SOUTHERN ELECTRONICS CORPORATION
SOUTHERN ELECTRONICS DISTRIBUTORS, INC.
REVOLVING CREDIT AGREEMENT
Dated as of June 29, 1995
NATIONAL CITY BANK, COLUMBUS
WACHOVIA BANK OF GEORGIA, N.A.
TABLE OF CONTENTS
Page
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . .1
Subsection 1.01 Definitions . . . . . . . . . . . . . .1
Subsection 1.02 Accounting Terms and Determinations . 10
SECTION II - COMMITMENT AND LOANS. . . . . . . . . . . . . . . 11
Subsection 2.01 Commitment. . . . . . . . . . . . . . 11
Subsection 2.02 Revolving Nature of Credit. . . . . . 11
Subsection 2.03 Types of Loans. . . . . . . . . . . . 11
Subsection 2.04 Procedures With Respect to Prime
Loans and Offered Rate Loans . . . . 11
Subsection 2.05 Conversion of Certain Loans . . . . . 12
Subsection 2.06 Procedures With Respect to Eurodollar
Loans . . . . . . . . . . . . . . . . 12
Subsection 2.07 Certain Matters With Respect to Loans 13
Subsection 2.08 Conditions to Each Loan . . . . . . . 13
Subsection 2.09 Warranty. . . . . . . . . . . . . . . 14
Subsection 2.10 Notes . . . . . . . . . . . . . . . . 14
Subsection 2.11 Recordkeeping . . . . . . . . . . . . 14
Subsection 2.12 Interest Rates. . . . . . . . . . . . 14
Subsection 2.13 Interest Payment Dates. . . . . . . . 15
Subsection 2.14 Interest Periods. . . . . . . . . . . 15
Subsection 2.15 Commitment and Administration Fees. . 15
Subsection 2.16 Termination or Reduction of Loan
Commitment. . . . . . . . . . . . . . 16
Subsection 2.17 Optional Prepayments of Prime Loans . 16
Subsection 2.18 Computation of Interest and Fees. . . 16
Subsection 2.19 Payments. . . . . . . . . . . . . . . 17
Subsection 2.20 Use of Proceeds of Loans. . . . . . . 17
Subsection 2.21 Increased Taxes or Costs. . . . . . . 17
Subsection 2.22 Changes in Circumstances. . . . . . . 18
Subsection 2.23 Funding Losses. . . . . . . . . . . . 19
SECTION III - LETTERS OF CREDIT. . . . . . . . . . . . . . . . 19
Subsection 3.01 Letters of Credit . . . . . . . . . . 19
Subsection 3.02 Letter of Credit Applications . . . . 20
Subsection 3.03 Payments Under Letters of Credit. . . 20
Subsection 3.04 Payments by Banks . . . . . . . . . . 21
Subsection 3.05 Obligations Absolute. . . . . . . . . 21
Subsection 3.06 Increased Costs . . . . . . . . . . . 22
Subsection 3.07 Letter of Credit Compensation . . . . 22
Subsection 3.08 Uses of Letters of Credit . . . . . . 23
SECTION IV - CONDITIONS PRECEDENT. . . . . . . . . . . . . . . 23
Subsection 4.01 Documents Required for Closing. . . . 23
Subsection 4.02 Certificate Required for Subsequent
Disbursements and Letters of Credit . 25
Subsection 4.03 Certain Events. . . . . . . . . . . . 25
Subsection 4.04 Legal Matters . . . . . . . . . . . . 25
Subsection 4.05 Additional Conditions to Issuance of
Each Letter of Credit . . . . . . . . 25
SECTION V - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 26
Subsection 5.01 Original Representations and
Warranties . . . . . . . . . . . . . 26
Subsection 5.02 Survival of Representations and
Warranties. . . . . . . . . . . . . . 28
SECTION VI - BORROWERS' COVENANTS. . . . . . . . . . . . . . . 28
Subsection 6.01 Affirmative Covenants . . . . . . . . 29
Subsection 6.02 Negative Covenants. . . . . . . . . . 35
SECTION VII - EVENT OF DEFAULT . . . . . . . . . . . . . . . . 36
Subsection 7.01 Event of Default. . . . . . . . . . . 36
Subsection 7.02 Acceleration. . . . . . . . . . . . . 37
Subsection 7.03 Remedies. . . . . . . . . . . . . . . 37
SECTION VIII - ADMINISTRATIVE BANK . . . . . . . . . . . . . . 37
Subsection 8.01 Authorization . . . . . . . . . . . . 37
Subsection 8.02 Delegation of Duties. . . . . . . . . 38
Subsection 8.03 Exculpatory Provisions. . . . . . . . 38
Subsection 8.04 Reliance by Administrative Bank . . . 38
Subsection 8.05 Notice of Event of Default. . . . . . 39
Subsection 8.06 Non-Reliance on Administrative Bank
and Other Banks . . . . . . . . . . . 39
Subsection 8.07 Indemnification . . . . . . . . . . . 39
Subsection 8.08 Administrative Bank in Its Individual
Capacity. . . . . . . . . . . . . . . 39
SECTION IX - MISCELLANEOUS . . . . . . . . . . . . . . . . . . 40
Subsection 9.01 Construction. . . . . . . . . . . . . 40
Subsection 9.02 Further Assurances. . . . . . . . . . 40
Subsection 9.03 Enforcement and Waiver by Banks . . . 40
Subsection 9.04 Expenses of Banks . . . . . . . . . . 40
Subsection 9.05 Notices . . . . . . . . . . . . . . . 40
Subsection 9.06 Waiver and Release by Borrowers . . . 41
Subsection 9.07 Applicable Law. . . . . . . . . . . . 41
Subsection 9.08 Binding Effect, Assignment and Entire
Agreement . . . . . . . . . . . . . . 42
Subsection 9.09 Severability. . . . . . . . . . . . . 42
Subsection 9.10 Counterparts. . . . . . . . . . . . . 42
Subsection 9.11 Setoffs; Sharing of Setoffs . . . . . 42
Subsection 9.12 Waiver of Jury Trial. . . . . . . . . 43
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 43
EXHIBITS AND SCHEDULES . . . . . . . . . . . . . . . . . . . . 44
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of June 29, 1995, by and among
(A) Southern Electronics Corporation, a Delaware corporation, and Southern
Electronics Distributors, Inc., a Delaware corporation (collectively, the
"Borrowers"), and (B) National City Bank, Columbus, a national banking
association ("NCB"), and Wachovia Bank of Georgia, N.A., a national banking
association ("WB") (collectively, the "Banks").
RECITAL:
The Borrowers have requested that the Banks lend to them up to the sum
provided for herein on a revolving loan basis, and the Banks are willing to do
so, all upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the covenants herein contained, and
each intending to be legally bound hereby, the parties agree as follows:
SECTION I. DEFINITIONS
1.01 Definitions. As used herein:
"Administrative Bank" means whichever of the Banks the Borrowers elect from
time to time to have perform the functions of the Administrative Bank hereunder.
Unless and until the Borrowers elect otherwise, WB shall perform the functions
of the Administrative Bank.
"Administration Fee" shall have the meaning assigned to it in subsection
2.15(B).
"Administrative Bank Fee" shall have the meaning assigned to it in
subsection 2.15(B).
"Affected Bank" shall have the meaning assigned to it in subsection
2.22(A).
"Affiliate" of any relevant Person means (A) any Person that directly, or
indirectly through one or more intermediaries, controls the relevant Person (a
"Controlling Person"), (B) any Person (other than the relevant Person or a
Subsidiary of the relevant Person) which is controlled by or is under common
control with a Controlling Person, or (C) any Person (other than a Subsidiary of
the relevant Person) of which the relevant Person owns, directly or indirectly,
20% or more of the common stock or equivalent entity interests. As used herein,
the term "control" means possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Revolving Credit Agreement, as the same may from
time to time be amended, modified or supplemented.
"Applicable Margin" means, with respect to any Performance Pricing
Determination Date, the percentage set forth below as the Applicable Margin
based upon the L/TNW Ratio of the Borrowers set forth below, determined
pursuant to subsection 2.12(E).
Applicable
L/TNW Ratio Margin
Not more than .80 to 1 .75%
Greater than .80 to 1 but not more than 1 to 1 1.00%
Greater than 1 to 1 but not more than 1.33 to 1 1.25%
Greater than 1.33 to 1 but not more than 1.6 to 1 1.50%
Greater than 1.6 to 1 1.75%
"Banks" shall have the meaning assigned to it in the introductory
paragraph of this Agreement.
"Borrowers" shall have the meaning assigned to it in the introductory
paragraph of this Agreement.
"Borrowing Date" means the date of any borrowing by the Borrowers
pursuant to this Agreement.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in Columbus, Ohio or Atlanta, Georgia are authorized
or required by law to close.
"Closing" shall have the meaning assigned to it in subsection 4.01.
"Code" shall have the meaning assigned to it in subsection 6.01(L)(1).
"Commitment Fee" shall have the meaning assigned to it in subsection
2.15(A).
"Consolidated Net Profit After Tax" shall have the meaning assigned to
it in subsection 6.01(F)(4).
"Controlling Person" shall have the meaning assigned to it in the
definition of "Affiliate" contained in this subsection 1.01.
"Current Assets" means, at any time, all assets that, in accordance
with generally accepted accounting principles consistently applied, should be
classified as current assets on a consolidated balance sheet of the Borrowers.
"Current Liabilities" means, at any time, all liabilities that, in
accordance with generally accepted accounting principles consistently applied,
should be classified as current liabilities on a consolidated balance sheet of
the Borrowers, including without limitation Indebtedness incurred hereunder
and under the Notes.
"Current Loan Documents" shall have the meaning assigned to it in
subsection 9.08.
"Documentary Letter of Credit" means a Letter of Credit which (A) is
issued by the Issuing Bank for the account of either of the Borrowers, (B)
expires not later than the earlier to occur of the then scheduled Loan
Commitment maturity Date or 12 months from the date of issuance thereof and
(C) supports payment for the purchase of inventory, merchandise and other
property held for resale in the ordinary course of business of the Borrowers.
"Documentary Letter of Credit Commission" shall have the meaning
assigned to it in subsection 3.07(B).
"Dollars" means the lawful currency of the United States.
"Environmental Laws" shall have the meaning assigned to it in
subsection 5.01(Q).
"ERISA" shall have the meaning assigned to it in subsection 5.01(O).
"Eurocurrency Reserve Percentage" means, with respect to any day, the
then applicable maximum percentage (expressed as a decimal) prescribed by the
Federal Reserve Board for determining reserve requirements (including without
limitation any marginal, emergency, supplemental, special or other reserves)
applicable generally to member banks of the Federal Reserve System in respect of
"Eurocurrency Liabilities" pursuant to Regulation D or any other then applicable
regulation of the Federal Reserve Board which prescribes reserve requirements
applicable to "Eurocurrency Liabilities" as presently defined in said Regulation
D.
"Eurodollar Business Day" means a day on which banks are open for
business in Columbus, Ohio and Atlanta, Georgia and on which dealings are
carried on in the London interbank eurodollar market.
"Eurodollar Loan" means a Loan accruing interest at a rate based on the
Eurodollar Rate (Reserve Adjusted).
"Eurodollar Rate" means, with respect to any Eurodollar Loan for any
Interest Period, the rate per annum determined on the basis of the offered rate
for deposits in Dollars of amounts equal or comparable to the principal amount
of such Eurodollar Loan offered for a term comparable to such Interest Period,
which rates appear on the Reuters Screen LIBO Page effective as of 11:00 A.M.,
London time, two Eurodollar Business Days prior to the first day of such
Interest Period, provided that (A) if more than one such offered rate appears
on the Reuters Screen LIBO Page, the "Eurodollar Rate" will be the offered rate
which is used in the majority of such quotations, if there is a majority, and
otherwise the arithmetic average (rounded upward, if necessary, to the next
higher 1/100th of 1%) of such offered rates; (B) if no such offered rates appear
on such page, the "Eurodollar Rate" for such Interest Period will be the
arithmetic average (rounded upward, if necessary, to the next higher 1/100th
of 1%) of rates quoted by not less than two major banks in New York City,
selected by the Administrative Bank at approximately 10:00 A.M., New York
City time, two Eurodollar Business Days prior to the first day of such Interest
Period, for deposits in Dollars offered to leading European banks for a period
comparable to such Interest Period in an amount comparable to the principal
amount of such Eurodollar Loan.
"Eurodollar Rate (Reserve Adjusted)" means, with respect to any
Eurodollar Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/16%), determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1 - Eurocurrency
Reserve Percentage
"Event of Default" shall have the meaning assigned to it in subsection
7.01.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
thereto.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Financial Statements" means the audited consolidated financial
statements of the Borrowers as of June 30, 1994 and the Unaudited Financial
Statements.
"Fixed Charges" means the sum of the Borrowers' (A) interest expense
(including interest expense with respect to capitalized leases), plus (B)
capital expenditures, plus (C) lease expense with respect to non-capitalized
leases, plus (D) current maturities with respect to long term Indebtedness,
all as determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied.
"Fixed Charges Coverage Ratio" means the ratio of the Income Available
for Fixed Charges to the Fixed Charges of the Borrowers.
"Income Available for Fixed Charges" means the Borrowers' (A) earnings
before interest expense (including interest expense with respect to capitalized
leases), income taxes, depreciation expense and amortization of property rights
related to properties owned or held other than pursuant to capitalized leases,
plus (B) lease expense with respect to non-capitalized leases, all as determined
on a consolidated basis in accordance with generally accepted accounting
principles consistently applied.
