AMENDMENT NUMBER ONE
TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER ONE TO LOAN AND SECURITY AGREEMENT, dated as of
November 2, 1998 (this "Amendment"), is entered into by and among QUESTRON
TECHNOLOGY, INC., a Delaware corporation, QUESTRON DISTRIBUTION LOGISTICS, INC.,
a Delaware corporation, INTEGRATED MATERIAL SYSTEMS, INC., an Arizona
corporation, POWER COMPONENTS, INC., a Pennsylvania corporation, CALIFORNIA
FASTENERS, INC., a California corporation, COMP ▇▇▇▇, INC., a Delaware
corporation doing business as ▇▇▇▇ Distribution, FAS-TRONICS, INC., a Texas
corporation, and FORTUNE INDUSTRIES, INC., a Texas corporation (individually and
collectively, and jointly and severally, "Borrower"), each of the Lenders,
CONGRESS FINANCIAL CORPORATION (FLORIDA), a Florida corporation, as
Administrative Agent, and ▇▇▇▇▇▇▇▇▇ L.L.C., a New York limited liability
company, as Collateral Agent.
This Amendment is entered into with reference to the following facts:
A. Borrower heretofore entered into that certain Loan and Security
Agreement, dated as of September 24, 1998 (as amended, restated,
supplemented, or otherwise modified from time to time, the
"Agreement") with the financial institutions identified therein as the
"Lenders", Congress Financial Corporation (Florida), a Florida
corporation, as Administrative Agent, and ▇▇▇▇▇▇▇▇▇ L.L.C., as
Collateral Agent (individually and collectively, the "Lender Group").
B. Borrower has requested the Lender Group to amend the Agreement to,
among other things, provide a letter of credit facility in accordance
with the terms and conditions hereof and the Lender Group is willing
to so amend the Agreement in accordance with the terms and conditions
hereof.
D. All capitalized terms used herein and not defined herein shall have
the meanings ascribed to them in the Agreement, as amended hereby.
NOW, THEREFORE, in consideration of the above recitals and the mutual
promises contained herein, Borrower and the Lender Group hereby agree as
follows:
1. Amendments to Agreement.
a. The following definitions set forth in Appendix A of the Agreement
hereby are amended and restated in their entirety to read as follows:
Commitment - Revolving Credit Commitment, Letter of Credit
Sub-Commitment, Term Loan Commitment, or Total Commitment, as the
context requires.
Eligible Inventory - such Inventory of Borrower (other than
packaging materials and supplies) which Administrative Agent, in its
sole credit judgment, deems to be Eligible inventory. Without limiting
the generality of the foregoing, no Inventory shall be Eligible
Inventory if:
(a) it is not finished goods that is, in
Administrative Agent's opinion, readily marketable in its
current form, or
(b) it is not in good, new, and saleable
condition, or
(c) it is slow-moving, obsolete (i.e., it has been
in Borrower's inventory for more than 365 days), or
unmerchantable, or
(d) it does not meet all standards imposed by any
governmental agency or authority, or
(e) it does not conform in all respects to the
warranties and representations set forth in the Agreement,
or
(f) it is not at all times subject to Collateral
Agent's duly perfected first priority security interest, and
is not subject to any other Lien except a Permitted Lien, or
(g) it is not situated at a location in compliance
with the Agreement (including any location that is neither
owned by Borrower nor the subject of a Collateral Access
Agreement in full force and effect) or is in transit, or
(h) it is purchased under a Commercial Letter of
Credit, unless such Commercial Letter of Credit either has
been drawn in full and reimbursed or has expired undrawn.
Obligations - all Loans and all other advances, debts,
liabilities, obligations (including contingent reimbursement
obligations under any outstanding Letter of Credit Accommodations),
covenants, and duties, together with all interest, fees, and other
charges owing, arising, due or payable from Borrower to any Lender of
any kind or nature, present or future, whether or not evidenced by any
note, guaranty, or other instrument, whether arising under the
Agreement or any of the other Loan Documents or otherwise whether
direct or indirect (including those acquired by assignment), absolute
or contingent, primary or secondary, due or to become due, now
existing or hereafter arising, and however acquired.
Other Agreements - the Fee Letter, the Suretyship Agreement,
the Revolving Notes, the Term Notes, the Subordination Agreement, the
Post-Closing Letter, the Dominion Account Agreements, the Letter of
Credit Accommodations, and any and all other agreements, instruments,
and documents (other than this Agreement and the Security Documents),
heretofore, now, or hereafter executed by Borrower, any Subsidiary of
Borrower, or any other third party and delivered
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to the Lender Group in respect of the transactions contemplated by the
Agreement.
