<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended August 31, 1995
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________ to ___________.
Commission file number 1-5441.
MARSHALL INDUSTRIES
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-2048764
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9320 Telstar Avenue, El Monte, California 91731-2895
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 307-6000
Common Stock outstanding by class as of August 31, 1995:
Common Stock 17,278,864 shares
- -------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
1
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MARSHALL INDUSTRIES
CONDENSED BALANCE SHEETS
(000's Omitted)
ASSETS
------
<TABLE>
<CAPTION>
August 31,
1995 May 31,
(Unaudited) 1995
------------- ---------
<S> <C> <C>
Current Assets:
Cash $ 1,333 $ 3,508
Receivables - net 136,736 137,892
Inventories 219,967 196,097
Deferred income tax benefits 10,216 10,216
Prepaid expenses 459 507
-------- --------
Total Current Assets 368,711 348,220
-------- --------
Property, Plant and Equipment, net
of accumulated depreciation and
amortization of $47,023 at
August 31, 1995 and $45,704
at May 31, 1995 40,347 40,661
Note Receivable (Note 3) 29,461 29,050
Other Assets - net 4,852 5,376
-------- --------
Total Assets $443,371 $423,307
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
Current Liabilities:
Current portion of long-term debt $ --- $ 410
Accounts payable and accrued expenses 101,136 90,616
Income taxes payable 6,663 2,800
-------- --------
Total Current Liabilities 107,799 93,826
-------- --------
Long-Term Debt; net of current portion:
Bank lines of credit 14,000 20,000
Term Loan and other debt 25,000 25,205
-------- --------
Total Long-Term Debt 39,000 45,205
-------- --------
Deferred Income Tax Liabilities 4,524 4,524
Shareholders' Investment 292,048 279,752
-------- --------
Total Liabilities and
Shareholders' Investment $443,371 $423,307
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these condensed balance sheets.
2
<PAGE>
MARSHALL INDUSTRIES
CONDENSED INCOME STATEMENTS
(Unaudited)
(000's omitted except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31
-------------------
1995 1994
---- ----
<S> <C> <C>
Net sales $275,870 $223,101
Cost of sales 224,925 178,989
-------- --------
Gross profit 50,945 44,112
Selling, general and
administrative expenses 29,898 28,587
-------- -------
Income from operations 21,047 15,525
Interest expense - net 308 539
-------- -------
Income before income taxes 20,739 14,986
Provision for income taxes 8,540 6,250
-------- -------
Net income $ 12,199 $ 8,736
-------- -------
-------- -------
Net income per share $ .70 $ .50
-------- -------
-------- -------
Average number of shares outstanding 17,499 17,414
-------- -------
-------- -------
</TABLE>
That accompanying notes are an integral part of these condensed income
statements.
3
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MARSHALL INDUSTRIES
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(000's omitted)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
---------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 12,199 $ 8,736
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,844 1,808
Net (increase) decrease in
current assets (22,666) 1,349
Net increase (decrease) in
current liabilities 14,383 (2,742)
Interest on note receivable (411) ---
Other operating activities 7 14
-------- -------
Net cash provided by operating activities 5,356 9,165
Cash flows from investing activities:
Capital expenditures (1,005) (714)
Deferred software costs ---- (372)
-------- -------
Net cash used for investing activities (1,005) (1,086)
Cash flows from financing activities:
Net paydown under bank
lines of credit (6,000) (9,000)
Repayments of other long-term debt (615) (427)
Other financing activities 89 7
-------- -------
Net cash used in financing activities (6,526) (9,420)
Net decrease in cash (2,175) (1,341)
Cash at the beginning of the period 3,508 3,694
-------- -------
Cash at the end of the period $ 1,333 $ 2,353
-------- -------
-------- -------
Cash payments during the quarter
for the following:
Interest $ 573 $ 519
-------- -------
-------- -------
Income taxes $ 4,664 $ 3,338
-------- -------
-------- -------
</TABLE>
The accompanying notes are an integral part of these condensed cash flow
statements.
4
<PAGE>
MARSHALL INDUSTRIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1: GENERAL
- ----------------
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. These condensed financial
statements should be read in conjunction with the financial statements and the
notes thereto in the Company's annual report on Form 10-K for the year ended May
31, 1995.
In the opinion of the Company, the unaudited condensed financial statements
reflect all adjustments (consisting of normal recurring accruals) considered
necessary to present fairly the Company's financial position as of August 31,
1995 and the results of its operations and cash flows for the three month
periods ended August 31, 1995 and 1994.