"Indebtedness" means, as to the Borrowers, all items of indebtedness,
obligation or liability, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, including without
limitation:
(A) All indebtedness guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or deposit in the ordinary course
of business) or discounted with recourse;
(B) All indebtedness in effect guaranteed, directly or
indirectly, through agreements, contingent or otherwise: (1) to purchase such
indebtedness; (2) to purchase, sell or lease (as lessee or lessor) property,
products, materials or supplies or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such indebtedness or to
assure the owner of the indebtedness against loss; or (3) to supply funds to or
in any other manner invest in the debtor;
(C) All indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(D) All indebtedness incurred as the lessee of goods or services
under leases that, in accordance with generally accepted accounting principles,
should not be reflected on the lessee's balance sheet.
"Interest Period" shall have the meaning assigned to it in subsection
2.14(A).
"Issuing Bank" means (A) NCB with respect to the Pre-Existing Letters
of Credit and (B) the Administrative Bank at the time of issuance with respect
to each other Letter of Credit.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any government or political subdivision or
agency thereof, or any court or similar entity established by any thereof.
"LC Amount" shall have the meaning assigned to it in subsection 3.01.
"LC Share" means, as to each Bank, its participating share of a Letter
of Credit issued pursuant to Section III determined by multiplying the LC Amount
for such Letter of Credit by the Bank's Percentage.
"Letter of Credit Application" shall have the meaning assigned to it
in subsection 3.02.
"Letters of Credit" shall have the meaning assigned to it in subsection
3.01.
"Letters of Credit Maximum" means Five Million Dollars ($5,000,000).
"Liabilities" means all Indebtedness that, in accordance with generally
accepted accounting principles consistently applied, should be classified as
liabilities on a consolidated balance sheet of the Borrowers.
"Loans" shall have the meaning assigned to it in subsection 2.01.
"Loan Commitment" means the sum of Thirty Million Dollars ($30,000,000)
or such lesser amount as shall hereafter be determined from time to time
pursuant to subsection 2.16.
"Loan Commitment Maturity Date" means August 31, 1997; provided,
however, that during the month of May in each year prior to the year in which
the then Loan Commitment Maturity Date falls (thus, in May of 1996 when the
then Loan Commitment Maturity Date is August 31, 1997), the Borrowers may
request in writing to the Banks that the then Loan Commitment Maturity Date
be extended for an additional period of one (1) year and the Banks, in their
sole discretion, may elect to honor or not honor such request. The Banks
shall notify in writing the Borrowers of the decision of the Banks, and in
the event an extension is agreed upon it shall be reflected in an amendment
to this Agreement which appropriately changes this definition of Loan
Commitment Maturity Date to reflect the new such Loan Commitment Maturity Date.
"Loan Commitment Period" means the period from and including the date
hereof to but not including the Loan Termination Date.
"Loan Termination Date" means the earliest of (A) the Loan Commitment
Maturity Date, (B) the date on which the Loan Commitment is terminated or
reduced to zero pursuant to the terms of subsection 2.16 or (C) the date of any
acceleration pursuant to subsection 7.02.
"L/TNW Ratio" shall have the meaning assigned to it in subsection
6.01(F)(2).
"Material Ownership Change" means any change or series of changes in
ownership of either of the Borrowers which causes the ownership of any
shareholder or affiliated group of shareholders in either of the Borrowers to
exceed the greater of (A) 5% of the outstanding shares of voting stock of either
of the Borrowers or (B) such percentage of the outstanding shares of voting
stock of either of the Borrowers as is equal to 110% of their percentage of
ownership of the outstanding shares of voting stock of either of the Borrowers
on the date hereof.
"NCB" shall have the meaning assigned to it in the introductory
paragraph of this Agreement.
"Net Working Capital" means, at any time, the amount by which Current
Assets exceed Current Liabilities.
"New Loan" shall have the meaning assigned to it in subsection 2.05.
"Note" shall have the meaning assigned to it in subsection 2.10.
"Obligations" means the obligations of the Borrowers:
(A) To pay the principal of and interest on the Notes in
accordance with the terms thereof and to satisfy all of their other liabilities
to the Banks hereunder and under the Notes, whether now existing or hereafter
incurred, matured or unmatured, direct or contingent, joint or several,
including any extensions, modifications or renewals thereof and substitutions
therefor;
(B) To repay to the Banks all amounts advanced by the Banks
hereunder or under the Notes on behalf of the Borrowers, including without
limitation advances pursuant to the Letters of Credit and advances for principal
or interest payments to prior secured parties, mortgagees or lienors; and
(C) To reimburse the Banks, on demand, for all of the Banks'
expenses and costs, including the reasonable fees and expenses of their counsel,
in connection with the preparation, administration, amendment, modification or
enforcement of this Agreement and the documents required hereunder, including
without limitation any proceeding brought or threatened to enforce payment of
any of the obligations referred to in the foregoing clauses (A) and (B).
"Offered Base Rate" means, with respect to any Interest Period for any
Offered Rate Loan, that rate per annum which the Banks have jointly established
as the then Offered Base Rate.
"Offered Rate Loan" means a Loan accruing interest at a rate based on
the Offered Base Rate.
"Old Loan" shall have the meaning assigned to it in subsection 2.05.
"Outstanding LC Amounts" means the aggregate of all outstanding LC
Amounts for Letters of Credit.
"PBGC" shall have the meaning assigned to it in subsection 6.01(L).
"Percentage" means, in the case of each Bank, the percentage which the
Bank's Share of the Commitment is of the Loan Commitment.
"Performance Pricing Determination Date" shall have the meaning
assigned to it in subsection 2.12(E).
"Permitted Liens" means:
(A) Liens for taxes, assessments or similar charges incurred in
the ordinary course of business that are not yet due and payable;
(B) Pledges or deposits made in the ordinary course of business
to secure payment of workers' compensation, or to participate in any fund in
connection with workers' compensation, unemployment insurance, old-age pensions
or other social security programs;
(C) Liens of mechanics, materialmen, warehousemen, carriers or
other like liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable;
(D) Good faith pledges or deposits made in the ordinary course
of business to secure performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, not in excess of ten percent (10%)
of the aggregate amount due thereunder, or to secure statutory obligations,
or surety, appeal, indemnity, performance or other similar bonds required in
the ordinary course of business;
(E) Encumbrances consisting of zoning restrictions, easements or
other restrictions on the use of real property, none of which materially
detracts from the value of or impairs the use of such property by the Borrowers
in the operation of their business, and none of which is violated in any
material respect by existing or proposed structures or land use;
(F) Existing liens set forth or described on Schedule 1.01-1
attached hereto;
(G) Purchase money liens aggregating not more than Two Hundred
Fifty Thousand Dollars ($250,000) for capital expenditures in connection with
purchases after the date of this Agreement; and
(H) The following, if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings, so long as levy
and execution thereon have been stayed and continue to be stayed and they do
not, in the aggregate, materially detract from the value of the property of the
Borrowers, or materially impair the use thereof in the operation of their
business:
(1) Claims or liens for taxes,
assessments or charges due and payable and subject
to interest or penalty;
(2) Claims, liens and encumbrances upon,
and defects of title to, real or personal property,
including any attachment of personal or real
property or other legal process prior to
adjudication of a dispute on the merits;
(3) Claims or liens of mechanics,
materialmen, warehousemen, carriers or other like
liens; and
(4) Adverse judgments on appeal.
"Person" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, joint venture, court or
government or political subdivision or agency thereof.
"Plan" shall have the meaning assigned to it in subsection 5.01(O).
"Pre-Existing Letters of Credit" shall have the meaning assigned to it
in subsection 3.01.
"Prime Loan" means a Loan accruing interest at a rate based on the
Prime Rate.
"Prime Rate" means the rate of interest in effect from time to time
which is publicly announced by the Administrative Bank from time to time as its
prime rate. Said prime rate is not necessarily nor is it intended to be the
lowest rate of interest charged by the Administrative Bank in connection with
extensions of credit.
"Records" means correspondence, memoranda, tapes, discs, papers, books
and other documents, or transcribed information of any type, whether expressed
in ordinary or machine language.
Redeemable Preferred Stock" means, with respect to any Person, any
preferred stock issued by such Person which is at any time prior to the Loan
Termination Date either (A) mandatorily redeemable (by sinking fund or similar
payments or otherwise) or (B) redeemable at the option of the holder thereof.
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder with respect to which the 30-day notice
requirements to PBGC has not been waived.
"Restricted Payment" means (A) any dividend on any shares of either
Borrower's capital stock (except dividends payable solely in shares of its
capital stock) or (B) any payment on account of the purchase, redemption,
retirement or acquisition of (1) any shares of either Borrower's capital stock
(except shares acquired upon the conversion thereof into other shares of its
capital stock) or (2) any option, warrant or other right to acquire shares of
either Borrower's capital stock.
"Senior Management" means all officers having the title of Vice
President and above.
"Share of the Borrowing" means, as to each Bank, the amount determined
by multiplying the amount of the borrowing by the Bank's Percentage.
"Share of the Commitment" means 50% of the Loan Commitment in the case
of NCB and 50% of the Loan Commitment in the case of WB.
"Share of the Outstanding LC Amounts" means, as to each Bank, the
amount determined by multiplying the Outstanding LC Amounts by the Bank's
Percentage.
"Stand-By Letter of Credit" means a Letter of Credit which (A) is
issued by the Issuing Bank for the account of either of the Borrowers, (B)
expires not later than the earlier to occur of the then scheduled Loan
Commitment Maturity Date or 12 months from the date of issuance thereof and
(C) supports payment for any Indebtedness permitted under this Agreement.
"Stand-By Letter of Credit Commission" shall have the meaning assigned
to it in subsection 3.07(C).
"Stockholders' Equity" means, at any time, the stockholders' equity of
the Borrowers, as set forth or reflected on the most recent consolidated balance
sheet of the Borrowers prepared in accordance with generally accepted accounting
principles consistently applied, but excluding any Redeemable Preferred Stock of
the Borrowers. Stockholders' equity generally includes, but is not limited to,
(A) the par or stated value of all outstanding capital stock, (B) capital
surplus, (C) retained earnings and (D) various deductions such as (1) purchases
of treasury stock, (2) valuation allowances, (3) receivables due from an
employee stock ownership plan, (4) employee stock ownership plan debt
guarantees and (5) translation adjustments for foreign currency transactions.
"Subsidiary" means any corporation or partnership of which more than
50% of the outstanding voting securities or partnership interests shall, at the
time of determination, be owned directly, or indirectly through one or more
intermediaries, by either of the Borrowers.
"Tangible Net Worth" means, at any time, Stockholders' Equity, less the
sum of:
(A) Any surplus resulting from any write-up of assets subsequent
to the Unaudited Financial Statements Date;
(B) All assets which would be treated as intangible assets for
balance sheet presentation purposes under generally accepted accounting
principles consistently applied, including without limitation goodwill (whether
representing the excess of cost over book value of assets acquired, or
otherwise), trademarks, tradenames, copyrights, patents and technologies, and
unamortized debt discount and expense;
(C) Any amount at which shares of capital stock of either of the
Borrowers appear as an asset on the Borrowers' consolidated balance sheet;
(D) Loans and advances to stockholders, directors, officers or
employees of the Borrowers; and
(E) Deferred expenses.
"Unaudited Financial Statements" means the unaudited consolidated
financial statements of the Borrowers as of the Unaudited Financial Statements
Date.
"Unaudited Financial Statements Date" means March 31, 1995.
"WB" shall have the meaning assigned to it in the introductory
paragraph of this Agreement.
1.02 Accounting Terms and Determinations. Unless otherwise
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles, applied on a basis
consistent with the most recent audited consolidated financial statements of the
Borrowers delivered to the Banks, except for changes concurred in by the
Borrowers' independent public accountants or otherwise required by a change in
generally accepted accounting principles unless with respect to any such change:
(A) the Borrowers shall have objected to determining such compliance on such
basis at the time of delivery of such financial statements, or (B) the Banks
shall so object in writing within thirty (30) days after the delivery of such
financial statements, in either of which events such calculations shall be made
on a basis consistent with those used in the preparation of the latest financial
statements as to which such objection shall not have been made.
SECTION II. COMMITMENT AND LOANS
2.01 Commitment. Subject to the terms and conditions of this
Agreement, each Bank severally agrees to make loans to the Borrowers on a
revolving basis, from time to time during the Loan Commitment Period, in such
amounts as the Borrowers may from time to time request in accordance with
subsection 2.04, subsection 2.05 or subsection 2.06 (such loans are herein
called "Loans"); provided that the aggregate principal amount which any Bank
shall have outstanding hereunder on loan to the Borrowers (including for this
purpose such Bank's Share of the Outstanding LC Amounts) shall not at any time
exceed such Bank's Share of the Commitment.
2.02 Revolving Nature of Credit. The Loans are revolving in
nature and, within the limits set forth in subsection 2.01 and subject to the
other terms and conditions of this Agreement, the Borrowers may borrow under
subsection 2.01, prepay and reborrow at any time during the Loan Commitment
Period and prior to the Loan Termination Date.
2.03 Types of Loans. Each Loan shall be a Prime Loan, an Offered
Rate Loan or a Eurodollar Loan, it being understood that: (A) any such Loans
shall be made by each Bank pro rata according to its respective Percentage, (B)
Prime Loans and Offered Rate Loans shall be made as provided in subsections
2.04, 2.05 and 2.07 and (C) Eurodollar Loans shall be made as provided in
subsections 2.05, 2.06 and 2.07.
