations Several; No Fiduciary Obligations.................................................. 63
Section 10.8. Execution in Counterparts...................................................................... 63
Section 10.9. Binding Effect; Borrower's Assignment.......................................................... 63
Section 10.10. Lender Assignments............................................................................ 63
Section 10.11. Sale of Participations........................................................................ 65
Section 10.12. Severability of Provisions; Captions; Attachments............................................. 66
Section 10.13. Entire Agreement.............................................................................. 66
Section 10.14. Confidentiality............................................................................... 66
Section 10.15. Legal Representation of Parties............................................................... 67
Section 10.16. Judgment Currency............................................................................. 67
Section 10.17. Currency Equivalent Generally................................................................. 68
Section 10.18. Governing Law; Submission to Jurisdiction..................................................... 68
Section 10.19. Jury Trial Waiver...............................................................Signature Page 1
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Schedule 1 Lenders and Commitments
Schedule 5.8 Indebtedness
Schedule 5.9 Liens
Schedule 5.11 Permitted Foreign Subsidiary Loans and Investments
Schedule 6.1 Corporate Existence/Subsidiaries
Schedule 6.4 Litigation
Schedule 6.10 Employee Benefits Plans
Schedule 6.15 Material Agreements
Exhibit A Revolving Credit Note
Exhibit B Swing Line Note
Exhibit C Notice of Loan
Exhibit D Compliance Certificate
Exhibit E Borrowing Base Certificate
Exhibit F Form of Assignment and Acceptance Agreement
Exhibit G Request for Extension
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This CREDIT AGREEMENT (as the same may from time to time be amended,
restated or otherwise modified, this "Agreement") is made effective as of the
16th day of April, 2003, among:
(a) PIONEER-STANDARD ELECTRONICS, INC., an Ohio
corporation, ("Borrower");
(b) the financial institutions listed on Schedule 1
hereto and each other Eligible Transferee, as hereinafter defined, that
becomes a party hereto pursuant to Section 10.10 hereof (collectively,
the "Lenders" and, individually, each a "Lender");
(c) KEY CORPORATE CAPITAL INC., as lead arranger, book
runner and administrative agent for the Lenders under this Agreement
("Agent");
(d) U.S. BANK NATIONAL ASSOCIATION, as syndication agent
for the Lenders under this Agreement ("Syndication Agent"); and
(e) ▇▇▇▇▇▇ TRUST AND SAVINGS BANK, as documentation agent
for the Lenders under this Agreement ("Documentation Agent").
WITNESSETH:
WHEREAS, Borrower, Agent and the Lenders desire to contract for the
establishment of credits in the aggregate principal amounts hereinafter set
forth, to be made available to Borrower upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I. DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Account" shall mean (a) all accounts, as defined in Chapter 1309 of
the Ohio Revised Code as in effect from time to time; (b)(i) any right to
payment now or hereafter owing to a Company (including but not limited to any
such right to payment by reason of any lease, sale, manufacture, repair,
processing or fabrication of personal property formerly, now or hereafter owned
or otherwise held by such Company, by reason of any services formerly, now or
hereafter rendered by or on behalf of such Company or by reason of any former,
existing or future contract for any such lease, sale, manufacture, repair,
processing, fabrication and/or services), whether such right to payment be
classified by law as an instrument, chattel paper, contract right, account,
document, general intangible or otherwise; (ii) the security, if any, for such
right to
payment; (iii) such Company's right, title and interest (including, without
limitation, all of such Company's rights as an unpaid vendor, and any applicable
right of stoppage in transit) in or to the personal property, if any, that is
the subject of such right to payment; and (iv) all books and records pertaining
to such right to payment; and (c) all proceeds of any of the foregoing,
irrespective of the form or kind thereof.
"Account Debtor" shall mean any Person obligated to pay all or any part
of any Account in any manner and includes (without limitation) any Guarantor
thereof.
"Acquisition" shall mean any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of any Person, or any
business or division of any Person (other than a Company), (b) the acquisition
of in excess of fifty percent (50%) of the stock (or other equity interest) of
any Person (other than a Company), or (c) the acquisition of another Person
(other than a Company) by a merger, amalgamation or consolidation or any other
combination with such Person.
"Additional Commitment" shall have the meaning given to such term in
Section 2.11(b) hereof.
"Additional Lender" shall mean a financial institution that shall
become a Lender hereunder during the Commitment Increase Period pursuant to
Section 2.11(b) hereof.
"Additional Lender Assumption Agreement" shall mean an assumption
agreement in form and substance satisfactory to Agent, wherein an Additional
Lender shall become a Lender hereunder.
"Advantage" shall mean any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by any Lender in respect of the Debt, if such payment results in that
Lender having less than its pro rata share of the Debt then outstanding, than
was the case immediately before such payment.
"Affiliate" shall mean any Person, directly or indirectly, controlling,
controlled by or under common control with a Company and "control" (including
the correlative meanings, the terms "controlling", "controlled by" and "under
common control with") shall mean the power, directly or indirectly, to direct or
cause the direction of the management and policies of a Company, whether through
the ownership of voting securities, by contract or otherwise.
"Agent Fee Letter" shall mean the Agent Fee Letter between Borrower and
Agent, dated as of the Closing Date, as the same may from time to time be
amended, restated or otherwise modified.
"Agreement for Inventory Financing" shall mean that certain Amended and
Restated Agreement for Inventory Financing (Unsecured), dated on or about April
16, 2003, by and between IBM Credit LLC and Borrower, as amended and as the same
may from time to time be further amended, restated or otherwise modified.
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"Alternate Currency" shall mean Euros, Pounds Sterling, Japanese Yen or
any other currency, other than Dollars, agreed to by Agent that shall be freely
transferable and convertible into Dollars.
"Alternate Currency Exposure" shall mean, at any time and without
duplication, the sum of the Dollar Equivalent of (a) the aggregate principal
amount of Alternate Currency Loans, and (b) the Letter of Credit Exposure that
is denominated in one or more Alternate Currencies.
"Alternate Currency Loan" shall mean a Loan described in Section 2.2
hereof that shall be denominated in an Alternate Currency and on which Borrower
shall pay interest at a rate based upon the Alternate Currency Rate applicable
to such Alternate Currency.
"Alternate Currency Maximum Amount" shall mean, at any time, the Dollar
Equivalent of Ten Million Dollars ($10,000,000).
"Alternate Currency Rate" shall mean, with respect to an Alternate
Currency Loan, for any Interest Period, a rate per annum equal to the quotient
obtained (rounded upwards, if necessary, to the nearest 1/16th of 1%) by
dividing (a) the rate of interest, determined by Agent in accordance with its
usual procedures (which determination shall be conclusive absent manifest error)
as of approximately 11:00 A.M. (London time) three Business Days prior to the
beginning of such Interest Period pertaining to such Alternate Currency Loan, as
listed on British Bankers Association Interest Rate LIBOR 01 or 02 as provided
by Reuters (or, if for any reason such rate is unavailable from Reuters, from
any other similar company or service that provides rate quotations comparable to
those currently provided by Reuters) as the rate in the London interbank market
for deposits in the relevant Alternate Currency in immediately available funds
with a maturity comparable to such Interest Period, provided that, in the event
that such rate quotation is not available for any reason, then the Alternate
Currency Rate shall be the average (rounded upward to the nearest 1/16th of 1%)
of the per annum rates at which deposits in immediately available funds in the
relevant Alternate Currency for the relevant Interest Period and in the amount
of the Alternate Currency Loan to be disbursed or to remain outstanding during
such Interest Period, as the case may be, are offered to Agent (or an affiliate
of Agent, in Agent's discretion) by prime banks in any Alternate Currency market
reasonably selected by Agent, determined as of 11:00 A.M. (London time) (or as
soon thereafter as practicable), three Business Days prior to the beginning of
the relevant Interest Period pertaining to such Alternate Currency Loan
hereunder; by (b) 1.00 minus the Reserve Percentage.
"Annualized Consolidated EBITDA" shall mean (a) for the fiscal quarter
of Borrower ending on June 30, 2003, Consolidated EBITDA for such quarter times
four, (b) for the fiscal quarter of Borrower ending on September 30, 2003,
Consolidated EBITDA for the fiscal year to date period times two, and (c) for
the fiscal quarter of Borrower ending on December 31, 2003, Consolidated EBITDA
for the fiscal year to date period times one and one-third.
"Applicable Facility Fee Rate" shall mean:
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(a) for the period from the Closing Date through August 31, 2003,
thirty-five (35) basis points; and
(b) commencing with the Consolidated financial statements of
Borrower for the fiscal quarter ending June 30, 2003, the number of basis points
set forth in the following matrix, based upon the result of the computation of
the Leverage Ratio, shall be used to establish the number of basis points that
will go into effect on September 1, 2003 and thereafter:
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LEVERAGE RATIO APPLICABLE FACILITY FEE RATE
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Greater than or equal to 1.50 to 1.00 50.00
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Greater than or equal to 1.00 to 1.00 but less than 1.50 to 45.00
1.00
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Greater than or equal to 0.50 to 1.00 but less than 1.00 to 40.00
1.00
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Less than 0.50 to 1.00 35.00
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After September 1, 2003, changes to the Applicable Facility Fee Rate shall be
effective on the first day of each month following the date upon which Agent
received, or, if earlier, Agent should have received, pursuant to Section 5.3(a)
or (b) hereof, the financial statements of the Companies. The above matrix does
not modify or waive, in any respect, the requirements of Section 5.7 hereof, the
rights of Agent and the Lenders to charge the Default Rate, or the rights and
remedies of Agent and the Lenders pursuant to Articles VII and VIII hereof.
"Applicable Margin" shall mean:
(a) for the period from the Closing Date through August 31, 2003,
one hundred ten (110) basis points for LIBOR Fixed Rate Loans and zero (0) basis
points for Base Rate Loans; and
(b) commencing with the Consolidated financial statements of
Borrower for the fiscal quarter ending June 30, 2003, the number of basis points
(depending upon whether Loans are LIBOR Fixed Rate Loans or Base Rate Loans) set
forth in the following matrix, based upon the result of the computation of the
Leverage Ratio, shall be used to establish the number of basis points that will
go into effect on September 1, 2003 and thereafter:
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APPLICABLE BASIS APPLICABLE BASIS
POINTS FOR LIBOR FIXED POINTS FOR BASE RATE
LEVERAGE RATIO RATE LOANS LOANS
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Greater than or equal to 2.00 to 1.00 225.00 25.00
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Greater than or equal to 1.50 to 1.00 but less than 200.00 0.00
2.00 to 1.00
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Greater than or equal to 1.00 to 1.00 but less than 175.00 0.00
1.50 to 1.00
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Greater than or equal to 0.50 to 1.00 but less than 130.00 0.00
1.00 to 1.00
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Less than 0.50 to 1.00 110.00 0.00
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After September 1, 2003, changes to the Applicable Margin shall be effective on
the first day of each month following the date upon which Agent received, or, if
earlier, Agent should have received, pursuant to Section 5.3(a) or (b) hereof,
the financial statements of the Companies. The above matrix does not modify or
waive, in any respect, the requirements of Section 5.7 hereof, the rights of
Agent and the Lenders to charge the Default Rate, or the rights and remedies of
Agent and the Lenders pursuant to Articles VII and VIII hereof.
"Assignment Agreement" shall mean an Assignment and Acceptance
Agreement in the form of the attached Exhibit F.
"Authorized Officer" shall mean a Financial Officer or other individual
authorized by a Financial Officer in writing (with a copy to Agent) to handle
certain administrative matters in connection with this Agreement.
"Base Rate" shall mean a rate per annum equal to the greater of (a) the
Prime Rate or (b) one-half of one percent (.50%) in excess of the Federal Funds
Effective Rate. Any change in the Base Rate shall be effective immediately from
and after such change in the Base Rate.
"Base Rate Loan" shall mean a Revolving Loan described in Section 2.2
hereof, that shall be denominated in Dollars and on which Borrower shall pay
interest at a rate based on the Derived Base Rate.
"Borrower Investment Policy" shall mean the Investment Policy
Guidelines of Borrower in effect as of the Closing Date, together with such
modifications as approved from time to time by the Board of Directors of
Borrower.
"Borrowing Base" shall mean an amount equal to the sum of the
following:
(a) eighty-five percent (85%) of the aggregate amount due
and owing on Eligible Accounts Receivable of the Credit Parties; plus
(b) fifty percent (50%) of the aggregate of the cost or
market value (whichever is lower) of the Eligible Inventory of the
Credit Parties; plus
(c) the aggregate amount of Cash Equivalent Investments
(other than Cash Equivalent Investments in the Restricted Account) of
the Credit Parties in excess of Ten Million Dollars ($10,000,000);
minus
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(d) any amounts owed under the Agreement for Inventory
Financing.
"Borrowing Base Certificate" shall mean a certificate, substantially in
the form of the attached Exhibit E.
"Business Day" shall mean a day of the year on which banks are not
authorized or required to close in Cleveland, Ohio, and, if the applicable
Business Day shall relate to any Eurodollar Loan, a day of the year on which
dealings in deposits are carried on in the London interbank Eurodollar market
and, if the applicable Business Day relates to any Alternate Currency, a day of
the year on which dealings in deposits are carried on in the relevant Alternate
Currency.
"Capital Distribution" shall mean a payment made, liability incurred or
other consideration given by a Company to any Person that is not a Company, (a)
for the purchase, acquisition, redemption, repurchase, payment or retirement of
any capital stock or other equity interest of such Company or with respect to
the Convertible Debentures, or (b) as a dividend, return of capital or other
distribution (other than any stock dividend, stock split or other equity
distribution payable only in capital stock or other equity of such Company) in
respect of such Company's capital stock or other equity interest or with respect
to the Convertible Debentures.
"Capitalized Lease Obligations" shall mean obligations for the payment
of rent for any real or personal property under leases or agreements to lease
that, in accordance with GAAP, have been or should be capitalized on the books
of the lessee and, for purposes hereof, the amount of any such obligation shall
be the capitalized amount thereof determined in accordance with GAAP.
"Cash Equivalent Investments" shall mean (a) short-term obligations of,
or fully guaranteed by, the United States of America, (b) commercial paper rated
A-2 or better by Standard & Poor's or P-2 or better by Moody's, (c) demand
deposit accounts maintained in the ordinary course of business, and (d)
certificates of deposit issued by and time deposits with commercial banks
(whether domestic or foreign) having capital and surplus in excess of One
Hundred Million Dollars ($100,000,000); provided, in each case, that the same
provides for payment of both principal and interest (and not principal alone or
interest alone) and is not subject to any contingency regarding the payment of
principal or interest.
"Change in Control" shall mean (a) the acquisition of, or, if earlier,
the shareholder or director approval of the acquisition of, ownership or voting
control, directly or indirectly, beneficially or of record, on or after the
Closing Date, by any Person or group (within the meaning of Rule 13d-3 of the
SEC under the Securities Exchange Act of 1934, as then in effect), of shares
representing more than thirty percent (30%) of the aggregate ordinary Voting
Power represented by the issued and outstanding capital stock of Borrower; (b)
the occupation of a majority of the seats (other than vacant seats) on the board
of directors or other governing body of Borrower by Persons who were neither (i)
nominated by the board of directors or other governing body of Borrower nor (ii)
appointed by directors so nominated; or (c) the occurrence
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of a change in control, or other similar provision, as defined in any Material
Indebtedness Agreement.
"Closing Commitment Amount" shall mean the Dollar Equivalent of One
Hundred Million Dollars ($100,000,000).
"Closing Date" shall mean the effective date of this Agreement as set
forth in the first paragraph of this Agreement.
"Closing Date Required Net Worth" shall mean an amount equal to
eighty-five percent (85%) of Consolidated Tangible Net Worth as measured on
March 31, 2003.
"Closing Fee Letter" shall mean the Closing Fee Letter between Borrower
and Agent, dated as of the Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
together with the rules and regulations promulgated thereunder.
"Commitment" shall mean the obligation hereunder of the Lenders, during
the Commitment Period, to make Revolving Loans and to participate in Swing Loans
and the issuance of Letters of Credit pursuant to the Revolving Credit
Commitment, up to the Total Commitment Amount.
"Commitment Increase Period" shall mean the period from the Closing
Date to the date that is thirty (30) days prior to the last day of the
Commitment Period.
"Commitment Percentage" shall mean, for each Lender, the percentage set
forth opposite such Lender's name under the column headed "Commitment
Percentage", as listed in Schedule 1 hereto.
"Commitment Period" shall mean the period from the Closing Date to
April 15, 2006, or such earlier date on which the Commitment shall have been
terminated pursuant to Article VIII hereof.
"Companies" shall mean Borrower and all Subsidiaries.
"Company" shall mean Borrower or a Subsidiary.
"Compliance Certificate" shall mean a certificate, substantially in the
form of the attached Exhibit D.
"Confidential Information" shall mean all confidential or proprietary
information about the Companies that has been furnished by any Company to Agent
or any Lender, whether furnished before or after the Closing Date and regardless
of the manner in which it is furnished, but does not include any such
information that (a) is or becomes generally available to the public
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other than as a result of a disclosure by Agent or such Lender not permitted by
this Agreement, (b) was available to Agent or such Lender on a nonconfidential
basis prior to its disclosure to Agent or such Lender, or (c) becomes available
to Agent or such Lender on a nonconfidential basis from a Person other than any
Company that is not, to the best knowledge of Agent or such Lender, acting in
violation of a confidentiality agreement with a Company or is not otherwise
prohibited from disclosing the information to Agent or such Lender.
"Confidential Memorandum" shall mean that certain Confidential
Information Memorandum prepared by Borrower and Agent, based upon information
provided by Borrower, delivered to the Lenders on March 17, 2003.
"Consideration" shall mean, in connection with an Acquisition, the
aggregate consideration paid, including borrowed funds, cash, the issuance of
securities or notes, the assumption or incurring of liabilities (direct or
contingent), the payment of consulting fees or fees for a covenant not to
compete and any other consideration paid for such Acquisition.
"Consolidated" shall mean the resultant consolidation of the financial
statements of Borrower and its Subsidiaries in accordance with GAAP, including
principles of consolidation consistent with those applied in preparation of the
consolidated financial statements referred to in Section 6.13 hereof.
"Consolidated Capital Expenditures" shall mean, for any period, the
amount of capital expenditures of Borrower, as determined on a Consolidated
basis and in accordance with GAAP.
"Consolidated Depreciation and Amortization Charges" shall mean, for
any period, the aggregate of all depreciation and amortization charges for fixed
assets, leasehold improvements and general intangibles (specifically including
goodwill) of Borrower for such period, as determined on a Consolidated basis and
in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, on a Consolidated
basis and in accordance with GAAP, Consolidated Net Earnings for such period
plus the aggregate amounts deducted in determining such Consolidated Net
Earnings in respect of (a) Consolidated Income Tax Expense, (b) Consolidated
Interest Expense (including, to the extent deducted from Consolidated Net
Earnings, the amortization of deferred financing costs, interest expense on
deferred compensation arrangements, if any, and payments made to obtain Hedge
Agreements), (c) Consolidated Depreciation and Amortization Charges, and (d)(i)
non-recurring charges resulting from the Project Moose (but in no event to be
greater than Fifteen Million Dollars ($15,000,000)) or the Senior Notes
Repurchase (but in no event to be greater than Fifteen Million Dollars
($15,000,000)), minus (ii) extraordinary non-cash gains not incurred in the
ordinary course of business but that were counted in the net income calculation
for such period.
"Consolidated Fixed Charges" shall mean, for any period, on a
Consolidated basis and in accordance with GAAP, without duplication, the
aggregate of (a) Consolidated Interest Expense (including, without limitation,
the "imputed interest" portion of capital leases, synthetic leases and asset
securitizations, if any), (b) rent expenses, (c) principal payments on
Consolidated
8
Funded Indebtedness (other than optional prepayments of the Notes or any other
Indebtedness), (d) Consolidated Income Tax Expense paid in cash, and (e) cash
expenditures relating to Capital Distributions (specifically including the
Convertible Debentures).
"Consolidated Funded Indebtedness" shall mean, for any period, the sum
of (a) all Indebtedness for borrowed money, and (b) Capitalized Lease
Obligations and Indebtedness pursuant to synthetic leases; as determined on a
Consolidated basis and, in accordance with GAAP, and without regard to amounts
owed on the Convertible Debentures.
"Consolidated Income Tax Expense" shall mean, for any period, all
provisions for taxes based on the gross or net income of Borrower (including,
without limitation, any additions to such taxes, and any penalties and interest
with respect thereto), and all franchise taxes of Borrower, as determined on a
Consolidated basis and in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, the
interest expense of Borrower for such period, as determined on a Consolidated
basis and, in accordance with GAAP, and without regard to payments on the
Convertible Debentures.
"Consolidated Net Earnings" shall mean, for any period, the net income
(loss) of Borrower for such period, as determined on a Consolidated basis and,
in accordance with GAAP, and without regard to payments on the Convertible
Debentures.
"Consolidated Tangible Net Worth" shall mean, at any date, the net book
value (after deducting all applicable reserves and excluding any re-appraisal or
write-up of assets) of the assets (other than patents, goodwill, treasury stock
and other intangibles) of Borrower, as determined on a Consolidated basis and in
accordance with GAAP.
"Controlled Group" shall mean a Company and each Person required to be
aggregated with a Company under Code Section 414(b), (c), (m) or (o).
"Convertible Debentures" shall mean the Series A 6 3/4% Junior
Convertible Subordinated Debentures of Borrower, due March 31, 2028, issued in
the aggregate original principal amount of up to One Hundred Fifty Million
Dollars ($150,000,000), under the Convertible Debentures Indenture.
"Convertible Debentures Indenture" shall mean that certain Junior
Subordinated Indenture, dated as of March 23, 1998, of Borrower to Wilmington
Trust Company, as trustee, as supplemented by that certain First Supplemental
Indenture, dated as of March 23, 1998, of Borrower to Wilmington Trust Company,
as trustee.
"Credit Event" shall mean the making by the Lenders of a Loan, the
conversion by the Lenders of a Base Rate Loan to a LIBOR Fixed Rate Loan, the
continuation by the Lenders of a LIBOR Fixed Rate Loan after the end of the
applicable Interest Period, the making by the Swing Line Lender of a Swing Loan,
or the issuance by the Fronting Lender of a Letter of Credit.
9
"Credit Party" shall mean Borrower and each Subsidiary, including any
Guarantor of Payment, that, in each case, is a party to any Loan Document.
"Debt" shall mean, collectively, (a) all Indebtedness and other
obligations incurred by Borrower or any Guarantor of Payment to Agent, the Swing
Line Lender, the Fronting Lender or the Lenders (or any affiliate thereof)
pursuant to this Agreement and includes the principal of and interest on all
Loans and all obligations pursuant to Letters of Credit; (b) each extension,
renewal or refinancing thereof in whole or in part; and (c) the facility fees,
other fees, any prepayment fees payable hereunder, and all fees and charges in
connection with the Letters of Credit.
"Default" shall mean an event or condition that constitutes, or with
the lapse of any applicable grace period or the giving of notice or both would
constitute, an Event of Default and that has not been waived by the Required
Lenders in writing.
"Default Rate" shall mean (a) with respect to any Loan, a rate per
annum equal to two percent (2%) in excess of the rate otherwise applicable
thereto, and (b) with respect to any other amount, if no rate is specified or
available, a rate per annum equal to two percent (2%) in excess of the Derived
Base Rate from time to time in effect.
"Derived Base Rate" shall mean a rate per annum equal to the sum of the
Applicable Margin (from time to time in effect) for Base Rate Loans plus the
Base Rate.
"Derived LIBOR Fixed Rate" shall mean (a) with respect to a Eurodollar
Loan, a rate per annum equal to the sum of the Applicable Margin (from time to
time in effect) plus the Eurodollar Rate, and (b) with respect to an Alternate
Currency Loan, a rate per annum equal to the sum of the Applicable Margin (from
time to time in effect) plus the Alternate Currency Rate applicable to the
relevant Alternate Currency.