NOTE 2: ACCOUNTING POLICIES
- ----------------------------
Reference is made to Note 1 of Notes to Financial Statements in the Company's
annual report on Form 10-K for the summary of significant accounting policies.
NOTE 3: INVESTMENT IN SONEPAR ELECTRONIQUE INTERNATIONAL
- ---------------------------------------------------------
As described in Note 6 to the Financial Statements in the Company's Annual
Report on Form 10K for the year ended May 31, 1995, the Company invested 151
million French Francs (approximately $28 million in U.S. dollars) in Sonepar
Electronique International ("SEI"), one of the three largest electronic
component distributors in Europe. This investment is in the form of an interest
bearing, convertible note guaranteed by a major French bank as to default.
NOTE 4: BANK LINES OF CREDIT
- -----------------------------
Subsequent to May 31, 1995, the Company amended one of its credit line
agreements to extend its maturity date and replaced the other agreement with a
new agreement with a major bank. This new agreement has an effective date of
October 2, 1995. The maturity
5
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date of the amended and new agreements will be September 30, 1998. All of the
major terms and conditions of the amended and new agreements are similar to the
Company's previous agreements. The amended and new agreements will provide the
Company a total borrowing capacity of $55,000,000, as compared to $70,000,000
under the previous agreements. This reduction in the total credit capacity was
due to the Company's anticipated lower borrowing requirements.
6
<PAGE>
MARSHALL INDUSTRIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
------------
1995 1994
---- ----
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 81.5 80.2
----- -----
Gross profit 18.5 19.8
Selling, general and administrative expenses 10.9 12.8
----- -----
Income from operations 7.6 7.0
Interest expense - net .1 .3
----- -----
Income before provision for income taxes 7.5 6.7
Provision for income taxes 3.1 2.8
----- -----
Net income 4.4% 3.9%
----- -----
----- -----
</TABLE>
Three Month Periods Ended August 31, 1995 and 1994
- --------------------------------------------------
The increase in net sales for the three months ended August 31, 1995, the first
quarter of fiscal 1996, as compared to fiscal 1995, was primarily due to an
increase in the sales volume of semiconductor products. The sales of such
products increased by $47,279,000 for the first quarter of fiscal 1995 as
compared to the same period of a year ago. The increase in the sales of
semiconductor products was mainly the result of continued strong market demand
for these products. The sales volume of the Company's other major products also
increased modestly between periods.
The decrease in net margins for the first quarter of fiscal 1996, as compared to
fiscal 1995, was due to market pressures on the pricing of most of the Company's
products, including value added products. The Company believes that these
conditions affecting margins may continue in the near term.
Selling, general, and administrative expenses ("SG&A"), increased in dollars for
the first quarter of fiscal 1996, as compared to fiscal 1995 primarily due to
higher operating costs to meet the requirements from the significant increase in
sales volume. SG&A expenses as a percentage of sales, however, declined to
10.9% for
7
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the first quarter of fiscal 1996, as compared to 12.8% for fiscal 1995. Of the
$1,311,000 increase in SG&A expenses for the first quarter of fiscal 1996 as
compared to fiscal 1995, approximately $500,000 was due to higher salaries,
incentives and fringe benefit costs. In addition, there were increases of
approximately $400,000 in outside consulting costs, most of which related to
information systems enhancement projects. There were also increases in delivery
costs and bad debt expense, mostly from the higher sales volume.
The decrease in interest expense for the first quarter of fiscal 1996, as
compared to fiscal 1995, was due to lower borrowing levels, partially offset by
higher interest rates in fiscal 1996.
The Company's sources of liquidity at August 31, 1995 consisted principally of
working capital of $260,912,000 and unsecured bank lines of credit of
$70,000,000 which were subsequently reduced by the Company, as described in
Note 4, to $55,000,000. The Company's borrowings under these lines of credit
were $14,000,000 at August 31, 1995. The Company believes that its working
capital, borrowing capabilities and additional funds generated from operations
should be sufficient to finance its anticipated operations requirements.
8
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits--
(i) Revolving Credit Loan Agreement dated October 2, 1995 between
Marshall Industries and First Union National Bank of North
Carolina.
(ii) Third amendment dated as of June 1, 1995 to Credit Agreement
between Marshall Industries and Bank of America National Trust and
Savings Association.
(b) No reports on Form 8-K have been filed during the quarter for which this
report is filed.