Pro Rata Share - (a) with respect to a Lender's obligation
to make Revolving Credit Loans and receive payments relative thereto,
the percentage obtained by dividing (i) such Lender's Revolving Credit
Commitment, as set forth on Schedule C-1, by (ii) the aggregate
Revolving Credit Commitments of all Lenders, as set forth on Schedule
C-1;
(b) with respect to a Lender's obligation to participate in
Letter of Credit Accommodations, and receive payments of fees with
respect thereto, the percentage obtained by dividing (i) such Lender's
Letter of Credit Sub-Commitment, as set forth on Schedule C-1, by (ii)
the aggregate Letter of Credit Sub-Commitments of all Lenders, as set
forth on Schedule C-1
(c) with respect to a Lender's obligation to make Term Loan
A and receive payments relative thereto, the percentage obtained by
dividing (i) such Lender's Term Loan A Commitment, as set forth on
Schedule C-1, by (ii) the aggregate Term Loan A Commitments of all
Lenders, as set forth on Schedule C-1;
(d) with respect to a Lender's obligation to make Term Loan
B and receive payments relative thereto, the percentage obtained by
dividing (i) such Lender's Term Loan B Commitment, as set forth on
Schedule C-1, by (ii) the aggregate Term Loan B Commitments of all
Lenders, as set forth on Schedule C-1; and
(e) with respect to all other matters (including the
indemnification obligations arising under Section 11.5), the
percentage obtained by dividing (i) such Lender's Total Commitments to
make Loans, as set forth on Schedule C-1, by (ii) the aggregate Total
Commitments of all Lenders, as set forth on Schedule C-1.
Revolving Facility Usage - as of any date of determination,
the sum of the aggregate amount of Revolving Credit Loans outstanding
and the LC Amount.
b. Appendix A of the Agreement hereby is amended by adding
thereto the following new definitions in proper alphabetical
order:
Commercial Letter of Credit - means a documentary letter of
credit issued by Administrative Agent or any of Administrative Agent's
Affiliates for the account of Borrower to support the purchase by
Borrower of Inventory prior to transit to a location set forth on
Schedule 6.1.1, that provides that all draws thereunder must require
presentation of customary documentation (including, if applicable,
commercial invoices, packing list, certificate of origin, ▇▇▇▇ of
lading or airwaybill, customs clearance documents, quota statement,
inspection certificate, beneficiaries statement, and ▇▇▇▇ of exchange,
bills of lading, dock
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warrants, dock receipts, warehouse receipts, or other documents of
title) in form and substance satisfactory to Administrative Agent and
reflecting the passage to Borrower of title to first quality Inventory
conforming to Borrower's contract with the seller thereof. Any such
Letter of Credit shall cease to be a "Commercial Letter of Credit" at
such time, if any, as the goods purchased thereunder become Eligible
Inventory.
LC Amount - at any time, an amount equal to the sum of (a)
100% of the aggregate undrawn face amount of all Standby Letters of
Credit and LC Guaranties of Standby Letters of Credit then
outstanding, and (b) 50% of the aggregate undrawn face amount of all
Commercial Letters of Credit and LC Guaranties of Commercial Letters
of Credit then outstanding.
LC Exposure - at any time, an amount equal to the sum of (a) 100%
of the aggregate undrawn face amount of all Standby Letters of Credit
and LC Guaranties of Standby Letters of Credit then outstanding, and
(b) 100% of the aggregate undrawn face amount of all Commercial
Letters of Credit and LC Guaranties of Commercial Letters of Credit
then outstanding.
LC Guaranty - any guaranty pursuant to which Administrative Agent
or any Affiliate of Administrative Agent shall guaranty the payment or
performance by Borrower of its reimbursement obligation under any
letter of credit.
Letter of Credit - any Standby Letter of Credit or Commercial
Letter of Credit.
Letter of Credit Accommodations - Letters of Credit or LC
Guaranties.
Letter of Credit Sub-Commitment - for each Lender, the obligation
of such Lender to participate in Letter of Credit Accommodations, in
an aggregate amount at one time outstanding with respect to each such
Lender up to but not exceeding the amount set forth opposite the name
of such Lender under Letter of Credit Sub-Commitment on Schedule C-1.
The Letter of Credit Sub-Commitment of any Lender is a sub-commitment
of such Lender's Revolving Credit Commitment and is not to be added to
such Lender's Revolving Credit Commitment or Total Commitment.
Standby Letter of Credit - any letter of credit issued by
Administrative Agent or any of Administrative Agent's Affiliates for
the account of Borrower other than a Commercial Letter of Credit.
c. Section 1.1.1 of the Agreement hereby is amended and restated in its
entirety to read as follows:
1.1.1 Loans and Reserves. Each Revolving Credit Lender agrees,
ratably in accordance with its respective Revolving Credit Commitment,
and subject to the satisfaction of the applicable conditions precedent
set forth in
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Sections 9 and 9A hereof, to make Revolving Credit Loans to Borrower
from time to time, as requested by Borrower in the manner set forth in
Section 3.1.1 hereof, up to a maximum principal amount at any time
outstanding not to exceed such Lender's Pro Rata Share (in accordance
with its Revolving Credit Commitment) of an amount equal to the lesser
of (a) the Maximum Amount minus the LC Amount, or (b) the Borrowing
Base at such time minus the LC Amount and the amount of reserves, if
any, established by Administrative Agent as set forth below.