"Derived Swing Loan Rate" shall mean a rate per annum equal to (a)
Agent's cost of funds as quoted to Borrower by Agent and agreed to by Borrower,
plus (b) the Applicable Margin (from time to time in effect) for LIBOR Fixed
Rate Loans.
"Disposition" shall mean the lease, transfer or other disposition of
assets (whether in one or more than one transaction) by a Company, other than a
sale, lease, transfer or other disposition made by a Company pursuant to Section
5.12(b) hereof or in the ordinary course of business.
"Dollar" or the sign $ shall mean lawful money of the United States of
America.
"Dollar Equivalent" shall mean (a) with respect to an Alternate
Currency Loan or Letter of Credit denominated in an Alternate Currency, the
Dollar equivalent of the amount of such Alternate Currency Loan or Letter of
Credit denominated in an Alternate Currency, determined by Agent on the basis of
its spot rate at approximately 11:00 A.M. (London time) on the date three
Business Days before the date of such Alternate Currency Loan, for the purchase
of the relevant Alternate Currency with Dollars for delivery on the date of such
Alternate Currency
10
Loan or Letter of Credit, and (b) with respect to any other amount, if such
amount is denominated in Dollars, then such amount in Dollars and, otherwise the
Dollar equivalent of such amount, determined by Agent on the basis of its spot
rate at approximately 11:00 A.M. (London time) on the date for which the Dollar
equivalent amount of such amount is being determined, for the purchase of the
relevant Alternate Currency with Dollars for delivery on such date; provided,
however, that, in calculating the Dollar Equivalent for purposes of determining
(i) Borrower's obligation to prepay Loans and Letters of Credit pursuant to
Section 2.13 hereof, or (ii) Borrower's ability to request additional Loans or
Letters of Credit pursuant to the Commitment, Agent may, in its discretion, on
any Business Day selected by Agent (prior to payment in full of the Debt),
calculate the Dollar Equivalent of each such Loan or Letter of Credit. Agent
shall notify Borrower of the Dollar Equivalent of such Alternate Currency Loan
or any other amount, at the time that such Dollar Equivalent shall have been
determined.
"Domestic Subsidiary" shall mean a Subsidiary that is not a Foreign
Subsidiary.
"Eligible Account Receivable" shall mean an Account of a Credit Party
to the extent arising out of completed sales by such Credit Party in accordance
with the terms and conditions of all purchase orders, contracts and other
documents relating thereto, which, at all times until it is collected in full,
continuously meets the following requirements: (a) arose in the ordinary course
of business of such Credit Party from the performance (fully completed) of
services or bona fide sale of goods that have been shipped to the Account
Debtor, and not more than ninety (90) days have elapsed since the date that the
payment on such account receivable was due; (b) is not due from any Account
Debtor with respect to which such Credit Party has received any notice or has
any knowledge of insolvency, bankruptcy or financial impairment; (c) is not
subject to an assignment, pledge, claim, mortgage, lien, or security interest of
any type (other than Liens permitted under Section 5.9(b), (c), (g) and (h)
hereof); (d) is not an account receivable due from any Affiliate, shareholder or
employee of such Credit Party; and (e) has not been determined by Agent, in the
exercise of its good-faith, reasonable credit judgment, to be ineligible.
"Eligible Inventory" shall mean all Inventory of the Credit Parties,
except Inventory that is (a) located outside of the United States, (b) damaged,
defective, or obsolete, or (c) determined by Agent, in the exercise of its
good-faith, reasonable credit judgment, to be ineligible.
"Eligible Transferee" shall mean a commercial bank, financial
institution or other "accredited investor" (as defined in SEC Regulation D) that
is not Borrower, a Subsidiary or an Affiliate.
"Environmental Laws" shall mean all provisions of law, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by the government
of the United States of America or any foreign jurisdiction or by any state or
municipality thereof, or by any court, agency, instrumentality, regulatory
authority or commission of any of the foregoing concerning health, safety and
protection of, or regulation of the discharge of substances into, the
environment.
11
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated pursuant thereto.
"ERISA Event" shall mean (a) the existence of a condition or event with
respect to an ERISA Plan that presents a significant risk of the imposition of
an excise tax in a material amount or any other material liability on a Company
or of the imposition of a Lien on the assets of a Company; (b) the engagement by
a Controlled Group member in a non-exempt "prohibited transaction" (as defined
under ERISA Section 406 or Code Section 4975) or a breach of a fiduciary duty
under ERISA that, in either case, could result in a material liability to a
Company; (c) the application by a Controlled Group member for a waiver from the
minimum funding requirements of Code Section 412 or ERISA Section 302 or a
Controlled Group member is required to provide security under Code Section
401(a)(29) or ERISA Section 307; (d) the occurrence of a Reportable Event with
respect to any Pension Plan as to which 30-day notice is required to be provided
to the PBGC; (e) the withdrawal by a Controlled Group member from a
Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" (as such
terms are defined in ERISA Sections 4203 and 4205, respectively) which results
or is likely to result in a material liability to a Company; (f) the involvement
of, or occurrence or existence of any event or condition that makes likely the
involvement of, a Multiemployer Plan in any reorganization under ERISA Section
4241; (g) the failure of an ERISA Plan (and any related trust) that is intended
to be qualified under Code Sections 401 and 501 to be so qualified or the
failure of any "cash or deferred arrangement" under any such ERISA Plan to meet
the requirements of Code Section 401(k), provided, in any such case, that the
failure exposes or is likely to expose a Company to material liability; (h) the
taking by the PBGC of any steps to terminate a Pension Plan or appoint a trustee
to administer a Pension Plan, or the taking by a Controlled Group member of any
steps to terminate a Pension Plan; (i) the failure by a Controlled Group member
or an ERISA Plan to satisfy any requirements of law applicable to an ERISA Plan,
provided, in any such case, that the failure exposes or is likely to expose a
Company to material liability; (j) the commencement, existence or threatening of
a claim, action, suit, audit or investigation with respect to an ERISA Plan,
other than a routine claim for benefits, provided any such commencement,
existence or threatening can reasonably be anticipated to expose a Company to a
material liability; or (k) any occurrence by or any expectation of the
incurrence by a Controlled Group member of any liability for post-retirement
medical benefits under any Welfare Plan, other than as required by ERISA Section
601, et. seq. or Code Section 4980B other than limited payment in connection
with severance benefits or with respect to senior executives of a Company.
"ERISA Plan" shall mean an "employee benefit plan" (within the meaning
of ERISA Section 3(3)) that a Controlled Group member at any time sponsors,
maintains, contributes to, has liability with respect to or has an obligation to
contribute to such plan.
"Eurocurrency Liabilities" shall have the meaning assigned to that term
in Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar" shall mean a Dollar denominated deposit in a bank or
branch outside of the United States.
12
"Eurodollar Loan" shall mean a Revolving Loan described in Section 2.2
hereof, that shall be denominated in Dollars and on which Borrower shall pay
interest at a rate based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to a Eurodollar Loan, for
any Interest Period, a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the nearest 1/16th of 1%) by dividing (a) the rate of
interest, determined by Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) as of approximately
11:00 A.M. (London time) three Business Days prior to the beginning of such
Interest Period pertaining to such Eurodollar Loan, as listed on British Bankers
Association Interest Rate LIBOR 01 or 02 as provided by Reuters (or, if for any
reason such rate is unavailable from Reuters, from any other similar company or
service that provides rate quotations comparable to those currently provided by
Reuters) as the rate in the London interbank market for deposits in Eurodollars
in immediately available funds with a maturity comparable to such Interest
Period, provided that, in the event that such rate quotation is not available
for any reason, then the Eurodollar Rate shall be the average (rounded upward to
the nearest 1/16th of 1%) of the per annum rates at which deposits in
immediately available funds in Eurodollars for the relevant Interest Period and
in the amount of the Eurodollar Loan to be disbursed or to remain outstanding
during such Interest Period, as the case may be, are offered to Agent (or an
affiliate of Agent, in Agent's discretion) by prime banks in any Eurodollar
market reasonably selected by Agent, determined as of 11:00 A.M. (London time)
(or as soon thereafter as practicable), three Business Days prior to the
beginning of the relevant Interest Period pertaining to such Eurodollar Loan
hereunder; by (b) 1.00 minus the Reserve Percentage.
"Event of Default" shall mean an event or condition that shall
constitute an event of default as defined in Article VII hereof.
"Excluded Subsidiary" shall mean a Company that (a) is not a Credit
Party, (b) has aggregate assets of less than Five Hundred Thousand Dollars
($500,000) and aggregate investments by the Companies of less than Five Hundred
Thousand Dollars ($500,000) (but excluding any investment by the Companies in
Aprisa Holdings, Inc., Aprisa Inc. or Pioneer-Standard Financial Trust so long
as no further investments are made by the Companies in Aprisa Holdings, Inc.,
Aprisa Inc. or Pioneer-Standard Financial Trust after the Closing Date), and (c)
has no direct or indirect Subsidiaries with aggregate assets for all such
Subsidiaries of more than Five Hundred Thousand Dollars ($500,000).
"Excluded Taxes" shall mean net income taxes (and franchise taxes
imposed in lieu of net income taxes) imposed on Agent or any Lender by the
Governmental Authority located in the jurisdiction where Agent or such Lender is
organized.
"Federal Funds Effective Rate" shall mean, for any day, the rate per
annum (rounded upward to the nearest one one-hundredth of one percent (1/100 of
1%)) announced by the Federal Reserve Bank of New York (or any successor) on
such day as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on
13
the previous trading day, as computed and announced by such Federal Reserve Bank
(or any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the Closing Date.
"Financial Officer" shall mean any of the following officers: chief
executive officer, president, chief financial officer or treasurer. Unless
otherwise qualified, all references to a Financial Officer in this Agreement
shall refer to a Financial Officer of Borrower.
"Fixed Charge Coverage Ratio" shall mean, for the most recently
completed four fiscal quarters of Borrower (but excluding any period prior to
the period ending June 30, 2003), the ratio of (a) Consolidated EBITDA, minus
Consolidated Capital Expenditures, plus Consolidated rent expenses of the
Companies; to (b) Consolidated Fixed Charges.
"Foreign Subsidiary" shall mean a Subsidiary that is organized outside
of the United States.
"Fronting Lender" shall mean, as to any Letter of Credit transaction
hereunder, KeyBank National Association, as issuer of the Letter of Credit, or,
in the event that KeyBank National Association either shall be unable to issue
or shall agree that another Lender may issue, a Letter of Credit, such other
Lender as shall agree to issue the Letter of Credit in its own name, but on
behalf of the Lenders hereunder.
"GAAP" shall mean generally accepted accounting principles as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, applied on a basis consistent with the
past accounting practices and procedures of Borrower.
"Governmental Authority" shall mean any nation or government, any
state, province or territory or other political subdivision thereof, any
governmental agency, authority, instrumentality, regulatory body, court, central
bank or other governmental entity exercising executive, legislative, judicial,
taxing, regulatory or administrative functions of or pertaining to government,
any securities exchange and any self-regulatory organization.
"Guarantor" shall mean a Person that shall have pledged its credit or
property in any manner for the payment or other performance of the indebtedness,
contract or other obligation of another and includes (without limitation) any
guarantor (whether of payment or of collection), surety, co-maker, endorser or
Person that shall have agreed conditionally or otherwise to make any purchase,
loan or investment in order thereby to enable another to prevent or correct a
default of any kind.
"Guarantor of Payment" shall mean Pioneer-Standard Minnesota, Inc., a
Delaware corporation, Pioneer-Standard Illinois, Inc., a Delaware corporation,
and Pioneer-Standard Electronics, Ltd. LP, a Delaware limited partnership, that
are each executing and delivering a Guaranty of Payment, or any other Domestic
Subsidiary or Person that shall deliver a Guaranty of Payment to Agent
subsequent to the Closing Date.
14
"Guaranty Effectiveness Date" shall mean the date on which the Senior
Unsecured Notes are paid in full.
"Guaranty of Payment" shall mean each Guaranty of Payment of Debt
executed and delivered on or after the Closing Date in connection with this
Agreement by the Guarantors of Payment, as the same may from time to time be
amended, restated or otherwise modified.
"Hedge Agreement" shall mean any (a) hedge agreement, interest rate
swap, cap, collar or floor agreement, or other interest rate management device
entered into by a Company with any Person in connection with any Indebtedness of
the Companies, or (b) currency swap agreement, forward currency purchase
agreement or similar arrangement or agreement designed to protect against
fluctuations in currency exchange rates entered into by the Companies.
"Indebtedness" shall mean, for any Company (excluding in all cases
trade payables payable in the ordinary course of business by such Company),
without duplication, (a) all obligations to repay borrowed money, direct or
indirect, incurred, assumed, or guaranteed, (b) all obligations for the deferred
purchase price of capital assets, (c) all obligations under conditional sales or
other title retention agreements, (d) all obligations (contingent or otherwise)
under any letter of credit, banker's acceptance, currency swap agreement,
interest rate swap, cap, collar or floor agreement or other interest rate
management device, (e) all synthetic leases, (f) all lease obligations that have
been or should be capitalized on the books of such Company in accordance with
GAAP, (g) all obligations of such Company with respect to asset securitization
financing programs to the extent that there is recourse against such Company or
such Company is liable (contingent or otherwise) under any such program, (h) all
obligations to advance funds to, or to purchase assets, property or services
from, any other Person in order to maintain the financial condition of such
Person, and (i) any other transaction (including forward sale or purchase
agreements) having the commercial effect of a borrowing of money entered into by
such Company to finance its operations or capital requirements.
"Interest Adjustment Date" shall mean the last day of each Interest
Period.
"Interest Period" shall mean, with respect to any LIBOR Fixed Rate
Loan, the period commencing on the date such LIBOR Fixed Rate Loan is made and
ending on the last day of such period, as selected by Borrower pursuant to the
provisions hereof, and, thereafter (unless, with respect to a Eurodollar Loan,
such LIBOR Fixed Rate Loan is converted to a Base Rate Loan), each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of such period, as selected by Borrower pursuant to
the provisions hereof. The duration of each Interest Period for a LIBOR Fixed
Rate Loan shall be one month, two months, three months or six months, in each
case as Borrower may select upon notice, as set forth in Section 2.7 hereof;
provided that (a) if Borrower shall fail to so select the duration of any
Interest Period for a Eurodollar Loan at least three Business Days prior to the
Interest Adjustment Date applicable to such Eurodollar Loan, Borrower shall be
deemed to have converted such LIBOR Fixed Rate Loan to a Base Rate Loan at the
end of the then current
15
Interest Period; and (b) each Alternate Currency Loan must be repaid on the last
day of the Interest Period applicable thereto.
"Inventory" shall mean all (a) inventory, as defined in Chapter 1309 of
the Ohio Revised Code as in effect from time to time; (b) goods that are raw
materials; (c) goods that are work-in-process; (d) goods that are materials used
or consumed in the ordinary course of any Company's business; (e) goods that
are, in the ordinary course of any Company's business, held for sale or lease or
furnished or to be furnished under contracts of service; and (f) substitutes and
replacements for, and parts, accessories, additions, attachments or accessions
to (a) through (e) above.
"Letter of Credit" shall mean any standby letter of credit that shall
be issued by the Fronting Lender for the account of Borrower or a Guarantor of
Payment, including amendments thereto, if any, and shall have an expiration date
no later than the earlier of (a) one year after its date of issuance or (b)
thirty (30) days prior to the last day of the Commitment Period.
"Letter of Credit Commitment" shall mean the Commitment of the Fronting
Lender, on behalf of the Lenders, to issue Letters of Credit in an aggregate
face amount of up to the Dollar Equivalent of Five Million Dollars ($5,000,000).
"Letter of Credit Exposure" shall mean, at any time, the Dollar
Equivalent of the sum of (a) the aggregate undrawn face amount of all issued and
outstanding Letters of Credit, and (b) the aggregate of the draws made on
Letters of Credit that shall not have been reimbursed by Borrower or converted
to a Revolving Loan pursuant to Section 2.3 hereof.
"Leverage Ratio" shall mean, at any time, on a Consolidated basis and
in accordance with GAAP, the ratio of (a) Consolidated Funded Indebtedness (for
the most recently completed fiscal quarter of Borrower) to (b) Consolidated
EBITDA (for the most recently completed four fiscal quarters of Borrower);
provided that, for purposes of calculating the Leverage Ratio, (i) Consolidated
Funded Indebtedness shall not include Indebtedness (A) under the Senior
Unsecured Notes for a fiscal quarter of Borrower if the Restricted Account
Maintenance Requirement shall have been met for each day of such fiscal quarter,
or (B) under the Agreement for Inventory Financing, and (ii) with respect to
calculations for the fiscal quarters of Borrower ending June 30, 2003, September
30, 2003 and December 31, 2003, such ratio shall equal (1) Consolidated Funded
Indebtedness (for the most recently completed fiscal quarter of Borrower) to (2)
Annualized Consolidated EBITDA.
"LIBOR Fixed Rate Loan" shall mean a Eurodollar Loan or an Alternate
Currency Loan.
"Lien" shall mean any mortgage, security interest, lien (statutory or
other), charge, encumbrance on, pledge or deposit of, or conditional sale,
leasing, sale with a right of redemption or other title retention agreement and
any capitalized lease with respect to any property (real or personal) or asset.
16
"Liquidity Amount" shall mean, as determined at any time, the amount of
(a) the Revolving Credit Commitment, minus (b) the Revolving Credit Exposure,
plus (c) Cash Equivalent Investments.
"Loan" shall mean a Revolving Loan or Swing Loan granted to Borrower by
the Lenders in accordance with Section 2.2 or 2.4 hereof.
"Loan Documents" shall mean, collectively, this Agreement, each Note,
each Guaranty of Payment, all documentation relating to each Letter of Credit,
the Agent Fee Letter and the Closing Fee Letter, as any of the foregoing may
from time to time be amended, restated or otherwise modified or replaced, and
any other document delivered pursuant thereto.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, property, condition (financial or otherwise) or results of
operations of Borrower and its Subsidiaries taken as a whole, (b) the ability of
Borrower to perform its obligations under the Loan Documents, or (c) the
validity or enforceability of any of the Loan Documents or the rights or
remedies of Agent or the Lenders thereunder.
"Material Indebtedness Agreement" shall mean any debt instrument, lease
(capital, operating or otherwise), guaranty, contract, commitment, agreement or
other arrangement evidencing any Indebtedness of any Company or the Companies in
excess of the amount of Ten Million Dollars ($10,000,000).
"Maximum Amount" shall mean, for each Lender, the amount set forth
opposite such Lender's name under the column headed "Maximum Amount" as set
forth on Schedule 1 hereto, subject to decreases determined pursuant to Section
2.11(a) hereof, increases pursuant to Section 2.11(b) hereof and assignments of
interests pursuant to Section 10.10 hereof; provided, however, that the Maximum
Amount for the Swing Line Lender shall exclude the Swing Line Commitment.
"Maximum Commitment Amount" shall mean the Dollar Equivalent of One
Hundred Fifty Million Dollars ($150,000,000), or such other amount as shall be
determined pursuant to Section 2.11 hereof.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
to such company.
"Multiemployer Plan" shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.
"Note" shall mean each Revolving Credit Note or the Swing Line Note, or
any other promissory note delivered pursuant to this Agreement.
"Notice of Loan" shall mean a Notice of Loan in the form of the
attached Exhibit C.
17
"Organizational Documents" shall mean, with respect to any Person
(other than an individual), such Person's Articles (Certificate) of
Incorporation, or equivalent formation documents, and Regulations (Bylaws), or
equivalent governing documents, and any amendments to any of the foregoing.
"Other Indebtedness Maximum Amount" shall mean that the sum of the
Indebtedness permitted under Section 5.11(d), (e) and (g) hereof shall not
exceed the aggregate amount of Thirty Million Dollars ($30,000,000) at any time
outstanding.
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, goods and services
taxes, harmonized sales taxes and other sales taxes, charges or similar levies
(other than Excluded Taxes) arising from any payment made hereunder or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or its
successor.
"Pension Plan" shall mean an ERISA Plan that is a "pension plan"
(within the meaning of ERISA Section 3(2)).
"Permitted Foreign Subsidiary Loans and Investments" shall mean:
(a) the investments by Borrower or a Domestic Subsidiary
in a Foreign Subsidiary, in such amounts existing as of the Closing
Date and set forth on Schedule 5.11 hereto;
(b) the loans by Borrower or a Domestic Subsidiary to a
Foreign Subsidiary, in such amounts existing as of the Closing Date and
set forth on Schedule 5.11 hereto;
(c) any investment by a Foreign Subsidiary in, or loan
from a Foreign Subsidiary to, or guaranty from a Foreign Subsidiary
issued to, a Company that is a Credit Party;
(d) any loans by a Credit Party to a Foreign Subsidiary,
not otherwise permitted under this definition, up to the aggregate
amount of One Million Dollars ($1,000,000) for such Foreign Subsidiary,
so long as the aggregate for all such loans to all Foreign Subsidiaries
does not exceed the aggregate amount of Five Million Dollars
($5,000,000) at any time outstanding; and
(e) any investments in the form of capital contributions
by a Credit Party in a Foreign Subsidiary, not otherwise permitted
under this definition, up to the aggregate amount of One Million
Dollars ($1,000,000) by all Credit Parties for such Foreign Subsidiary,
so long as the aggregate for all such investments in all Foreign
Subsidiaries does not exceed the aggregate amount of Five Million
Dollars ($5,000,000).
18
"Permitted Investment" shall mean an investment of a Company in the
stock (or other debt or equity instruments) of a Person (other than a Company),
so long as (a) the Company making the investment is a Credit Party or a Foreign
Subsidiary; and (b) in addition to those existing on the Closing Date and listed
on Schedule 5.11 hereto, the aggregate amount of all such investments of all
Companies does not exceed, at any time, an aggregate amount of Ten Million
Dollars ($10,000,000).
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, unincorporated organization, corporation, limited liability
company, institution, trust, estate, government or other agency or political
subdivision thereof or any other entity.
"Prime Rate" shall mean the interest rate established from time to time
by Agent as Agent's prime rate, whether or not such rate shall be publicly
announced; the Prime Rate may not be the lowest interest rate charged by Agent
for commercial or other extensions of credit. Each change in the Prime Rate
shall be effective immediately from and after such change.
"Project Moose" shall mean the Acquisition by Borrower of an IBM
solutions provider with EBITDA in the range of Twenty Million Dollars
($20,000,000) and revenue size in the range of Three Hundred Twenty to Three
Hundred Fifty Million Dollars ($320,000,000-350,000,000).
"Regularly Scheduled Payment Date" shall mean the last day of each
March, June, September and December of each year.
"Related Writing" shall mean each Loan Document and any other guaranty
agreement, subordination agreement, financial statement, audit report or other
writing furnished by any Credit Party, or any of its officers, to Agent or the
Lenders pursuant to or otherwise in connection with this Agreement.
"Reportable Event" shall mean a reportable event as that term is
defined in Title IV of ERISA, except actions of general applicability by the
Secretary of Labor under Section 110 of such Act.
"Request for Extension" shall mean a notice, substantially in the form
of the attached Exhibit G.
"Required Lenders" shall mean the holders of at least fifty-one percent
(51%) of the Total Commitment Amount, with such holders to be comprised of at
least two of the Lenders; or, if there shall be any borrowing hereunder, the
holders of at least fifty-one percent (51%) of the aggregate amount outstanding
under the Notes (other than the Swing Line Note), with such holders to be
comprised of at least two of the Lenders.
"Requirement of Law" shall mean, as to any Person, any law, treaty,
rule or regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property.