9
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARSHALL INDUSTRIES
October 11, 1995 /s/ HENRY W. CHIN
______________________________
Henry W. Chin
Vice President, Finance and
Chief Financial Officer
10
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EXHIBIT INDEX
(i) Revolving Credit Loan Agreement dated
October 2, 1995 between Marshall Industries
and First Union National Bank of North
Carolina . . . . . . . . . . . . . . . . . . . .
(ii) Third amendment dated as of June 1, 1995 to
Credit Agreement between Marshall Industries
and Bank of America National Trust and Savings
Assocation . . . . . . . . . . . . . . . . . . .
(27) Financial Data Schedule
11
<PAGE>
EXHIBIT 1
- --------------------------------------------------------------------------------
REVOLVING CREDIT LOAN AGREEMENT
DATED AS OF OCTOBER ___, 1995
BETWEEN
MARSHALL INDUSTRIES
AND
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
- --------------------------------------------------------------------------------
1
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TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS.............................................. 5
SECTION 1.1. DEFINITIONS.............................................. 5
SECTION 1.2. GENERAL.................................................. 18
SECTION 1.3. OTHER DEFINITIONS AND PROVISIONS......................... 19
ARTICLE II
REVOLVING CREDIT LOAN FACILITY........................... 19
SECTION 2.1. REVOLVING CREDIT LOANS................................... 19
SECTION 2.2. PROCEDURE FOR ADVANCES OF LOANS.......................... 19
SECTION 2.3. REPAYMENT OF LOANS....................................... 20
SECTION 2.4. REVOLVING CREDIT NOTES................................... 20
SECTION 2.5. PERMANENT REDUCTION OF THE AGGREGATE COMMITMENT.......... 21
SECTION 2.6. TERMINATION OF CREDIT FACILITY........................... 21
SECTION 2.7. USE OF PROCEEDS.......................................... 21
ARTICLE III
ACCEPTANCE FACILITY...................................... 22
SECTION 3.1. AVAILABILITY............................................. 22
SECTION 3.2. ACCEPTANCE PROCEDURES.................................... 22
SECTION 3.3. ELIGIBLE ACCEPTANCES..................................... 22
SECTION 3.4. LIMITATION OF LIABILITY OF THE LENDER.................... 23
SECTION 3.5. CHANGED CIRCUMSTANCES.................................... 23
SECTION 3.6. DISCOUNT AND COMMISSIONS................................. 24
ARTICLE IV
LETTER OF CREDIT FACILITY................................ 24
SECTION 4.1. LETTER OF CREDIT COMMITMENT.............................. 24
SECTION 4.2. LETTER OF CREDIT AGREEMENT............................... 25
SECTION 4.3. PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT.............. 25
SECTION 4.4. ISSUANCE FEES............................................ 26
SECTION 4.5. AMENDMENT OF LETTERS OF CREDIT........................... 26
SECTION 4.6. REIMBURSEMENT OBLIGATION OF THE BORROWER................. 26
SECTION 4.7. OBLIGATIONS ABSOLUTE..................................... 27
SECTION 4.8. EFFECT OF APPLICATION.................................... 27
ARTICLE V
GENERAL LOAN PROVISIONS.................................. 28
SECTION 5.1. INTEREST................................................. 28
2
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SECTION 5.2. NOTICE AND MANNER OF CONVERSION OR CONTINUATION
OF LOANS................................................. 30
SECTION 5.3. COMMITMENT FEE AND FACILITY FEE.......................... 31
SECTION 5.4. MANNER OF PAYMENT........................................ 31
SECTION 5.5. CREDITING OF PAYMENTS AND PROCEEDS....................... 32
SECTION 5.6. CHANGED CIRCUMSTANCES.................................... 32
SECTION 5.7. INDEMNITY................................................ 34
SECTION 5.8. CAPITAL REQUIREMENTS..................................... 34
SECTION 5.9. TAXES.................................................... 35
ARTICLE VI
CLOSING; CONDITIONS OF CLOSING AND BORROWING............. 36
SECTION 6.1. CLOSING.................................................. 36
SECTION 6.2. CONDITIONS OF LOAN....................................... 36
SECTION 6.3. CONDITIONS TO ALL LOANS, LETTERS OF CREDIT
AND ACCEPTANCES.......................................... 39
SECTION 6.4. WAIVER OF CONDITIONS PRECEDENT........................... 40
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BORROWER............... 40
SECTION 7.1. REPRESENTATIONS AND WARRANTIES........................... 40
SECTION 7.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. ........ 46