Administrative Agent shall have the right to establish reserves in
such amounts, and with respect to such matters, as Administrative
Agent deem in good faith necessary or appropriate, against the amount
of Revolving Credit Loans which Borrower may otherwise request under
this Section 1.1.1, including, without limitation, with respect to (i)
price adjustments, damages, unearned discounts, returned products or
other matters for which credit memoranda are issued in the ordinary
course of Borrower's business, (ii) shrinkage, spoilage, and
obsolescence of Inventory, (iii) slow moving Inventory, (iv) sums
chargeable against Borrower's Loan Account as Revolving Credit Loans
under any section of this Agreement, (v) amounts owing by Borrower to
any Person to the extent secured by a Lien on, or trust over, any
Property of Borrower, and (vi) such other matters, events, conditions,
or contingencies as to which Administrative Agent, in its good faith
sole credit judgment, determines reserves should be established from
time to time hereunder. The Revolving Credit Loans shall be evidenced
hereby and by the Revolving Notes, shall be secured by all of the
Collateral, and shall constitute Obligations.
d. A new Section 1.4 of the Agreement hereby is added to the Agreement in
proper alphanumerical order as follows:
1.4 Letter of Credit Accommodations.
(a) For so long as no Default or Event of Default exists and
subject to and upon the terms and conditions contained herein
(including Sections 9 and 9A), at the written request of Borrower,
Administrative Agent, on behalf of the Revolving Credit Lenders
(ratably in accordance with their respective Letter of Credit
Sub-Commitments), agrees to provide or arrange for Letter of Credit
Accommodations for the account of Borrower containing terms and
conditions acceptable to Administrative Agent and (if other than
Administrative Agent) the issuer thereof.
(b) In addition to any charges, fees or expenses charged by
any bank or issuer in connection with the Letter of Credit
Accommodations, Borrower shall pay to Administrative Agent, for the
ratable benefit of the Revolving Credit Lenders, a Letter of Credit
Accommodation fee at a rate equal to 2.75% per annum on the daily
outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as
of the first day of each succeeding month, except that Borrower shall
pay to Administrative Agent, for the ratable benefit of the Revolving
Credit Lenders,
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such Letter of Credit Accommodation fee, at the Required Lender's
option, without notice, at a rate equal to 5.75% per annum on such
daily outstanding balance for: (i) the period from and after the date
of termination hereof until the Lender Group has received full and
final payment of all Obligations (notwithstanding the entry of any
judgment against Borrower) and (ii) the period from and after the date
of the occurrence of an Event of Default for so long as such Event of
Default is continuing as determined by the Required Lenders. Such
Letter of Credit Accommodation fee shall be calculated on the basis of
a three hundred sixty (360) day year and actual days elapsed and the
obligation of Borrower to pay such fee shall survive the termination
of this Agreement. Any and all charges, commissions, fees, and costs
incurred by the Lender Group relating to the Letters of Credit
Accommodations shall be considered Obligations for purposes of this
Agreement and immediately shall be reimbursable by Borrower to
Administrative Agent for the benefit of the Lender Group.
(c) Letter of Credit Accommodations shall be available only
if and to the extent that, on the date of the proposed issuance of any
Letter of Credit Accommodations, the LC Exposure shall not exceed the
lesser of (i) $1,000,000, and (ii) the lesser of (1) the Maximum
Amount minus the then aggregate outstanding principal amount of
Revolving Credit Loans, or (2) the Borrowing Base at such time minus
the then aggregate outstanding principal amount of Revolving Credit
Loans.
(d) Without the prior written consent of the Required
Lenders, Borrower shall not request any Letter of Credit Accommodation
with an expiration date that is after the last day of the Term.
Borrower agrees immediately to reimburse Administrative Agent for the
benefit of the Lender Group for any amounts paid by the Lender Group
with respect to Letter of Credit Accommodations and Borrower and the
Lender Group agree that any amounts paid by the Lender Group under any
Letter of Credit Accommodation and not reimbursed by Borrower shall
constitute additional Revolving Credit Loans pursuant to Section
3.1.1(b), shall be secured by all of the Collateral, and shall bear
interest and be payable at the same rate and in the same manner as all
other Revolving Credit Loans.
(e) Immediately upon issuance of any Letter of Credit
Accommodation in accordance with this Section 1.4, each Revolving
Credit Lender shall be deemed to have irrevocably and unconditionally
purchased and received, without recourse or warranty, an undivided
interest and participation in the credit support or enhancement
provided through Administrative Agent to such issuer in connection
with the issuance of such Letter of Credit Accommodation equal to such
Lender's Pro Rata Share (based upon its respective Letter of Credit
Sub-Commitment) of the face amount of such Letter of Credit
Accommodation (including, without limitation, all obligations of
Borrower with respect thereto, and any security therefor or guaranty
pertaining thereto). In the event any payment by or on behalf of
Borrower received by Administrative Agent with respect to any Letter
of Credit Accommodation (or any guaranty by Borrower or reimbursement
obligation of Borrower relating thereto) and distributed by
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Administrative Agent to the Revolving Credit Lenders on account of
their respective participations therein is thereafter set aside,
avoided, or recovered from Administrative Agent in connection with any
receivership, liquidation, or bankruptcy proceeding, each of the
Revolving Credit Lenders shall, upon demand by Administrative Agent,
pay to Administrative Agent such Lender's Pro Rata Share (based upon
its respective Letter of Credit Sub-Commitment) of such amount set
aside, avoided, or recovered, together with interest at the rate
required to be paid by Administrative Agent upon the amount required
to be repaid by it.