19
"Reserve Percentage" shall mean for any day that percentage (expressed
as a decimal) that is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, all basic,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements) for
a member bank of the Federal Reserve System in Cleveland, Ohio, in respect of
Eurocurrency Liabilities. The Derived LIBOR Fixed Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Percentage.
"Restricted Account" shall mean one or more accounts maintained at
Agent (or an affiliate of Agent) in the name of Borrower from which Borrower
shall have the ability to withdraw funds or assets only under specific
conditions as set forth in Section 5.25 hereof and in the Restricted Account
Agreement.
"Restricted Account Agreement" shall mean that Restricted Account
Agreement, dated as of the Closing Date, among Borrower, Agent, for the benefit
of the Lenders, and McDonald Investments, Inc., as the same may from time to
time be amended, restated, or otherwise modified.
"Restricted Account Maintenance Requirement" shall mean, with respect
to a fiscal quarter of Borrower, that Borrower shall have maintained in the
Restricted Account, at all times during such fiscal quarter, investments made
pursuant to the Borrower Investment Policy in an amount of no less than the
Dollar Equivalent of one hundred ten percent (110%) of the aggregate principal
amount outstanding on the Senior Unsecured Notes.
"Restricted Payment" shall mean, with respect to any Company, (a) any
Capital Distribution, or (b) any amount paid by such Company in repayment,
redemption, retirement or repurchase, direct or indirect, of any Subordinated
Indebtedness.
"Revolving Credit Commitment" shall mean the obligation hereunder,
during the Commitment Period, of (a) each Lender to make Revolving Loans up to
the Maximum Amount for such Lender, (b) the Fronting Lender to issue and each
Lender to participate in Letters of Credit pursuant to the Letter of Credit
Commitment, and (c) the Swing Line Lender to make and each Lender to participate
in Swing Loans pursuant to the Swing Line Commitment; provided, however, that
the Revolving Credit Commitment shall at no time exceed the lesser of (i) the
Borrowing Base or (ii) the Total Commitment Amount.
"Revolving Credit Exposure" shall mean, at any time, the Dollar
Equivalent of the sum of (a) the aggregate principal amount of all Revolving
Loans outstanding, (b) the Swing Line Exposure and (c) the Letter of Credit
Exposure.
"Revolving Credit Note" shall mean a Revolving Credit Note executed and
delivered pursuant to Section 2.6(a) hereof.
20
"Revolving Loan" shall mean a Loan granted to Borrower by the Lenders
in accordance with Section 2.2 hereof.
"SEC" shall mean the United States Securities and Exchange Commission,
or any governmental body or agency succeeding to any of its principle functions.
"Senior Notes Indenture" shall mean that certain Indenture, dated as of
August 1, 1996, of Borrower to Star Bank, N.A., as trustee, as the same may from
time to time be amended, restated or otherwise modified.
"Senior Notes Repurchase" shall mean the repayment in full or in part
(other than scheduled payments (as scheduled on the Closing Date) of the Senior
Unsecured Notes).
"Senior Unsecured Notes" means the nine and one-half percent (9 1/2%)
senior notes of Borrower, due August 2006, issued in the aggregate original
principal amount of One Hundred Fifty Million Dollars ($150,000,000), under the
Senior Notes Indenture.
"Significant Asset Disposition" shall mean a Disposition or a related
series of Dispositions (other than the Disposition of the components
distribution business of the Companies consummated February 28, 2003) in which
the aggregate fair market value or book value, whichever is greater, of the
assets sold, leased, transferred or otherwise disposed of shall be greater than
or equal to five percent (5%) of the total Consolidated assets of the Companies.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of ▇▇▇▇▇▇-▇▇▇▇, Inc., or any successor to such company.
"Subordinated" shall mean, as applied to Indebtedness, that the
Indebtedness shall have been subordinated (by written terms or written agreement
being, in either case, in form and substance satisfactory to Agent and the
Required Lenders) in favor of the prior payment in full of the Debt.
"Subsidiary" of a Company shall mean (a) a corporation more than fifty
percent (50%) of the Voting Power of which is owned, directly or indirectly, by
such Company or by one or more other subsidiaries of such Company or by such
Company and one or more subsidiaries of such Company, (b) a partnership or
limited liability company of which such Company, one or more other subsidiaries
of such Company or such Company and one or more subsidiaries of such Company,
directly or indirectly, is a general partner or managing member, as the case may
be, or otherwise has an ownership interest greater than fifty percent (50%) of
all of the ownership interests in such partnership or limited liability company,
or (c) any other Person (other than a corporation, partnership or limited
liability company) in which such Company, one or more other subsidiaries of such
Company or such Company and one or more subsidiaries of such Company, directly
or indirectly, has at least a majority interest in the Voting Power or the power
to elect or direct the election of a majority of directors or other governing
body of such Person.
21
"Swing Line" shall mean the credit facility established by the Swing
Line Lender for Borrower in accordance with Section 2.4 hereof.
"Swing Line Commitment" shall mean the commitment of the Swing Line
Lender to make Swing Loans to Borrower up to the aggregate amount at any time
outstanding of Ten Million Dollars ($10,000,000).
"Swing Line Exposure" shall mean, at any time, the aggregate principal
amount of all Swing Loans outstanding.
"Swing Line Lender" shall mean Key Corporate Capital Inc., as holder of
the Swing Line Commitment.
"Swing Line Note" shall mean the Swing Line Note executed and delivered
pursuant to Section 2.6(b) hereof.
"Swing Loan" shall mean a loan that shall be denominated in Dollars
granted to Borrower by the Swing Line Lender under the Swing Line.
"Swing Loan Maturity Date" shall mean, with respect to any Swing Loan,
the earlier of (a) fifteen (15) days after the date such Swing Loan is made, or
(b) the last day of the Commitment Period.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, charges, fees, deductions or withholdings now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority (together
with any interest, penalties or similar liabilities with respect thereto) other
than Excluded Taxes.
"Total Commitment Amount" shall mean the Closing Commitment Amount, as
such amount may be increased up to the Maximum Commitment Amount pursuant to
Section 2.11(b) hereof, or decreased pursuant to Section 2.11(a) hereof;
provided, however, that, for the purposes of determining the Total Commitment
Amount, Agent may, in its discretion, calculate the Dollar Equivalent of any
Alternate Currency Loan on any Business Day selected by Agent.
"Voting Power" shall mean, with respect to any Person, the exclusive
ability to control, through the ownership of shares of capital stock,
partnership interests, membership interests or otherwise, the election of
members of the board of directors or other similar governing body of such
Person. The holding of a designated percentage of Voting Power of a Person means
the ownership of shares of capital stock, partnership interests, membership
interests or other interests of such Person sufficient to control exclusively
the election of that percentage of the members of the board of directors or
similar governing body of such Person.
"Welfare Plan" shall mean an ERISA Plan that is a "welfare plan" within
the meaning of ERISA Section 3(l).
22
"Wholly-Owned Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company or other entity, all of the securities or
other ownership interest of which having ordinary Voting Power to elect a
majority of the board of directors, or other Persons performing similar
functions, are at the time directly or indirectly owned by such Person.
Section 1.2. Accounting Terms. Any accounting term not specifically
defined in this Article I shall have the meaning ascribed thereto by GAAP.
Section 1.3. Terms Generally. The foregoing definitions shall be
applicable to the singular and plurals of the foregoing defined terms.
ARTICLE II. AMOUNT AND TERMS OF CREDIT
Section 2.1. Amount and Nature of Credit.
(a) Subject to the terms and conditions of this Agreement, the
Lenders, during the Commitment Period and to the extent hereinafter provided,
shall make Loans to Borrower, participate in Swing Loans made by the Swing Line
Lender to Borrower, and issue or participate in Letters of Credit at the request
of Borrower, in such aggregate amount as Borrower shall request pursuant to the
Commitment; provided, however, that in no event shall the Revolving Credit
Exposure be in excess of the Revolving Credit Commitment.
(b) Each Lender, for itself and not one for any other, agrees to
make Loans, participate in Swing Loans, and issue or participate in Letters of
Credit, during the Commitment Period, on such basis that, immediately after the
completion of any borrowing by Borrower or the issuance of a Letter of Credit:
(i) the Dollar Equivalent of the aggregate principal
amount then outstanding on the Notes (other than the Swing Line Note)
issued to such Lender or, if there is no Note outstanding to such
Lender, when combined with such Lender's pro rata share, if any, of the
Letter of Credit Exposure and the Swing Line Exposure, shall not be in
excess of the Maximum Amount for such Lender; and
(ii) such aggregate principal amount outstanding on the
Notes (other than the Swing Line Note) issued to such Lender or, if
there is no Note outstanding to such Lender, shall represent that
percentage of the aggregate principal amount then outstanding on all
Loans (other than the Swing Loan) together with such Lender's interest
in the Letter of Credit Exposure and the Swing Line Exposure that shall
be such Lender's Commitment Percentage. Each borrowing (other than
Swing Loans) from the Lenders hereunder shall be made pro rata
according to the respective Commitment Percentages of the Lenders.
23
(c) The Loans may be made as Revolving Loans as described in
Section 2.2 hereof and Swing Loans as described in Section 2.4. hereof, and
Letters of Credit may be issued in accordance with Section 2.3 hereof.
Section 2.2. Revolving Loans. Subject to the terms and conditions of
this Agreement, during the Commitment Period, the Lenders shall make a Revolving
Loan or Revolving Loans to Borrower in such amount or amounts as Borrower may
from time to time request, but not exceeding in aggregate principal amount at
any time outstanding hereunder the Revolving Credit Commitment, when such
Revolving Loans are combined with the Letter of Credit Exposure and Swing Line
Exposure; provided, however, that Borrower shall not request any Alternate
Currency Loan (and the Lenders shall not be obligated to make an Alternate
Currency Loan) if, after giving effect thereto, the Alternate Currency Exposure
would exceed the Alternate Currency Maximum Amount. Borrower shall have the
option, subject to the terms and conditions set forth herein, to borrow
Revolving Loans, maturing on the last day of the Commitment Period, by means of
any combination of Base Rate Loans, Eurodollar Loans or Alternate Currency
Loans. With respect to each Alternate Currency Loan, subject to the other
provisions of this Agreement, Borrower shall receive all of the proceeds of such
Alternate Currency Loan in one Alternate Currency and repay such Alternate
Currency Loan in the same Alternate Currency. Subject to the provisions of this
Agreement, Borrower shall be entitled under this Section 2.2 to borrow funds,
repay the same in whole or in part and re-borrow hereunder at any time and from
time to time during the Commitment Period.
Section 2.3. Letters of Credit.
(a) Generally. Subject to the terms and conditions of this
Agreement, during the Commitment Period, the Fronting Lender shall, in its own
name, on behalf of the Lenders, issue such Letters of Credit for the account of
Borrower or a Guarantor of Payment, as Borrower may from time to time request.
Borrower shall not request any Letter of Credit (and the Fronting Lender shall
not be obligated to issue any Letter of Credit) if, after giving effect thereto,
(i) the Letter of Credit Exposure would exceed the Letter of Credit Commitment,
(ii) the Revolving Credit Exposure would exceed the Revolving Credit Commitment,
or (iii) with respect to a request for a Letter of Credit to be issued in an
Alternate Currency, the Alternate Currency Exposure would exceed the Alternate
Currency Maximum Amount. The issuance of each Letter of Credit shall confer upon
each Lender the benefits and liabilities of a participation consisting of an
undivided pro rata interest in the Letter of Credit to the extent of such
Lender's Commitment Percentage.
(b) Request for Letter of Credit. Each request for a Letter of
Credit shall be delivered to Agent (and to the Fronting Lender, if the Fronting
Lender is a Lender other than Agent) by an Authorized Officer not later than
11:00 A.M. (Eastern time) three Business Days prior to the day upon which the
Letter of Credit is to be issued. Each such request shall be in a form
acceptable to Agent (and the Fronting Lender, if the Fronting Lender is a Lender
other than Agent) and specify the face amount thereof, the account party, the
beneficiary, the intended date of issuance, the expiry date thereof, the
Alternate Currency if other than Dollars are requested, and the nature of the
transaction to be supported thereby. Concurrently with each such request,
Borrower, and
24
any Guarantor of Payment for whose account the Letter of Credit is to be issued,
shall execute and deliver to the Fronting Lender an appropriate application and
agreement, being in the standard form of the Fronting Lender for such letters of
credit, as amended to conform to the provisions of this Agreement if required by
Agent. Agent shall give the Fronting Lender and each Lender notice of each such
request for a Letter of Credit.
(c) Letter of Credit Fees. In respect of each Letter of Credit and
the drafts thereunder, if any, issued for the account of Borrower or a Guarantor
of Payment, Borrower agrees to pay to Agent (i) for the pro rata benefit of the
Lenders, a non-refundable commission based upon the face amount of such Letter
of Credit, which shall be paid quarterly in arrears, on each Regularly Scheduled
Payment Date, at the rate per annum of the Applicable Margin for LIBOR Fixed
Rate Loans (in effect on the date such payment is to be made) times the face
amount of such Letter of Credit; (ii) for the sole benefit of the Fronting
Lender, an additional Letter of Credit fee, which shall be paid on each date
that such Letter of Credit shall be issued, amended or renewed at the rate per
annum of one-fourth of one percent (1/4 of 1%) of the face amount of such Letter
of Credit; and (iii) for the sole benefit of the Fronting Lender, such other
issuance, amendment, negotiation, draw, acceptance, telex, courier, postage and
similar transactional fees as are generally charged by the Fronting Lender under
its fee schedule as in effect from time to time.
(d) Refunding of Letters of Credit with Revolving Loans. Whenever
a Letter of Credit shall be drawn, Borrower shall immediately reimburse the
Fronting Lender for the amount drawn. In the event that the amount drawn shall
not have been reimbursed by Borrower within one Business Day of the drawing of
such Letter of Credit, at the sole option of Agent (and the Fronting Lender, if
the Fronting Lender is a Lender other than Agent), Borrower shall be deemed to
have requested a Revolving Loan, subject to the provisions of Sections 2.2 and
2.7 hereof, in the amount drawn. Such Revolving Loan shall be evidenced by the
Revolving Credit Notes. Each Lender agrees to make a Revolving Loan on the date
of such notice, subject to no conditions precedent whatsoever. Each Lender
acknowledges and agrees that its obligation to make a Revolving Loan pursuant to
Section 2.2 hereof when required by this Section 2.3 shall be absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the occurrence and continuance of a Default or
Event of Default, and that its payment to Agent, for the account of the Fronting
Lender, of the proceeds of such Revolving Loan shall be made without any offset,
abatement, recoupment, counterclaim, withholding or reduction whatsoever and
whether or not such Lender's Revolving Credit Commitment shall have been reduced
or terminated. Borrower irrevocably authorizes and instructs Agent to apply the
proceeds of any borrowing pursuant to this subsection to reimburse, in full, the
Fronting Lender for the amount drawn on such Letter of Credit. Each such
Revolving Loan shall be deemed to be a Base Rate Loan unless otherwise requested
by and available to Borrower hereunder. Each Lender is hereby authorized to
record on its records relating to its Revolving Credit Note such Lender's pro
rata share of the amounts paid and not reimbursed on the Letters of Credit.
(e) Participation in Letters of Credit. If, for any reason, Agent
(or the Fronting Lender if the Fronting Lender shall be a Lender other than
Agent) shall be unable to or, in the
25
opinion of Agent, it shall be impracticable to, convert any Letter of Credit to
a Revolving Loan pursuant to the preceding subsection, Agent (or the Fronting
Lender if the Fronting Lender is a Lender other than Agent) shall have the right
to request that each Lender purchase a participation in the amount due with
respect to such Letter of Credit, and Agent shall promptly notify each Lender
thereof (by facsimile or telephone, confirmed in writing). Upon such notice, but
without further action, the Fronting Lender hereby agrees to grant to each
Lender, and each Lender hereby agrees to acquire from the Fronting Lender, an
undivided participation interest in the amount due with respect to such Letter
of Credit in an amount equal to such Lender's Commitment Percentage of the
principal amount due with respect to such Letter of Credit. In consideration and
in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to
Agent, for the account of the Fronting Lender, such Lender's ratable share of
the amount due with respect to such Letter of Credit (determined in accordance
with such Lender's Commitment Percentage). Each Lender acknowledges and agrees
that its obligation to acquire participations in the amount due under any Letter
of Credit that is drawn but not reimbursed by Borrower pursuant to this
subsection shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or Event of Default, and that each such payment shall
be made without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever and whether or not such Lender's Revolving Credit
Commitment shall have been reduced or terminated. Each Lender shall comply with
its obligation under this subsection by wire transfer of immediately available
funds, in the same manner as provided in Section 2.7 hereof with respect to
Revolving Loans. Each Lender is hereby authorized to record on its records such
Lender's pro rata share of the amounts paid and not reimbursed on the Letters of
Credit.
Section 2.4. Swing Loans.
(a) Generally. Subject to the terms and conditions of this
Agreement, during the Commitment Period, the Swing Line Lender shall make a
Swing Loan or Swing Loans to Borrower in such amount or amounts as Borrower,
through an Authorized Officer, may from time to time request; provided that
Borrower shall not request any Swing Loan if, after giving effect thereto, (i)
the Revolving Credit Exposure would exceed the Revolving Credit Commitment, or
(ii) the Swing Line Exposure would exceed the Swing Line Commitment. Each Swing
Loan shall be due and payable on the Swing Loan Maturity Date applicable
thereto. Borrower shall not request that more than two Swing Loans be
outstanding at any time. Each Swing Loan shall be made in Dollars.
(b) Refunding of Swing Loans. If Agent so elects, by giving notice
to Borrower and the Lenders, Borrower agrees that the Swing Line Lender shall
have the right, in its sole discretion, to require that any Swing Loan be
refinanced as a Revolving Loan. Such Revolving Loan shall be a Base Rate Loan
unless otherwise requested by and available to Borrower hereunder. Upon receipt
of such notice by Borrower and the Lenders, Borrower shall be deemed, on such
day, to have requested a Revolving Loan in the principal amount of the Swing
Loan in accordance with Sections 2.2 and 2.7 hereof (other than the requirement
set forth in Section 2.7(d) hereof). Each Lender agrees to make a Revolving Loan
on the date of such
26
notice, subject to no conditions precedent whatsoever. Each Lender acknowledges
and agrees that such Lender's obligation to make a Revolving Loan pursuant to
Section 2.2 hereof when required by this subsection is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the occurrence and continuance of a Default or
Event of Default, and that its payment to Agent, for the account of the Swing
Line Lender, of the proceeds of such Revolving Loan shall be made without any
offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever
and whether or not such Lender's Revolving Credit Commitment shall have been
reduced or terminated. Borrower irrevocably authorizes and instructs Agent to
apply the proceeds of any borrowing pursuant to this subsection to repay in full
such Swing Loan.
(c) Participation in Swing Loans. If, for any reason, Agent is
unable to or, in the opinion of Agent, it is impracticable to, convert any Swing
Loan to a Revolving Loan pursuant to the preceding subsection, then on any day
that a Swing Loan is outstanding (whether before or after the maturity thereof),
Agent shall have the right to request that each Lender purchase a participation
in such Swing Loan, and Agent shall promptly notify each Lender thereof (by
facsimile or telephone, confirmed in writing). Upon such notice, but without
further action, the Swing Line Lender hereby agrees to grant to each Lender, and
each Lender hereby agrees to acquire from the Swing Line Lender, an undivided
participation interest in such Swing Loan in an amount equal to such Lender's
Commitment Percentage of the principal amount of such Swing Loan. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees, upon receipt of notice as provided above, to pay to
Agent, for the benefit of the Swing Line Lender, such Lender's ratable share of
such Swing Loan (determined in accordance with such Lender's Commitment
Percentage). Each Lender acknowledges and agrees that its obligation to acquire
participations in Swing Loans pursuant to this subsection is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the occurrence and continuance of a Default or an
Event of Default, and that each such payment shall be made without any offset,
abatement, recoupment, counterclaim, withholding or reduction whatsoever and
whether or not such Lender's Revolving Credit Commitment shall have been reduced
or terminated. Each Lender shall comply with its obligation under this
subsection by wire transfer of immediately available funds, in the same manner
as provided in Section 2.7 hereof with respect to Revolving Loans to be made by
such Lender.
Section 2.5. Interest.
(a) Revolving Loans.
(i) Base Rate Loan. Borrower shall pay interest on the
unpaid principal amount of a Base Rate Loan outstanding from time to
time from the date thereof until paid at the Derived Base Rate from
time to time in effect. Interest on such Base Rate Loan shall be
payable, commencing June 30, 2003, and on each Regularly Scheduled
Payment Date thereafter and at the maturity thereof.
27
(ii) LIBOR Fixed Rate Loans. Borrower shall pay interest
on the unpaid principal amount of each LIBOR Fixed Rate Loan
outstanding from time to time, fixed in advance on the first day of the
Interest Period applicable thereto through the last day of the Interest
Period applicable thereto (but subject to changes in the Applicable
Margin), at the Derived LIBOR Fixed Rate. Interest on such LIBOR Fixed
Rate Loan shall be payable on each Interest Adjustment Date with
respect to an Interest Period (provided that if an Interest Period
shall exceed three months, the interest must be paid every three
months, commencing three months from the beginning of such Interest
Period).
(b) Swing Loans. Borrower shall pay interest to Agent, for the
sole benefit of the Swing Line Lender (and any Lender that shall have purchased
a participation in such Swing Loan), on the unpaid principal amount of each
Swing Loan outstanding from time to time from the date thereof until paid at the
Derived Swing Loan Rate applicable to such Swing Loan. Interest on each Swing
Loan shall be payable on the Swing Loan Maturity Date applicable thereto. Each
Swing Loan shall bear interest for a minimum of one day.
(c) Default Rate. Anything herein to the contrary notwithstanding,
if an Event of Default shall occur, upon the election of the Required Lenders
(i) the principal of each Loan and the unpaid interest thereon shall bear
interest, until paid, at the Default Rate; (ii) the fee for the aggregate
undrawn face amount of all issued and outstanding Letters of Credit shall be
increased by two percent (2%) in excess of the rate otherwise applicable
thereto; and (iii) in the case of any other amount due from Borrower hereunder
or under any other Loan Document, such amount shall bear interest at the Default
Rate; provided that, during an Event of Default under Section 7.11 hereof, the
applicable Default Rate shall apply without any election or action on the part
of Agent or any Lender.
(d) Limitation on Interest. In no event shall the rate of interest
hereunder exceed the maximum rate allowable by law.
Section 2.6. Evidence of Indebtedness.
(a) Revolving Loans. Upon request of a Lender, to evidence the
obligation of Borrower to repay the Base Rate Loans and LIBOR Fixed Rate Loans
made by such Lender and to pay interest thereon, Borrower shall execute a
Revolving Credit Note of Borrower in the form of Exhibit A hereto, payable to
the order of such Lender in the principal amount of its Maximum Amount or, if
less, the aggregate unpaid principal amount of Revolving Loans made by such
Lender; provided, however, that the failure of any Lender to request a Revolving
Credit Note shall in no way detract from Borrower's obligations to such Lender
hereunder.
(b) Swing Loan. The obligation of Borrower to repay the Swing
Loans and to pay interest thereon shall be evidenced by a Swing Line Note of
Borrower in the form of Exhibit B hereto, and payable to the order of the Swing
Line Lender in the principal amount of the Swing Line Commitment or, if less,
the aggregate unpaid principal amount of Swing Loans made by the Swing Line
Lender.
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Section 2.7. Notice of Credit Event; Funding of Loans.
(a) Notice of Credit Event. Borrower, through an Authorized
Officer, shall provide to Agent a Notice of Loan prior to (i) 11:00 A.M.
(Eastern time) on the proposed date of borrowing or conversion of any Base Rate
Loan, (ii) 11:00 A.M. (Eastern time) three Business Days prior to the proposed
date of borrowing, conversion or continuation of any LIBOR Fixed Rate Loan, and
(iii) 2:00 P.M. (Eastern time) on the proposed date of borrowing of any Swing
Loan.