2.04 Procedures With Respect to Prime Loans and Offered Rate
Loans. For Prime Loans and Offered Rate Loans, the Borrowers shall give the
Administrative Bank notice (which notice must be in substantially the form of
Exhibit 2.04, with appropriate insertions, and received by the Administrative
Bank prior to 12:00 noon in the time zone of the Administrative Bank on the
requested Borrowing Date), which notice shall state:
(A) Whether the Loan comprising such borrowing is to be a Prime
Loan or an Offered Rate Loan;
(B) The requested Borrowing Date, which shall be a Business Day;
(C) The aggregate principal amount of such borrowing, which shall
be in an amount equal to an integral multiple of $50,000 for a Prime Loan or
$100,000 for an Offered Rate Loan but shall not, for any Offered Rate Loan, be
less than $1,000,000; and
(D) In the case of an Offered Rate Loan borrowing, the duration
of the Interest Period with respect thereto, which shall be 30, 60 or 90
calendar days and which shall not end after the Loan Commitment Maturity Date
in any event.
The Administrative Bank shall promptly advise each Bank of any such notice.
Upon fulfillment of the applicable conditions set forth herein, each Bank shall
provide to the Borrowers, at the Administrative Bank's office at the address
applicable for notices under subsection 8.05, immediately available funds
covering such Bank's Share of the Borrowing. No notice of borrowing given
pursuant to this subsection 2.04 shall be revocable by the Borrowers at any time
after its receipt by the Administrative Bank, provided that the Administrative
Bank may, in its discretion, consent to any revocation given before the
Administrative Bank has notified the Banks of such notice.
2.05 Conversion of Certain Loans. The Borrowers may convert all
or any part of any outstanding Prime Loan, Offered Rate Loan or Eurodollar Loan
(herein in this subsection 2.05 called an "Old Loan") into another Prime Loan,
Offered Rate Loan or Eurodollar Loan of the same type or of another of such
types (herein in this subsection 2.05 called a "New Loan"), by giving advance
notice thereof in accordance with the procedures set forth in subsection 2.04 or
subsection 2.06, whichever is applicable (which notice shall, in addition to the
matters specified in subsection 2.04 or subsection 2.06, specify the type and
amount of the Old Loan that is to be converted into the New Loan which is
requested pursuant to subsection 2.04 or subsection 2.06); provided that: (A)
no Offered Rate Loan or Eurodollar Loan shall be converted on any day other than
the last day of the then-current Interest Period relating to such Loan, (B) no
Offered Rate Loan or Eurodollar Loan shall in any event have (and the Borrowers
shall not in any event designate) an Interest Period ending after the Loan
Commitment Maturity Date, (C) no New Loan of a particular type shall be less
than the amount specified in subsection 2.04(C) or subsection 2.06(C) applicable
to such type and (D) no conversion shall be permitted hereunder when an Event of
Default has occurred and is continuing. If, with respect to any Old Loan which
is an Offered Rate Loan or Eurodollar Loan, the Borrowers do not give the notice
provided for above in this subsection 2.05, or no conversion with respect
thereto shall be permitted pursuant to the preceding sentence, the Borrowers
shall be deemed to have requested that such Old Loan be converted to a Prime
Loan in the same principal amount. In effecting each conversion, each Bank
shall, on the Borrowers' behalf, directly apply the proceeds of the New Loan to
the payment of the Old Loan, and only the excess (if any) of the proceeds of the
New Loan over the amount being repaid shall be directly paid over to the
Borrowers.
2.06 Procedures With Respect to Eurodollar Loans. Eurodollar
Loans may be made from and after the date hereof in accordance with the terms of
this Agreement, provided that the maturity of any such Eurodollar Loans shall
not extend past the Loan Commitment Maturity Date in any event. For a
Eurodollar Loan, the Borrowers shall give the Administrative Bank notice (which
notice must be in substantially the form of Exhibit 2.06, with appropriate
insertions, and received at least three Eurodollar Business Days before each
requested Eurodollar Loan borrowing), which notice shall state:
(A) That the Loan comprising such borrowing is to be a Eurodollar
Loan;
(B) The requested Borrowing Date, which shall be a Eurodollar
Business Day;
(C) The aggregate principal amount of such borrowing, which shall
be in an amount equal to an integral multiple of $100,000 but shall not, in any
event, be less than $1,000,000; and
(D) The duration of the Interest Period with respect thereto,
which shall be 1, 2 or 3 months and which shall not end after the Loan
Commitment Maturity Date in any event.
The Administrative Bank shall promptly advise each Bank of any such Eurodollar
Loan notice. Upon fulfillment of the applicable conditions set forth herein,
each Bank shall provide to the Borrowers, at such Bank's office at the address
applicable for notices under subsection 8.05, immediately available funds
covering such Bank's Share of the Borrowing. No notice of borrowing given
pursuant to this subsection 2.06 shall be revocable by the Borrowers at any time
after its receipt by the Administrative Bank, provided that the Administrative
Bank may, in its discretion, consent to any revocation given before the
Administrative Bank has notified the Banks of such notice.
2.07 Certain Matters With Respect to Loans.
(A) All borrowings, conversions and repayments of the Prime
Loans, Offered Rate Loans and Eurodollar Loans shall be effected so that, after
giving effect thereto, each type and all types of Prime Loans, Offered Rate
Loans and Eurodollar Loans shall be in existence pro rata among the Banks
according to their respective Percentages.
(B) The Borrowers shall not request and no Bank shall make any
Loan of any type if, as a result of the making of such Loan, the aggregate
principal amount of all Loans of any Bank outstanding hereunder (including for
this purpose the Bank's Share of the Outstanding LC Amounts) would exceed such
Bank's Share of the Commitment.
2.08 Conditions to Each Loan. No Bank shall have any obligation
to make (whether initially, pursuant to subsection 2.04, pursuant to subsection
2.05, pursuant to subsection 2.06 or otherwise) any Loan if the conditions
precedent to the making of such Loan specified herein shall have not been
satisfied or if an Event of Default shall have occurred and be continuing or
will result therefrom, and any Loan made in the discretion of the Banks during
the continuance of any Event of Default shall be made as a Prime Loan, and not
as an Offered Rate Loan or a Eurodollar Loan, subject to the provisions of
subsection 2.12(D).
2.09 Warranty. Each notice of borrowing referred to in subsection
2.04, subsection 2.05 or subsection 2.06 shall constitute a representation and
warranty by the Borrowers to each Bank that on the requested Borrowing Date no
Event of Default shall have occurred and be continuing or will result therefrom.
2.10 Notes. The Loans of each Bank shall be evidenced by a joint
and several promissory note of the Borrowers (a "Note") substantially in the
form set forth in Exhibit 2.10, with appropriate insertions, dated the date
hereof, payable to the order of such Bank in a principal amount equal to such
Bank's Share of the Commitment, it being expressly agreed that all principal and
all interest shall be payable at maturity (whether by acceleration or
otherwise).
2.11 Recordkeeping. Each Bank may record on the schedule attached
to its Note or elsewhere in its Records the date and amount of each Loan made by
such Bank, each repayment thereof and, in the case of each Loan other than a
Prime Loan, the dates on which the Interest Period for such Loan shall begin and
end. The amounts so recorded shall be rebuttable presumptive evidence of the
amounts owing and unpaid on such Note. The failure to so record any such amount
or any error in so recording any such amount shall not, however, limit or
otherwise affect the obligations of the Borrowers hereunder or under any Note to
repay the principal amount of the Loans together with all interest accruing
thereon.
2.12 Interest Rates. The unpaid principal amount from time to
time outstanding of each Note shall bear interest as follows:
(A) As to any unpaid principal amount representing Prime Loans:
on and from the date hereof to the Loan Termination Date, at a rate per annum
equal to the Prime Rate;
(B) As to any unpaid principal amount representing Offered Rate
Loans: during each applicable Interest Period, at a rate per annum equal to the
sum of (1) the Offered Base Rate applicable to such Interest Period, plus (2)
the Applicable Margin;
(C) As to any unpaid principal amount representing Eurodollar
Loans: during each applicable Interest Period, at a rate per annum equal to the
sum of (1) the Eurodollar Rate (Reserve Adjusted) applicable to such Interest
Period, plus (2) the Applicable Margin;
(D) Notwithstanding the provisions of the preceding clauses (A),
(B) or (C), all unpaid principal of any Loan shall bear interest after maturity
(whether by acceleration or otherwise) at a rate per annum equal to the higher
of the rate in effect prior to such maturity or the sum of (1) the Prime Rate
plus (2) 2% (but not in any event less than the Prime Rate in effect as at such
maturity); and
(E) In determining the Applicable Margin and any interest rate
to which it applies for purposes of this subsection 2.12, the Borrowers and the
Banks shall refer to the Borrowers' most recent consolidated quarterly and
annual (as the case may be) financial statements delivered pursuant to
subsection 6.01(B). If such financial statements require a change in the
Applicable Margin and any interest rate to which it applies pursuant to this
subsection 2.12, the Borrowers shall deliver to the Banks, along with such
financial statements, a notice to that effect, which notice shall set forth in
reasonable detail the calculations establishing the required change. The date
which is ten (10) Business Days after receipt by the Banks of such financial
statements and notice, commencing with the financial statements for the fiscal
quarter ending June 30, 1995, is the "Performance Pricing Determination Date."
Any such required change in the Applicable Margin and any interest rate to which
it applies shall become effective on such Performance Pricing Determination Date
and shall be in effect until the next Performance Pricing Determination Date;
provided, however, that:
(1) changes in the Applicable Margin and any interest rate to which it applies
shall only be effective for Interest Periods commencing on or after the
Performance Pricing Determination Date; and (2) no Applicable Margin or any
interest rate to which it applies shall be decreased pursuant to this subsection
2.12 if, as of the Performance Pricing Determination Date, an Event of Default,
or an event which, with the giving of notice or passage of time or both, would
become an Event of Default, has occurred.
2.13 Interest Payment Dates. Subject to subsection 2.19, all
accrued interest on all Prime Loans shall be payable monthly, on the last day of
each month, and at maturity (whether by acceleration or otherwise), commencing
July 31, 1995. Subject to subsection 2.19, all accrued interest on each Offered
Rate Loan and each Eurodollar Loan shall be payable on the last day of each
Interest Period relating to such Loan and at maturity (whether by acceleration
or otherwise).
2.14 Interest Periods.
(A) Except as is hereinafter provided in this subsection 2.14,
each period for the payment of interest on a Loan (the "Interest Period") shall
commence on the date the Loan is made, continued or converted and shall end in
the case of an Offered Rate Loan on the date which is 30, 60 or 90 calendar days
thereafter and in the case of a Eurodollar Loan on the date which is 1, 2 or 3
months thereafter, in each case as the Borrowers shall have specified in the
Borrowers' related notice of borrowing given pursuant to subsection 2.04,
subsection 2.05 or subsection 2.06.
(B) Each Interest Period which would otherwise end on a day which
is not a Business Day or Eurodollar Business Day, as the case may be, shall end
on the next succeeding Business Day in the case of an Offered Rate Loan or
Eurodollar Business Day in the case of a Eurodollar Loan (unless the result of
the foregoing would be to extend the Interest Period of a Eurodollar Loan to the
next succeeding calendar month, in which case with respect to such Eurodollar
Loan such Interest Period shall end on the next preceding Eurodollar Business
Day).
2.15 Commitment and Administration Fees. The following fees shall
be applicable:
(A) The Borrowers agree to pay to the Administrative Bank for the
ratable account of the Banks (in accordance with each Bank's Share of the
Commitment) a commitment fee (the "Commitment Fee") accruing from the date
hereof computed at the rate of .25% per annum on the average daily unused
portion of the Share of the Commitment of each Bank. In computing the
Commitment Fee, the unused portion shall not be reduced by a Bank's Share of the
Outstanding LC Amounts. The Commitment Fee shall be payable quarterly in
arrears on the last day of each September, December, March and June, commencing
with September 30, 1995, and ending on the Loan Termination Date.
(B) The Borrowers agree to pay to the Administrative Bank (1) for
the ratable account of the Banks (in accordance with each Bank's Share of the
Commitment) an administration fee (the "Administration Fee") accruing from the
date hereof in an aggregate amount of $2,500 per calendar quarter and (2) for
the account of the Administrative Bank only an Administrative Bank fee (the
"Administrative Bank Fee") in the amount of $1,000 per calendar quarter, in each
case pro rated for any partial calendar quarter hereunder. The Administration
Fee and the Administrative Bank Fee shall be payable quarterly in arrears on the
last day of each September, December, March and June, commencing with September
30, 1995.
2.16 Termination or Reduction of Loan Commitment. The Borrowers
shall have the right, upon not less than three Business Days' prior notice to
the Administrative Bank, to terminate, or from time to time ratably reduce, the
Loan Commitment, provided that (A) any reduction shall be accompanied by the
ratable prepayment of the Notes, together with accrued interest thereon to the
date of such prepayment, to the extent, if any, that the aggregate unpaid
principal amount thereof then outstanding exceeds the amount of the Loan
Commitment as then reduced, together with the payment of any unpaid Commitment
Fee then accrued hereunder in respect of the Loan Commitment, and (B) any
termination shall be accompanied by prepayment in full of the unpaid principal
amount of the Notes, together with accrued interest thereon to the date of such
prepayment and the payment of any unpaid Commitment Fee then accrued hereunder
in respect of the Loan Commitment; provided that any prepayment of any Offered
Rate Loans or Eurodollar Loans pursuant to this subsection 2.16 shall be subject
to the provisions of subsection 2.23. Any such reduction of the Loan Commitment
shall be in an aggregate amount of $1,000,000, or a whole multiple thereof. Any
such reduction shall ratably reduce permanently the Share of the Commitment
allocable to each Bank then in effect. If not terminated earlier, the Loan
Commitment shall automatically terminate on the Loan Commitment Maturity Date.