(f) Borrower shall indemnify and hold the Lender Group
harmless from and against any and all losses, claims, damages,
liabilities, costs and expenses which the Lender Group may suffer or
incur in connection with any Letter of Credit Accommodations and any
documents, drafts or acceptances relating thereto, including any
losses, claims, damages, liabilities, costs and expenses due to any
action taken by any issuer or correspondent with respect to any Letter
of' Credit Accommodation. Borrower assumes all risks with respect to
the acts or omissions of the drawer under or beneficiary of any Letter
of Credit Accommodation and for such purposes the drawer or
beneficiary shall be deemed Borrower's agent. Borrower assumes all
risks for, and agrees to pay, all foreign, federal, state, and local
taxes, duties and levies relating to any goods subject to any Letter
of Credit Accommodations or any documents, drafts or acceptances
thereunder. Borrower hereby releases and holds the Lender Group
harmless from and against any acts, waivers, errors, delays or
omissions, whether caused by Borrower, by any issuer or correspondent
or otherwise with respect to or relating to any Letter of Credit
Accommodation, The provisions of this Section 1.4(f) shall survive the
payment of Obligations and the termination or non-renewal of this
Agreement.
(g) Nothing contained herein shall be deemed or construed to
grant Borrower any right or authority to pledge the credit of the
Lender Group in any manner. The Lender Group shall have no liability
of any kind with respect to any Letter of Credit Accommodation
provided by an issuer other than Administrative Agent unless
Administrative Agent has duly executed and delivered to such issuer
the application or a guarantee or indemnification in writing with
respect to such Letter of Credit Accommodation. Borrower shall be
bound by any interpretation made in good faith by Administrative
Agent, or any other issuer or correspondent under or in connection
with any Letter of Credit Accommodation or any documents, drafts or
acceptances thereunder, notwithstanding that such interpretation may
be inconsistent with any instructions of Borrower. Administrative
Agent shall have the sole and exclusive right and authority to, and
Borrower shall not: (i) at any time an Event of Default exists or has
occurred and is continuing, (A) approve or resolve any questions of
non-compliance of documents, (B) give any instructions as to
acceptance or rejection of any documents or goods, or (C) execute any
and all applications for steamship or airway guaranties, indemnities
or delivery orders; and (ii) at all times, (A) grant any extensions of
the maturity of, time of payment for, or time of presentation of, any
drafts, acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any
of the terms
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or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any
letters of credit included in the Collateral. Administrative Agent may
take such actions either in its own name or in Borrower's name.
(h) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other
agreement in favor of any issuer or correspondent relating to any
Letter of Credit Accommodation, shall be deemed to have been granted
or undertaken by Borrower to Administrative Agent for the benefit of
the Lender Group. Any duties or obligations undertaken by
Administrative Agent to any issuer or correspondent in any application
for any Letter of Credit Accommodation, or any other agreement by
Administrative Agent in favor of any issuer or correspondent relating
to any Letter of Credit Accommodation, shall be deemed to have been
undertaken by Borrower to the Lender Group and to apply in all
respects to Borrower.
(i) Borrower hereby authorizes and directs any issuing bank
that issues a Letter of Credit Accommodation to deliver to
Administrative Agent all instruments, documents, and other writings
and property received by the issuing bank pursuant to such Letter of
Credit Accommodation, and to accept and rely upon Administrative
Agent's instructions and agreements with respect to all matters
arising in connection with such Letter of Credit Accommodation and the
related application. Borrower shall be the "applicant" or "account
party" with respect to such Letter of Credit Accommodation.