(b) Funding of Loans. Agent shall notify each Lender of the date,
amount, type of currency and Interest Period (if applicable) promptly upon the
receipt of a Notice of Loan, and, in any event, by 2:00 P.M. (Eastern time) on
the date such notice is received. On the date that the Credit Event set forth in
such notice is to occur, each such Lender shall provide to Agent, not later than
3:00 P.M. (Eastern time), the amount in Dollars, or, with respect to an
Alternate Currency, in the applicable Alternate Currency, in federal or other
immediately available funds, required of it. If Agent shall elect to advance the
proceeds of such Loan prior to receiving funds from such Lender, Agent shall
have the right, upon prior notice to Borrower, to debit any account of Borrower
or otherwise receive such amount from Borrower, on demand, in the event that
such Lender shall fail to reimburse Agent in accordance with this subsection.
Agent shall also have the right to receive interest from such Lender at the
Federal Funds Effective Rate in the event that such Lender shall fail to provide
its portion of the Loan on the date requested and Agent shall elect to provide
such funds.
(c) Conversion of Loans. At the request of Borrower to Agent,
subject to the notice and other provisions of this Section 2.7, the Lenders
shall convert a Base Rate Loan to one or more Eurodollar Loans at any time and
shall convert a Eurodollar Loan to a Base Rate Loan on any Interest Adjustment
Date applicable thereto. No Alternate Currency Loan may be converted to a Base
Rate Loan or Eurodollar Loan and no Base Rate Loan or Eurodollar Loan may be
converted to an Alternate Currency Loan.
(d) Minimum Amount. Each request for:
(i) a Base Rate Loan shall be in an amount of not less
than Five Million Dollars ($5,000,000), increased by increments of One
Million Dollars ($1,000,000);
(ii) a LIBOR Fixed Rate Loan shall be in an amount (or,
with respect to an Alternate Currency Loan, the Dollar Equivalent) of
not less than Five Million Dollars ($5,000,000), increased by
increments of One Million Dollars ($1,000,000) (or, with respect to an
Alternate Currency Loan, the Dollar Equivalent); and
(iii) a Swing Loan shall be in an amount of not less than
One Hundred Thousand Dollars ($100,000).
(e) Interest Periods. At no time shall Borrower request that LIBOR
Fixed Rate Loans be outstanding for more than eight different Interest Periods
at any time, and, if a Base Rate
29
Loan is outstanding, then LIBOR Fixed Rate Loans shall be limited to seven
different Interest Periods at any time.
Section 2.8. Payment on Loans and Other Obligations.
(a) Payments Generally. Each payment made hereunder by a Credit
Party shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever.
(b) Payments in Alternate Currency. With respect to any Alternate
Currency Loan or any Alternate Currency Letter of Credit, all payments
(including prepayments) to any Lender of the principal of or interest on such
Alternate Currency Loan or Alternate Currency Letter of Credit shall be made in
the same Alternate Currency as the original Loan or Letter of Credit. All such
payments shall be remitted by Borrower to Agent, at the address of Agent for
notices referred to in Section 10.4 hereof, (or at such other office or account
as designated in writing by Agent to Borrower) for the account of the Lenders
(or the Fronting Lender or the Swing Line Lender, as appropriate) not later than
11:00 A.M. (Eastern time) on the due date thereof in same day funds. Any
payments received by Agent after 11:00 A.M. (Eastern time) shall be deemed to
have been made and received on the next Business Day.
(c) Payments in Dollars. With respect to (i) any Loan (other than
an Alternate Currency Loan), or (ii) any other payment to Agent and the Lenders
that shall not be covered by subsection (b) above, all such payments (including
prepayments) to Agent of the principal of or interest on such Loan or other
payment, including but not limited to principal, interest, fees or any other
amount owed by Borrower under this Agreement, shall be made in Dollars. All
payments described in this subsection shall be remitted to Agent, at the address
of Agent for notices referred to in Section 10.4 hereof, for the account of the
Lenders (or the Fronting Lender or the Swing Line Lender, as appropriate) not
later than 11:00 A.M. (Eastern time) on the due date thereof in immediately
available funds. Any such payments received by Agent after 11:00 A.M. (Eastern
time) shall be deemed to have been made and received on the next following
Business Day.
(d) Payments to Lenders. Upon Agent's receipt of payments
hereunder, Agent shall immediately distribute to each Lender its ratable share,
if any, of the amount of principal, interest, and facility and other fees
received by Agent for the account of such Lender. Payments received by Agent in
Dollars shall be delivered to the Lenders in Dollars in immediately available
funds. Payments received by Agent in any Alternate Currency shall be delivered
to the Lenders in such Alternate Currency in same day funds. Each Lender shall
record any principal, interest or other payment, the principal amounts of Base
Rate Loans, LIBOR Fixed Rate Loans and Swing Loans, the type of currency for
each Loan, all prepayments and the applicable dates, including Interest Periods,
with respect to the Loans made, and payments received by such Lender, by such
method as such Lender may generally employ; provided, however, that failure to
make any such entry shall in no way detract from the obligations of Borrower
under this Agreement or any Note. The aggregate unpaid amount of Loans, types of
Loans, Interest Periods and similar information with respect to the Loans and
Letters of Credit set forth on the records of
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Agent shall be rebuttably presumptive evidence with respect to such information,
including the amounts of principal and interest owing to each Lender.
(e) Timing of Payments. Whenever any payment to be made hereunder,
including, without limitation, any payment to be made on any Loan, shall be
stated to be due on a day that shall not be a Business Day, such payment shall
be made on the next succeeding Business Day and such extension of time shall in
each case be included in the computation of the interest payable on such Loan;
provided, however, that, with respect to any LIBOR Fixed Rate Loan, if the next
Business Day shall fall in the succeeding calendar month, such payment shall be
made on the preceding Business Day and the relevant Interest Period shall be
adjusted accordingly.
Section 2.9. Prepayment.
(a) Right to Prepay. Borrower shall have the right at any time or
from time to time to prepay, on a pro rata basis for all of the Lenders, all or
any part of the principal amount of the Revolving Loans then outstanding, as
designated by Borrower, plus interest accrued on the amount so prepaid to the
date of such prepayment, and any amount payable under Article III hereof with
respect to the amount being prepaid. Borrower shall have the right, at any time
or from time to time, to prepay, for the benefit of the Swing Line Lender (and
any Lender that has purchased a participation in such Swing Loan), all or any
part of the principal amount of the Swing Loans then outstanding, as designated
by Borrower, plus interest accrued on the amount so prepaid to the date of such
prepayment, and any amount payable under Article III hereof with respect to the
amount being prepaid.
(b) Notice of Prepayment. Borrower shall give Agent (i) notice of
prepayment of any Base Rate Loan or Swing Loan by not later than 11:00 A.M.
(Eastern time) one Business Day before the Business Day on which such prepayment
is to be made, (ii) written notice of the prepayment of any Eurodollar Loan not
later than 1:00 P.M. (Eastern time) two Business Days before the Business Day on
which such prepayment is to be made, and (iii) written notice of the prepayment
of any Alternate Currency Loan not later than 1:00 P.M. (Eastern time) three
Business Days before the Business Day on which such prepayment is to be made.
(c) Minimum Amount. Each prepayment of a LIBOR Fixed Rate Loan
shall be in the principal amount of not less than One Million Dollars
($1,000,000) (or, with respect to an Alternate Currency Loan, the Dollar
Equivalent of such amount) or, with respect to a Swing Loan, the principal
balance of such Swing Loan, except in the case of a mandatory payment pursuant
to Section 2.13 or Article III hereof.
Section 2.10. Facility and Other Fees.
(a) Facility Fee. Borrower shall pay to Agent, for the ratable
account of the Lenders, as a consideration for the Commitment, a facility fee
from the Closing Date to and including the last day of the Commitment Period,
payable quarterly, equal to (i) the Applicable Facility Fee Rate in effect on
the payment date, times (ii) the average daily Total Commitment Amount in effect
during such quarter. The facility fee shall be payable in arrears, on June 30,
2003 and
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continuing on each Regularly Scheduled Payment Date thereafter, and on the last
day of the Commitment Period.
(b) Agent Fee. Borrower shall pay to Agent, for its sole benefit,
the fees set forth in the Agent Fee Letter.
Section 2.11. Modification to Commitment.
(a) Optional Reduction of Commitment. Borrower may at any time or
from time to time permanently reduce in whole or ratably in part the Commitment
of the Lenders hereunder to an amount not less than the then existing Revolving
Credit Exposure, by giving Agent not fewer than three Business Days' notice of
such reduction, provided that any such partial reduction shall be in an
aggregate amount, for all of the Lenders, of not less than Five Million Dollars
($5,000,000), increased by increments of One Million Dollars ($1,000,000). Agent
shall promptly notify each Lender of the date of each such reduction and such
Lender's proportionate share thereof. After each such reduction, the facility
fees payable hereunder shall be calculated upon the Total Commitment Amount as
so reduced. If Borrower reduces in whole the Commitment of the Lenders, on the
effective date of such reduction (Borrower having prepaid in full the unpaid
principal balance, if any, of the Loans, together with all interest and facility
and other fees accrued and unpaid, and provided that no Letter of Credit
Exposure or Swing Line Exposure shall exist), all of the Notes shall be
delivered to Agent marked "Canceled" and Agent shall redeliver such Notes to
Borrower. Any partial reduction in the Total Commitment Amount shall be
effective during the remainder of the Commitment Period.
(b) Increase in Commitment. At any time during the Commitment
Increase Period (but no more frequently than once per calendar year), Borrower
may request that Agent increase the Total Commitment Amount from the Closing
Commitment Amount up to an amount that shall not exceed the Maximum Commitment
Amount. Each such increase shall be in increments of at least Five Million
Dollars ($5,000,000), and may be made by either (i) proportionally increasing,
for one or more Lenders, with their prior written consent, their respective
Maximum Amounts, or (ii) including one or more Additional Lenders, each with a
new Maximum Amount of the Revolving Credit Commitment, as a party to this
Agreement (collectively, the "Additional Commitment"). During the Commitment
Increase Period, the Lenders agree that Agent, in its sole discretion, may
permit one or more Additional Commitments upon satisfaction of the following
requirements: (A) each Additional Lender, if any, shall execute an Additional
Lender Assumption Agreement, (B) Agent shall provide to each Lender a revised
Schedule 1 to this Agreement, including revised Commitment Percentages for each
of the Lenders, if appropriate, at least three Business Days prior to the
effectiveness of such Additional Commitments (each an "Assumption Effective
Date"), and (C) Borrower shall execute and deliver to Agent and the Lenders such
replacement or additional Revolving Credit Notes as shall be required by Agent.
The Lenders hereby authorize Agent to execute each Additional Lender Assumption
Agreement on behalf of the Lenders. On each Assumption Effective Date, the
Lenders shall make adjustments among themselves with respect to the Revolving
Loans then outstanding and amounts of principal, interest, facility fees and
other amounts paid or payable with respect thereto as shall be necessary, in the
opinion of Agent, in order to reallocate among the Lenders
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such outstanding amounts, based on the revised Commitment Percentages and to
otherwise carry out fully the intent and terms of this subsection. Borrower
shall not request any increase in the Total Commitment Amount pursuant to this
subsection if a Default or an Event of Default shall then exist, or immediately
after giving effect to any such increase would exist.
Section 2.12. Computation of Interest and Fees. With the exception of
Base Rate Loans, interest on Loans, and facility and other fees and charges
hereunder shall be computed on the basis of a year having three hundred sixty
(360) days and calculated for the actual number of days elapsed. With respect to
Base Rate Loans, interest shall be computed on the basis of a year having three
hundred sixty-five (365) days or three hundred sixty-six (366) days, as the case
may be, and calculated for the actual number of days elapsed.
Section 2.13. Mandatory Payment.
(a) If, at any time, the Revolving Credit Exposure shall exceed
the Revolving Credit Commitment as then in effect, Borrower shall, as promptly
as practicable, but in no event later than the next Business Day, prepay an
aggregate principal amount of the Revolving Loans sufficient to bring the
Revolving Credit Exposure within the Revolving Credit Commitment.
(b) If, at any time, the Swing Line Exposure shall exceed the
Swing Line Commitment, Borrower shall, as promptly as practicable, but in no
event later than the next Business Day, prepay an aggregate principal amount of
the Swing Loans sufficient to bring the Swing Line Exposure within the Swing
Line Commitment.
(c) Unless otherwise designated by Borrower, each prepayment
pursuant to Section 2.13(a) hereof shall be applied in the following order (i)
first, on a pro rata basis among all of the outstanding Base Rate Loans, and
(ii) second, on a pro rata basis among all of the outstanding LIBOR Fixed Rate
Loans, provided that if the outstanding principal amount of any LIBOR Fixed Rate
Loan shall be reduced to an amount less than the minimum amount set forth in
Section 2.7(d) hereof as a result of such prepayment, then such LIBOR Fixed Rate
Loan shall be converted into a Base Rate Loan on the date of such prepayment.
Any prepayment of a LIBOR Fixed Rate Loan or Swing Loan pursuant to this Section
2.13 shall be subject to the prepayment penalties set forth in Article III
hereof.
Section 2.14. Extension of Commitment. Contemporaneously with the
delivery of the financial statements required pursuant to Section 5.3(b) hereof
(beginning with the financial statements for Borrower's fiscal year ending March
31, 2004), Borrower may deliver a Request for Extension, requesting that the
Lenders extend the maturity of the Revolving Credit Commitment for an additional
year. Each such extension shall require the unanimous written consent of all of
the Lenders and shall be upon such terms and conditions as may be agreed to by
Agent, Borrower and the Lenders. Borrower shall pay any reasonable attorneys'
fees or other properly documented expenses of Agent in connection with the
documentation of any such extension, as well as such other fees as may be agreed
upon between Borrower and Agent.
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Section 2.15. Effectiveness of Guaranties. Concurrently with the
execution of this Agreement, Borrower shall cause each Domestic Subsidiary
(other than an Excluded Subsidiary) to execute and deliver to Agent, for the
benefit of the Lenders, a Guaranty of Payment, to provide Organizational
Documents and a legal opinion with respect to such Guaranty of Payment, and to
provide such other documents as Agent shall deem reasonably necessary or
appropriate (the "Guaranty Documents"). Agent, on behalf of the Lenders,
acknowledges that the Guaranty Documents will be held in escrow by Agent and
that any guaranty granted by such Domestic Subsidiary to Agent in the Guaranty
Documents shall not be effective until the earliest of (a) Borrower shall fail
to comply with any financial covenant set forth in Section 5.7 hereof and the
Required Lenders shall not have waived such violation in writing or amended such
financial covenant to cure such violation within thirty (30) days after such
failure to comply, (b) an Event of Default shall occur under Section 7.1, 7.7,
or 7.11 hereof, or (c) the Guaranty Effectiveness Date, at which time Agent may,
in its sole and absolute discretion, release the Guaranty Documents from escrow
to Agent, for the benefit of the Lenders. Borrower acknowledges and agrees that
Agent, on behalf of the Lenders, may release the Guaranty Documents from escrow
under any of the preceding conditions by providing five days prior notice to
Borrower or such Domestic Subsidiary (provided that no notice or time period
shall be required if an Event of Default shall have occurred under Section 7.11
hereof), and such Guaranty Documents shall thereafter be automatically
effective, without any further action by Agent, any Lender or any Credit Party
or other Company. The provisions in this Section 2.15 shall control over the
provisions of the Guaranty Documents until such time as the Guaranty Documents
shall become effective in accordance with this Section 2.15.
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR FIXED RATE
LOANS; INCREASED CAPITAL; TAXES
Section 3.1. Requirements of Law.
(a) If, after the Closing Date (i) the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
(ii) the compliance by any Lender with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority:
(A) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit or any
LIBOR Fixed Rate Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Taxes and
Excluded Taxes which are governed by Section 3.2 hereof);
(B) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender that is not
otherwise included in the determination of the Eurodollar Rate or the
Alternate Currency Rate; or
34
(C) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender of
making, converting into, continuing or maintaining LIBOR Fixed Rate Loans or
issuing or participating in Letters of Credit, or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, Borrower shall
pay to such Lender, promptly after receipt of a written request therefor, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this subsection, such Lender shall promptly
notify Borrower (with a copy to Agent) of the event by reason of which it has
become so entitled.
(b) If any Lender shall have determined that, after the Closing
Date, the adoption of or any change in any Requirement of Law regarding capital
adequacy or in the interpretation or application thereof or compliance by such
Lender or any corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority shall have the effect of reducing the rate of return on
such Lender's or such corporation's capital as a consequence of its obligations
hereunder, or in respect of any Letter of Credit, to a level below that which
such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration the policies of such Lender or
corporation with respect to capital adequacy), then from time to time, upon
submission by such Lender to Borrower (with a copy to Agent) of a written
request therefor (which shall include the method for calculating such amount and
reasonable detail regarding such calculation), Borrower shall promptly pay or
cause to be paid to such Lender such additional amount or amounts as will
compensate such Lender for such reduction.
(c) A certificate as to any additional amounts payable pursuant to
this Section 3.1 submitted by any Lender to Borrower, together with a reasonably
detailed calculation and description of such amounts contemplated by this
Section 3.1 (with a copy to Agent), shall be rebuttably presumptive evidence of
the amounts so payable. In determining any such additional amounts, such Lender
may use any method of averaging and attribution that it (in its good-faith,
reasonable credit judgment) shall deem applicable. The obligations of Borrower
pursuant to this Section 3.1 shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.
Section 3.2. Taxes.
(a) All payments made by any Credit Party under any Loan Document
shall be made free and clear of, and without deduction or withholding for or on
account of any Taxes or Other Taxes. If any Taxes or Other Taxes are required to
be withheld from any amounts payable to Agent or any Lender thereunder, the
amounts so payable to Agent or such Lender shall be increased to the extent
necessary to yield to Agent or such Lender (after payment of all Taxes and Other
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in the Loan Documents.
35
(b) In addition, Credit Parties shall pay Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Taxes or Other Taxes are required to be withheld
and paid by a Credit Party, such Credit Party shall timely withhold and pay such
taxes to the relevant Governmental Authorities. As promptly as possible
thereafter, Borrower shall send to Agent for its own account or for the account
of the relevant Lender, as the case may be, a certified copy of an original
official receipt received by such Credit Party showing payment thereof. If such
Credit Party shall fail to pay any Taxes or Other Taxes when due to the
appropriate taxing authority or fails to remit to Agent the required receipts or
other required documentary evidence, Borrower shall indemnify Agent and the
Lenders on demand for any incremental taxes, interest or penalties that may
become payable by Agent or any Lender as a result of any such failure.
(d) If any Lender shall be so indemnified by a Credit Party, such
Lender shall use reasonable efforts to obtain the benefits of any refund,
deduction or credit for any taxes or other amounts with respect to the amount
paid by such Credit Party and shall reimburse such Credit Party to the extent,
but only to the extent, that such Lender shall receive a refund with respect to
the amount paid by such Credit Party or an effective net reduction in taxes or
other governmental charges (including any taxes imposed on or measured by the
total net income of such Lender) of the United States or any state or
subdivision or any other Governmental Authority thereof by virtue of any such
deduction or credit, after first giving effect to all other deductions and
credits otherwise available to such Lender. If, at the time any audit of such
Lender's income tax return is completed, such Lender determines, based on such
audit, that it shall not have been entitled to the full amount of any refund
reimbursed to such Credit Party as aforesaid or that its net income taxes shall
not have been reduced by a credit or deduction for the full amount reimbursed to
such Credit Party as aforesaid, such Credit Party, upon request of such Lender,
shall promptly pay to such Lender the amount so refunded to which such Lender
shall not have been so entitled, or the amount by which the net income taxes of
such Lender shall not have been so reduced, as the case may be.
(e) Each Lender that is not (i) a citizen or resident of the
United States of America, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States of America (or
any jurisdiction thereof), or (iii) any estate or trust that is subject to
federal income taxation regardless of the source of its income (any such Person,
a "Non-U.S. Lender") shall deliver to Borrower and Agent two copies of either
U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a
Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a statement with respect to such interest and a Form W-8BEN, or any
subsequent versions thereof or successors thereto, properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from, or a reduced
rate of, U.S. federal withholding tax on all payments by Credit Parties under
this Agreement and the other Loan Documents. Such forms shall be delivered by
each Non-U.S. Lender on or before the date it becomes a party to this Agreement
or such other Loan Document. In addition, each Non-U.S. Lender shall deliver
such forms or appropriate replacements promptly upon the obsolescence or
invalidity of any from previously delivered by such Non-U.S. Lender. Each
Non-U.S. Lender
36
shall promptly notify Borrower at any time it determines that it is no longer in
a position to provide any previously delivered certificate to Borrower (or any
other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this subsection, a Non-U.S.
Lender shall not be required to deliver any form pursuant to this subsection
that such Non-U.S. Lender is not legally able to deliver.
(f) The agreements in this Section 3.2 shall survive the
termination of the Loan Documents and the payment of the Loans and all other
amounts payable hereunder.
Section 3.3. Funding Losses. Borrower agrees to indemnify each Lender,
promptly after receipt of a written request therefor, and to hold each Lender
harmless from, any properly documented loss or expense that such Lender may
sustain or incur as a consequence of (a) default by Borrower in making a
borrowing of, conversion into or continuation of LIBOR Fixed Rate Loans after
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by Borrower in making any prepayment
of or conversion from LIBOR Fixed Rate Loans after Borrower has given a notice
thereof in accordance with the provisions of this Agreement, (c) the making of a
prepayment of a LIBOR Fixed Rate Loan on a day that is not the last day of an
Interest Period applicable thereto, (d) the making of a prepayment of a Swing
Loan on a day that is not the Swing Loan Maturity Date applicable thereto, or
(e) any conversion of a LIBOR Fixed Rate Loan to a Base Rate Loan pursuant to
Section 3.4 hereof on a day that is not the last day of an Interest Period
applicable thereto. Such indemnification shall be in an amount equal to the
excess, if any, of (i) the amount of interest (with no premium or penalty
thereon) that would have accrued on the amounts so prepaid, or not so borrowed,
converted or continued, for the period from the date of such prepayment or of
such failure to borrow, convert or continue to the last day of such Interest
Period (or, in the case of a failure to borrow, convert or continue, the
Interest Period that would have commenced on the date of such failure) or the
applicable Swing Loan Maturity Date in each case at the applicable rate of
interest for such Loans provided for herein (excluding, however, the Applicable
Margin included therein, if any) over (ii) the amount of interest as reasonably
determined by such Lender (with no premium or penalty thereon) that would have
accrued to such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the appropriate London interbank market,
along with any administration fee charged by such Lender. A certificate as to
any amounts payable pursuant to this Section 3.3 submitted to Borrower, together
with a reasonably detailed calculation and description of such amounts (with a
copy to Agent) by any Lender shall be rebuttably presumptive evidence of the
amounts so payable. The obligations of Borrower pursuant to this Section 3.3
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
Section 3.4. Eurodollar Rate or Alternate Currency Rate Lending
Unlawful; Inability to Determine Rate.
(a) If any Lender shall determine (which determination shall, upon
notice thereof to Borrower and Agent, be conclusive and binding on Borrower)
that, after the Closing Date, (i) the introduction of or any change in or in the
interpretation of any law makes it unlawful, or (ii) any
37
Governmental Authority asserts that it is unlawful, for such Lender to make or
continue any Loan as, or to convert (if permitted pursuant to this Agreement)
any Loan into, a LIBOR Fixed Rate Loan, the obligations of such Lender to make,
continue or convert any such LIBOR Fixed Rate Loan shall, upon such
determination, be suspended until such Lender shall notify Agent that the
circumstances causing such suspension no longer exist, and all outstanding LIBOR
Fixed Rate Loans payable to such Lender shall automatically convert (if
conversion is permitted under this Agreement) into a Base Rate Loan, or be
repaid (if no conversion is permitted) at the end of the then current Interest
Periods with respect thereto or sooner, if required by law or such assertion.