2.17 Optional Prepayments of Prime Loans. The Borrowers may, at
their option, ratably prepay the Prime Loans, without premium or penalty, in
whole or in part, upon notice to the Administrative Bank, not later than 12:00
noon in the time zone of the Administrative Bank on the date of prepayment,
specifying the amount of prepayment. Upon receipt of such notice the
Administrative Bank shall promptly notify each Bank thereof. Such notice shall
be irrevocable and the payment amount specified in such notice shall be due and
payable on the date specified, together with accrued interest to such date on
the amount prepaid. Partial optional prepayments of the Prime Loans shall be in
an aggregate principal amount of at least $50,000 or a whole multiple thereof.
2.18 Computation of Interest and Fees. Interest on the Loans and
the Notes and all fees payable pursuant hereto shall be calculated on the basis
of a year of 360 days for the actual days elapsed. Any change in the interest
rate on the Loans resulting from a change in the Prime Rate shall become
effective as of the opening of business on the day on which such change in the
Prime Rate shall become effective. The Administrative Bank shall as soon as
practicable notify the Borrowers and the Banks of the effective date and the
amount of each such change in the Prime Rate.
2.19 Payments. All payments (including prepayments) to be made
by the Borrowers on account of principal of and interest on the Notes and fees
payable pursuant hereto shall be made without set-off or counterclaim and shall
be made to the Administrative Bank at its address in effect from time to time
for notices under subsection 8.05, in each case in Dollars and in immediately
available funds and for the ratable account of each Bank. If any payment
hereunder becomes due and payable on a day other than a Business Day or
Eurodollar Business Day, whichever is applicable, the due date for such payment
shall be extended to the next succeeding Business Day or Eurodollar Business
Day, whichever is applicable, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension, unless the result of the foregoing would be to extend the due date of
a Eurodollar Loan to the next succeeding calendar month, in which case, with
respect to such Eurodollar Loan, such due date shall end on the next preceding
Eurodollar Business Day.
2.20 Use of Proceeds of Loans. The proceeds of the Loans shall
be used by the Borrowers initially to repay in full all revolving credit loan
amounts outstanding under the Current Loan Documents (if any) and thereafter for
their working capital requirements, capital expenditures and other general
corporate purposes, but in any case subject to the provisions of subsection
6.02(I).
2.21 Increased Taxes or Costs. If any Bank shall have determined
that (A) Regulation D of the Federal Reserve Board, (B) the adoption of any
applicable law, rule or regulation, whether domestic or foreign, after the date
hereof, (C) any change after the date hereof in any applicable law, rule or
regulation, whether domestic or foreign, whether now or hereafter in effect, and
whether or not presently applicable to any Bank, or any change after the date
hereof in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or (D) compliance by any Bank with any request or
directive issued after the date hereof including any such request or directive
regarding capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency:
(1) Shall subject any Bank to any
tax, duty or other charge with respect to
its Loans, its Note or its obligation to
make or maintain Loans, or shall change
the basis of taxation of payments to any
Bank of the principal of or interest on
its Loans or any other amounts due under
this Agreement in respect of its Loans or
its obligation to make or maintain Loans
(except for a change in the rate of tax
on the overall net income of such Bank);
(2) Shall impose, modify or deem
applicable any reserve (including without
limitation any reserve imposed by the
Federal Reserve Board), special deposit,
minimum capital, capital ratio or similar
requirement against assets of, deposits
with or for the account of, or credit
extended by, any Bank or its holding
company; or
(3) Shall impose on any Bank any
other condition affecting its Loans, its
Note or its obligation to make or
maintain Loans;
and the result of any of the foregoing is to increase the cost to or impose a
cost on such Bank of making or maintaining any Loan (other than Prime Loans) or
its Share of the Commitment, or reduce the amount of any rate of return on such
Bank's capital as a consequence thereof or any sum received or receivable by
such Bank under this Agreement or under its Note with respect thereto, by an
amount deemed by such Bank to be material, then from time to time, within 30
days after demand by such Bank (which demand shall have been made within six (6)
months after such Bank first has knowledge of an occurrence entitling such Bank
to compensation pursuant to this subsection 2.21), the Borrowers shall pay to
such Bank such additional amount or amounts as will compensate such Bank for
such costs, increased costs or reduction less the amount, if any, of such costs,
increased costs or reduction that (i) is reasonably attributable to unsafe or
unsound banking practices of such Bank or (ii) is an amount which such Bank is
not generally charging to other similarly situated borrowers from such Bank.
Each Bank shall promptly notify the Borrowers of any event of which it has
knowledge, occurring after the date hereof, which shall entitle such Bank to
compensation pursuant to this subsection 2.21. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
2.22 Changes in Circumstances.
(A) If any of the matters described in clause (B), (C) or (D) of
the introductory portion of subsection 2.21 shall make it unlawful or impossible
for a Bank (the "Affected Bank") to make, maintain or fund a type of Loan, then
(1) the Affected Bank shall promptly notify each of the other parties hereto of
that fact (which notification shall be accompanied by a statement from the
Affected Bank setting forth the basis therefor), (2) the obligation of all Banks
to make or effect conversions into the type of Loans made unlawful for the
Affected Bank shall, upon the effectiveness of such event, be suspended for the
duration of such unlawfulness, and (3) on the last day of the current Interest
Period for Loans of such type or, in any event, if the Affected Bank so
requests, on such earlier date as may be required by the relevant law,
regulation or interpretation, the Loans of such type then made by the Affected
Bank shall, unless then repaid in full, together with accrued interest thereon,
automatically convert to Prime Loans.
(B) If, with respect to any Interest Period relating to a
Loan:
(1) The Administrative Bank determines
that deposits in Dollars in the applicable
amounts are not being offered in the relevant
market for such Interest Period; or
(2) Any Bank determines that the
interest rate applicable to its Loan or Loans
relating to such Interest Period will not
adequately and fairly reflect the cost to such
Bank of maintaining or funding such Loan or
Loans;
such Bank shall give notice thereof to the other parties hereto (which notice
shall be accompanied by a statement from such Affected Bank or Banks setting
forth the basis therefor), whereupon the obligations of the Affected Bank or
Banks to make Loans of the affected type shall be suspended until it notifies
the other parties hereto that the circumstances giving rise to such suspension
no longer exist.
2.23 Funding Losses. The Borrowers hereby agree that, upon demand by
any Bank (which demand shall be accompanied by a statement from the Bank or
Banks in question setting forth the basis for such demand), the Borrowers shall
indemnify any Bank furnishing such statement against any reasonable amount of
loss or expense which such Bank may reasonably sustain or incur (including
without limitation lost profits or any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Bank to
fund or maintain Offered Rate Loans or Eurodollar Loans), as reasonably
determined by such Bank, as a result of (A) any payment (including after
acceleration pursuant to subsection 7.02), prepayment or conversion of any such
Loan of such Bank on a date other than the last day of an Interest Period for
such Loan, or (B) any failure of the Borrowers to borrow or convert any such
Loan on the date specified therefor in a notice of borrowing or conversion
pursuant to this Agreement; provided, however, that the Borrowers shall
indemnify the Banks against lost profits only if such loss occurred as a result
of an Event of Default or an action or failure to act of the Borrowers, and not
if such loss occurred as a result of any change in the law rendering certain
such Loans unlawful. Prepayment of such Loans may be negotiated with the Banks
with respect to premium and payment of verified lost profits.
SECTION III. LETTERS OF CREDIT
3.01 Letters of Credit. Subject to the terms and conditions of this
Agreement, the Issuing Bank agrees to issue irrevocable Stand-By Letters of
Credit and Documentary Letters of Credit (collectively, the "Letters of Credit")
for the account of either Borrower as account party from time to time until the
Loan Termination Date in an aggregate amount at any one time not to exceed the
lesser of (A) the Letters of Credit Maximum or (B) the excess of the Loan
Commitment then in effect over the sum of (1) the aggregate principal amount of
the then outstanding Loans, (2) the Outstanding LC Amounts and (3) the aggregate
amount of any unreimbursed drawings under the Letters of Credit which have not
been funded by Loans. The issuance of any Letter of Credit in accordance with
the provisions of this Section III shall be given effect in the calculation of
and thereby reduce the remaining Loan Commitment available for Loans, with each
Bank's Share of the Commitment available for Loans being reduced by such Bank's
LC Share of such Letter of Credit due to the participation in such Letters of
Credit provided for below, and shall require the satisfaction of the conditions
herein as if such issuance were the making of a Loan.
Immediately upon the issuance of each Letter of Credit, each Bank hereby
agrees to irrevocably purchase, and shall be deemed to have irrevocably
purchased, from the Issuing Bank a participation in such Letter of Credit and
drawing thereunder in an amount equal to such Bank's LC Share determined on the
maximum amount which is or at any time may become available to be drawn
thereunder (the "LC Amount"). Further, and consistent therewith, as of the date
hereof each pre-existing Letter of Credit then outstanding issued by the Issuing
Bank and listed on Schedule 3.01 (the "Pre-Existing Letters of Credit") shall
become and thereafter be deemed a Letter of Credit issued hereunder with each
Bank hereby agreeing to irrevocably purchase, and being deemed to have
irrevocably purchased, from the Issuing Bank a participation in each such Letter
of Credit and drawing thereunder in an amount equal to such Bank's LC Share (it
being understood that the Issuing Bank under the Pre-Existing Letters of Credit
will share with the other Bank on a reasonable basis determined by such Issuing
Bank the commissions previously received by the Issuing Bank upon issuance of
thePre-Existing Letters of Credit).
In determining whether to pay under a Letter of Credit, the Issuing Bank
shall be responsible only to determine that the documents and certificates
required to be delivered under that Letter of Credit have been delivered and
that they comply on their face with the requirements of that Letter of Credit.
Each Letter of Credit may provide that the Issuing Bank may (but shall not be
required to) pay the beneficiary thereof upon the occurrence of an Event of
Default and the acceleration of the maturity of the Loans or, if payment is not
then due to the beneficiary, provide for the deposit of funds in an account to
secure payment to the beneficiary and that any funds so deposited shall be paid
to the beneficiary of the Letter of Credit if conditions to such payment are
satisfied or returned to the Issuing Bank for distribution to the Banks (or, if
all obligations of the Borrowers under this Agreement and the Notes shall have
been indefeasibly paid in full, to the Borrowers) if no payment to the
beneficiary has been made and the final date available for drawings under the
Letter of Credit has passed. Each payment or deposit of funds by the Issuing
Bank as provided in this paragraph shall be treated for all purposes of this
Agreement as a drawing duly honored by the Issuing Bank under the related Letter
of Credit.
3.02 Letter of Credit Applications. Each Letter of Credit shall be
issued pursuant to an appropriate Letter of Credit Application executed and
delivered by the desired Borrower for such Letter of Credit on the standard form
of the Issuing Bank from time to time (or on such other form as may be approved
by the Issuing Bank) (a "Letter of Credit Application"), and each Letter of
Credit shall (A) expire not later than the earlier to occur of the then
scheduled Loan Commitment Maturity Date or 12 months from the date of issuance
thereof and (B) be denominated in Dollars or any other currency agreed to by the
Issuing Bank and the Banks.
3.03 Payments Under Letters of Credit. In the event of any request for
drawing under any Letter of Credit by the beneficiary thereof, the Issuing Bank
shall notify the Borrowers on or before the date on which the Issuing Bank
intends to honor such drawing, and the Borrowers shall reimburse the Issuing
Bank on the day on which such drawing is honored in an amount in same day funds
equal to the amount of such drawing; provided that, anything contained in this
Agreement to the contrary notwithstanding, unless the Borrowers shall have
notified the Issuing Bank prior to 11:00 A.M. in the time zone of the Issuing
Bank on the Business Day immediately prior to the date of such drawing that the
Borrowers intend to reimburse the Issuing Bank for the amount of such drawing
with funds other than the proceeds of Loans, the Borrowers shall be deemed to
have timely given a notice of borrowing to the Administrative Bank pursuant to
subsection 2.04 requesting the Banks to make Loans which are Prime Loans on the
date on which such drawing is honored in an amount equal to the amount of such
drawing, and, subject to satisfaction or waiver of the conditions specified
herein for Loans, the Banks shall, on the date of such drawing, make Loans which
are Prime Loans on the date on which such drawing is honored in amount equal to
the amount of such drawing, the proceeds of which shall be applied directly by
the Administrative Bank to reimburse the Issuing Bank for the amount of such
drawing; and provided, further, that, in such case, if for any reason proceeds
of Loans are not received by the Issuing Bank on such date in an amount equal to
the amount of such drawing, the Borrowers shall reimburse the Issuing Bank, on
the Business Day immediately following the date of such drawing, in an amount in
same day funds equal to the excess of the amount of such drawing over the amount
of such Loans, if any, which are so received, plus accrued interest on such
amount at a rate per annum equal to the Prime Rate plus 2%.
3.04 Payments by Banks. In the event that the Borrowers shall fail to
reimburse the Issuing Bank as provided in subsection 3.03 in an amount equal to
the amount of any drawing honored by the Issuing Bank under a Letter of Credit
issued by it, the Issuing Bank shall promptly notify each Bank of the
unreimbursed amount of such drawing and of such Bank's respective participation
therein. Each Bank shall make available to the Issuing Bank an amount equal to
its respective participation in same day funds, at the office of the Issuing
Bank specified in such notice, not later than 1:00 P.M. in the time zone of the
Issuing Bank on the Business Day after the date notified by the Issuing Bank.