ARTICLE VIII
FINANCIAL INFORMATION AND NOTICES........................ 47
SECTION 8.1. FINANCIAL STATEMENTS..................................... 47
SECTION 8.2. OFFICER'S CERTIFICATE.................................... 48
SECTION 8.3. OTHER REPORTS............................................ 48
SECTION 8.4. NOTICE OF LITIGATION AND OTHER MATTERS................... 48
SECTION 8.5. ACCURACY OF INFORMATION.................................. 48
ARTICLE IX
AFFIRMATIVE COVENANTS.................................... 50
SECTION 9.1. PRESERVATION OF CORPORATE EXISTENCE AND RELATED MATTERS.. 50
SECTION 9.2. MAINTENANCE OF PROPERTY.................................. 50
SECTION 9.3. INSURANCE................................................ 51
SECTION 9.4. ACCOUNTING METHODS AND FINANCIAL RECORDS; VISITS......... 51
SECTION 9.5. PAYMENT AND PERFORMANCE OF OBLIGATIONS................... 51
SECTION 9.6. COMPLIANCE WITH LAWS AND APPROVALS....................... 51
SECTION 9.7. ENVIRONMENTAL MANAGEMENT................................. 51
SECTION 9.8. COMPLIANCE WITH ERISA.................................... 52
SECTION 9.9. COMPLIANCE WITH AGREEMENTS............................... 52
SECTION 9.10. CONDUCT OF BUSINESS..................................... 52
SECTION 9.11. VISITS AND INSPECTIONS.................................. 52
SECTION 9.12. FURTHER ASSURANCES...................................... 52
3
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ARTICLE X
NEGATIVE COVENANTS...................................... 52
SECTION 10.1. FINANCIAL COVENANTS..................................... 52
SECTION 10.2. LIMITATIONS ON DEBT..................................... 53
SECTION 10.3. LIMITATIONS ON GUARANTEES............................... 53
SECTION 10.4. LIMITATIONS ON LIENS.................................... 54
SECTION 10.5. LIMITATIONS ON LOANS, ADVANCES AND INVESTMENTS.......... 54
SECTION 10.6. RESTRICTIONS ON MERGER, SALE OF ASSETS, ETC. ........... 54
SECTION 10.7. RESTRICTIONS ON DIVIDENDS AND DISTRIBUTIONS............. 55
SECTION 10.8. TRANSACTIONS WITH AFFILIATES............................ 55
SECTION 10.9. REGULATIONS G, T AND U.................................. 56
SECTION 10.10. LEASE OBLIGATIONS...................................... 56
SECTION 10.11. ACCOUNTING CHANGES..................................... 56
SECTION 10.12. COMPLIANCE WITH ERISA.................................. 56
ARTICLE XI
DEFAULT................................................. 57
SECTION 11.1. EVENTS OF DEFAULT....................................... 57
SECTION 11.2. REMEDIES................................................ 60
SECTION 11.3. RIGHTS AND REMEDIES CUMULATIVE; NON-WAIVER; ETC. ....... 61
ARTICLE XII
MISCELLANEOUS........................................... 61
SECTION 12.1. NOTICES................................................. 61
SECTION 12.2. EXPENSES................................................ 62
SECTION 12.3. STAMP AND OTHER TAXES................................... 63
SECTION 12.4. SET-OFF................................................. 63
SECTION 12.5. GOVERNING LAW........................................... 63
SECTION 12.6. CONSENT TO JURISDICTION................................. 63
SECTION 12.7. WAIVER OF JURY TRIAL.................................... 64
SECTION 12.8. REVERSAL OF PAYMENTS.................................... 64
SECTION 12.9. INJUNCTIVE RELIEF....................................... 64
SECTION 12.10. ACCOUNTING MATTERS..................................... 64
SECTION 12.11. ASSIGNMENT............................................. 65
SECTION 12.12. AMENDMENTS, WAIVERS AND CONSENTS....................... 65
SECTION 12.13. PERFORMANCE OF BORROWER'S DUTIES....................... 65
SECTION 12.14. INDEMNIFICATION........................................ 65
SECTION 12.15. ALL POWERS COUPLED WITH INTEREST....................... 65
SECTION 12.16. SURVIVAL OF INDEMNITIES................................ 66
SECTION 12.17. TITLES AND CAPTIONS.................................... 66
SECTION 12.18. SEVERABILITY OF PROVISIONS............................. 66
SECTION 12.19. COUNTERPARTS........................................... 66
SECTION 12.20. TERM OF AGREEMENT...................................... 66
SECTION 12.21. INCONSISTENCIES WITH OTHER DOCUMENTS................... 66
4
<PAGE>
REVOLVING CREDIT LOAN AGREEMENT
THIS REVOLVING CREDIT LOAN AGREEMENT dated as of the ____ of October, 1995
by and among MARSHALL INDUSTRIES, a California corporation (the "Borrower") and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association (the
"Lender").