(b) If Agent or the Required Lenders determine that for any reason
adequate and reasonable means do not exist for determining the Eurodollar Rate
or Alternate Currency Rate for any requested Interest Period with respect to a
proposed LIBOR Fixed Rate Loan, or that the Eurodollar Rate or Alternate
Currency Rate for any requested Interest Period with respect to a proposed LIBOR
Fixed Rate Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, Agent will promptly so notify Borrower and each Lender.
Thereafter, the obligation of the Lenders to make or maintain such LIBOR Fixed
Rate Loan shall be suspended until Agent (upon the instruction of the Required
Lenders) revokes such notice. Upon receipt of such notice, Borrower may revoke
any pending request for a borrowing of, conversion to or continuation of such
LIBOR Fixed Rate Loan or, failing that, will be deemed to have converted such
request into a request for a borrowing of a Base Rate Loan in the amount
specified therein.
ARTICLE IV. CONDITIONS PRECEDENT
Section 4.1. Conditions to Each Credit Event. The obligation of the
Lenders to participate in any Credit Event shall be conditioned, in the case of
each Credit Event, upon the following:
(a) all conditions precedent as listed in Section 4.2 hereof
required to be satisfied prior to the first Credit Event shall have been
satisfied prior to or as of the first Credit Event;
(b) Borrower shall have submitted a Notice of Loan (or with
respect to a Letter of Credit, complied with the provisions of Section 2.3
hereof) and otherwise complied with Section 2.7 hereof;
(c) no Default or Event of Default shall then exist or immediately
after the Credit Event would exist; and
(d) each of the representations and warranties contained in
Article VI hereof shall be true in all material respects as if made on and as of
the date of the Credit Event, except to the extent that any thereof expressly
relate to an earlier date.
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Each request by Borrower for a Credit Event shall be deemed to be a
representation and warranty by Borrower as of the date of such request as to the
satisfaction of the conditions precedent specified in subsections (c) and (d)
above.
Section 4.2. Conditions to the First Credit Event. The obligation of
the Lenders to participate in the first Credit Event is subject to Borrower
satisfying each of the following conditions prior to or concurrently with such
Credit Event:
(a) Notes. Borrower shall have executed and delivered a Revolving
Credit Note to each Lender that shall have requested a Revolving Credit Note and
shall have executed and delivered to the Swing Line Lender the Swing Line Note.
(b) Guaranties of Payment of Debt. Each Guarantor of Payment shall
have executed and delivered to Agent a Guaranty of Payment of Debt (which
Guaranties of Payment shall be subject to the provisions of Section 2.15
hereof).
(c) Restricted Account Documents. Borrower shall have executed and
delivered to Agent, for the benefit of the Lenders, a Restricted Account
Agreement and other documents as required by Agent in connection with the
Restricted Account, in form and substance satisfactory to Agent; provided that
Borrower need not comply with this requirement if the Senior Unsecured Notes
shall have been paid in full prior to the Closing Date.
(d) Officer's Certificate, Resolutions, Organizational Documents.
Borrower and each Guarantor of Payment shall have delivered to Agent an
officer's certificate (or comparable documents) certifying the names of the
officers of Borrower or such Guarantor of Payment authorized to sign the Loan
Documents, together with the true signatures of such officers and certified
copies of (i) the resolutions of the board of directors (or comparable
documents) of Borrower or such Guarantor of Payment evidencing approval of the
execution and delivery of the Loan Documents and the execution of other Related
Writings to which Borrower or such Guarantor of Payment, as the case may be, is
a party, and (ii) the Organizational Documents of Borrower or such Guarantor of
Payment.
(e) Legal Opinion. Borrower shall have delivered to Agent an
opinion of counsel for Borrower and each Guarantor of Payment, in form and
substance satisfactory to Agent and the Lenders.
(f) Good Standing Certificates and Full Force and Effect
Certificates. Borrower shall have delivered to Agent a good standing certificate
or full force and effect certificate, as the case may be, for Borrower and each
Guarantor of Payment, issued on or about the Closing Date by the Secretary of
State in the state(s) where Borrower or such Guarantor of Payment is
incorporated or formed.
(g) Agent Fee Letter, Closing Fee Letter and Other Fees. Borrower
shall have (i) executed and delivered to Agent the Agent Fee Letter and paid to
Agent, for its sole account, the fees stated therein, (ii) executed and
delivered to Agent the Closing Fee Letter and paid to
39
Agent, for the benefit of the Lenders, the fees stated therein, and (iii) paid
all reasonable, properly documented legal fees and expenses of Agent in
connection with the preparation and negotiation of the Loan Documents.
(h) Lien Searches. With respect to the property owned or leased by
Borrower and each Guarantor of Payment, Borrower and each Guarantor of Payment
shall have caused to be delivered to Agent (i) the results of U.C.C. lien
searches, satisfactory to Agent and the Lenders, (ii) the results of federal and
state tax lien and judicial lien searches, satisfactory to Agent and the
Lenders, and (iii) U.C.C. termination statements reflecting termination of all
financing statements previously filed by any Person and not expressly permitted
pursuant to Section 5.9 hereof.
(i) Closing Certificate. Borrower shall have delivered to Agent
and the Lenders an officer's certificate certifying that, as of the Closing
Date, (i) all conditions precedent set forth in this Article IV have been
satisfied, (ii) no Default or Event of Default exists nor immediately after the
making of the first Loan or the issuance of the first Letter of Credit will
exist, and (iii) each of the representations and warranties contained in Article
VI hereof are true and correct as of the Closing Date.
(j) Existing Credit Agreement. Borrower shall have terminated the
Credit Agreement, dated as of September 15, 2000, by and among Borrower, the
financial institutions named therein, and Bank One, Michigan, as agent, as the
same may from time to time be amended, restated or otherwise modified, which
termination shall be deemed to have occurred upon payment in full of all of the
Indebtedness outstanding thereunder and termination of the commitments
established therein.
(k) Letter of Direction. Borrower shall have delivered to Agent a
letter of direction authorizing Agent, on behalf of the Lenders, to disburse the
proceeds of the Loans, which includes the transfer of funds under this Agreement
and wire instructions setting forth the locations to which such funds shall be
sent.
(l) No Material Adverse Change. No material adverse change, in the
opinion of Agent, shall have occurred in the financial condition or operations
of the Companies since March 31, 2002, other than as disclosed in (i) Borrower's
Form 8K, dated February 28, 2003, including the Borrower's Consolidated pro
forma financial statements for the nine-month period ending December 31, 2002
included therein, and (ii) the Confidential Memorandum.
(m) Miscellaneous. Borrower shall have provided to Agent and the
Lenders such other items and shall have satisfied such other conditions as may
be reasonably required by Agent or the Lenders.
ARTICLE V. COVENANTS
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Section 5.1. Insurance. Each Company shall (a) maintain insurance to
such extent and against such hazards and liabilities as is commonly maintained
by Persons similarly situated; and (b) within ten days of any Lender's written
request, furnish to such Lender such information about such Company's insurance
as that Lender may from time to time reasonably request.
Section 5.2. Money Obligations. Each Company shall pay in full (a)
prior in each case to the date when penalties would attach, all taxes,
assessments and governmental charges and levies (except only those so long as
and to the extent that the same shall be contested in good faith by appropriate
and timely proceedings and for which adequate provisions have been established
in accordance with GAAP) for which it may be or become liable or to which any or
all of its properties may be or become subject; (b) all of its material wage
obligations to its employees in compliance with the Fair Labor Standards Act (29
U.S.C. Sections 206-207) or any comparable provisions; and (c) all of its other
obligations calling for the payment of money (except only those so long as and
to the extent that nonpayment would not cause a Material Adverse Effect) before
such payment becomes overdue.
Section 5.3. Financial Statements and Information. Borrower shall
furnish to Agent and the Lenders:
(a) within fifty (50) days after the end of each of the first
three quarter-annual periods of each fiscal year of Borrower, balance sheets of
the Companies as of the end of such period and statements of income (loss),
stockholders' equity and cash flow for the quarter and fiscal year to date
periods, all prepared on a Consolidated basis, in accordance with GAAP, and in
form and detail reasonably satisfactory to Agent and the Lenders and certified
by a Financial Officer of Borrower;
(b) within ninety (90) days after the end of each fiscal year of
Borrower, an annual audit report of the Companies for that year prepared on a
Consolidated and consolidating basis (provided that consolidating statements may
be internally prepared and need not be certified by independent public
accountants and shall not be required to be delivered until one hundred forty
(140) days after the close of the fiscal year of Borrower ending March 31, 2003
and one hundred (100) days after the close of each fiscal year of Borrower
thereafter), in accordance with GAAP, and in form and detail reasonably
satisfactory to Agent and the Lenders and certified by an independent public
accountant satisfactory to Agent, which report shall include balance sheets and
statements of income (loss), stockholders' equity and cash-flow for that period,
together with a certificate by the accountant setting forth the Defaults and
Events of Default coming to its attention during the course of its audit or, if
none, a statement to that effect;
(c) within thirty (30) days after the end of each month, or at
such other time as Agent may reasonably request, (i) a Borrowing Base
Certificate prepared as of the end of such month by a Financial Officer of
Borrower, and (ii) a summary Accounts aging report, in form and substance
reasonably satisfactory to the Lenders and signed by a Financial Officer of
Borrower;
(d) concurrently with the delivery of the financial statements set
forth in subsections (a) and (b) above, a Compliance Certificate;
41
(e) concurrently with the delivery of the quarterly and annual
financial statements in subsections (a) and (b) above, a copy of any management
report, letter or similar writing furnished to the Companies by the accountants
in respect of the Companies' systems, operations, financial condition or
properties;
(f) within sixty (60) days after the end of each fiscal year of
Borrower, annual budget projections of the Companies for the then current fiscal
year, to be in form reasonably acceptable to Agent;
(g) as soon as available, copies of all notices, reports,
definitive proxy or other statements and other documents sent by Borrower to its
shareholders, to the holders of any of its debentures or bonds or the trustee of
any indenture securing the same or pursuant to which they are issued, or sent by
Borrower (in final form) to any securities exchange or over the counter
authority or system, or to the SEC or any similar federal agency having
regulatory jurisdiction over the issuance of Borrower's securities; and
(h) within thirty (30) days of the written request of Agent or any
Lender, such other information about the financial condition, properties and
operations of any Company as Agent or such Lender may from time to time
reasonably request, which information shall be submitted in form and detail
reasonably satisfactory to Agent or such Lender and certified by a Financial
Officer of the Company or Companies in question.
Section 5.4. Financial Records. Each Company shall at all times
maintain true and complete records and books of account in accordance with GAAP,
and at all reasonable times (during normal business hours and upon notice to
such Company) permit Agent, or any representative of Agent, to examine such
Company's books and records and to make excerpts therefrom and transcripts
thereof.
Section 5.5. Franchises; Change in Business.
(a) Each Company that is not an Excluded Subsidiary shall preserve
and maintain at all times its existence and rights and franchises material to
its business, except as otherwise permitted pursuant to Section 5.12 hereof.
(b) No Company shall engage in any business if, as a result
thereof, the general nature of the business of the Companies taken as a whole
would be substantially changed from the general nature of the business the
Companies are engaged in on the Closing Date.
Section 5.6. ERISA Compliance. No Company shall incur any material
accumulated funding deficiency within the meaning of ERISA, or any material
liability to the PBGC, established thereunder in connection with any ERISA Plan.
Borrower shall furnish to the Lenders (a) as soon as possible and in any event
within thirty (30) days after any Company knows or has reason to know that any
Reportable Event with respect to any ERISA Plan has occurred, a statement of a
Financial Officer of such Company, setting forth details as to such
42
Reportable Event and the action that such Company proposes to take with respect
thereto, together with a copy of the notice of such Reportable Event given to
the PBGC if a copy of such notice is available to such Company, and (b) promptly
after receipt thereof a copy of any notice such Company, or any member of the
Controlled Group may receive from the PBGC or the Internal Revenue Service with
respect to any ERISA Plan administered by such Company; provided, that this
latter clause shall not apply to notices of general application promulgated by
the PBGC or the Internal Revenue Service or to letters or notices such as a
favorable Determination Letter with respect to an ERISA Plan, which does not
threaten a material liability to a Company. Borrower shall promptly notify the
Lenders of any material taxes assessed, proposed to be assessed or that Borrower
has reason to believe may be assessed against a Company by the Internal Revenue
Service with respect to any ERISA Plan. As used in this Section "material" means
the measure of a matter of significance that shall be determined as being an
amount equal to five percent (5%) of Consolidated Tangible Net Worth. As soon as
practicable, and in any event within thirty (30) days, after any Company shall
become aware that an ERISA Event shall have occurred, such Company shall provide
Agent with notice of such ERISA Event with a certificate by a Financial Officer
of such Company setting forth the details of the event and the action such
Company or another Controlled Group member proposes to take with respect
thereto. Borrower shall, at the request of Agent or any Lender, deliver or cause
to be delivered to Agent or such Lender, as the case may be, true and correct
copies of any documents relating to the ERISA Plan of any Company.
Section 5.7. Financial Covenants.
(a) Leverage Ratio. Borrower shall not suffer or permit at any
time the Leverage Ratio to exceed 2.50 to 1.00 on June 30, 2003 and thereafter.
(b) Fixed Charge Coverage Ratio. Borrower shall not suffer or
permit at any time the Fixed Charge Coverage Ratio to be less than 1.20 to 1.00
on June 30, 2003 and thereafter.
(c) Consolidated Tangible Net Worth. Borrower shall not suffer or
permit at any time the Consolidated Tangible Net Worth, for the most recently
completed fiscal quarter of Borrower, to be less than the current minimum amount
required, which current minimum amount required shall be the Closing Date
Required Net Worth on the Closing Date through June 29, 2003, with such current
minimum amount required to be positively increased by the Increase Amount on
June 30, 2003 and by an additional Increase Amount on the last day of each
succeeding fiscal quarter of Borrower thereafter. As used herein, the term
"Increase Amount" shall mean an amount equal to (i) fifty percent (50%) of
positive Consolidated Net Earnings (with no deduction for losses) for the fiscal
quarter then ended, plus (ii) one hundred percent (100%) of the proceeds of any
equity offering by the Companies, or any debt offering of the Companies, to the
extent converted into equity.
Section 5.8. Borrowing. No Company shall create, incur or have
outstanding any obligation for borrowed money or any Indebtedness of any kind;
provided, that this Section 5.8 shall not apply to the following:
43
(a) the Loans, the Letters of Credit or any other Indebtedness
under this Agreement;
(b) the Indebtedness existing on the Closing Date, in addition to
the other Indebtedness permitted to be incurred pursuant to this Section 5.8, as
set forth in Schedule 5.8 hereto (and any extension, renewal or refinancing
thereof so long as the principal amount thereof shall not be increased after the
Closing Date);
(c) loans to a Company from a Company so long as each such Company
is a Credit Party;
(d) unsecured Indebtedness incurred or assumed in connection with
an Acquisition permitted pursuant to Section 5.13 hereof, so long as the
aggregate principal amount of all such indebtedness incurred in connection with
all such Acquisitions by all Companies does not exceed Twenty-Five Million
Dollars ($25,000,000) at any time outstanding (subject to the Other Indebtedness
Maximum Amount);
(e) any loans granted to or capital leases entered into by any
Company for the purchase or lease of fixed assets (and refinancings of such
loans or capital leases), which loans and capital leases shall only be secured
by the fixed assets being purchased, so long as the aggregate principal amount
of all such loans and leases for all Companies shall not exceed Fifteen Million
Dollars ($15,000,000) at any time outstanding (subject to the Other Indebtedness
Maximum Amount);
(f) Indebtedness under any Hedge Agreement, so long as such Hedge
Agreement shall have been entered into in the ordinary course of business and
not for speculative purposes;
(g) Permitted Foreign Subsidiary Loans and Investments;
(h) unsecured Indebtedness (other than Indebtedness otherwise
permitted under this Section 5.8), so long as the aggregate principal amount of
all such indebtedness for all Companies shall not exceed Five Million Dollars
($5,000,000) at any time outstanding (subject to the Other Indebtedness Maximum
Amount); and
(i) unsecured Indebtedness owing with respect to the Agreement for
Inventory Financing, the Convertible Debentures or the Senior Unsecured Notes.
Section 5.9. Liens. No Company shall create, assume or suffer to exist
any Lien upon any of its property or assets, whether now owned or hereafter
acquired; provided that this Section shall not apply to the following:
(a) Liens for taxes, assessments or governmental charges or levies
on such Company's property or assets if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being contested in
good faith by appropriate and timely proceedings and for which adequate
provisions have been established in accordance with GAAP;
44
(b) other statutory Liens incidental to the conduct of its
business or the ownership of its property and assets that (i) were not incurred
in connection with the borrowing of money or the obtaining of advances or
credit, and (ii) do not in the aggregate materially detract from the value of
its property or assets or materially impair the use thereof in the operation of
its business;
(c) Liens arising in the ordinary course of business out of
pledges or deposits under workers' compensation laws, unemployment insurance,
old age pensions, or social security, retirement benefits or similar
legislation;
(d) easements or other minor defects or irregularities in title of
real property not interfering in any material respect with the use of such
property in the business of any Company;
(e) the Liens existing on the Closing Date as set forth in
Schedule 5.9 hereto and replacements, extensions, renewals, refundings or
refinancings thereof, but only to the extent that the amount of debt secured
thereby shall not be increased;
(f) purchase money Liens on fixed assets securing the loans and
capitalized leases pursuant to Section 5.8(e) hereof, provided that such Lien is
limited to the purchase price and only attaches to the property being acquired;
(g) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to a Credit Party;
(h) any Lien granted to Agent, for the benefit of the Lenders;
(i) Liens arising out of deposits to secure the performance of
bids, trade contracts (other than contracts for the payment of money), leases,
licenses, franchises, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business in an aggregate amount, for all Companies, not in
excess of Five Million Dollars ($5,000,000);
(j) Liens arising with respect to rights of lessees or sublessees
under operating leases in assets leased by a Company under an operating lease;
or
(k) any Lien on fixed assets owned by a Company as a result of an
Acquisition permitted pursuant to Section 5.13 hereof, so long as such Lien (i)
is released within one hundred eighty (180) days of such Acquisition (unless
Borrower shall have obtained the prior written consent of Agent and the Required
Lenders), and (ii) such Lien was not created at the time of or in contemplation
of such Acquisition.
Section 5.10. Regulations U and X. No Company shall take any action
that would result in any non-compliance of the Loans or Letters of Credit with
Regulations U or X, or any other applicable regulation, of the Board of
Governors of the Federal Reserve System.
45
Section 5.11. Investments and Loans. No Company shall, without the
prior written consent of Agent and the Required Lenders, (a) create, acquire or
hold any Subsidiary, (b) make or hold any investment in any stocks, bonds or
securities of any kind, (c) be or become a party to any joint venture or other
partnership, (d) make or keep outstanding any advance or loan to any Person, or
(e) be or become a Guarantor of any kind; provided that this Section 5.11 shall
not apply to the following:
(i) any endorsement of a check or other medium of payment
for deposit or collection through normal banking channels or similar
transaction in the normal course of business;
(ii) any investment made according to the Borrower
Investment Policy;
(iii) the holding of Subsidiaries listed on Schedule 6.1
hereto and investments therein existing on the Closing Date;
(iv) loans to and investments in a Company made by a
Company so long as each such Company is a Credit Party;
(v) any guaranty of the Indebtedness permitted pursuant
to Section 5.8(h) hereof;
(vi) any Permitted Investment or Permitted Foreign
Subsidiary Loans and Investments, so long as no Default or Event of
Default shall then exist or would result therefrom;
(vii) the holding of any stock that has been acquired
pursuant to an Acquisition permitted by Section 5.13 hereof;
(viii) the creation and holding of a Subsidiary for the
purpose of making an Acquisition permitted by Section 5.13 hereof, so
long as such Subsidiary becomes a Guarantor of Payment promptly
following such Acquisition if required by Section 5.19 hereof; or
(ix) loans to and investments in Excluded Subsidiaries
made by Credit Parties or Foreign Subsidiaries so long as the aggregate
of all such loans and investments shall not exceed One Million Dollars
($1,000,000).
Section 5.12. Merger and Sale of Assets. No Company shall merge or
consolidate with any other Person, or sell, lease or transfer or otherwise
dispose of any assets to any Person other than in the ordinary course of
business, except that, if no Default or Event of Default shall then exist or
immediately thereafter shall begin to exist:
(a) any Subsidiary may merge with (i) Borrower (provided that
Borrower shall be the continuing or surviving Person), (ii) any one or more
Guarantors of Payment, or (iii) any other
46
Subsidiary; provided that either (A) the continuing or surviving Person shall be
a Subsidiary (other than an Excluded Subsidiary) that shall be a Guarantor of
Payment, or (B) after giving effect to any merger pursuant to sub-clause (ii) or
(iii) above, Borrower and/or one or more Subsidiaries (other than Excluded
Subsidiaries) that shall be Guarantors of Payment shall own not less than the
same percentage of the outstanding Voting Power of the continuing or surviving
Person as Borrower and/or one or more Subsidiaries (that shall be Guarantors of
Payment) owned of the merged Subsidiary immediately prior to such merger;
(b) any Subsidiary may sell, lease, transfer or otherwise dispose
of any of its assets to (i) Borrower, (ii) any Wholly-Owned Subsidiary that is a
Guarantor of Payment, or (iii) any Excluded Subsidiary, so long as such Excluded
Subsidiary becomes a Guarantor of Payment if required pursuant to Section 5.19
hereof;
(c) any Company may sell, lease, transfer or otherwise dispose of
any assets (including capital stock) (i) that are obsolete, or (ii) no longer
useful in such Company's business, provided that Borrower shall not, without the
prior written consent of Agent and the Required Lenders, effect a Significant
Asset Disposition;
(d) any Foreign Subsidiary may sell, lease, transfer or otherwise
dispose of any assets (including capital stock) to any Company;
(e) any Company may sell, lease, transfer or otherwise dispose of
any assets (including capital stock) described in the Confidential Memorandum;
and
(f) any Company may sell, transfer or otherwise dispose of fixed
assets in the ordinary course of business for the purpose of replacing such
fixed assets, provided that any such fixed assets are replaced within one
hundred eighty (180) days of such sale or other disposition with other fixed
assets which have a fair market value not materially less than the fair market
value of the fixed assets sold or otherwise disposed.
Section 5.13. Acquisitions. No Company shall acquire the assets or
stock of any other Person; provided, however, that Borrower or any Guarantor of
Payment may effect an Acquisition so long as:
(a) such Acquisition is the Project Moose and is consummated on or
prior to March 31, 2004; or
(b) each such Acquisition meets all of the following requirements:
(i) Borrower or such Guarantor of Payment, as the case
may be, shall be the surviving entity in the case of a merger or other
combination;
(ii) the business to be acquired shall be similar to the
lines of business of the Companies;
47
(iii) the Companies shall be in full compliance with the
Loan Documents both prior to and subsequent to the transaction;
(iv) each such Acquisition is not actively opposed by the
board of directors (or similar governing body) of the selling Persons
or the Persons whose equity interests are to be acquired;
(v) the Liquidity Amount shall be no less than Fifty
Million Dollars ($50,000,000) after giving effect to each such
Acquisition;
(vi) the aggregate Consideration (other than the issuance
of equity securities) paid by the Companies shall not exceed the
aggregate amount of One Hundred Million Dollars ($100,000,000) for each
such Acquisition, or which, when added to all other Acquisitions for
all Companies during the Commitment Period, would not exceed the
aggregate amount of (A) on the Closing Date through March 31, 2004, One
Hundred Fifty Million Dollars ($150,000,000), and (B) on April 1, 2004
and thereafter, (1) Two Hundred Twenty-Five Million Dollars
($225,000,000) if Project Moose has not been consummated on or prior to
March 31, 2004, or (B) One Hundred Fifty Million Dollars ($150,000,000)
if Project Moose has been consummated on or prior to March 31, 2004;
and
(vii) the aggregate Consideration (including the issuance
of equity securities) paid by the Companies for each such Acquisition
shall not exceed One Hundred Fifty Million Dollars ($150,000,000).