(j) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or
application by any governmental authority of any such applicable law,
treaty, rule, or regulation, or (ii) compliance by the issuing bank or
the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any governmental
authority or monetary authority including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System
as from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement
is or shall be imposed or modified in respect of any Letter
of Credit Accommodation issued hereunder, or
(ii) there shall be imposed on the issuing bank or
the Lender Group any other condition regarding any Letter of
Credit Accommodation issued pursuant hereto;
and the result of the foregoing is to increase, directly or
indirectly, the cost to the Lender Group of issuing any Letter of
Credit Accommodation, or to reduce the amount receivable in respect
thereof the Lender Group, then, and in any such case, Administrative
Agent may, at any time within a reasonable period after the additional
cost is incurred or the amount received is reduced, notify
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Borrower, and Borrower shall pay on demand such amounts as
Administrative Agent may specify to be necessary to compensate the
Lender Group for such additional cost or reduced receipt, together
with interest on such amount from the date of such demand until
payment in full thereof at the rate then applicable to Revolving
Credit Loans pursuant hereto. The determination by Administrative
Agent of any amount due pursuant to this Section 1.4(j), as set forth
in a certificate setting forth the calculation thereof in reasonable
detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
e. Section 3.1.2 of the Agreement hereby is amended and restated in its
entirety to read as follows:
3.1.2 Funding by Lenders. Administrative Agent shall from time to
time, but no less frequently than weekly, notify each Revolving Credit
Lender of the date such Lender is to fund its Revolving Credit Loans,
and fund any amounts paid under any Letter of Credit Accommodation,
and the amount to be made available by it. If and to the extent that a
Revolving Credit Lender and Administrative Agent so agree, at
Administrative Agent's discretion, the amount to be made available by
such Revolving Credit Lender on any date may be netted against any
amount owing to such Lender and otherwise payable by Administrative
Agent on account of payments received by it from Borrower on such
date. The amount to be made available by each Revolving Credit Lender
on any date shall be made available by it on such date to
Administrative Agent at Administrative Agent's Account, in immediately
available funds, not later than 1:00 p.m. (New York time) on any day
in the case of fundings of which such Lenders have received notice not
later than 11:00 a.m. (New York time) on such day (or, if notice is
received after such time, not later than 12:00 p.m. (New York time) on
the next succeeding Business Day). The obligation of each Revolving
Credit Lender to Administrative Agent (as opposed to Borrower) to fund
its Revolving Credit Loans, and any payments under any Letter of
Credit Accommodation, on the date specified by Administrative Agent is
absolute and unconditional and shall not be affected by any
circumstance whatsoever, including (a) any set off counterclaim,
recoupment, defense or other right which such Lender may have against
Administrative Agent, Borrower or any other Person for any reason
whatsoever, (b) the financial condition or prospects of Borrower, (c)
the failure of any other such Lender to make funds available to Agent
with respect to its Revolving Credit Loans or any payments under any
Letter of Credit Accommodation, (d) the occurrence or continuation of
an Event of Default, whether the same shall occur before or after
Administrative Agent shall have made the Revolving Credit Loans or
Letter of Credit Accommodations, or (e) any other circumstance,
happening or event whatsoever, whether or not similar to any of the
foregoing.
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f. Section 3.1.6 of the Agreement hereby is amended and restated in its
entirety to read as follows:
3.1.6 Settlements.
(a) Revolving Credit Loans, Letter of Credit Accommodations,
and payments will be settled among Administrative Agent and the
Revolving Credit Lenders according to such procedures as
Administrative Agent and such Lenders may agree in writing from time
to time. These procedures notwithstanding, each such Lender's
obligation to fund its portion of the Revolving Credit Loans and
amounts paid under Letter of Credit Accommodations made by
Administrative Agent to Borrower shall commence on the date such
Revolving Credit Loans and Letter of Credit Accommodations are made by
Administrative Agent. Such payments to Administrative Agent will be
made by such Lenders without set-off, counterclaim or reduction of any
kind.
(b) Administrative Agent may require the Revolving Credit
Lenders to settle Revolving Credit Loans, amounts paid under Letter of
Credit Accommodations, and payments on a daily basis (or such lesser
frequency as Administrative Agent may determine) (each day of
settlement being a "Settlement Date"). Administrative Agent will
advise each Revolving Credit Lender by telephone or telecopy of the
amount of each such Lender's Pro Rata Share (in accordance with its
Revolving Credit Commitment and its Letter of Credit Sub-Commitment)
of the Revolving Facility Usage as of the close of business of the
Business Day immediately preceding the Settlement Date. In the event
that payments are necessary to adjust such Lender's actual Pro Rata
Share (in accordance with its Revolving Credit Commitment and its
Letter of Credit Sub-Commitment) of the Revolving Facility Usage as of
any Settlement Date to equal the amount of such Lender's required Pro
Rata Share (in accordance with its Revolving Credit Commitment and its
Letter of Credit Sub-Commitment) of the Revolving Facility Usage, the
party from which such payment is due will pay the other, in same day
funds, by wire transfer to the other's account not later than the
applicable time set forth on Section 3.1.2.
(c) If any such payment is not made to Administrative Agent
by any such Lender on the Settlement Date applicable thereto to the
extent required by the terms hereof, such Lender shall be a Defaulting
Lender and Administrative Agent shall be entitled to recover for its
account such amount on demand from such Lender together with interest
thereon at the Defaulting Lenders Rate. Administrative Agent shall not
be obligated to transfer to a Defaulting Lender any payments made by
Borrower to Administrative Agent for the Defaulting Lender's benefit
on account of its Revolving Credit Loans and participations in Letter
of Credit Accommodations. Any such amounts payable to a Defaulting
Lender shall instead be paid to or retained by Administrative Agent.