In the event that any Bank fails to make available to the Issuing Bank the
amount of such Bank's participation in such Letter of Credit as provided in this
subsection 3.04, the Issuing Bank shall be entitled to recover such amount on
demand from such Bank together with interest at the customary rate set by the
Issuing Bank for the correction of errors among banks. Nothing in this
subsection 3.04 shall be deemed to prejudice the right of any Bank to recover
from the Issuing Bank any amounts made available by such Bank to the Issuing
Bank pursuant to this subsection 3.04 in the event that it is determined by a
court of competent jurisdiction that the payment with respect to a Letter of
Credit by the Issuing Bank in respect of which payment was made by such Bank
constituted gross negligence or willful misconduct on the part of the Issuing
Bank. The Issuing Bank shall distribute to each other Bank which has paid all
amounts payable by it under this subsection 3.04 with respect to any Letter of
Credit issued by the Issuing Bank such other Bank's pro rata share (determined
based on the Bank's Percentage) of all payments received by the Issuing Bank
from the Borrowers in reimbursement of drawings honored by the Issuing Bank
under such Letter of Credit when such payments are received.
3.05 Obligations Absolute. The obligations of the Borrowers to
reimburse the Issuing Bank for drawings made under the Letters of Credit issued
by it and the obligations by the Banks under subsection 3.04 shall, other than
in the case of gross negligence or willful misconduct on the part of the Issuing
Bank, be unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Agreement under all circumstances, including without
limitation the following circumstances:
(A) Any lack of validity or enforceability of any Letter of
Credit;
(B) The existence of any claim, set-off, defense or other right
which any of the Borrowers may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons or entities for whom any such
beneficiary or transferee may be acting), the Issuing Bank, any Bank or any
other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction;
(C) Any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(D) Payment by the Issuing Bank under any Letter of Credit
against presentation of a demand, draft, certificate or other document which
does not comply with the terms of the Letter of Credit;
(E) Any other circumstance or happening whatsoever which is
similar to any of the foregoing; or
(F) The fact that an Event of Default shall have occurred and
be continuing.
3.06 Increased Costs. If any change in any law, regulation, treaty
or directive or in the final interpretation thereof by any court or
administrative or other governmental authority, agency or instrumentality
charged with the administration thereof, or compliance with any request or
directive (whether or not having the force of law) of any of the foregoing,
shall either (A) impose, modify or deem applicable any reserve, premium, special
assessment, special deposit or similar requirement, or regarding adequacy of
capital, against letters of credit issued by, or the assets or deposits
maintained by the Borrowers with, the Issuing Bank or (B) impose on the Issuing
Bank any other condition regarding the Letters of Credit, and the result of any
event referred to in clause (A) or (B) above shall be to increase the cost to
the Issuing Bank of issuing or maintaining the Letters of Credit (which increase
in cost shall be the result of the Issuing Bank's reasonable allocation of the
aggregate of such cost increases resulting from such events), then, upon demand
by the Issuing Bank, the Borrowers shall promptly pay to the Issuing Bank from
time to time as specified by the Issuing Bank additional amounts which shall be
sufficient to compensate the Issuing Bank for such increased cost. A
certificate as to the fact (in sufficient detail to describe the material terms
of the fact) and amount of such increased cost incurred by the Issuing Bank as a
result of any event mentioned in clause (A) or (B) above, submitted by the
Issuing Bank to the Borrowers, shall be conclusive and binding on the Borrowers
absent manifest error. The Borrowers further agree to pay any applicable levies
or other taxes imposed in connection with any Letters of Credit, other than net
income taxes payable by the Banks, and otherwise comply with all domestic and
foreign laws and regulations applicable to all transactions under or in
connection with any Letter of Credit.
3.07 Letter of Credit Compensation. The following compensation shall
be payable by the Borrowers with respect to Letters of Credit:
(A) With respect to each Letter of Credit, an administrative
fee established by and payable solely to the Issuing Bank, payable on the date
of issuance of each Letter of Credit.
(B) In lieu of any other letter of credit commissions and fees
provided for in any Letter of Credit Application, the Borrowers agree to pay to
the Issuing Bank for the account of the Banks (pro rata based upon their
respective Percentages) a commission (the "Documentary Letter of Credit
Commission") on the face amount of each Documentary Letter of Credit at a rate
of .50% or at such other rate as agreed to in writing by the Banks and the
Borrowers from time to time (provided that the Borrowers shall pay to the
Issuing Bank for the account of the Banks in each case a minimum Documentary
Letter of Credit Commission equal to $250.00), plus reimbursement of any and all
reasonable fees and out-of-pocket costs and expenses incurred by the Issuing
Bank in connection with the issuance of each such Documentary Letter of Credit.
The Documentary Letter of Credit Commission and such reimbursement shall be
payable on the date of issuance of each such Documentary Letter of Credit.
(C) In lieu of any other letter of credit commissions and fees
provided for in any Letter of Credit Application, the Borrowers agree to pay to
the Issuing Bank for the account of the Banks (pro rata based upon their
respective Percentages) a commission (the "Stand-By Letter of Credit
Commission") on the undrawn and unexpired amount of each irrevocable Stand-By
Letter of Credit at a rate of 1.25% per annum or at such other rate as agreed to
in writing by the Banks and the Borrowers from time to time (provided that the
Borrowers shall pay to the Issuing Bank for the account of the Banks in each
case a minimum Stand-By Letter of Credit Commission equal to $250.00), plus
reimbursement of any and all reasonable fees and out-of-pocket costs and
expenses incurred by the Issuing Bank in connection with the issuance of each
Stand-By Letter of Credit. The Stand-By Letter of Credit Commission and such
reimbursement shall be payable on the date of issuance of each such Stand-By
Letter of Credit.
3.08 Uses of Letters of Credit. The uses by the Borrower of the
Letters of Credit shall be as provided in the definitions of Documentary Letters
of Credit and Stand-By Letters of Credit in Section I.
SECTION IV. CONDITIONS PRECEDENT
The obligations of the Banks to make the Loans and the Issuing Bank to
issue the Letters of Credit hereunder are subject to the following conditions
precedent:
4.01 Documents Required for Closing. The Borrowers shall have
delivered to the Banks, prior to the initial disbursement of the Loans or the
issuance of the initial Letter of Credit (the "Closing"), the following:
(A) The Notes;
(B) A certified (as of the date of the Closing) copy of
resolutions of the Borrowers' boards of directors authorizing the execution,
delivery and performance of this Agreement, the Notes and each other document to
be delivered pursuant hereto;
(C) A certified (as of the date of the Closing) copy of each
of the Borrowers' by-laws;
(D) A certificate (dated as of the date of the Closing) of
each of the Borrowers' corporate secretary as to the incumbency and signatures
of the officers of such Borrower signing this Agreement, the Notes and each
other document to be delivered pursuant hereto;
(E) A copy, certified as of the most recent date
practicable, by the Secretary of State of Delaware, of each of the Borrowers'
certificate of incorporation, together with a certificate (dated as of the date
of the Closing) of each of the Borrowers' corporate secretary to the effect that
such certificate of incorporation has not been amended since the date of the
aforesaid certification;
(F) Certificates, as of the most recent dates practicable,
of the aforesaid secretary of state, the secretary of state of each state in
which the Borrowers are qualified as a foreign corporation and the department of
revenue or taxation of each of the foregoing states, as to the good standing or
valid existence of each of the Borrowers;
(G) A written opinion of Messrs. Powell, Goldstein, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, the Borrowers' counsel, dated the date of the Closing and addressed to
the Banks, substantially in form satisfactory to the Banks, to the effect that:
(1) Each of the Borrowers is a
corporation duly organized, existing and in good
standing under the Laws of the State of Delaware
and is qualified to transact business and validly
exists in the State of Georgia and, to the
knowledge of such counsel, is not required to be
qualified as a foreign corporation in any other
jurisdiction;
(2) Each of the Borrowers has the
power to execute and deliver this Agreement, to
borrow money hereunder, to execute and deliver
the Notes and to perform its obligations
hereunder and thereunder;
(3) All corporate action by each of
the Borrowers, and all consents and approvals of
any Persons, necessary to the validity of this
Agreement, the Notes and each other document to
be delivered hereunder have been duly obtained,
and this Agreement, the Notes and such other
documents do not conflict with any provision of
the certificate of incorporation or by-laws of
either of the Borrowers, or of any applicable
Laws or any other material agreement binding upon
either of the Borrowers or its property of which
such counsel has knowledge; and
(4) This Agreement, the Notes and all
other documents to be delivered hereunder have
been duly executed by and each is a valid and
binding obligation of each of the Borrowers,
enforceable in accordance with its terms.
(H) A certificate, dated as of the date of the Closing, signed
by the president or a vice president of each of the Borrowers to the effect
that:
(1) The representations and warranties
set forth in subsection 5.01 are true in all
material respects as of the date of the Closing;
and
(2) No Event of Default hereunder, and
no event which, with the giving of notice or
passage of time or both, would become an Event of
Default, has occurred as of such date.
4.02 Certificate Required for Subsequent Disbursements and Letters
of Credit. The Borrowers shall have duly delivered to the Banks, prior to any
subsequent disbursement of the Loans or issuances of Letters of Credit, a
borrowing certificate, substantially in the form of Exhibit 4.02, dated the date
on which such disbursement is to be made, signed by the president or a vice
president and the secretary or an assistant secretary of each of the Borrowers.
4.03 Certain Events. At the time of the Closing and of each
subsequent disbursement or issuance of a Letter of Credit:
(A) No Event of Default shall have occurred and be continuing,
and no event shall have occurred and be continuing that, with the giving of
notice or passage of time or both, would be an Event of Default; and
(B) No material adverse change shall have occurred in the
operations, financial condition, property, prospects or business of either of
the Borrowers since the date of this Agreement or the Closing, as applicable.
4.04 Legal Matters. At the time of the Closing and of each
subsequent disbursement of Loans or issuance of a Letter of Credit, all legal
matters incidental thereto shall be satisfactory in all material respects to
Messrs. Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇.
4.05 Additional Conditions to Issuance of Each Letter of Credit.
The obligation of the Issuing Bank to issue each Letter of Credit (including the
initial Letter of Credit) shall be subject to (A) the conditions precedent set
forth in subsections 4.01, 4.02, 4.03 and 4.04, (B) the payment by the Borrowers
to the Banks of any fees in connection with the issuance of such Letter of
Credit and (C) the additional condition precedent that the Issuing Bank shall
have received a completed Letter of Credit Application in respect thereof.
SECTION V. REPRESENTATIONS AND WARRANTIES
5.01 Original Representations and Warranties. To induce the Banks
to enter into this Agreement, each of the Borrowers jointly and severally
represents and warrants to the Banks as follows:
(A) Neither of the Borrowers is in default with respect to any
of its existing Indebtedness, and the making and performance of this Agreement
and the Notes will not (immediately, with the passage of time or the giving of
notice, or any one or more of them):
(1) Violate the certificate of
incorporation or by-laws of either of the
Borrowers, or violate any Laws or result in a
default under any contract, agreement or
instrument to which either of the Borrowers is a
party or by which either of the Borrowers or its
property is bound; or
(2) Result in the creation or
imposition of any security interest in, or lien
or encumbrance upon, any of the assets of either
of the Borrowers;
(B) Each of the Borrowers has the power and authority to enter
into and perform this Agreement and the Notes, and to incur the obligations
herein and therein provided for, and has taken all corporate action necessary to
authorize the execution, delivery and performance of this Agreement and the
Notes;
(C) This Agreement is, and the Notes when delivered will be, the
valid, binding and enforceable obligations of each of the Borrowers in
accordance with their respective terms;
(D) Except as disclosed in Schedule 5.01(D) attached hereto,
there is no pending order, notice, claim, litigation, proceeding or
investigation against or affecting either of the Borrowers, whether or not
covered by insurance, that would involve the payment of $100,000 or more
individually if adversely determined;
(E) Each of the Borrowers has good and marketable title to all
of its assets, subject to no security interest, encumbrance or lien or the claim
of any third person except for Permitted Liens;
(F) The Financial Statements, including any schedules and notes
pertaining thereto, have been prepared in accordance with generally accepted
accounting principles consistently applied and fully and fairly present the
consolidated financial condition of the Borrowers at the date thereof, and there
have been no material adverse changes in the operations, financial condition,
property, prospects or business of the Borrowers from the date thereof to the
date hereof;
(G) As at the Unaudited Financial Statements Date the Borrowers
had no material Indebtedness of any nature, including without limitation
liabilities for taxes and any interest or penalties relating thereto, except to
the extent reflected (in a footnote or otherwise) and reserved against in the
Unaudited Financial Statements or as disclosed in or permitted by this
Agreement; and neither of the Borrowers knows or has reasonable ground to know
of any basis for the assertion against it as of the Unaudited Financial
Statements Date of any material Indebtedness of any nature not fully reflected
and reserved against in the Unaudited Financial Statements;
(H) Except as otherwise permitted herein, each of the Borrowers
has filed all federal, state and local tax returns and other reports it is
required by Laws to file prior to the date hereof and which are material to the
conduct of its business, has paid or caused to be paid all taxes, assessments
and other governmental charges that are due and payable prior to the date hereof
unless an extension has been granted and has made adequate provision for the
payment of such taxes, assessments or other charges accruing but not yet
payable; and neither of the Borrowers has knowledge of any deficiency or
additional assessment in a materially important amount in connection with any
taxes, assessments or charges not provided for on its books;
(I) Except to the extent that the failure to comply would not
materially interfere with the conduct of the business of either of the
Borrowers, each of the Borrowers has complied with all applicable Laws with
respect to: (1)any restrictions, specifications or other requirements pertaining
to products that such Borrower sells or to the services it performs; (2) the
conduct of its business; and (3) the use, maintenance and operation of the real
and personal properties owned or leased by it in the conduct of its business;
(J) No representation or warranty by either of the Borrowers
contained herein or in any certificate or other document furnished by either of
the Borrowers pursuant hereto contains any untrue statement of material fact or
omits to state a material fact necessary to make such representation or warranty
not misleading in light of the circumstances under which it was made;
(K) Each consent, approval or authorization of, or filing,
registration or qualification with, any Person required to be obtained or
effected by either of the Borrowers in connection with the execution and
delivery of this Agreement and the Notes or the undertaking or performance of
any obligation hereunder or thereunder has been duly obtained or effected;
(L) All existing Indebtedness of each of the Borrowers: (1) for
money borrowed, or (2) under any security agreement, mortgage or agreement
covering the lease by such Borrower as lessee of real or personal property, is
described in Schedule 5.01(L) attached hereto;
(M) Except as described in Schedule 5.01(M) attached hereto, with
respect to all material leases, contracts and commitments of any kind of either
of the Borrowers (such as employment agreements, collective bargaining
agreements, powers of attorney, distribution arrangements, patent license
agreements, contracts for future purchase or delivery of goods or rendering of
services, bonus, pension and retirement plans, or accrued vacation pay,
insurance and welfare agreements), to the best of each of the Borrowers'
knowledge all parties (including each of the Borrowers) to all such material
leases, contracts and other commitments to which either of the Borrowers is a
party have complied with the provisions of such leases, contracts and other
commitments, and to the best of each of the Borrowers' knowledge no party is in
default under any thereof and no event has occurred which, but for the giving of
notice or the passage of time, or both, would constitute a default;
(N) Neither of the Borrowers has made any agreement or taken any
action which may cause anyone to become entitled to a commission or finder's fee
as a result of the making of the Loans or the issuance of the Letters of Credit
other than fees and commissions payable hereunder;
(O) Neither of the Borrowers has ever had or presently has any
employee benefit plan ("Plan") within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
established and/or maintained and/or contributed to by either of the Borrowers;
(P) Southern Electronics Corporation has no Subsidiaries, other
than Southern Electronics Distributors, Inc., and Southern Electronics
Distributors, Inc. has no Subsidiaries; and
(Q) No release, emission or discharge into the environment of
hazardous substances, as defined under the Comprehensive Environmental Response,
Compensation, and Liability Act, or hazardous waste as defined under the Solid
Waste Disposal Act, or air pollutants as defined under the Clean Air Act, or
toxic pollutants as defined under the Clear Air Act, or the Toxic Substances and
Control Act, have occurred or are presently occurring in excess of federally
permitted releases or reportable quantities, or other concentrations, standards
or limitations under the foregoing laws or under any other federal, state or
local law or regulations, in connection with any aspect of the business of the
Borrowers; and the Borrowers have no knowledge of any past or existing
violations of any environmental laws, ordinances or regulations issued by any
federal, state or local governmental authority ("Environmental Laws").