Section 5.14. Notice. Borrower shall cause a Financial Officer of
Borrower to promptly notify Agent and the Lenders whenever any Default or Event
of Default may occur hereunder or any representation or warranty made in Article
VI hereof or elsewhere in this Agreement or in any Related Writing may for any
reason cease in any material respect to be true and complete.
Section 5.15. Environmental Compliance. Each Company shall comply in
all material respects with any and all Environmental Laws including, without
limitation, all Environmental Laws in jurisdictions in which any Company owns or
operates a facility or site, arranges for disposal or treatment of hazardous
substances, solid waste or other wastes, accepts for transport any hazardous
substances, solid waste or other wastes or holds any interest in real property
or otherwise. Borrower shall furnish to the Lenders, promptly after receipt
thereof, a copy of any notice any Company may receive from any Governmental
Authority, private Person or otherwise that any material litigation or
proceeding pertaining to any environmental, health or safety matter has been
filed or is threatened against such Company, any real property in which such
Company holds any interest or any past or present operation of such Company. No
Company shall allow the release or disposal of hazardous waste, solid waste or
other wastes on, under or to any real property in which any Company holds any
interest or performs any of its operations, in violation of any Environmental
Law. As used in this Section, "litigation or proceeding" means any demand,
claim, notice, suit, suit in equity action, administrative action, investigation
or inquiry whether brought by any Governmental Authority or private Person or
otherwise. Borrower shall
48
defend, indemnify and hold Agent and the Lenders harmless against all properly
documented costs, expenses, claims, damages, penalties and liabilities of every
kind or nature whatsoever (including attorneys' fees) arising out of or
resulting from the noncompliance of any Company with any Environmental Law. Such
indemnification shall survive any termination of this Agreement.
Section 5.16. Affiliate Transactions. No Company shall, or shall permit
any Subsidiary to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate
(other than a Credit Party or a Foreign Subsidiary) on terms that shall be less
favorable to such Company or such Subsidiary, as the case may be, than those
that might be obtained at the time in a transaction with a non-Affiliate;
provided, however, that the foregoing shall not prohibit the payment of
customary and reasonable directors' fees to directors who are not employees of a
Company or an Affiliate of a Company.
Section 5.17. Use of Proceeds. Borrower's use of the proceeds of the
Loans shall be solely for working capital, strategic acquisitions, share
repurchases, letters of credit and other general corporate purposes of Borrower
and its Subsidiaries.
Section 5.18. Corporate Names. No Company shall change its corporate
name or its state of organization, unless, in each case, Borrower shall have
provided Agent and the Lenders with at least five days prior written notice
thereof.
Section 5.19. Subsidiary Guaranties. Each Domestic Subsidiary of a
Company (that is not an Excluded Subsidiary) created, acquired or held
subsequent to the Closing Date, shall immediately execute and deliver to Agent,
for the benefit of the Lenders, a Guaranty of Payment of all of the Debt
(subject to Section 2.15 hereof), such agreement to be in form and substance
acceptable to Agent, along with any corporate governance and authorization
documents, and an opinion of counsel as may be deemed reasonably necessary or
advisable by Agent.
Section 5.20. Restricted Payments. No Company shall make or commit
itself to make any Restricted Payment except that Borrower may make Capital
Distributions so long as the Companies shall be in full compliance with the Loan
Documents both prior to and after giving effect to such Capital Distribution.
Section 5.21. Restrictive Agreements. Except as set forth in this
Agreement until after the Guaranty Effectiveness Date, Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Subsidiary to (a) make, directly or
indirectly, any Capital Distribution to Borrower, (b) make, directly or
indirectly, loans or advances or capital contributions to Borrower or (c)
transfer, directly or indirectly, any of the properties or assets of such
Subsidiary to Borrower; except for such encumbrances or restrictions existing
under or by reason of (i) applicable law, (ii) customary non-assignment
provisions in leases or other agreements entered in the ordinary course of
business and consistent with past practices, (iii) customary restrictions in
security agreements or mortgages securing Indebtedness of a
49
Company, or capital leases, of a Company to the extent such restrictions shall
only restrict the transfer of the property subject to such security agreement,
mortgage or lease, or (iv) customary restrictions in agreements executed by
Foreign Subsidiaries in connection with foreign financing arrangements.
Section 5.22. Other Covenants. In the event that any Company shall
enter into, or shall have entered into, any Material Indebtedness Agreement,
wherein the covenants and agreements contained therein shall be more restrictive
than the covenants set forth herein, then the Companies shall be bound hereunder
by such covenants and agreements with the same force and effect as if such
covenants and agreements were written herein.
Section 5.23. Guaranty Under Material Indebtedness Agreement. Neither
Borrower nor any Domestic Subsidiary shall be or become a Guarantor of the
Indebtedness incurred pursuant to any Material Indebtedness Agreement unless
Borrower or such Domestic Subsidiary shall also be a Guarantor of Payment under
this Agreement prior to or concurrently therewith.
Section 5.24. Pari Passu Ranking. The Debt shall, and Borrower shall
take all necessary action to ensure that the Debt shall, at all times, rank at
least pari passu in right of payment with all other senior unsecured
Indebtedness of Borrower.
Section 5.25. Restricted Account Funding. So long as the Senior
Unsecured Notes shall be outstanding, unless Borrower shall include the Senior
Unsecured Notes as Consolidated Funded Indebtedness in the calculation of the
Leverage Ratio for any fiscal quarter, Borrower shall comply with the Restricted
Account Maintenance Requirement at all times during such fiscal quarter. In the
event that Borrower has complied with the Restricted Account Maintenance
Requirement for any fiscal quarter, then Borrower may not remove the investments
from the Restricted Account at the end of or after such fiscal quarter if a
Default or an Event of Default shall then exist.
Section 5.26. Amendment of Organizational Documents. No Company shall
amend its Organizational Documents in any material respect without providing
Agent with and the Lenders prior written notice thereof.
Section 5.27. Other Indebtedness. Borrower shall not suffer or permit
any Company to make any amendment, supplement or modification to the Convertible
Debentures Indenture, the Senior Notes Indenture or any agreements or
instruments executed in connection therewith.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification.
(a) Each Company is duly organized, validly existing, and in good
standing under the laws of its state or jurisdiction of incorporation or
organization and is duly qualified and authorized to do business and is in good
standing as a foreign entity in all of the states or
50
jurisdictions where the character of its property or its business activities
makes such qualification necessary, except where the failure to so qualify will
not cause or result in a Material Adverse Effect.
(b) Schedule 6.1 hereto sets forth each Subsidiary of Borrower
(and whether such Subsidiary is an Excluded Subsidiary), its state of formation,
the location of its chief executive offices and its principal place of business.
Except as set forth on Schedule 6.1 hereto, on the date hereof, Borrower owns
all of the capital stock of each of its Subsidiaries.
Section 6.2. Corporate Authority. Each Credit Party has the right and
power and is duly authorized and empowered to enter into, execute and deliver
the Loan Documents to which it is a party and to perform and observe the
provisions of the Loan Documents. The Loan Documents to which each Credit Party
is a party have been duly authorized and approved by such Credit Party's board
of directors or other governing body, as applicable, and are the valid and
binding obligations of such Credit Party, enforceable against such Credit Party
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by equitable principles (regardless of whether
enforcement is sought in equity or at law). The execution, delivery and
performance of the Loan Documents will not conflict with nor result in any
breach in any of the provisions of, or constitute a default under, or result in
the creation of any Lien (other than Liens permitted under Section 5.9 hereof)
upon any assets or property of any Company under the provisions of, such
Company's Organizational Documents or any agreement.
Section 6.3. Compliance with Laws. Each Company:
(a) holds all material permits, certificates, licenses, orders,
registrations, franchises, authorizations, and other approvals from federal,
state, local, and foreign governmental and regulatory bodies reasonably
necessary for the conduct of its business and is in compliance with all
applicable laws relating thereto on the Closing Date and, except where the
failure to do so would not have or result in a Material Adverse Effect, after
the Closing Date;
(b) is in material compliance with all federal, state, local, or
foreign applicable statutes, rules, regulations, and orders including, without
limitation, those relating to environmental protection, occupational safety and
health, and equal employment practices on the Closing Date and, except where the
failure to do so would not have or result in a Material Adverse Effect, after
the Closing Date; and
(c) is not in violation of or in default under any material
agreement to which it is a party or by which its assets are subject or bound on
the Closing Date and, except with respect to any violation or default that would
not have or result in a Material Adverse Effect, after the Closing Date.
Section 6.4. Litigation and Administrative Proceedings. Except as
disclosed on Schedule 6.4 hereto, there are (a) no lawsuits, actions,
investigations, or other proceedings pending or threatened against any Company,
or in respect of which any Company may have any
51
liability, in any court or before any Governmental Authority, arbitration board
or other tribunal, which Borrower reasonably expects to have a Material Adverse
Effect, (b) no orders, writs, injunctions, judgments, or decrees of any court or
government agency or instrumentality to which any Company is a party or by which
the property or assets of any Company are bound, which Borrower reasonably
expects to have a Material Adverse Effect, or (c) no grievances, disputes, or
controversies outstanding with any union or other organization of the employees
of any Company, or threats of work stoppage, strike, or pending demands for
collective bargaining.
Section 6.5. Title to Assets. Each Company has good title to and
ownership of all property it purports to own, which property is free and clear
of all Liens, except those permitted under Section 5.9 hereof.
Section 6.6. Liens and Security Interests. On and after the Closing
Date, except for Liens permitted pursuant to Section 5.9 hereof, (a) there is no
financing statement outstanding covering any personal property of any Company;
(b) there is no mortgage outstanding covering any real property of any Company;
and (c) no real or personal property of any Company is subject to any security
interest or Lien of any kind.
Section 6.7. Tax Returns. All federal, state and local tax returns and
other reports required by law to be filed in respect of the income, business,
properties and employees of each Company have been filed and all taxes,
assessments, fees and other governmental charges that are due and payable have
been paid, except as otherwise permitted herein. The provision for taxes on the
books of each Company is adequate for all years not closed by applicable
statutes and for the current fiscal year.
Section 6.8. Environmental Laws. Each Company is in substantial
compliance with all Environmental Laws, including, without limitation, all
Environmental Laws in all jurisdictions in which any Company owns or operates,
or has owned or operated, a facility or site, arranges or has arranged for
disposal or treatment of hazardous substances, solid waste or other wastes,
accepts or has accepted for transport any hazardous substances, solid waste or
other wastes or holds or has held any interest in real property or otherwise. No
material litigation or proceeding arising under, relating to or in connection
with any Environmental Law is pending or, to the best knowledge of each Company,
threatened, against any Company, any real property in which any Company holds or
has held an interest or any past or present operation of any Company. No
material release, threatened release or disposal of hazardous waste, solid waste
or other wastes is occurring, or has occurred (other than those that are
currently being cleaned up in accordance with Environmental Laws), on, under or
to any real property in which any Company holds any interest or performs any of
its operations, in violation of any Environmental Law. As used in this Section,
"litigation or proceeding" means any demand, claim, notice, suit, suit in
equity, action, administrative action, investigation or inquiry whether brought
by any Governmental Authority, private Person or otherwise.
Section 6.9. Continued Business. There exists no actual, pending, or,
to Borrower's knowledge, any threatened termination, cancellation or limitation
of, or any modification or change in the business relationship of any Company
and any customer or supplier, or any group
52
of customers or suppliers, which Borrower reasonably expects to have a Material
Adverse Effect, and there exists no present condition or state of facts or
circumstances that would have a Material Adverse Effect.
Section 6.10. Employee Benefits Plans. Schedule 6.10 hereto identifies
each ERISA Plan. No ERISA Event has occurred or is expected to occur with
respect to an ERISA Plan. Full payment has been made of all amounts which a
Controlled Group member is required, under applicable law or under the governing
documents, to have been paid as a contribution to or a benefit under each ERISA
Plan. The liability of each Controlled Group member with respect to each ERISA
Plan qualified under Code Section 401(a) has been fully funded based upon
reasonable and proper actuarial assumptions, has been fully insured, or has been
fully reserved for on its financial statements. No changes have occurred or are
expected to occur that would cause a material increase in the cost of providing
benefits under the ERISA Plan. With respect to each ERISA Plan that is intended
to be qualified under Code Section 401(a), (a) the ERISA Plan and any associated
trust operationally comply with the applicable requirements of Code Section
401(a) in all material respects or are subject to cure under a correction
program approved by a Governmental Authority; (b) the ERISA Plan and any
associated trust have been amended to comply with all such requirements as
currently in effect, other than those requirements for which a retroactive
amendment can be made within the "remedial amendment period" available under
Code Section 401(b) (as extended under Treasury Regulations and other Treasury
pronouncements upon which taxpayers may rely); (c) to the extent applicable, the
ERISA Plan and any associated trust have received a favorable determination
letter from the Internal Revenue Service stating that the ERISA Plan qualifies
under Code Section 401(a), that the associated trust qualifies under Code
Section 501(a) and, if applicable, that any cash or deferred arrangement under
the ERISA Plan qualifies under Code Section 401(k), unless the ERISA Plan was
first adopted at a time for which the above-described "remedial amendment
period" has not yet expired; (d) the ERISA Plan currently satisfies the
requirements of Code Section 410(b), subject to any retroactive amendment that
may be made within the above-described "remedial amendment period"; and (e) no
contribution made to the ERISA Plan is subject to an excise tax under Code
Section 4972. With respect to any Pension Plan qualified under Code Section
401(a), the "accumulated benefit obligation" of Controlled Group members with
respect to the Pension Plan (as determined in accordance with Statement of
Accounting Standards No. 87, "Employers' Accounting for Pensions") does not
exceed the fair market value of Pension Plan assets.
Section 6.11. Consents or Approvals. No consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person is required to be obtained or
completed by any Company in connection with the execution, delivery or
performance of any of the Loan Documents, that has not already been obtained or
completed.
Section 6.12. Solvency. Borrower has received consideration that is the
reasonable equivalent value of the obligations and liabilities that Borrower has
incurred to Agent and the Lenders. Borrower is not insolvent as defined in any
applicable state, federal or relevant foreign statute, nor will Borrower be
rendered insolvent by the execution and delivery of the Loan Documents to Agent
and the Lenders. Borrower is not engaged or about to engage in any
53
business or transaction for which the assets retained by it are or will be an
unreasonably small amount of capital, taking into consideration the obligations
to Agent and the Lenders incurred hereunder. Borrower does not intend to, nor
does it believe that it will, incur debts beyond its ability to pay such debts
as they mature.
Section 6.13. Financial Statements. The Consolidated financial
statements of Borrower for the fiscal year ended March 31, 2002 and the
unaudited Consolidated financial statements of Borrower for the fiscal quarter
ended December 31, 2002, furnished to Agent and the Lenders, are true and
complete, have been prepared in accordance with GAAP, and fairly present the
financial condition of the Companies as of the dates of such financial
statements and the results of their operations for the periods then ending.
Since the dates of such statements, there has been no material adverse change in
any Company's financial condition, properties or business or any change in any
Company's accounting procedures other than as disclosed in (a) Borrower's Form
8K, dated February 28, 2003, including Borrower's Consolidated pro forma
financial statements for the nine-month period ending December 31, 2002 included
therein, and (b) the Confidential Memorandum.
Section 6.14. Regulations. No Company is engaged principally or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any "margin stock" (within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System of the United States of
America). Neither the granting of any Loan (or any conversion thereof) or Letter
of Credit nor the use of the proceeds of any Loan or Letter of Credit will
violate, or be inconsistent with, the provisions of Regulation U or X or any
other Regulation of such Board of Governors.
Section 6.15. Material Agreements. Except as disclosed on Schedule 6.15
hereto or as permitted pursuant to Section 5.8 hereof, as of the Closing Date,
no Company is a party to any (a) debt instrument (excluding the Loan Documents),
(b) lease (capital, operating or otherwise), whether as lessee or lessor
thereunder, or (c) collective bargaining agreement that, as to subsections (a)
through (c), above, if violated, breached, or terminated for any reason, would
have or would be reasonably expected to have a Material Adverse Effect.
Section 6.16. Intellectual Property. Each Company owns, possesses, or
has the right to use all of the patents, patent applications, trademarks,
service marks, copyrights, licenses, and rights with respect to the foregoing
reasonably necessary for the conduct of its business without any known conflict
with the rights of others.
Section 6.17. Insurance. Each Company maintains with financially sound
and reputable insurers insurance with coverage and limits as required by law and
as is customary with Persons engaged in the same businesses as the Companies.
Section 6.18. Accurate and Complete Statements. Neither the Loan
Documents nor any written statement made by any Company in connection with any
of the Loan Documents contains any untrue statement of a material fact or omits
a material fact necessary to make the statements contained therein or in the
Loan Documents not misleading. After due inquiry by
54
Borrower, there is no known fact that any Company has not disclosed to Agent and
the Lenders that has or is likely to have a Material Adverse Effect.
Section 6.19. Investment Company; Holding Company. No Company is (a) an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or (b) subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, each as amended, or any foreign, federal, state or local statute or
regulation limiting its ability to incur Indebtedness.
Section 6.20. Defaults. No Default or Event of Default exists
hereunder, nor will any begin to exist immediately after the execution and
delivery hereof.
ARTICLE VII. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default hereunder:
Section 7.1. Payments. If (a) the interest on any Loan or any facility
or other fee shall not be paid in full punctually when due and payable or within
five Business Days thereafter, or (b) the principal of any Loan or any
obligation under any Letter of Credit shall not be paid in full when due and
payable, unless such principal is due and owing because the Total Commitment
Amount exceeds the Borrowing Base, in which case such principal shall not be
paid in full within five Business Days thereafter.
Section 7.2. Special Covenants. If any Company or Credit Party shall
fail or omit to perform and observe Section 5.7, 5.8, 5.9, 5.11, 5.12, 5.13,
5.20, 5.21, 5.22 or 5.23 hereof.
Section 7.3. Other Covenants. If any Company shall fail or omit to
perform and observe any agreement or other provision (other than those referred
to in Section 7.1 or 7.2 hereof) contained or referred to in this Agreement or
any Related Writing that is on such Company's part to be complied with, and that
Default shall not have been fully corrected within thirty (30) days after the
giving of written notice thereof to Borrower by Agent or any Lender that the
specified Default is to be remedied.
Section 7.4. Representations and Warranties. If any representation,
warranty or statement made in or pursuant to this Agreement or any Related
Writing or any other material information furnished by any Company to the
Lenders or any thereof or any other holder of any Note, shall be false or
erroneous in any material respect.
Section 7.5. Cross Default.
(a) If any Company or Credit Party shall default in the payment of
principal or interest due and owing under any Material Indebtedness Agreement
beyond any period of grace provided with respect thereto or in the performance
or observance of any other agreement, term or condition contained in any
agreement under which such obligation is created, if the effect of
55
such default is to allow the acceleration of the maturity of such Indebtedness
or to permit the holder thereof to cause such Indebtedness to become due prior
to its stated maturity.
(b) If Borrower shall default (other than defaults that have been
cured within applicable grace periods or have otherwise been waived) under the
Agreement for Inventory Financing, the Senior Notes Indenture or the Convertible
Debentures Indenture.
Section 7.6. ERISA Default. The occurrence of one or more ERISA Events
that (a) the Required Lenders reasonably determine could have a Material Adverse
Effect, or (b) results in a Lien on any of the assets of any Company, in the
aggregate for all such Liens for all Companies in excess of One Million Dollars
($1,000,000).
Section 7.7. Change in Control. If any Change in Control shall occur.
Section 7.8. Money Judgment. A final judgment or order for the payment
of money shall be rendered against any Company by a court of competent
jurisdiction, that remains unpaid or unstayed and undischarged for a period
(during which execution shall not be effectively stayed) of thirty (30) days
after the date on which the right to appeal has expired, provided that the
aggregate of all such judgments for all such Companies shall exceed Five Million
Dollars ($5,000,000).
Section 7.9. Material Adverse Change. There shall have occurred any
condition or event that Agent or the Required Lenders reasonably determine has
or is reasonably likely to have a Material Adverse Effect.
Section 7.10. Validity of Loan Documents. (a) Any material provision,
in the sole opinion of Agent, of any Loan Document shall at any time for any
reason cease to be valid, binding and enforceable against any Credit Party; (b)
the validity, binding effect or enforceability of any Loan Document against any
Credit Party shall be contested by any Credit Party; (c) any Credit Party shall
deny that it has any or further liability or obligation thereunder; or (d) any
Loan Document shall be terminated, invalidated or set aside, or be declared
ineffective or inoperative or in any way cease to give or provide to Agent and
the Lenders the benefits purported to be created thereby. In addition to any
other material Loan Documents, this Agreement, each Note and each Guaranty of
Payment shall be deemed to be "material".
Section 7.11. Solvency. If any Company (other than an Excluded
Subsidiary) shall (a) discontinue business, (b) generally not pay its debts as
such debts become due, (c) make a general assignment for the benefit of
creditors, (d) apply for or consent to the appointment of a receiver, a
custodian, a trustee, an interim trustee or liquidator of all or a substantial
part of its assets, (e) be adjudicated a debtor or insolvent or have entered
against it an order for relief under Title 11 of the United States Code, or
under any other bankruptcy insolvency, liquidation, winding-up, corporate or
similar statute or law, foreign, federal state or provincial, in any applicable
jurisdiction, now or hereafter existing, as any of the foregoing may be amended
from time to time, or other applicable statute for jurisdictions outside of the
United States, as the case may be, (f) file a voluntary petition in bankruptcy,
or file a proposal or notice of intention to file
56
a proposal or have an involuntary proceeding filed against it and the same shall
continue undismissed for a period of thirty (30) days from commencement of such
proceeding or case, or file a petition or an answer or an application or
proposal seeking reorganization or an arrangement with creditors or seeking to
take advantage of any other law (whether federal or state, or, if applicable,
other jurisdiction) relating to relief of debtors, or admit (by answer, by
default or otherwise) the material allegations of a petition filed against it in
any bankruptcy, reorganization, insolvency or other proceeding (whether federal
or state, or, if applicable, other jurisdiction) relating to relief of debtors,
(g) suffer or permit or to continue unstayed and in effect for thirty (30)
consecutive days any judgment, decree or order entered by a court of competent
jurisdiction, that approves a petition or an application or a proposal seeking
its reorganization or appoints an interim receiver, a receiver and manager, an
administrator, custodian, trustee, interim trustee or liquidator of all or a
substantial part of its assets, (h) have an administrative receiver appointed
over the whole or substantially the whole of its assets, (i) have assets, the
value of which is less than its liabilities (taking into account prospective and
contingent liabilities), or (j) have a moratorium declared in respect of any of
its Indebtedness, or any analogous procedure or step is taken in any
jurisdiction.
ARTICLE VIII. REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or inference herein or
elsewhere,
Section 8.1. Optional Defaults. If any Event of Default referred to in
Section 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9 or 7.10 hereof shall occur,
Agent may, with the consent of the Required Lenders, and shall, at the request
of the Required Lenders, give written notice to Borrower, to:
(a) terminate the Commitment, if not previously terminated, and,
immediately upon such election, the obligations of the Lenders, and each
thereof, to make any further Loan and the obligation of the Fronting Lender to
issue any Letter of Credit immediately shall be terminated, and/or
(b) accelerate the maturity of all of the Debt (if the Debt is not
already due and payable), whereupon all of the Debt shall become and thereafter
be immediately due and payable in full without any presentment or demand and
without any further or other notice of any kind, all of which are hereby waived
by Borrower.