Administrative Agent may hold and, in its discretion, re-lend to
Borrower as Revolving Credit Loans the amount of any or all such
payments received or retained by it for the account of such Defaulting
Lender or treat any or all such amounts as participations in Letter of
Credit Accommodations made for
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Borrower's account. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents and determining Required
Lenders, Defaulting Lender shall be deemed not to be a "Lender" (in
respect of its Revolving Credit Loans, participations in Letter of
Credit Accommodations, Revolving Credit Commitment, and Letter of
Credit Sub-Commitment) and such Defaulting Lender's Revolving Credit
Commitment with respect to the Revolving Credit Loans and Letter of
Credit Sub-Commitment with respect to the Letter of Credit
Accommodations shall be deemed to be zero (-0-). This section shall
remain effective with respect to such Lender until (x) the Obligations
under this Agreement shall have been declared or shall have become
immediately due and payable or (y) the Revolving Credit Lenders that
are non-Defaulting Lenders and Administrative Agent shall have waived
such Lender's default in writing. The operation of this section shall
not be construed to increase or otherwise affect the Commitments of
any Lender other than such Defaulting Lender, or relieve or excuse the
performance by Borrower of its duties and obligations hereunder.
g. Clause "fourth" of Section 3.2.6(a)(i) of the Agreement hereby is
amended and restated in its entirety to read as follows:
fourth, to repay the principal of the Revolving Credit Loans
until paid in full, and then to be held by Administrative Agent
as cash collateral hereunder with respect to unreimbursed
obligations in respect of Letter of Credit Accommodations;
h. Clause "sixth" of Section 3.2.6(a)(ii) of the Agreement hereby is
amended and restated in its entirety to read as follows:
sixth, to repay the principal of the Revolving Credit Loans until
paid in full, and then to be held by Administrative Agent as cash
collateral hereunder with respect to unreimbursed obligations in
respect of Letter of Credit Accommodations;
i. Clause "fourth" of Section 3.2.6(a)(iii) of the Agreement hereby is
amended and restated in its entirety to read as follows:
fourth, to repay the principal of the Revolving Credit Loans
until paid in full, and then to be held by Administrative Agent
as cash collateral hereunder with respect to unreimbursed
obligations in respect of Letter of Credit Accommodations;
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j. Clause "fourth" of Section 3.2.6(b) of the Agreement hereby is amended
and restated in its entirety to read as follows:
fourth, to repay the principal of the Revolving Credit Loans
until paid in full, and then to be held by Administrative Agent
as cash collateral hereunder with respect to unreimbursed
obligations in respect of Letter of Credit Accommodations;
k. Section 4.2.2 of the Agreement hereby is amended and restated in its
entirety to read as follows:
4.2.2 Termination by Borrower. Upon at least 60 days prior
written notice to Administrative Agent, Borrower may, at its option,
terminate this Agreement without penalty or premium (other than as may
be required by the provisions of Section 2.4); provided, however, that
no such termination shall be effective until Borrower has paid all of
the Obligations in immediately available funds and all Letter of
Credit Accommodations have expired or have been cash collateralized to
Administrative Agent's satisfaction. Any notice of termination given
by Borrower shall be irrevocable unless the Required Lenders otherwise
agree in writing, and the Lender Group shall have no obligation to
make any Loans or procure any Letter of Credit Accommodations on or
after the termination date stated in such notice. Borrower may elect
to terminate this Agreement in its entirety only. No section of this
Agreement or type of Loan available hereunder may be terminated
singly.
l. The first paragraph of Section 7.1 of the Agreement hereby is amended
and restated in its entirety to read as follows:
7.1 General Representations and Warranties. In order to induce
the Lender Group to enter into this Agreement and to extend credit
hereunder, each Borrower hereby jointly and severally with each other
Borrower makes the following representations and warranties which
shall be true, correct, and complete in all material respects as of
the date hereof, and, subject to the ability of Borrower to modify
certain provisions thereof pursuant to the terms of Section 7.3
hereof, shall be true, correct, and complete in all material respects
as of the Closing Date, and at and as of the date of the making of
each Loan or Letter of Credit Accommodation made hereafter, as though
made on and as of the date of such Loan (except to the extent that
such representations and warranties relate solely to an earlier date)
and such representations and warranties shall survive the execution
and delivery of this Agreement:
12
m. Section 7.1.12 of the Agreement hereby is amended and restated in its
entirety to read as follows:
7.1.12 Solvent Financial Condition. Borrower, and each of its
Subsidiaries, taken as a whole, is and, after giving effect to the
Loans to be made hereunder, will be, Solvent.
n. Section 7.1.28 of the Agreement hereby is amended and restated in its
entirety to read as follows:
7.1.28 No Violation of Federal Reserve Board Regulations. The
making by the Lender Group of the Loans and Letter of Credit
Accommodations, and the use by each Borrower of the proceeds of any
and all Loans and Letter of Credit Accommodations, do not and will not
violate any of Regulations T, U, and X of the Federal Reserve Board.