5.02 Survival of Representations and Warranties. All of the
representations and warranties set forth in subsection 5.01 shall survive until
all Obligations are satisfied in full.
SECTION VI. BORROWERS' COVENANTS
Each of the Borrowers jointly and severally does hereby covenant and
agree with the Banks that, so long as any of the Obligations remain unsatisfied,
it will comply with the following covenants:
6.01 Affirmative Covenants.
(A) The Borrowers will use the proceeds of the Loans only for the
purposes permitted under subsection 2.20, and will furnish each of the Banks
such evidence as they may reasonably require with respect to such use.
(B) The Borrowers will furnish each of the Banks:
(1) Within sixty (60) days after the
close of each fiscal quarter of the Borrowers
commencing with the fiscal quarter ending June
30, 1995: (a) a consolidated statement of
stockholders' equity and a consolidated statement
of cash flows of the Borrowers for such quarterly
period and the year to date; (b) a consolidated
income statement of the Borrowers for such
quarterly period and the year to date; and (c) a
consolidated balance sheet of the Borrowers as of
the end of such quarterly period--all in
reasonable detail, subject to year-end audit
adjustments and certified by each of the
Borrowers' president or chief financial officer
to have been prepared in accordance with
generally accepted accounting principles
consistently applied by each of the Borrowers,
except for any inconsistencies explained in such
certificate;
(2) Within ninety (90) days after the
close of each fiscal year of the Borrowers
commencing with the fiscal year ending June 30,
1995: (a) a consolidated statement of
stockholders' equity and a consolidated statement
of cash flows of the Borrowers for such fiscal
year; (b) a consolidated income statement of the
Borrowers for such fiscal year; and (c) a
consolidated balance sheet of the Borrowers as of
the end of such fiscal year--all in reasonable
detail, including all supporting schedules and
comments; the consolidated statements and balance
sheet to be audited by Deloitte & Touche or
another firm of independent certified public
accountants selected by the Borrowers and
acceptable to the Banks, and certified by such
accountants to have been prepared in accordance
with generally accepted accounting principles
consistently applied by the Borrowers, except for
any inconsistencies explained in such
certificate; in addition, the Borrowers will
obtain from such independent certified public
accountants and deliver to the Banks, within
ninety (90) days after the close of each fiscal
year of the Borrowers, their written statement
that in making the examination necessary to their
certification they have obtained no knowledge of
any Event of Default by the Borrowers, or
disclosing all Events of Default of which they
have obtained knowledge; provided, however, that
in making their examination such accountants
shall not be required to go beyond the bounds of
generally accepted auditing procedures for the
purpose of certifying financial statements; and
the Banks shall have the right, from time to
time, to discuss the Borrowers' affairs directly
with the Borrowers' independent certified public
accountants after reasonable notice to the
Borrowers and opportunity of the Borrowers to be
present at any such discussions;
(3) Contemporaneously with providing
each set of quarterly and year-end financial
statements required by the foregoing paragraphs
(1) and (2), a certificate of the president or
chief financial officer of each of the Borrowers
stating (a) the results, as of the ending date of
the period to which such statements relate, of
the calculations with respect to each of the
financial tests set forth in subsection 6.01(F),
and (b) that he has individually in his corporate
capacity reviewed the provisions of this
Agreement and that a review of the activities of
the Borrowers during the year or quarterly and
year-to-date period to which such statements
relate, as the case may be, has been made by him
or under his supervision, with a view to
determining whether such Borrower has fulfilled
all of its obligations under this Agreement, and
that, to the best of his knowledge, such Borrower
has observed and performed each undertaking
contained in this Agreement and is not in default
in the observance or performance of any of the
provisions hereof, or if such Borrower shall be
so in default, specifying all such defaults and
events of which he may have knowledge;
(4) Within sixty (60) days after the
close of each fiscal quarter of the Borrowers, a
quarterly accounts receivable aging report as of
the end of each such fiscal quarter, which report
shall be in a form satisfactory to the Banks;
(5) Within sixty (60) days after the
close of each fiscal quarter of the Borrowers, a
quarterly inventory aging report as of the end of
each such fiscal quarter, which report shall be
in a form satisfactory to the Banks;
(6) Promptly upon their becoming
available, copies of all press releases and all
financial statements, reports, notices and proxy
statements sent or made available generally by
either of the Borrowers to its security holders,
and all regular and periodic reports and all
final registration statements and final
prospectuses, if any, filed by either of the
Borrowers with any securities exchange or with
the Securities and Exchange Commission; and
(7) Promptly upon request, such
additional financial and other information as
either of the Banks may from time to time
reasonably request.
(C) Each of the Borrowers will maintain the inventory, equipment,
real estate and other properties material to its business in good condition and
repair (normal wear and tear excepted), and will pay and discharge or cause to
be paid and discharged when due the cost of repairs to or maintenance of the
same, and will pay or cause to be paid all rental or mortgage payments due on
such real estate.
(D) Each of the Borrowers will maintain, or cause to be
maintained, public liability insurance and fire and extended coverage insurance
on all assets owned by it, all in such form and amounts as are consistent with
industry practices and with such insurers as may be satisfactory to the Banks.
Such policies shall contain a provision whereby they cannot be cancelled except
after thirty (30) days' written notice to the Banks. Each of the Borrowers will
furnish to the Banks such evidence of insurance as the Banks may require.
(E) Each of the Borrowers will pay or cause to be paid when due
all taxes, assessments and charges or levies imposed upon it or on any of its
property or which it is required to withhold and pay over, except where
contested in good faith by appropriate proceedings with adequate reserves
therefor having been set aside on its books. But each of the Borrowers shall
pay or cause to be paid all such taxes, assessments, charges or levies forthwith
whenever foreclosure on any lien that attaches (or security therefor) appears
imminent.
(F) The Borrowers will:
(1) Maintain at all times Net Working
Capital in the minimum amount of Twenty Million
Dollars ($20,000,000).
(2) Maintain at all times a ratio of
Liabilities to Tangible Net Worth (the "L/TNW
Ratio") of not more than 2 to 1.
(3) Maintain at all times a ratio of
Current Assets to Current Liabilities of not less
than 1.5 to 1.
(4) Maintain at all times a minimum
Tangible Net Worth of not less than (a) Thirty
Million Dollars ($30,000,000) plus (b) Seventy-Five
Percent (75%) of Consolidated Net Profit
After Tax for each fiscal quarter of the
Borrowers completed after the Unaudited Financial
Statements Date. As used herein, "Consolidated
Net Profit After Tax" means the Borrowers'
current consolidated earnings (excluding
extraordinary items) less the amount of
consolidated income tax that the Borrowers paid
with respect to such earnings.
(5) Maintain at all times a minimum
Consolidated Net Profit After Tax for the four
immediately preceding fiscal quarters of the
Borrowers of not less than Two Million Five
Hundred Thousand Dollars ($2,500,000), and not
experience in any fiscal quarter of the
Borrowers, beginning with the fiscal quarter of
the Borrowers immediately following the fiscal
quarter of the Borrowers ended on the Unaudited
Financial Statements Date, a Consolidated Net
Profit After Tax of less than zero.
(6) Maintain a minimum Fixed Charges
Coverage Ratio, as of the end of each fiscal
quarter of the Borrowers, commencing with the
fiscal quarter ending June 30, 1995, for such
fiscal quarter and the three immediately
preceding fiscal quarters of the Borrowers, of 2
to 1.
(7) Be prohibited from making
Restricted Payments at any time during the Loan
Commitment Period and while any obligations are
outstanding hereunder or under the Notes, which
in the aggregate exceed 25% of the aggregate
Consolidated Net Profit After Tax earned after
the Unaudited Financial Statements Date,
excluding dividends paid by Southern Electronics
Distributors, Inc. to Southern Electronics
Corporation.
(G) Each of the Borrowers will, when requested so to do, make
available for inspection by duly authorized representatives of the Banks any of
its books and Records, and will furnish to the Banks within a reasonable time
after written request therefor any information regarding its business affairs
and financial condition. The Banks shall keep all such information confidential
and shall not disclose to any third party (other than (1) bank regulatory
authorities, (2) upon the order of any court or administrative agency, (3) to
the extent reasonably required in connection with any litigation involving the
Borrowers or their Affiliates to which the Administrative Bank, any Bank or
their respective Affiliates may be a party, (4) to the extent reasonably
required in connection with the exercise of any remedy hereunder and (5) to any
Bank's legal counsel and independent auditors) any such information received by
them that is not otherwise available to the public from sources other than the
Banks.
(H) Each of the Borrowers will take all necessary steps to
preserve the corporate existence and franchises material to its business and
comply with all present and future Laws applicable to it in the operation of its
business and all material agreements to which it is subject.
(I) Each of the Borrowers will give immediate notice to the Banks
of: (1) any litigation or proceeding in which it is a party if a final judgment
has been entered requiring it to pay over more than $75,000 or deliver assets
the value of which exceeds such sum (whether or not the claim is considered to
be covered by insurance); and (2) the institution of any other suit or
proceeding involving it that might materially and adversely affect its
operations, financial condition, property, prospects or business.
(J) Within ten (10) days of either Bank's request therefor, each
of the Borrowers will furnish such Bank with copies of federal income tax
returns filed by it.
(K) Each of the Borrowers will pay when due (or within applicable
grace periods) all Indebtedness due third Persons, except when the amount
thereof is being contested in good faith by appropriate proceedings and with
adequate reserve therefor being set aside on its books. If default be made by
either of the Borrowers or any Subsidiary in the payment of any principal (or
installment thereof) of, or interest on, any such Indebtedness, the Banks shall
have the right, in their discretion, upon forty-eight (48) hours' notice to the
Borrowers, to pay such interest or principal for the account of either of the
Borrowers and be reimbursed without penalty or premium by the Borrowers
therefor.
(L) Each of the Borrowers:
(1) Has not and will not incur any
material accumulated funding deficiency within
the meaning of Section 302 of ERISA and Section
412 of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (the
"Code"), or any material liability to the Pension
Benefit Guaranty Corporation ("PBGC") in
connection with any Plan.
(2) Will furnish to the Banks the
following:
(a) Simultaneously with a filing with the PBGC of
notice regarding any Reportable Event, and in any event within
sixty (60) days after such Borrower knows or has reason to know
that any Reportable Event with respect to any Plan has occurred,
a statement of the chief financial officer of such Borrower
setting forth details as to such Reportable Event and the action
which such Borrower proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event
filed with the PBGC;
(b) Promptly after the filing thereof with the
Internal Revenue Service, copies of each annual report with
respect to each Plan established or maintained by such
Borrower for each plan year, including (i) where required
by law, a statement of assets and liabilities of such Plan
as of the end of such plan year and statements of changes
in fund balance and in financial position, or a statement
of changes in net assets available for plan benefits, for
such plan year, certified by an independent public
accountant satisfactory to the Banks, and (ii) an actuarial
statement of such Plan applicable to such plan year,
certified by an enrolled actuary of recognized standing
acceptable to the Banks;
(c) Promptly after receipt thereof a copy of any
notice such Borrower may receive from the PBGC or the
Internal Revenue Service or the United States Department of
Labor with respect to any Plan maintained or administered
by such Borrower; and
(d) Promptly after the filing thereof with the
Internal Revenue Service and/or the PBGC, copies of Form
5310 relating to the termination of any Plan.