Section 8.2. Automatic Defaults. If any Event of Default referred to in
Section 7.11 hereof shall occur:
(a) all of the Commitment shall automatically and immediately
terminate, if not previously terminated, and no Lender thereafter shall be under
any obligation to grant any further Loan, nor shall the Fronting Lender be
obligated to issue any Letter of Credit, and
57
(b) the principal of and interest then outstanding on all of the
Notes, and all of the other Debt, shall thereupon become and thereafter be
immediately due and payable in full (if the Debt is not already due and
payable), all without any presentment, demand or notice of any kind, which are
hereby waived by Borrower.
Section 8.3. Letters of Credit. If the maturity of the Debt shall be
accelerated pursuant to Section 8.1 or 8.2 hereof, Borrower shall immediately
deposit with Agent, as security for the obligations of Borrower and any
Guarantor of Payment to reimburse Agent and the Lenders for any then outstanding
Letters of Credit, cash equal to the sum of the aggregate undrawn balance of any
then outstanding Letters of Credit. Agent and the Lenders are hereby authorized,
at their option, to deduct any and all such amounts from any deposit balances
then owing by any Lender (or any affiliate of such Lender) to or for the credit
or account of any Company, as security for the obligations of Borrower and any
Guarantor of Payment to reimburse Agent and the Lenders for any then outstanding
Letters of Credit.
Section 8.4. Offsets. If there shall occur or exist any Event of
Default referred to in Section 7.11 hereof or if the maturity of the Debt is
accelerated pursuant to Section 8.1 or 8.2 hereof, each Lender shall have the
right at any time to set off against, and to appropriate and apply toward the
payment of, any and all Debt then owing by Borrower to such Lender (including,
without limitation, any participation purchased or to be purchased pursuant to
Section 2.2, 2.3 or 8.5 hereof), whether or not the same shall then have
matured, any and all deposit (general or special) balances and all other
indebtedness (excluding the Restricted Account) then held or owing by such
Lender (including, without limitation, by branches and agencies or any affiliate
of such Lender) to or for the credit or account of Borrower or any Guarantor of
Payment, all without notice to or demand upon Borrower or any other Person, all
such notices and demands being hereby expressly waived by Borrower.
Section 8.5. Equalization Provision. Each Lender agrees with the other
Lenders that if it, at any time, shall obtain any Advantage over the other
Lenders or any thereof in respect of the Debt (except as to Swing Loans and
Letters of Credit prior to Agent's giving of notice to participate and except
under Article III hereof), it shall purchase from the other Lenders, for cash
and at par, such additional participation in the Debt as shall be necessary to
nullify the Advantage. If any such Advantage resulting in the purchase of an
additional participation as aforesaid shall be recovered in whole or in part
from the Lender receiving the Advantage, each such purchase shall be rescinded,
and the purchase price restored (but without interest unless the Lender
receiving the Advantage is required to pay interest on the Advantage to the
Person recovering the Advantage from such Lender) ratably to the extent of the
recovery. Each Lender further agrees with the other Lenders that if it at any
time shall receive any payment for or on behalf of Borrower on any indebtedness
owing by Borrower to that Lender (whether by voluntary payment, by realization
upon security, by reason of offset of any deposit or other indebtedness, by
counterclaim or cross-action, by the enforcement of any right under any Loan
Document, or otherwise), it will apply such payment first to any and all Debt
owing by Borrower to that Lender (including, without limitation, any
participation purchased or to be purchased pursuant to this Section or any other
Section of this Agreement). Borrower agrees that any Lender so purchasing a
participation from the other Lenders or any thereof pursuant to this
58
Section may exercise all of its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender was a
direct creditor of Borrower in the amount of such participation.
Section 8.6. Other Remedies. The remedies in this Article VIII are in
addition to, not in limitation of, any other right, power, privilege, or remedy,
either in law, in equity, or otherwise, to which the Lenders may be entitled.
Agent shall exercise the rights under this Article VIII and all other collection
efforts on behalf of the Lenders and no Lender shall act independently with
respect thereto, except as otherwise specifically set forth in this Agreement.
ARTICLE IX. THE AGENT
The Lenders authorize Key Corporate Capital Inc. and Key Corporate
Capital Inc. hereby agrees to act as agent for the Lenders in respect of this
Agreement upon the terms and conditions set forth elsewhere in this Agreement,
and upon the following terms and conditions:
Section 9.1. Appointment and Authorization. Each Lender hereby
irrevocably appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers hereunder as are delegated to Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
Neither Agent nor any of its affiliates, directors, officers, attorneys or
employees shall (a) be liable for any action taken or omitted to be taken by it
or them hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct, be responsible in any manner to any of the
Lenders for the effectiveness, enforceability, genuineness, validity or due
execution of this Agreement or any other Loan Documents, (b) be under any
obligation to any of the Lenders to ascertain or to inquire as to the
performance or observance or any of the terms, covenants or conditions hereof or
thereof on the part of Borrower, or the financial condition of Borrower, or (c)
be liable to any of the Companies for consequential damages resulting from any
breach of contract, tort or other wrong in connection with the negotiation,
documentation, administration or collection of the Loans or any of the Loan
Documents.
Section 9.2. Note Holders. Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with it,
signed by such payee and in form satisfactory to Agent.
Section 9.3. Consultation With Counsel. Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the opinion of such counsel.
Section 9.4. Documents. Agent shall not be under any duty to examine
into or pass upon the validity, effectiveness, genuineness or value of any Loan
Document or any other Related Writing furnished pursuant hereto or in connection
herewith or the value of any collateral obtained hereunder, and Agent shall be
entitled to assume that the same are valid, effective and genuine and what they
purport to be.
59
Section 9.5. Agent and Affiliates. With respect to the Loans, Agent
shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not Agent, and Agent and its affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with any Company or any affiliate thereof.
Section 9.6. Knowledge of Default. It is expressly understood and
agreed that Agent shall be entitled to assume that no Default or Event of
Default has occurred, unless Agent has been notified by a Lender in writing that
such Lender believes that a Default or Event of Default has occurred and is
continuing and specifying the nature thereof or has been notified by Borrower
pursuant to Section 5.14 hereof.
Section 9.7. Action by Agent. Subject to the other terms and conditions
hereof, so long as Agent shall be entitled, pursuant to Section 9.6 hereof, to
assume that no Default or Event of Default shall have occurred and be
continuing, Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights that may be vested in it by,
or with respect to taking or refraining from taking any action or actions that
it may be able to take under or in respect of, this Agreement. Agent shall incur
no liability under or in respect of this Agreement by acting upon any notice,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties, or with respect to
anything that it may do or refrain from doing in the reasonable exercise of its
judgment, or that may seem to it to be necessary or desirable in the premises.
Section 9.8. Notices, Default. In the event that Agent shall have
acquired actual knowledge of any Default or Event of Default, Agent shall
promptly notify the Lenders and shall take such action and assert such rights
under this Agreement as the Required Lenders shall direct and Agent shall inform
the other Lenders in writing of the action taken. Agent may take such action and
assert such rights as it deems to be advisable, in its discretion, for the
protection of the interests of the holders of the Debt.
Section 9.9. Indemnification of Agent. The Lenders agree to indemnify
Agent (to the extent not reimbursed by Borrower) ratably, according to their
respective Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against Agent in its capacity as agent in any way
relating to or arising out of this Agreement or any Loan Document or any action
taken or omitted by Agent with respect to this Agreement or any Loan Document,
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees) or disbursements resulting from Agent's
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction), or from any action taken or omitted by Agent in any capacity
other than as agent under this Agreement or any other Loan Document.
Section 9.10. Successor Agent. Agent may resign as agent hereunder by
giving not fewer than thirty (30) days prior written notice to Borrower and the
Lenders. If Agent shall
60
resign under this Agreement, then either (a) the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders (with the consent of
Borrower so long as an Event of Default has not occurred and which consent shall
not be unreasonably withheld), or (b) if a successor agent shall not be so
appointed and approved within the thirty (30) day period following Agent's
notice to the Lenders of its resignation, then Agent shall appoint a successor
agent that shall serve as agent until such time as the Required Lenders appoint
a successor agent. Upon its appointment, such successor agent shall succeed to
the rights, powers and duties as agent, and the term "Agent" shall mean such
successor effective upon its appointment, and the former agent's rights, powers
and duties as agent shall be terminated without any other or further act or deed
on the part of such former agent or any of the parties to this Agreement.
Section 9.11. Other Agents. As used in this Agreement, the term "Agent"
shall only include Agent. Neither the Documentation Agent nor the Syndication
Agent shall have any rights, obligations or responsibilities hereunder in such
capacity.
ARTICLE X. MISCELLANEOUS
Section 10.1. Lenders' Independent Investigation. Each Lender, by its
signature to this Agreement, acknowledges and agrees that Agent has made no
representation or warranty, express or implied, with respect to the
creditworthiness, financial condition, or any other condition of any Company or
with respect to the statements contained in any information memorandum furnished
in connection herewith or in any other oral or written communication between
Agent and such Lender. Each Lender represents that it has made and shall
continue to make its own independent investigation of the creditworthiness,
financial condition and affairs of the Companies in connection with the
extension of credit hereunder, and agrees that Agent has no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto (other than such
notices as may be expressly required to be given by Agent to the Lenders
hereunder), whether coming into its possession before the first Credit Event
hereunder or at any time or times thereafter. Each Lender further represents
that it has reviewed each of the Loan Documents.
Section 10.2. No Waiver; Cumulative Remedies. No omission or course of
dealing on the part of Agent, any Lender or the holder of any Note in exercising
any right, power or remedy hereunder or under any of the Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder or under any of the
Loan Documents. The remedies herein provided are cumulative and in addition to
any other rights, powers or privileges held by operation of law, by contract or
otherwise.
Section 10.3. Amendments, Consents. No amendment, modification,
termination, or waiver of any provision of any Loan Document nor consent to any
variance therefrom, shall be effective unless the same shall be in writing and
signed by the Required Lenders and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Anything herein to the contrary notwithstanding, unanimous consent of the
61
Lenders shall be required with respect to (a) any increase in the Commitment
hereunder (except as specified in Section 2.11(b) hereof), (b) the extension of
maturity of the Debt, the payment date of interest or principal thereunder, or
the payment of facility or other fees or amounts payable hereunder, (c) any
reduction in the rate of interest on the Debt, or in any amount of principal of
or interest due on the Debt, or the payment of facility or other fees hereunder
or any change in the manner of pro rata application of any payments made by
Borrower to the Lenders hereunder, (d) any change in any percentage voting
requirement, voting rights, or the Required Lenders definition in this
Agreement, (e) the release of any Guarantor of Payment, or (f) any amendment to
this Section 10.3 or Section 8.5 hereof. Notice of amendments or consents
ratified by the Lenders hereunder shall be forwarded by Agent to all of the
Lenders. Each Lender or other holder of a Note shall be bound by any amendment,
waiver or consent obtained as authorized by this Section, regardless of its
failure to agree thereto.
Section 10.4. Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to Borrower,
mailed or delivered to it, addressed to it at the address specified on the
signature pages of this Agreement, if to a Lender, mailed or delivered to it,
addressed to the address of such Lender specified on the signature pages of this
Agreement, or, as to each party, at such other address as shall be designated by
such party in a written notice to each of the other parties. All notices,
statements, requests, demands and other communications provided for hereunder
shall be deemed to be given or made when delivered or two Business Days after
being deposited in the mails with postage prepaid by registered or certified
mail, addressed as aforesaid, or sent by facsimile with telephonic confirmation
of receipt, except that notices from Borrower to Agent or the Lenders pursuant
to any of the provisions hereof shall not be effective until received by Agent
or the Lenders, as the case may be.
Section 10.5. Costs, Expenses and Taxes. Borrower agrees to pay on
demand all reasonable and properly documented costs and expenses of Agent,
including, but not limited to, (a) syndication, administration, travel and
out-of-pocket expenses, including but not limited to attorneys' fees and
expenses, of Agent in connection with the preparation, negotiation and closing
of the Loan Documents and the administration of the Loan Documents, the
collection and disbursement of all funds hereunder and the other instruments and
documents to be delivered hereunder, (b) extraordinary expenses of Agent in
connection with the administration of the Loan Documents and the other
instruments and documents to be delivered hereunder, and (c) the reasonable fees
and out-of-pocket expenses of special counsel for Agent, with respect to the
foregoing, and of local counsel, if any, who may be retained by said special
counsel with respect thereto. Borrower also agrees to pay on demand all properly
documented costs and expenses of Agent and the Lenders, including reasonable
attorneys' fees, in connection with the restructuring or enforcement of the
Debt, this Agreement or any Related Writing. In addition, Borrower shall pay any
and all properly documented stamp and other taxes and fees payable or determined
to be payable in connection with the execution and delivery of the Loan
Documents, and the other instruments and documents to be delivered hereunder,
and agrees to hold Agent and each Lender harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes or fees other than those liabilities resulting from the gross
62
negligence or willful misconduct of Agent, or, with respect to amounts owing to
a Lender, such Lender, in each case as determined by a court of competent
jurisdiction.
Section 10.6. Indemnification. Borrower agrees to defend, indemnify and
hold harmless Agent and the Lenders (and their respective affiliates, officers,
directors, attorneys, agents and employees) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including reasonable attorneys' fees) or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by or asserted
against Agent or any Lender in connection with any investigative, administrative
or judicial proceeding (whether or not such Lender or Agent shall be designated
a party thereto) or any other claim by any Person relating to or arising out of
any Loan Document or any actual or proposed use of proceeds of the Loans or any
of the Debt, or any activities of any Company or its Affiliates; provided that
no Lender nor Agent shall have the right to be indemnified under this Section
10.6 for its own gross negligence or willful misconduct as determined by a court
of competent jurisdiction. All obligations provided for in this Section 10.6
shall survive any termination of this Agreement.
Section 10.7. Obligations Several; No Fiduciary Obligations. The
obligations of the Lenders hereunder are several and not joint. Nothing
contained in this Agreement and no action taken by Agent or the Lenders pursuant
hereto shall be deemed to constitute the Lenders a partnership, association,
joint venture or other entity. No default by any Lender hereunder shall excuse
the other Lenders from any obligation under this Agreement; but no Lender shall
have or acquire any additional obligation of any kind by reason of such default.
The relationship between Borrower and the Lenders with respect to the Loan
Documents and the Related Writings is and shall be solely that of debtor and
creditors, respectively, and neither Agent nor any Lender shall have any
fiduciary obligation toward any Credit Party with respect to any such documents
or the transactions contemplated thereby.
Section 10.8. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which counterparts when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
Section 10.9. Binding Effect; Borrower's Assignment. This Agreement
shall become effective when it shall have been executed by Borrower, Agent and
each Lender and thereafter shall be binding upon and inure to the benefit of
Borrower, Agent and each of the Lenders and their respective successors and
assigns, except that Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of Agent and
all of the Lenders.
Section 10.10. Lender Assignments.
(a) Assignments of Commitments. Each Lender shall have the right
at any time or times to assign to an Eligible Transferee (other than to a Lender
that shall not be in compliance with this Agreement), without recourse, all or a
percentage of all of the following: (i) such
63
Lender's Commitment, (ii) all Loans made by that Lender, (iii) such Lender's
Notes, and (iv) such Lender's interest in any Letter of Credit or Swing Loan,
and any participation purchased pursuant to Section 2.3, 2.4 or 8.5 hereof.
(b) Prior Consent. No assignment may be consummated pursuant to
this Section 10.10 without the prior written consent of Borrower and Agent
(other than an assignment by any Lender to another Lender or to any affiliate of
such Lender which affiliate is an Eligible Transferee and either wholly-owned by
a Lender or is wholly-owned by a Person that wholly owns, either directly or
indirectly, such Lender), which consent of Borrower and Agent shall not be
unreasonably withheld; provided, however, that, Borrower's consent shall not be
required if, at the time of the proposed assignment, any Default or Event of
Default shall then exist. Anything herein to the contrary notwithstanding, any
Lender may at any time make a collateral assignment of all or any portion of its
rights under the Loan Documents to a Federal Reserve Bank, and no such
assignment shall release such assigning Lender from its obligations hereunder.
(c) Minimum Amount. Each such assignment shall be in a minimum
amount of the lesser of Five Million Dollars ($5,000,000) of the assignor's
Commitment and interest herein or the entire amount of the assignor's Commitment
and interest herein.
(d) Assignment Fee. Unless the assignment shall be to an affiliate
of the assignor or the assignment shall be due to merger of the assignor or for
regulatory purposes, either the assignor or the assignee shall remit to Agent,
for its own account, an administrative fee of Three Thousand Five Hundred
Dollars ($3,500).
(e) Assignment Agreement. Unless the assignment shall be due to
merger of the assignor or a collateral assignment for regulatory purposes, the
assignor shall (i) cause the assignee to execute and deliver to Borrower and
Agent an Assignment Agreement, and (ii) execute and deliver, or cause the
assignee to execute and deliver, as the case may be, to Agent such additional
amendments, assurances and other writings as Agent may reasonably require.
(f) Non-U.S. Assignee. If the assignment is to be made to an
assignee that is organized under the laws of any jurisdiction other than the
United States or any state thereof, the assignor Lender shall cause such
assignee, at least five Business Days prior to the effective date of such
assignment, (i) to represent to the assignor Lender (for the benefit of the
assignor Lender, Agent and Borrower) that under applicable law and treaties no
taxes will be required to be withheld by Agent, Borrower or the assignor with
respect to any payments to be made to such assignee in respect of the Loans
hereunder, (ii) to furnish to the assignor (and, in the case of any assignee
registered in the Register (as defined below), Agent and Borrower) either (A)
U.S. Internal Revenue Service Form W-8ECI or U.S. Internal Revenue Service Form
W-8BEN or (B) United States Internal Revenue Service Form W-8 or W-9, as
applicable (wherein such assignee claims entitlement to complete exemption from
U.S. federal withholding tax on all interest payments hereunder), and (iii) to
agree (for the benefit of the assignor, Agent and Borrower) to provide to the
assignor Lender (and, in the case of any assignee registered in the Register, to
Agent and Borrower) a new Form W-8ECI or Form W-8BEN or Form W-8 or W-9, as
64
applicable, upon the expiration or obsolescence of any previously delivered form
and comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such assignee, and to
comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.
(g) Deliveries by Borrower. Upon satisfaction of all applicable
requirements specified in subsections (a) through (f) above, Borrower shall
execute and deliver (i) to Agent, the assignor and the assignee, any consent or
release (of all or a portion of the obligations of the assignor) required to be
delivered by Borrower in connection with the Assignment Agreement, and (ii) to
the assignee and the assignor, if applicable, an appropriate Note or Notes.
After delivery of the new Note or Notes, the assignor's Note or Notes being
replaced shall be returned to Borrower marked "replaced".
(h) Effect of Assignment. Upon satisfaction of all applicable
requirements of set forth in subsections (a) through (g) above, and any other
condition contained in this Section 10.10, (i) the assignee shall become and
thereafter be deemed to be a "Lender" for the purposes of this Agreement, (ii)
the Assignor shall be released from its obligations hereunder to the extent that
its interest has been assigned, (iii) in the event that the assignor's entire
interest has been assigned, the assignor shall cease to be and thereafter shall
no longer be deemed to be a "Lender" and (iv) the signature pages hereto and
Schedule 1 hereto shall be automatically amended, without further action, to
reflect the result of any such assignment.
(i) Agent to Maintain Register. Agent shall maintain at the
address for notices referred to in Section 10.4 hereof a copy of each Assignment
Agreement delivered to it and a register (the "Register") for the recordation of
the names and addresses of the Lenders and the Commitment of, and principal
amount of the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and Borrower,
Agent and the Lenders may treat each Person whose name is recorded in the
Register as the owner of the Loan recorded therein for all purposes of this
Agreement. The Register shall be available for inspection by Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
Section 10.11. Sale of Participations. Any Lender may, in the ordinary
course of its commercial banking business and in accordance with applicable law,
at any time sell participations to one or more commercial banks or other Persons
other than a Company or an Affiliate of a Company (each a "Participant") in all
or a portion of its rights or obligations under this Agreement and the other
Loan Documents (including, without limitation, all or a portion of the
Commitment and the Loans and participations owing to it and the Note held by
it); provided, that:
(a) any such Lender's obligations under this Agreement and the
other Loan Documents shall remain unchanged;
(b) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
65
(c) the parties hereto shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and each of the other Loan Documents;
(d) such Participant shall be bound by the provisions of Section
8.5 hereof, and the Lender selling such participation shall obtain from such
Participant a written confirmation of its agreement to be so bound; and
(e) no Participant (unless such Participant is itself a Lender)
shall be entitled to require such Lender to take or refrain from taking action
under this Agreement or under any other Loan Document, except that such Lender
may agree with such Participant that such Lender will not, without such
Participant's consent, take action of the type described as follows:
(i) increase the portion of the participation amount of
any Participant over the amount thereof then in effect, or extend the
Commitment Period, without the written consent of each Participant
affected thereby; or
(ii) reduce the principal amount of or extend the time for
any payment of principal of any Loan, or reduce the rate of interest or
extend the time for payment of interest on any Loan, or reduce the
commitment fee, without the written consent of each Participant
affected thereby.
Borrower agrees that any Lender that sells participations pursuant to this
Section shall still be entitled to the benefits of Article III hereof,
notwithstanding any such transfer; provided, however, that the obligations of
Borrower shall not increase as a result of such transfer and Borrower shall have
no obligation to any Participant.
Section 10.12. Severability of Provisions; Captions; Attachments. Any
provision of this Agreement that shall be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction. The several captions to Sections and subsections
herein are inserted for convenience only and shall be ignored in interpreting
the provisions of this Agreement. Each schedule or exhibit attached to this
Agreement shall be incorporated herein and shall be deemed to be a part hereof.
Section 10.13. Entire Agreement. This Agreement, any Note and any other
Loan Document or other agreement, document or instrument attached hereto or
executed on or as of the Closing Date integrate all of the terms and conditions
mentioned herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.
Section 10.14. Confidentiality. Agent and each Lender shall hold all
Confidential Information in accordance with the customary procedures of Agent or
such Lender for handling
66
confidential information of this nature, and in accordance with safe and sound
banking practices. Notwithstanding the foregoing, Agent or any Lender may in any
event make disclosures of, and furnish copies of Confidential Information (a) to
another agent under this Agreement or another Lender; (b) when reasonably
required by any bona fide transferee or participant in connection with the
contemplated transfer of any Loans or Commitment or participation therein
(provided that each such prospective transferee or participant shall execute an
agreement for the benefit of Borrower with such prospective transferor Lender or
participant containing provisions substantially identical to those contained in
this Section 10.14); (c) to the parent corporation or corporations of Agent or
such Lender, and to their respective auditors and attorneys; and (d) as required
or requested by any governmental agency or representative thereof, or pursuant
to legal process, provided, that, unless specifically prohibited by applicable
law or court order, Agent or such Lender, as applicable, shall notify the chief
financial officer of Borrower of any request by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of Agent or such Lender by such
governmental agency), and of any other request pursuant to legal process, for
disclosure of any such non-public information prior to disclosure of such
Confidential Information. In no event shall Agent or any Lender be obligated or
required to return any materials furnished by or on behalf of any Company.
Borrower hereby agrees that the failure of Agent or any Lender to comply with
the provisions of this Section 10.14 shall not relieve Borrower of any of the
obligations to Agent and the Lenders under this Agreement and the other Loan
Documents.
Section 10.15. Legal Representation of Parties. The Loan Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Loan Document to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof or thereof.