o. The first paragraph of Section 9A of the Agreement hereby is amended
and restated in its entirety to read as follows:
Any other provision of this Agreement or any of the other Loan
Documents notwithstanding, and without affecting in any manner the
rights of the Lender Group under the other sections of this Agreement,
the Lender Group shall not be required to make any Loans or Letter of
Credit Accommodations under this Agreement unless and until each of
the following conditions has been and continues to be satisfied:
p. Section 10.3.5 of the Agreement hereby is amended and restated in its
entirety to read as follows:
10.3.5 Administrative Agent may, at its option, require Borrower
to deposit with Administrative Agent funds equal to the LC Exposure
and, if Borrower fails to promptly make such deposit, Administrative
Agent may advance such amount as a Revolving Credit Loan (whether or
not an Overadvance is created thereby). Any such deposit or advance
shall be held by Administrative Agent as a reserve to fund future
payments on such LC Guaranties and future drawings against such
Letters of Credit. At such time as all LC Guaranties have been paid or
terminated and all Letters of Credit have been drawn upon or expired,
any amounts remaining in such reserve shall be applied against any
outstanding Obligations, or, if all Obligations have been indefeasibly
paid in full, returned to Borrower.
13
q. Clause (a)(i) of the eighth sentence of Section 11.1.1 of the
Agreement hereby is amended and restated in its entirety to read as
follows:
(a)(i) Administrative Agent shall have the right to maintain, in
accordance with its customary business practices, ledgers and records
reflecting the status of the Obligations, the Revolving Credit Loans,
the Letter of Credit Accommodations, the Term Loans, the Collections,
and related matters, and
r. Clause (c) of the eighth sentence of Section 11.1.1 of the Agreement
hereby is amended and restated in its entirety to read as follows:
(c) Administrative Agent shall have the right to make the Revolving
Credit Loans and the Letter of Credit Accommodations, for itself or on
behalf of the applicable Lenders as provided in the Loan Documents;
s. Section 12.11 of the Agreement hereby is amended to include therein
the following additional notice information:
If to KZH ING-2 LLC: KZH ING-2 LLC
▇/▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: 212.946.7776
With copies to: ING Capital Advisors, Inc.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇
Facsimile: 213.626.6552
and to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: 212.351.5330
14
If to KZH ING-3 LLC: KZH ING-3 LLC
▇/▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: 212.946.7776
With copies to: ING Capital Advisors, Inc.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇
Facsimile: 213.626.6552
and to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: 212.351.5330
t. The Agreement and the other Loan Documents in effect as of the date
hereof hereby are amended such that all references to "Congress
Financial Corporation (Southern)" therein (including in Sections
11.4(a), 12.6(b), and 12.11 and in the definition of "Administrative
Agent" in Appendix A of the Agreement) shall be replaced by references
to "Congress Financial Corporation (Florida)".
u. Schedule C-1 of the Agreement hereby is amended, restated, and
replaced in its entirety by Schedule C-1 attached hereto.
2. Representations and Warranties. Borrower hereby represents and warrants to
Agent that (a) the execution, delivery, and performance of this Amendment and of
the Agreement, as amended by this Amendment, are within its corporate powers,
have been duly authorized by all necessary corporate action, and are not in
contravention of any law, rule, or regulation, or any order, judgment, decree,
writ, injunction, or award of any arbitrator, court, or governmental authority,
or of the terms of its charter or bylaws, or of any contract or undertaking to
which it is a party or by which any of its properties may be bound or affected,
and (b) this Amendment and the Agreement, as amended by this Amendment,
constitute Borrower's legal, valid, and binding obligation, enforceable against
Borrower in accordance with its terms.
15
3. Conditions Precedent to Amendment. The satisfaction of each of the following,
unless waived or deferred by the Lender Group in its sole discretion, shall
constitute conditions precedent to the effectiveness of this Amendment:
a. Collateral Agent shall have received that certain letter agreement,
dated as of even date herewith, between Administrative Agent and the Revolving
Credit Lenders, on the one hand, and Collateral Agent, on the other hand, in
form and substance satisfactory to Collateral Agent, duly executed, and such
document shall be in full force and effect.
b. The representations and warranties in this Amendment, the Agreement as
amended by this Amendment, and the other Loan Documents shall be true and
correct in all respects on and as of the date hereof, as though made on such
date (except to the extent that such representations and warranties relate
solely to an earlier date);
c. No Event of Default or event which with the giving of notice or passage
of time would constitute an Event of Default shall have occurred and be
continuing on the date hereof, nor shall result from the consummation of the
transactions contemplated herein;
d. All other documents and legal matters in connection with the
transactions contemplated by this Amendment shall have been delivered or
executed or recorded and shall be in form and substance satisfactory to
Collateral Agent and Administrative Agent.
4. Further Assurances. Borrower shall execute and deliver all agreements,
documents, and instruments, in form and substance satisfactory to Administrative
Agent and Collateral Agent, and take all actions as Administrative Agent or
Collateral Agent reasonably may request from time to time fully to consummate
the transactions contemplated under this Amendment and the Agreement, as amended
by this Amendment.