(3) Has not and will not engage in any
transaction with which such Borrower could be
subject to either a material civil penalty
assessed pursuant to Section 502(i) of ERISA or
a material tax imposed by Code Section 4975;
(4) Has paid and will pay all premiums
(and all penalties and interest, if applicable)
not being contested in good faith that are due
the PBGC with respect to any Plan;
(5) Has not and will not cease
operations at a facility so as to become subject
to Section 4062(e) of ERISA;
(6) Has not and will not withdraw as a
substantial employer so as to become subject to
Section 4063 of ERISA;
(7) Has not and will not make a
complete or partial withdrawal from a
"multiemployer plan" as defined in Section 3(37)
of ERISA so as to incur material "withdrawal
liability" as defined in Section 4201 of ERISA,
without regard to subsequent reduction or waiver
of such liability under Sections 4207 or 4208 of
ERISA; and
(8) Has not and will not terminate any
Plan or have termination proceedings instituted
with respect to any Plan pursuant to Sections
4041(c) or 4042 of ERISA.
(M) The Borrowers will comply in all material respects with any
and all Environmental Laws, including without limitation all Environmental Laws
in jurisdictions in which the Borrowers own or operate a facility or site,
arrange for disposal or treatment of hazardous substances, solid wastes or other
wastes, accept for transport any hazardous substances, solid waste or other
waste or hold any interest in real property or otherwise. The Borrowers will
not allow the release or disposal of hazardous waste, solid waste or other waste
on, under or to any real property in which the Borrowers hold any interest or
perform any of their operations, in violation of any Environmental Law. The
Borrowers shall defend, indemnify and hold the Banks harmless from and against
all costs, expenses, claims, damages, penalties and liabilities of every kind or
nature whatsoever (including attorney's fees) arising out of or resulting from
the non-compliance of the Borrowers with any Environmental Law.
6.02 Negative Covenants.
(A) Neither of the Borrowers will dissolve or liquidate, or enter
into any merger, consolidation, reorganization or recapitalization or reclassify
its capital stock, except that either Borrower may merge into or consolidate
with the other Borrower.
(B) Neither of the Borrowers will sell, transfer, lease or
otherwise dispose of all or (except in the ordinary course of business) any
material part of its assets except to the other Borrower.
(C) Neither of the Borrowers will mortgage, pledge, grant or
permit to exist a security interest in or lien upon any of its assets of any
kind, now owned or hereafter acquired, except for Permitted Liens.
(D) Neither of the Borrowers will become liable, directly or
indirectly, as guarantor or otherwise, for any obligation of any other Person
other than the other Borrower.
(E) Neither of the Borrowers will incur, create, assume or permit
to exist any Indebtedness except: (1) the Loans; (2) the Letters of Credit; (3)
existing Indebtedness as set forth in Schedule 5.01(L); (4) trade Indebtedness
incurred in the ordinary course of business; (5) contingent Indebtedness
permitted by subsection 6.02(D); and (6) Indebtedness secured by Permitted
Liens.
(F) Neither of the Borrowers will form any Subsidiary or make any
investment in or make any loan in the nature of any investment to any Person.
(G) Neither of the Borrowers will acquire any stock in, or all
or substantially all of the assets of, any Person.
(H) Neither of the Borrowers will furnish the Bank any
certificate or other document that will contain any untrue statement of a
material fact or that will omit to state a material fact necessary to make it
not misleading in light of the circumstances under which it was furnished.
(I) Neither of the Borrowers will directly or indirectly apply
any part of the proceeds of any of the Loans to the purchasing or carrying of
any "margin stock" within the meaning of Regulation U of the Federal Reserve
Board, or any regulations, interpretations or rulings thereunder.
(J) Neither Borrower shall enter into, or be a party to, any
transaction with any Affiliate of the Borrowers (which Affiliate is not the
other Borrower), except as permitted by law and in the ordinary course of
business and pursuant to reasonable terms which are fully disclosed to the
Banks, consented to in writing by the Banks and are no less favorable to such
Borrower than would be obtained in a comparable arm's length transaction with a
Person which is not an Affiliate.
SECTION VII. EVENT OF DEFAULT
7.01 Event of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:
(A) Either of the Borrowers shall fail to pay when due (1) any
installment of principal payable hereunder or (2) any interest or fee payable
hereunder and such failure to pay interest or fees shall continue for a period
of ten (10) days.
(B) Either of the Borrowers shall fail to observe or perform any
other obligation to be observed or performed by it hereunder and such failure
shall continue for a period of ten (10) days after: (1) notice of such failure
from any Bank; or (2) any Bank is notified of such failure by the Borrowers or
should have been so notified by the Borrowers pursuant to the provisions of this
Agreement, whichever is earlier.
(C) Either of the Borrowers shall fail to pay any Indebtedness
due either Bank under a separate agreement or any third Person and such failure
shall continue beyond any applicable grace period, or either of the Borrowers
shall suffer to exist any other event of default under any agreement binding on
such Borrower; provided, however, it shall not be an Event of Default if such
Borrower is contesting in good faith such Indebtedness which is not for money
borrowed with adequate reserve therefor being set aside on the books of such
Borrower.
(D) Any financial statement, representation, warranty or
certificate made or furnished by either of the Borrowers to the Banks in
connection with this Agreement, or as an inducement to the Banks to enter into
this Agreement, or in any separate statement or document to be delivered
hereunder to the Banks, shall be materially false, incorrect or incomplete when
made.
(E) Either of the Borrowers shall fail, or admit its inability
or failure, to pay its debts generally as they become due, or shall make an
assignment for the benefit of any of its creditors.
(F) A case or proceeding in bankruptcy, or for reorganization of
either of the Borrowers, or for the readjustment of any of its debts, under the
Bankruptcy Code or any part thereof, or under any other Laws, whether state or
federal, for the relief of debtors, now or hereafter existing, shall be
commenced by either of the Borrowers, or shall be commenced against either of
the Borrowers and shall not be dismissed or discharged within sixty (60) days of
their commencement, or an order for relief is entered at any time in a case
under the Bankruptcy Code.
(G) A receiver or trustee shall be appointed for either of the
Borrowers or for any substantial part of its assets, or any proceedings shall be
instituted for the dissolution or the full or partial liquidation of either of
the Borrowers, and such receiver or trustee shall not be discharged within sixty
(60) days of his appointment, or such proceedings shall not be discharged within
sixty (60) days of their commencement, or either of the Borrowers shall
discontinue business or materially change the nature of its business.
(H) Either of the Borrowers shall suffer final judgments for
payment of money aggregating in excess of $250,000 not covered by insurance and
shall not discharge or bond the same within a period of thirty (30) days unless,
pending further proceedings, execution has not been commenced or if commenced
has been effectively stayed.
(I) If (1) any Reportable Event occurs and the Banks determine
in good faith that there is a substantial possibility that such Reportable Event
constitutes grounds (a) for the termination of any Plan by the PBGC or (b) for
the appointment by the appropriate United States district court of a trustee to
administer any Plan and such Reportable Event shall not have been fully
corrected or remedied to the full satisfaction of the Banks within sixty (60)
days after giving of written notice of such determination to the Borrowers by
any Bank; or (2) any Plan shall be terminated within the meaning of Title IV of
ERISA; or (3) a trustee shall be appointed by the appropriate United States
district court to administer any Plan; or (4) the PBGC shall institute
proceedings to terminate any Plan or to appoint a trustee to administer any
Plan. Notwithstanding the foregoing, the occurrence of a Reportable Event under
(1) shall not be an Event of Default if the Borrowers establish to the
reasonable satisfaction of the Banks either (x) that the Plan is sufficiently
funded to meet all "benefit commitments" as such term is currently defined in
ERISA or (y) that the Reportable Event does not materially and adversely impair
either of the Borrowers' ability to satisfy and discharge its Obligations in
accordance with their terms.
(J) Either of the Borrowers fails to maintain Senior Management
reasonably acceptable to the Banks (for this purpose, the Banks acknowledge that
current Senior Management of the Borrowers is acceptable).
(K) Either of the Borrowers has a Material Ownership Change.
7.02 Acceleration. Immediately and without notice upon the
occurrence of an Event of Default specified in clause (E), (F), (G) or (H) of
subsection 7.01, or at the option of the Banks, but only upon notice to the
Borrowers, upon the occurrence of any other Event of Default, all Obligations,
whether hereunder or otherwise, shall immediately become due and payable without
further action of any kind, and the Borrowers shall immediately provide each
Issuing Bank with cash collateral in the amount of 105% of the Outstanding LC
Amounts under Letters of Credit issued by it.
7.03 Remedies. After any acceleration, as provided for in
subsection 7.02, the Banks shall have, in addition to the rights and remedies
given them by this Agreement and the Notes, all those allowed by all applicable
Laws.
SECTION VIII. ADMINISTRATIVE BANK
8.01 Authorization. Each Bank hereby authorizes the
Administrative Bank to exercise such powers and perform such duties as are
expressly delegated to the Administrative Bank by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Bank shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement, or otherwise exist against the
Administrative Bank.
8.02 Delegation of Duties. The Administrative Bank may execute
any of its duties under this Agreement by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Administrative Bank shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
8.03 Exculpatory Provisions. Neither the Administrative Bank nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (A) liable for any action lawfully taken or omitted to be
taken by it or such person under or in connection with this Agreement (except
for its or such person's own gross negligence or willful misconduct) or (B)
responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by the Borrowers or any officer thereof
contained in this Agreement or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative Bank
under or in connection with, this Agreement or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, or
for any failure of the Borrowers to perform their obligations hereunder. The
Administrative Bank shall be under no obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement, or to inspect the properties, books or
records of the Borrowers.
8.04 Reliance by Administrative Bank. The Administrative Bank
shall be entitled to rely, and shall be fully protected in relying, upon any
note, guaranty, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, facsimile, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper person and upon
advice and statements of legal counsel (including without limitation counsel to
the Borrowers), independent accountants and other experts selected by the
Administrative Bank. The Administrative Bank may deem and treat the payee of
any note as the owner thereof for all purposes. In making payments to the Banks
and taking other action with respect to the Banks, the Administrative Bank shall
be entitled to rely on the participation of each Bank therein on the basis
provided herein and in the Notes unless and until it has received written notice
otherwise as provided in subsection 9.05. The Administrative Bank shall be
fully justified in failing or refusing to take any action under this Agreement
unless it shall first receive such advice or concurrence of the Banks as it
deems appropriate or it shall first be indemnified to its satisfaction by all
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Bank
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement in accordance with a request of the Banks, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all Banks and all future holders of the Notes.
8.05 Notice of Event of Default. The Administrative Bank shall
not be deemed to have knowledge or notice of the occurrence of any Event of
Default hereunder unless the Administrative Bank has received notice from any
Bank or the Borrowers referring to this Agreement, describing such Event of
Default and stating that such notice is a "notice of default." If the
Administrative Bank receives such a notice, the Administrative Bank shall give
notice thereto to the Banks. The Administrative Bank shall take such action
with respect to such Event of Default as shall be reasonably directed by the
Banks; provided that, unless and until the Agent shall have received such
directions, the Administrative Bank may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Event of
Default as it shall deem advisable in the best interests of the Banks.
8.06 Non-Reliance on Administrative Bank and Other Banks. Each
Bank expressly acknowledges that neither the Administrative Bank nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates has made
any representations or warranties to it and that no act by the Administrative
Bank hereinafter taken, including any review of the affairs of the Borrowers,
shall be deemed to constitute any representation or warranty by the
Administrative Bank to any Bank. Each Bank represents to the Administrative
Bank that it has, independently and without reliance upon the Administrative
Bank or any other Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrowers. Except for notices, reports and other
documents expressly required to be furnished to the Banks by the Administrative
Bank hereunder, the Administrative Bank shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrowers which may come into the possession of the
Administrative Bank or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
8.07 Indemnification. Each Bank agrees to indemnify the
Administrative Bank in its capacity as such (to the extent not reimbursed by the
Borrowers and without limiting the obligation of the Borrowers to do so),
ratably according to the respective amounts of its Percentage, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including without limitation at any time following the payment
of the Notes) be imposed on, incurred by or asserted against the Administrative
Bank in any way relating to or arising out of this Agreement or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Bank under or in connection with any of the foregoing; provided
that no Bank shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Administrative Bank's gross
negligence or willful misconduct. The agreements in this subsection shall
survive the payment of the Notes and all other amounts payable hereunder.
8.08 Administrative Bank in Its Individual Capacity. The
Administrative Bank and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrowers as though the
Administrative Bank were not the administrative bank hereunder. With respect to
its loans made or renewed by it and any note issued to it and with respect to
any Letters of Credit issued by it, the Administrative Bank shall have the same
rights and powers under this Agreement as any Bank and may exercise the same as
though it were not the Administrative Bank, and the terms "Bank" and "Banks"
shall include the Administrative Bank in its individual capacity.
SECTION IX. MISCELLANEOUS
9.01 Construction. The provisions of this Agreement shall be in
addition to those of any guaranty, pledge or security agreement, note or other
evidence of liability held by the Banks, all of which shall be construed as
complementary to each other. Nothing herein contained shall prevent the Banks
from enforcing any or all other notes, guaranty, pledge or security agreements
in accordance with their respective terms.
9.02 Further Assurances. From time to time, the Borrowers will
execute and deliver to the Banks such additional documents and will provide such
additional information as the Banks may reasonably require to carry out the
terms of this Agreement and be informed of the Borrowers' status and affairs.