STATEMENT OF PURPOSE
The Borrower has requested and the Lender has agreed to extend a certain
revolving credit loan facility and other credit accommodations to and for the
benefit of the Borrower on the terms and conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. The following terms when used in this Agreement
shall have the meanings assigned to them below:
"ACCEPTANCE AGREEMENT" means a document or agreement in form and substance
satisfactory to the Lender pursuant to which the Borrower is obligated to the
Lender, in connection with, any Acceptances.
"ACCEPTANCE DATE" shall have the meaning specified in Section 3.2.
"ACCEPTANCE FACILITY OBLIGATIONS" means any and all Obligations arising
under any Acceptance Agreement or otherwise in connection with any Acceptance.
"ACCEPTANCE RATE" means, at any time, the Lender's "all-in-rate" for
acceptances in effect on the dates of acceptance and discount.
"ACCEPTANCES" shall have the meaning specified in Section 3.2.
"AFFILIATE" means, with respect to a Person, any other Person which
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. The term "control"
means (a) the power to vote twenty percent (20%) or more of the securities or
other equity interests of a Person having ordinary voting power, or (b) the
possession, directly or indirectly, of any other power to direct or cause the
5
<PAGE>
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"AGGREGATE COMMITMENT" means the aggregate amount of the Lender's
Commitments hereunder, as such amount may be reduced at any time or from time to
time pursuant to Section 2.5. On the Closing Date, the Aggregate Commitment
shall be Twenty-Five Million Dollars ($25,000,000).
"AGREEMENT" means this Revolving Credit Loan Agreement, as amended,
supplemented or modified from time to time.
"APPLICABLE LAW" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all Governmental Authorities and all
orders and decrees of all courts and arbitrators.
"APPLICABLE MARGIN" shall have the meaning assigned thereto in Section
5.1(c).
"APPLICATION" means an application, in the form specified by the Lender
from time to time, requesting the Lender to issue a Letter of Credit.
"BASE RATE" means, at any time, the higher of (a) the Prime Rate or (b) the
Federal Funds Rate as determined by the Lender PLUS 1/2 of 1%; each change in
the Base Rate shall take effect simultaneously with the corresponding change or
changes in the Prime Rate or the Federal Funds Rate.
"BASE RATE LOAN" means any Loan bearing interest at a rate determined with
reference to the Base Rate as provided in Section 2.8 hereof.
"BORROWER" means Marshall Industries, a California corporation, and its
permitted successors and assigns.
"BUSINESS DAY" means (a) for all purposes other than as set forth in clause
(b) below, any day other than a Saturday, Sunday or legal holiday on which banks
in Charlotte, North Carolina are open for the conduct of their commercial
banking business, and (b) with respect to all notices and determinations in
connection with, and payments of principal and interest on, any LIBOR Rate Loan,
any day that is a Business Day described in clause (a) and that is also a day
for trading by and between banks in U.S. Dollar deposits in the London interbank
market.
"CAPITAL EXPENDITURES" means, for any period and with respect to any
Person, the aggregate of all expenditures by such Person and its Subsidiaries
for the acquisition or leasing of fixed or capital assets or additions to
equipment (including replacements, capitalized repairs and improvements during
such period) which should be
6
<PAGE>
capitalized under GAAP on a consolidated balance sheet of such Person and its
Subsidiaries. For the purpose of this definition, the purchase price of
equipment which is purchased simultaneously with the trade-in of existing
equipment owned by such Person or any of its Subsidiaries or with insurance
proceeds shall be included in Capital Expenditures only to the extent of the
gross amount of such purchase price less the credit granted by the seller of
such equipment for such equipment being traded in at such time, or the amount of
such proceeds, as the case may be.
"CAPITAL LEASE" means any lease of any property that would, in accordance
with GAAP, be required to be classified and accounted for as a capital lease on
a balance sheet of the Borrower.