5. Effect on Agreement. The Agreement, as amended hereby, shall be and remain in
full force and effect in accordance with its terms and hereby is ratified and
confirmed in all respects. The execution, delivery, and performance of this
Amendment shall not operate as a waiver of or, except as expressly set forth
herein, as an amendment of any right, power, or remedy of the Lender Group under
the Agreement, as in effect prior to the date hereof.
6. Choice of Law and Venue; Jury Trial Waiver.
THIS AMENDMENT HAS BEEN NEGOTIATED, EXECUTED, AND DELIVERED AT AND SHALL BE
DEEMED TO HAVE BEEN MADE IN NEW YORK, NEW YORK. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK; PROVIDED,
16
HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION
OTHER THAN NEW YORK, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD,
MANNER, AND PROCEDURE FOR FORECLOSURE OF COLLATERAL AGENT'S LIEN UPON SUCH
COLLATERAL AND THE ENFORCEMENT OF THE LENDER GROUP'S OTHER REMEDIES IN RESPECT
OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE
DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NEW YORK. AS PART OF THE
CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE
DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR THE LENDER GROUP,
BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPREME COURT OF NEW YORK, NEW
YORK, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND THE LENDER GROUP PERTAINING TO THIS
AMENDMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION THAT
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE, OR
FORUM NON CONVENIENS, HEREBY CONSENTS TO THE EXERCISE OF PERSONAL JURISDICTION
OF SUCH COURT, AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT, AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT, AND OTHER PROCESS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS
SET FORTH IN THE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN
THE U.S. MAIL, PROPER POSTAGE PREPAID. NOTHING IN THIS AMENDMENT SHALL BE DEEMED
OR OPERATE TO AFFECT THE RIGHT OF THE LENDER GROUP TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY THE LENDER
GROUP OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION UNDER THE AGREEMENT OR THIS AMENDMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
BORROWER WAIVES (A) THE RIGHT TO TRIAL BY JURY (WHICH THE LENDER GROUP
HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM OF ANY KIND
ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS, OR THE
COLLATERAL, (B) PRESENTMENT, DEMAND, AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION, OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER, AND GUARANTIES AT ANY TIME HELD BY
17
AGENT OR ANY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER AGENT OR SUCH LENDER MAY DO IN THIS REGARD, (C)
NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR
SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO
EXERCISE ANY OF THE LENDER GROUP'S REMEDIES, (D) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT, AND EXEMPTION LAWS, AND (E) NOTICE OF ACCEPTANCE HEREOF. BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO THE LENDER
GROUP'S ENTERING INTO THIS AMENDMENT AND THAT THE LENDER GROUP IS RELYING UPON
THE FOREGOING WAIVERS IN THEIR FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS
AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL
AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AMENDMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
7. Miscellaneous.
a. Upon the effectiveness of this Amendment, each reference in the
Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like
import referring to the Agreement shall mean and refer to the Agreement as
amended by this Amendment.
b. Upon the effectiveness of this Amendment, each reference in the Loan
Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words
of like import referring to the Agreement shall mean and refer to the Agreement
as amended by this Amendment.
c. This Amendment may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Amendment by signing any such counterpart.
Delivery of an executed counterpart of this Amendment by telefacsimile shall be
equally as effective as delivery of a manually executed counterpart of this
Amendment. Any party delivering an executed counterpart of this Amendment by
telefacsimile also shall deliver a manually executed counterpart of this
Amendment but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability, and binding effect of this Amendment.
[signature page follows]
18
IN WITNESS WHEREOF, the parties have caused this Amendment Number One to
Loan and Security Agreement to be executed and delivered as of the date first
written above.
QUESTRON TECHNOLOGY, INC.,
a Delaware corporation
QUESTRON DISTRIBUTION LOGISTICS,INC.,
a Delaware corporation
INTEGRATED MATERIAL SYSTEMS, INC.,
an Arizona corporation
POWER COMPONENTS, INC.,
a Pennsylvania corporation
CALIFORNIA FASTENERS, INC.,
a California corporation
COMPWARE, INC.,
a Delaware corporation
doing business as ▇▇▇▇ Distribution
FAS-TRONICS, INC.,
a Texas corporation
FORTUNE INDUSTRIES, INC.,
a Texas corporation
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Title: a Responsible Officer of each of
the above-named Persons
CONGRESS FINANCIAL CORPORATION
(FLORIDA), a Florida corporation, as
Administrative Agent and a Lender
By:/s/ ▇▇▇▇▇▇ Cott
---------------
Title:Vice President
▇▇▇▇▇▇▇▇▇ L.L.C., a New York limited
liability company, as Collateral Agent
and a Lender
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------
Title:Authorized Signatory
KZH ING-2 LLC, a Delaware limited
liability company, as a Lender
By:/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
Title:Authorized Signatory
KZH ING-3 LLC, a Delaware limited
liability company, as a Lender
By:/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
Title:Authorized Signatory