9.03 Enforcement and Waiver by Banks. The Banks shall have the
right at all times to enforce the provisions of this Agreement and the Notes in
strict accordance with the terms hereof and thereof, notwithstanding any conduct
or custom on the part of the Banks in refraining from so doing at any time or
times. The failure of the Banks at any time or times to enforce their rights
under such provisions, strictly in accordance with the same, shall not be
construed as having created a custom in any way or manner contrary to specific
provisions of this Agreement or as having in any way or manner modified or
waived the same. All rights and remedies of the Banks are cumulative and
concurrent and the exercise of one right or remedy shall not be deemed a waiver
or release of any other right or remedy.
9.04 Expenses of Banks. The Borrowers will, on demand, reimburse
the Banks for all expenses, including the reasonable fees and expenses of legal
counsel for the Banks, incurred by the Banks in connection with the preparation,
administration, amendment, modification or enforcement of this Agreement and the
collection or attempted collection of the Notes.
9.05 Notices. Any notices or consents required or permitted by
this Agreement shall be in writing (including by telecopier) and shall be deemed
delivered if delivered in person or if sent by certified mail, postage prepaid,
return receipt requested, or sent by telecopier, as follows, unless such address
or telecopier number is changed by written notice hereunder:
(A) If to the Borrowers: Southern Electronics Corporation
and
Southern Electronics Distributors, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President-Finance
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation: ▇▇▇-▇▇▇-▇▇▇▇
(B) If to NCB: National City Bank, Columbus
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation: ▇▇▇-▇▇▇-▇▇▇▇
(C) If to WB: Wachovia Bank of Georgia, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
30th Floor
Mail Code ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation: ▇▇▇-▇▇▇-▇▇▇▇
9.06 Waiver and Release by Borrowers. To the maximum extent
permitted by applicable Laws, the Borrowers:
(A) Waive: (1) protest of all commercial paper at any time held
by the Banks on which the Borrowers are in any way liable; and (2) notice and
opportunity to be heard, after acceleration in the manner provided in subsection
7.02, before exercise by the Banks of the remedies of self-help, set-off or
other summary procedures permitted by any applicable Laws or by any agreement
with the Borrowers, and, except where required hereby or by any applicable Laws,
notice of any other action taken by the Banks; and
(B) Release the Banks and their officers, attorneys, agents and
employees from all claims for loss or damage caused by any act or omission on
the part of any of them except willful misconduct or gross negligence.
9.07 Applicable Law. The substantive Laws of the State of Georgia
shall govern the construction of this Agreement and the rights and remedies of
the parties hereto.
9.08 Binding Effect, Assignment and Entire Agreement. This
Agreement shall inure to the benefit of, and shall be binding upon, the
respective successors and permitted assigns of the parties hereto. The
Borrowers have no right to assign any of their rights or obligations hereunder
without the prior written consent of the Banks. This Agreement, and the
documents executed and delivered pursuant hereto, supersede the Revolving Credit
Agreement dated February 23, 1993 between the Borrowers and NCB and all
documents executed and delivered pursuant thereto (the "Current Loan
Documents"), constitute the entire agreement between the parties and may be
amended only by a writing signed on behalf of each party.
9.09 Severability. If any provision of this Agreement shall be
held invalid under any applicable Laws, such invalidity shall not affect any
other provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
9.10 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one and the same instrument.
9.11 Setoffs; Sharing of Setoffs. (A) Each Borrower agrees that
each Bank shall have a lien for all indebtedness and obligations owing to them
from such Borrower upon all deposits or deposit accounts, of any kind, or any
interest in any deposits or deposit accounts thereof, now or hereafter pledged,
mortgaged, transferred or assigned to such Bank or otherwise in the possession
or control of such Bank for any purpose for the account or benefit of such
Borrower and including any balance of any deposit account or of any credit of
such Borrower with such Bank, whether now existing or hereafter established
hereby authorizing each Bank at any time or times with or without prior notice
to apply such balances or any part thereof to such of the indebtedness and
obligations owing by such Borrower to the Banks then past due and in such
amounts as they may elect, and whether or not the collateral, if any, or the
responsibility of other Persons primarily, secondarily or otherwise liable may
be deemed adequate. For the purposes of this subsection all remittances and
property shall be deemed to be in the possession of any Bank as soon as the same
may be put in transit to it by mail or carrier or by other bailee.
(B) Each Bank agrees that if it shall, by exercising any right
of setoff or counterclaim or resort to collateral security or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest owing
with respect to the Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of all principal
and interest owing with respect to the Note held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks owing to such other Banks,
and such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Notes held by the Banks
owing to such other Banks shall be shared by the Banks pro rata; provided that
(1) nothing in this subsection shall impair the right of any Bank to exercise
any right of setoff or counterclaim it may have and to apply the amount subject
to such exercise to the payment of indebtedness of either Borrower other than
its indebtedness under the Notes, and (2) if all or any portion of such payment
received by the purchasing Bank is thereafter recovered from such purchasing
Bank, such purchase from each other Bank shall be rescinded and such other Bank
shall repay to the purchasing Bank the purchase price of such participation to
the extent of such recovery together with an amount equal to such other Bank's
ratable share (according to the proportion of (x) the amount of such other
Bank's required repayment to (y) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. Each Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that any holder of a participation in a Note, whether or not acquired pursuant
to the foregoing arrangements, may exercise rights of setoff or counterclaim and
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
9.12 Waiver of Jury Trial. Each Borrower and each of the Banks
irrevocably waives, to the fullest extent permitted by law, any and all right to
trial by jury in any legal proceeding arising out of this Agreement or the
Notes.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SOUTHERN ELECTRONICS SOUTHERN ELECTRONICS
CORPORATION DISTRIBUTORS, INC.
By: By:
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President-Finance Title: Vice President-Finance
NATIONAL CITY BANK, COLUMBUS WACHOVIA BANK OF GEORGIA, N.A.
By: By:
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President Title: Vice President
EXHIBITS AND SCHEDULES
Exhibit Subject Matter
2.04 Prime Loan/Offered Rate Loan
Borrowing Notice
2.06 Eurodollar Loan Borrowing Notice
2.10 Form of Revolving Credit Notes
4.02 Borrowing Certificate
Schedule Subject Matter
1.01-1 Liens
3.01 Pre-Existing Letters of Credit
5.01(D) Litigation
5.01(L) Indebtedness
5.01(M) Certain Contracts
Schedule 1.01-1
LIENS
[To Be Completed]
Schedule 3.01
PRE-EXISTING LETTERS OF CREDIT
. Irrevocable Standby Letter of Credit No. 28861 Dated May 26, 1995 in the
Amount of $800,000 Issued by National City Bank, Columbus to NEC America,
Inc. for the Benefit of Southern Electronics Distributors, Inc.
. Irrevocable Standby Letter of Credit No. 28914 Dated June 1, 1995 in the
Amount of $250,000 Issued by National City Bank, Columbus to Sharp
Electronics Corporation for the Benefit of Southern Electronics
Distributors, Inc.
Schedule 5.01 (D)
LITIGATION
[To Be Completed]
Schedule 5.01 (L)
INDEBTEDNESS
[To Be Completed]
Schedule 5.01(M)
CERTAIN CONTRACTS
[To Be Completed]
Exhibit 2.04
NOTICE OF BORROWING
FOR [PRIME LOAN]
[OFFERED RATE LOAN]
[Name and Address of
Administrative Bank
Per Section 9.05
of Revolving Credit
Agreement]
Subject: Revolving Credit Agreement (as amended and modified from time
to time, the "Credit Agreement") dated as of June 29, 1995 by
and among Southern Electronics Corporation and Southern
Electronics Distributors, Inc., National City Bank, Columbus
and Wachovia Bank of Georgia, N.A.
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall have
the meanings attributable thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to subsection 2.04
of the Credit Agreement.
The Borrowers hereby request [a Prime Loan] [an Offered Rate Loan] in the
aggregate principal amount of $____________ to be made on _______________,
19___, and for interest to accrue thereon at the rate established by the Credit
Agreement for [Prime Loans] [Offered Rate Loans]. [The duration of the Interest
Period for such Offered Rate Loan shall be [30] [60] [90] days.]
The Borrowers have caused this Notice of Borrowing to be executed and
delivered by their duly authorized officers this ___ day of _____________,
______.
SOUTHERN ELECTRONICS COMPANY
By:
Name:
Title:
SOUTHERN ELECTRONICS
DISTRIBUTORS, INC.
By:
Name:
Title:
Exhibit 2.06
NOTICE OF BORROWING
FOR EURODOLLAR LOAN
[Name and Address of
Administrative Bank
Per Section 9.05
of Revolving Credit
Agreement]
Subject: Revolving Credit Agreement (as amended and modified from time
to time, the "Credit Agreement") dated as of June 29, 1995 by
and among Southern Electronics Corporation and Southern
Electronics Distributors, Inc., National City Bank, Columbus
and Wachovia Bank of Georgia, N.A.
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall have
the meanings attributable thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to subsection 2.06
of the Credit Agreement.
The Borrowers hereby request a Eurodollar Loan in the aggregate principal
amount of $____________ to be made on _______________, 19___, and for interest
to accrue thereon at the rate established by the Credit Agreement for Eurodollar
Loans. The duration of the Interest Period for such Eurodollar Loan shall be
[1] [2] [3] months[s].
The Borrowers have caused this Notice of Borrowing to be executed and
delivered by their duly authorized officers this ___ day of _____________,
______.
SOUTHERN ELECTRONICS COMPANY
By:
Name:
Title:
SOUTHERN ELECTRONICS
DISTRIBUTORS, INC.
By:
Name:
Title:
Exhibit 4.02
BORROWING CERTIFICATE
This Certificate is made pursuant to subsection 4.02 of the Revolving
Credit Agreement, dated as of June 29, 1995, between SOUTHERN ELECTRONICS
CORPORATION ("SEC") and SOUTHERN ELECTRONICS DISTRIBUTORS, INC. ("SED"), on the
one hand, and NATIONAL CITY BANK, COLUMBUS and WACHOVIA BANK OF GEORGIA, N.A.,
on the other hand (the "Credit Agreement"). Capitalized terms used herein shall
have the same meanings as set forth in the Credit Agreement, unless otherwise
defined herein. SEC or SED (the "Requesting Party") hereby requests a loan
under the Credit Agreement in the sum of _____________________________________
Dollars ($_______________). The undersigned President or Vice President of the
Requesting Party hereby certifies as follows:
1. The representations and warranties of the
Borrowers set forth in the Credit Agreement or which are
contained in any certificate, document or financial or
other statement furnished pursuant to or in connection with
the Credit Agreement are true and correct in all material
respects on and as of the date hereof with the same effect
as if made on the date hereof; and
2. Immediately prior to and immediately after the
making of the loans requested to be made and the issuance
of the Letters of Credit requested to be issued on the date
hereof, no Event of Default will be continuing under the
Credit Agreement;
and the undersigned Secretary or Assistant Secretary of the Requesting Party
hereby certifies as follows:
3. There are no liquidation or dissolution
proceedings pending or to my knowledge threatened against
the Borrowers nor has any other event occurred affecting
or threatening the corporate existence of the Borrowers;
and
4. Each of the Borrowers is a corporation duly
incorporated, validly existing and in good standing under
the laws of the State of Delaware.
IN WITNESS WHEREOF, the undersigned have hereunto set their names on the
date set forth below.
President or Vice President Secretary or Assistant Secretary
Date:
Exhibit 2.10
REVOLVING CREDIT NOTE
$15,000,000.00 Columbus, Ohio
June 29, 1995
FOR VALUE RECEIVED, the undersigned, SOUTHERN ELECTRONICS CORPORATION and
SOUTHERN ELECTRONICS DISTRIBUTORS, INC., jointly and severally hereby
unconditionally promise to pay on the Loan Termination Date, to the order of
___________________________ (the "Lender") at the office of the Administrative
Bank located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Floor, Mail Code ▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President,
in lawful money of the United States of America and in immediately available
funds, the principal amount of the lesser of (a) FIFTEEN MILLION DOLLARS
($15,000,000.00) and (b) the aggregate unpaid principal amount of all loans made
by the Lender to the undersigned and the aggregate amount of all advances made
by the Lender pursuant to letters of credit issued by the Banks in favor of the
undersigned pursuant to the Revolving Credit Agreement, dated as of June 29,
1995, as amended, between the undersigned and the Banks (the "Credit
Agreement"). Capitalized terms used herein shall have the same meanings as set
forth in the Credit Agreement, unless otherwise defined herein.
The undersigned further agree to pay interest in like money at such office
on the unpaid principal amount hereof from time to time from the date hereof
until such amount shall be come due and payable (whether at the stated maturity,
by acceleration or otherwise) on the dates and at the applicable rate per annum
as provided in subsection 2.12 of the Credit Agreement.
The holder of this Note is authorized to endorse the date and amount of
each loan pursuant to the Credit Agreement, the date and amount of each payment
or prepayment of principal thereof and the unpaid principal amount under this
Note on the schedule annexed hereto and made a part hereof or on a continuation
thereof, which endorsement shall constitute prima facie evidence of the accuracy
of the information endorsed.
If any payment on this Note becomes due and payable on a day other than
a business day, the maturity thereof shall be extended to the next succeeding
business day and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
This Note is one of the Notes referred to in the Credit Agreement and is
entitled to the benefits thereof and is subject to optional and mandatory
prepayment in whole or in part as provided therein.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable all as provided
therein.
This Note shall be governed by and construed in accordance with the laws
of the State of Georgia.
SOUTHERN ELECTRONICS
CORPORATION
By:
Name:
Title:
SOUTHERN ELECTRONICS
DISTRIBUTORS, INC.
By:
Name:
Title:
Schedule to Revolving Credit Note
Amount
Amount of Unpaid
of Principal Principal
Date Loan Payments Balance
___________ $__________ $________ $_________
___________ $__________ $________ $_________
___________ $__________ $________ $_________
___________ $__________ $________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________
___________ $__________ $_________ $_________