Section 10.16. Judgment Currency. If Agent, on behalf of the Lenders,
obtains a judgment or judgments against any Credit Party in an Alternate
Currency, the obligations of such Credit Party in respect of any sum adjudged to
be due to Agent or the Lenders hereunder or under the Notes (the "Judgment
Amount") shall be discharged only to the extent that, on the Business Day
following receipt by Agent of the Judgment Amount in the Alternate Currency,
Agent, in accordance with normal banking procedures, purchases Dollars with the
Judgment Amount in such Alternate Currency. If the amount of Dollars so
purchased is less than the amount of Dollars that could have been purchased with
the Judgment Amount on the date or dates the Judgment Amount (excluding the
portion of the Judgment Amount that has accrued as a result of the failure of
such Credit Party to pay the sum originally due hereunder or under the Notes
when it was originally due and owing to Agent or the Lenders hereunder or under
the Notes) was originally due and owing to Agent or the Lenders hereunder or
under the Notes (the "Original Due Date") (the "Loss"), such Credit Party agrees
as a separate obligation and notwithstanding any such judgment, to indemnify
Agent or such Lender, as the case may be, against the Loss, and if the amount of
Dollars so purchased exceeds the amount of Dollars that could have been
purchased with the Judgment Amount on the Original Due Date, Agent or such
Lender agrees to remit such excess to such Credit Party.
67
Section 10.17. Currency Equivalent Generally. For the purposes of
making valuations or computations under this Agreement (but not for the purposes
of the preparation of any financial statements delivered pursuant hereto),
unless expressly provided otherwise, where a reference is made to a dollar
amount the amount is to be considered as the amount in Dollars and, therefor,
each other currency shall be converted into the Dollar Equivalent.
Section 10.18. Governing Law; Submission to Jurisdiction. This
Agreement, each of the Notes and any Related Writing shall be governed by and
construed in accordance with the laws of the State of Ohio and the respective
rights and obligations of Borrower and the Lenders shall be governed by Ohio
law, without regard to principles of conflict of laws. Borrower hereby
irrevocably submits to the non-exclusive jurisdiction of any Ohio state or
federal court sitting in Cleveland, Ohio, over any action or proceeding arising
out of or relating to this Agreement, the Debt or any Related Writing, and
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Ohio state or federal court.
Borrower, on behalf of itself and its Subsidiaries, hereby irrevocably waives,
to the fullest extent permitted by law, any objection it may now or hereafter
have to the laying of venue in any action or proceeding in any such court as
well as any right it may now or hereafter have to remove such action or
proceeding, once commenced, to another court on the grounds of FORUM NON
CONVENIENS or otherwise. Borrower agrees that a final, nonappealable judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
[Remainder of page left intentionally blank]
68
Section 10.19. Jury Trial Waiver. TO THE EXTENT PERMITTED BY LAW,
BORROWER, AGENT AND EACH LENDER WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG
BORROWER, AGENT AND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO.
IN WITNESS WHEREOF, the parties have executed and delivered this Credit
Agreement in Cleveland, Ohio as of the date first set forth above.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ INC.
Attn: Chief Financial Officer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive
Vice President and Chief
Financial Officer
Address: 127 Public Square KEY CORPORATE CAPITAL INC.,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ as Agent and as a Lender
Attn: Key Technology Finance
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
Address: U.S. Bank Centre U.S. BANK NATIONAL ASSOCIATION,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇. ▇▇▇▇ as Syndication Agent and as a
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ Lender
Attn: Corporate Banking
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ TRUST AND SAVINGS BANK
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as Documentation Agent and as a
Attn: Corporate Banking Lender
By: /s/ ▇▇▇▇▇ ▇. Law
----------------------------
Name: ▇▇▇▇▇ ▇. Law
Title: Vice President
Signature Page
1 of 2 of the Credit Agreement
Address: 1300 East Ninth Street, Suite ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ASSOCIATION
Attn: Corporate Banking
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Commercial Banking Officer
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Banking By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
Address: Suite 520 ▇.▇. ▇▇▇▇▇▇ CHASE BANK
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Attn: Corporate Banking -----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Signature Page
2 of 2 of the Credit Agreement
EXHIBIT A
REVOLVING CREDIT NOTE
$___________ Cleveland, Ohio
April 16, 2003
FOR VALUE RECEIVED, the undersigned, PIONEER-STANDARD ELECTRONICS,
INC., an Ohio corporation ("Borrower"), promises to pay, on the last day of the
Commitment Period, as defined in the Credit Agreement (as hereinafter defined),
to the order of _________ ("Lender") at the Main Office of KEY CORPORATE CAPITAL
INC., as Agent, as hereinafter defined, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇-▇▇▇▇ the principal sum of
_________________________________________________________________________DOLLARS
or the aggregate unpaid principal amount of all Revolving Loans, as defined in
the Credit Agreement made by Lender to Borrower pursuant to Section 2.2 of the
Credit Agreement, whichever is less, in lawful money of the United States of
America; provided that Revolving Loans that are Alternate Currency Loans, as
defined in the Credit Agreement, shall be payable in the applicable Alternate
Currency, as defined in the Credit Agreement, at the place or places designated
in the Credit Agreement. Borrower also agrees to pay any additional amount that
is required to be paid pursuant to Section 10.16 of the Credit Agreement.
As used herein, "Credit Agreement" means the Credit Agreement dated as
of April 16, 2003, among Borrower, the Lenders, as defined therein, and Key
Corporate Capital Inc., as lead arranger, book runner and administrative agent
for the Lenders ("Agent"), U.S. Bank National Association, as syndication agent,
and ▇▇▇▇▇▇ Trust and Savings Bank, as documentation agent, as the same may from
time to time be amended, restated or otherwise modified. Each capitalized term
used herein that is defined in the Credit Agreement and not otherwise defined
herein shall have the meaning ascribed to it in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each Revolving Loan from time to time outstanding, from the date of such
Revolving Loan until the payment in full thereof, at the rates per annum that
shall be determined in accordance with the provisions of Section 2.5(a) of the
Credit Agreement. Such interest shall be payable on each date provided for in
such Section 2.5(a); provided, however, that interest on any principal portion
that is not paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Base Rate Loans and LIBOR Fixed Rate Loans, and payments of principal of any
thereof, shall be shown on the records of Lender by such method as Lender may
generally employ; provided, however, that failure to make any such entry shall
in no way detract from the obligations of Borrower under this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a
E-1
rate per annum equal to the Default Rate. All payments of principal of and
interest on this Note shall be made in immediately available funds.
This Note is one of the Revolving Credit Notes referred to in the
Credit Agreement. Reference is made to the Credit Agreement for a description of
the right of the undersigned to anticipate payments hereof, the right of the
holder hereof to declare this Note due prior to its stated maturity, and other
terms and conditions upon which this Note is issued.
Except as expressly provided in the Credit Agreement, Borrower
expressly waives presentment, demand, protest and notice of any kind.
JURY TRIAL WAIVER. BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE LENDERS,
OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
PIONEER-STANDARD ELECTRONICS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
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EXHIBIT B
SWING LINE NOTE
$10,000,000 Cleveland, Ohio
April 16, 2003
FOR VALUE RECEIVED, the undersigned, PIONEER-STANDARD ELECTRONICS,
INC., an Ohio corporation ("Borrower"), promises to pay to the order of KEY
CORPORATE CAPITAL INC. ("Lender") at the Main Office of KEY CORPORATE CAPITAL
INC., as Agent, as hereinafter defined, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇-▇▇▇▇ the principal sum of
TEN MILLION AND 00/100___________________________________________________DOLLARS
or, if less, the aggregate unpaid principal amount of all Swing Loans, as
defined in the Credit Agreement (as hereinafter defined) made by Lender to
Borrower pursuant to Section 2.4 of the Credit Agreement, in lawful money of the
United States of America on the earlier of the last day of the Commitment
Period, as defined in the Credit Agreement, or, with respect to each Swing Loan,
the Swing Loan Maturity Date applicable thereto;
As used herein, "Credit Agreement" means the Credit Agreement dated as
of April 16, 2003, among Borrower, the Lenders, as defined therein, and Key
Corporate Capital Inc., as lead arranger, book runner and administrative agent
for the Lenders ("Agent"), U.S. Bank National Association, as syndication agent,
and ▇▇▇▇▇▇ Trust and Savings Bank, as documentation agent, as the same may from
time to time be amended, restated or otherwise modified. Each capitalized term
used herein that is defined in the Credit Agreement and not otherwise defined
herein shall have the meaning ascribed to it in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each Swing Loan from time to time outstanding, from the date of such Swing
Loan until the payment in full thereof, at the rates per annum that shall be
determined in accordance with the provisions of Section 2.5(b) of the Credit
Agreement. Such interest shall be payable on each date provided for in such
Section 2.5(b); provided, however, that interest on any principal portion which
is not paid when due shall be payable on demand.
The principal sum hereof from time to time and the payments of
principal and interest thereon, shall be shown on the records of Lender by such
method as Lender may generally employ; provided, however, that failure to make
any such entry shall in no way detract from the obligation of Borrower under
this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum equal to the Default Rate. All payments of principal of and interest on
this Note shall be made in immediately available funds.
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This Note is the Swing Line Note referred to in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the right of the
undersigned to anticipate payments hereof, the right of the holder hereof to
declare this Note due prior to its stated maturity, and other terms and
conditions upon which this Note is issued.
Except as expressly provided in the Credit Agreement, Borrower
expressly waives presentment, demand, protest and notice of any kind.
JURY TRIAL WAIVER. BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE LENDERS,
OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS NOTE OR ANY
OTHER NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
PIONEER-STANDARD ELECTRONICS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
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EXHIBIT C
NOTICE OF LOAN
[Date]_______________________, 200__
Key Corporate Capital Inc., as Agent
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention:__________________
Ladies and Gentlemen:
The undersigned, PIONEER-STANDARD ELECTRONICS, INC., refers to that
certain Credit Agreement, dated as of April 16, 2003 (as the same may from time
to time be amended, restated or otherwise modified, the "Credit Agreement", the
terms defined therein being used herein as therein defined), among the
undersigned, the Lenders, as defined in the Credit Agreement, and Key Corporate
Capital Inc., as Agent, and hereby gives you notice, pursuant to Section 2.7 of
the Credit Agreement that the undersigned hereby requests a Loan under the
Credit Agreement, and in connection therewith sets forth below the information
relating to the Loan (the "Proposed Loan") as required by Section 2.7 of the
Credit Agreement:
(a) The Business Day of the Proposed Loan is __________, 20__.
(b) The amount of the Proposed Loan is $_______________.
(c) The Proposed Loan is to be a:
Base Rate Loan ___, Alternate Currency Loan ___, Eurodollar
Loan ___, Swing Loan___. (Check one.)
(d) If the Proposed Loan is an Alternate Currency Loan or a
Eurodollar Loan, the Interest Period requested is:
one month ___, two months ___, three months ___, six
months ___. (Check one.)
The undersigned hereby certifies on behalf of Borrower that the
following statements are true on the date hereof, and will be true on the date
of the Proposed Loan:
(i) the representations and warranties contained in each
Loan Document are correct, before and after giving effect to the
Proposed Loan and the application of the proceeds therefrom, as though
made on and as of such date;
(ii) no event has occurred and is continuing, or would
result from such Proposed Loan, or the application of proceeds
therefrom, that constitutes a Default or Event of Default; and
(iii) the conditions set forth in Section 2.7 and Article
IV of the Credit Agreement have been satisfied.
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Very truly yours,
PIONEER-STANDARD ELECTRONICS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
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EXHIBIT D
COMPLIANCE CERTIFICATE
For Fiscal Quarter ended ____________________
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) I am the duly elected President/Chief Financial Officer of
PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation ("Borrower");
(2) I am familiar with the terms of that certain Credit Agreement,
dated as of April 16, 2003, among the undersigned, the Lenders, as defined in
the Credit Agreement, and Key Corporate Capital Inc., as Agent (as the same may
from time to time be amended, restated or otherwise modified, the "Credit
Agreement", the terms defined therein being used herein as therein defined), and
the terms of the other Loan Documents, and I have made, or have caused to be
made under my supervision, a review in reasonable detail of the transactions and
condition of Borrower and its Subsidiaries during the accounting period covered
by the attached financial statements;
(3) The review described in paragraph (2) above did not disclose,
and we have no knowledge of, the existence of any condition or event that
constitutes or constituted a Default or Event of Default, at the end of the
accounting period covered by the attached financial statements or as of the date
of this Certificate;
(4) The representations and warranties made by Borrower contained
in each Loan Document are true and correct as though made on and as of the date
hereof; and
(5) Set forth on Attachment I hereto are calculations of the
financial covenants set forth in Sections 5.7 and calculations with respect to
Sections 5.20 and 5.25 of the Credit Agreement, which calculations show
compliance with the terms thereof.
IN WITNESS WHEREOF, I have signed this certificate the ___ day of
_________, 20___.
PIONEER-STANDARD ELECTRONICS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
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EXHIBIT E
BORROWING BASE CERTIFICATE
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EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This Assignment and Acceptance Agreement (this "Assignment Agreement")
between ______________________ (the "Assignor") and ______________________ (the
"Assignee") is dated as of ________, 20_. The parties hereto agree as follows:
1. Preliminary Statement. Assignor is a party to a Credit
Agreement, dated as of April 16, 2003 (as the same may from time to time be
amended, restated or otherwise modified, the "Credit Agreement"), among
PIONEER-STANDARD ELECTRONICS, INC., an Ohio corporation ("Borrower"), the
banking institutions named on Schedule 1 thereto (together with their respective
successors and assigns, collectively, the "Lenders" and, individually, each a
"Lender"), and KEY CORPORATE CAPITAL INC., as lead arranger, book runner and
administrative agent for the Lenders ("Agent"), U.S. Bank National Association,
as syndication agent, and ▇▇▇▇▇▇ Trust and Savings Bank, as documentation agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Credit Agreement.
2. Assignment and Assumption. Assignor hereby sells and assigns
to Assignee, and Assignee hereby purchases and assumes from Assignor, an
interest in and to Assignor's rights and obligations under the Credit Agreement,
effective as of the Assignment Effective Date (as hereinafter defined), equal to
the percentage interest specified on Annex 1 hereto (hereinafter, "Assignee's
Percentage") of Assignor's right, title and interest in and to (a) the
Commitment of Assignor as set forth on Annex 1 hereto (hereinafter, the
"Assigned Amount"), (b) any Loan made by Assignor that is outstanding on the
Assignment Effective Date, (c) Assignor's interest in any Letter of Credit, as
defined in the Credit Agreement, that is issued and outstanding on the
Assignment Effective Date, (d) any Note delivered to Assignor pursuant to the
Credit Agreement, and (e) the Credit Agreement and the other Related Writings.
After giving effect to such sale and assignment and on and after the Assignment
Effective Date, Assignee shall be deemed to have a "Commitment Percentage" under
the Credit Agreement equal to the Commitment Percentage set forth in subpart
II.A on Annex 1 hereto.
3. Assignment Effective Date. The Assignment Effective Date (the
"Assignment Effective Date") shall be [__________ __, ____] (or such other date
agreed to by Agent). On or prior to the Assignment Effective Date, Assignor
shall satisfy the following conditions:
(a) receipt by Agent of this Assignment Agreement, including Annex
1 hereto, properly executed by Assignor and Assignee and accepted and consented
to by Agent and, if necessary pursuant to the provisions of Section 10.10(a) of
the Credit Agreement, by Borrower;
(b) receipt by Agent from Assignor of a fee of Three Thousand Five
Hundred Dollars ($3,500), if required by Section 10.10 of the Credit Agreement;
E-9
(c) receipt by Agent from Assignee of an administrative
questionnaire, or other similar document, which shall include (i) the address
for notices under the Credit Agreement, (ii) the address of its Lending Office,
(iii) wire transfer instructions for delivery of funds by Agent, (iv) and such
other information as Agent shall request; and
(d) receipt by Agent from Assignor or Assignee of any other
information required pursuant to Section 10.10 of the Credit Agreement or
otherwise necessary to complete the transaction contemplated hereby.
4. Payment Obligations. In consideration for the sale and
assignment of Loans hereunder, Assignee shall pay to Assignor, on the Assignment
Effective Date, the amount agreed to by Assignee and Assignor. Any interest,
fees and other payments accrued prior to the Assignment Effective Date with
respect to the Assigned Amount shall be for the account of Assignor. Any
interest, fees and other payments accrued on and after the Assignment Effective
Date with respect to the Assigned Amount shall be for the account of Assignee.
Each of Assignor and Assignee agrees that it will hold in trust for the other
part any interest, fees or other amounts which it may receive to which the other
party is entitled pursuant to the preceding sentence and to pay the other party
any such amounts which it may receive promptly upon receipt thereof.
5. Credit Determination; Limitations on Assignor's Liability.
Assignee represents and warrants to Assignor, Borrower, Agent and the Lenders
(a) that it is capable of making and has made and shall continue to make its own
credit determinations and analysis based upon such information as Assignee
deemed sufficient to enter into the transaction contemplated hereby and not
based on any statements or representations by Assignor, (b) Assignee confirms
that it meets the requirements to be an assignee as set forth in Section 10.10
of the Credit Agreement; (c) Assignee confirms that it is able to fund the Loans
and the Letters of Credit as required by the Credit Agreement; (d) Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement and the Related Writings
are required to be performed by it as a Lender thereunder; and (e) Assignee
represents that it has reviewed each of the Loan Documents. It is understood and
agreed that the assignment and assumption hereunder are made without recourse to
Assignor and that Assignor makes no representation or warranty of any kind to
Assignee and shall not be responsible for (i) the due execution, legality,
validity, enforceability, genuineness, sufficiency or collectability of the
Credit Agreement or any Related Writings, (ii) any representation, warranty or
statement made in or in connection with the Credit Agreement or any of the
Related Writings, (iii) the financial condition or creditworthiness of Borrower
or Guarantor of Payment, (iv) the performance of or compliance with any of the
terms or provisions of the Credit Agreement or any of the Related Writings, (v)
inspecting any of the property, books or records of Borrower, or (vi) the
validity, enforceability, perfection, priority, condition, value or sufficiency
of any collateral securing or purporting to secure the Loans or Letters of
Credit. Neither Assignor nor any of its officers, directors, employees, agents
or attorneys shall be liable for any mistake, error of judgment, or action taken
or omitted to be taken in connection with the Loans, the Letters of Credit, the
Credit Agreement or the Related Writings, except for its or their own bad faith
or willful misconduct.
E-10
Assignee appoints Agent to take such action as agent on its behalf and to
exercise such powers under the Credit Agreement as are delegated to Agent by the
terms thereof.
6. Indemnity. Assignee agrees to indemnify and hold Assignor
harmless against any and all losses, cost and expenses (including, without
limitation, attorneys' fees) and liabilities incurred by Assignor in connection
with or arising in any manner from Assignee's performance or non-performance of
obligations assumed under this Assignment Agreement.
7. Subsequent Assignments. After the Assignment Effective Date,
Assignee shall have the right pursuant to Section 10.10 of the Credit Agreement
to assign the rights which are assigned to Assignee hereunder, provided that (a)
any such subsequent assignment does not violate any of the terms and conditions
of the Credit Agreement, any of the Related Writings, or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Credit Agreement or any of the Related Writings
has been obtained, (b) the assignee under such assignment from Assignee shall
agree to assume all of Assignee's obligations hereunder in a manner satisfactory
to Assignor and (c) Assignee is not thereby released from any of its obligations
to Assignor hereunder.
8. Reductions of Aggregate Amount of Commitments. If any
reduction in the Total Commitment Amount occurs between the date of this
Assignment Agreement and the Assignment Effective Date, the percentage of the
Total Commitment Amount assigned to Assignee shall remain the percentage
specified in Section 1 hereof and the dollar amount of the Commitment of
Assignee shall be recalculated based on the reduced Total Commitment Amount.
9. Acceptance of Agent; Notice by Assignor. This Assignment
Agreement is conditioned upon the acceptance and consent of Agent and, if
necessary pursuant to Section 10.10 of the Credit Agreement, upon the acceptance
and consent of Borrower; provided, that the execution of this Assignment
Agreement by Agent and, if necessary, by Borrower is evidence of such acceptance
and consent.
10. Entire Agreement. This Assignment Agreement embodies the
entire agreement and understanding between the parties hereto and supersedes all
prior agreements and understandings between the parties hereto relating to the
subject matter hereof.
11. Governing Law. This Assignment Agreement shall be governed by
the laws of the State of Ohio, without regard to conflicts of laws.
12. Notices. Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement. For the purpose
hereof, the addresses of the parties hereto (until notice of a change is
delivered) shall be the address set forth under each party's name on the
signature pages hereof.
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13. JURY TRIAL WAIVER. EACH OF THE UNDERSIGNED, TO THE EXTENT
PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, ANY OF
THE LENDERS, AND BORROWER, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS INSTRUMENT OR ANY NOTE OR OTHER AGREEMENT, INSTRUMENT OR
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS
RELATED HERETO.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
ASSIGNOR:
Address: ______________________ ____________________________________
______________________
Attn:_________________ By:_________________________________
Phone:________________ Name: ______________________________
Fax:__________________ Title:______________________________
ASSIGNEE:
Address: ______________________ ____________________________________
______________________
Attn:_________________ By:_________________________________
Phone:________________ Name:_______________________________
Fax:__________________ Title:______________________________
Accepted and Consented to this ___ day
of ___, 20_:
KEY CORPORATE CAPITAL INC.,
as Agent
By:________________________________
Name:______________________________
Title:_____________________________
Accepted and Consented to this ___ day
of _______, 20__:
PIONEER-STANDARD ELECTRONICS, INC.
By:________________________________
Name:______________________________
Title:_____________________________
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ANNEX 1
TO
ASSIGNMENT AND ACCEPTANCE AGREEMENT
On and after the Assignment Effective Date, the Commitment of Assignee,
and, if this is less than an assignment of all of Assignor's interest, Assignor,
shall be as follows:
I. INTEREST OF ASSIGNOR BEING ASSIGNED TO ASSIGNEE
A. Assignee's Percentage __________%
B. Assigned Amount $_________
II. ASSIGNEE'S COMMITMENT (as of the Assignment Effective Date)
A. Assignee's Commitment Percentage
under the Credit Agreement __________%
B. Assignee's Commitment Amount under
the Credit Agreement $_________
III. ASSIGNOR'S COMMITMENT (as of the Assignment Effective Date)
A. Assignor's Commitment Percentage
under the Credit Agreement __________%
B. Assignor's Commitment Amount
under the Credit Agreement $_________
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EXHIBIT G
REQUEST FOR EXTENSION
[Date]_______________________, 200__
Key Corporate Capital Inc., as Agent
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:___________________
Ladies and Gentlemen:
The undersigned, PIONEER-STANDARD ELECTRONICS, INC., refers to that
certain Credit Agreement, dated as of April 16, 2003 (as the same may from time
to time be amended, restated or otherwise modified, the "Credit Agreement", the
terms defined therein being used herein as therein defined), among the
undersigned, the Lenders, as defined in the Credit Agreement, and Key Corporate
Capital Inc., as Agent, and hereby gives you notice, pursuant to Section 2.14 of
the Credit Agreement that the undersigned hereby requests an extension as set
forth below (the "Extension") under the Credit Agreement, and in connection with
the Extension sets forth below the information relating to the Extension as
required by Section 2.14 of the Credit Agreement.
The undersigned hereby requests Agent and the Lenders to extend the
Commitment Period from ______________ _____, 200_ to ________________ _____,
200_.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Extension: (a) the
representations and warranties contained in each Loan Document are correct,
before and after giving effect to the Extension and the application of the
proceeds therefrom, as though made on and as of such date; (b) no event has
occurred and is continuing, or would result from such Extension, or the
application of proceeds therefrom, which constitutes a Default or an Event of
Default; and (c) the conditions set forth in Section 2.14 and Article IV of the
Credit Agreement have been satisfied.
Very truly yours,
PIONEER-STANDARD ELECTRONICS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
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