"CAPITAL LEASE OBLIGATION" means, with respect to any Capital Lease, the
amount of the obligation of the Borrower thereunder that would, in accordance
with GAAP, appear on a balance sheet as a liability in respect of such Capital
Lease.
"CASH EQUIVALENTS" means
(a) securities issued or fully guaranteed or insured by the United States
Government or any agency thereof and backed by the full faith and credit of the
United States having maturities of not more than six (6) months from the date of
acquisition;
(b) certificates of deposit, time deposits, Eurodollar time deposits, or
bankers' acceptances having in each case a tenor of not more than six (6)
months, issued by the Lender, or by any U.S. commercial bank or any branch or
agency of a non-U.S. bank licensed to conduct business in the U.S. having
combined capital and surplus of not less than One Hundred Million dollars
($100,000,000) whose short term securities are rated at least A-1 by Standard &
Poor's Corporation or P-1 by Moody's Investors Service, Inc. and whose long-term
securities are rated at least "A" by Standard & Poor's Corporation or by Moody's
Investors Service, Inc. (such bank, an "ELIGIBLE BANK");
(c) commercial paper, of an issuer whose long-term securities are rated at
least "A" by Standard & Poor's Corporation or by Moody's Investors Service,
Inc., that is rated at least A-1 by Standard & Poor's Corporation or P-1 by
Moody's Investors Service, Inc. and having a tenor of not more than six (6)
months.
"CD ASSESSMENT RATE" means, for any day, the actual, if known, or the
estimated, if the actual rate is not known, assessment rate percentage
(expressed as a decimal rounded upwards, if necessary, to the next higher
1/100th of 1%) determined by the Lender to be payable on such day to the FDIC,
excluding any refund, for insuring the liability of the Lender for time
deposits.
7
<PAGE>
"CD BASE RATE" means the rate per annum for national secondary market
certificates of deposit on the first day of the applicable Interest Period as
quoted by the Lender and confirmed in Federal Reserve Board Statistical Release
H.15 (519) or any successor or substitute publication selected by the Lender for
a maturity equal to the Interest Period selected. If, for any reason, such rate
is not available, then "CD Base Rate" shall mean the rate per annum at which, in
the opinion of the Lender, the Lender can obtain funds in the national
certificate of deposit market in the amount of $5,000,000 at approximately 9:00
a.m. (Charlotte time), on the first day of an Interest Period for a maturity
equal to the Interest Period Selected.
"CD-BASED RATE" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Lender pursuant to the
following formula:
CD-Based Rate = CD BASE RATE + CD ASSESSMENT RATE
---------------------------------
1.00 - CD Reserve Percentage
"CD RATE LOAN" means any Loan bearing interest at a rate based upon the CD-
Based Rate as provided in Section 4.1(a).
"CD RESERVE PERCENTAGE" means, for any day, the percentage (expressed as a
decimal rounded upwards, if necessary, to the next higher 1/100th of 1%) which
is in effect for such day as prescribed by the Federal Reserve Board (or any
successor) for determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) for a member bank of
the Federal Reserve System in New York City in respect of new non-personal time
deposits in New York City having a maturity comparable to the Interest Period
selected and in an amount of $100,000 or more.
"CHANGE IN CONTROL" shall have the meaning assigned thereto in Section
11.1(i).
"CLOSING DATE" means the date of this Agreement or such later date on which
the Lender shall have determined that all conditions precedent set forth in
Article VI of this Agreement have been satisfied in full or waived.
"CODE" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"COMMITMENT" means the obligation of the Lender to make Loans to and issue
or participate in Letters of Credit issued for the account of the Borrower
hereunder and to finance Acceptances for the account of the Borrower hereunder
in an aggregate amount at any time outstanding not to exceed the Aggregate
Commitment, as the
8
<PAGE>
same may be reduced or modified at any time or from time to time pursuant to
Section 2.5.
"CONSOLIDATED" means, when used with reference to financial statements or
financial statement items of the Borrower and its Subsidiaries, such statements
or items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
"CONTINGENT OBLIGATIONS" means, as to any Person, (a) any Guarantee of that
Person; and (b) any direct or indirect obligation or liability, contingent or
otherwise, of that Person, (i) in respect of any letter of credit or similar
instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings, (ii) to purchase any materials,
supplies or other property from, or to obtain the services of, another Person if
the relevant contract or other related document or obligation requires that
payment for such materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such materials, supplies or
other property is ever made or tendered, or such services are ever performed or
tendered, or (iii) in respect of any Hedging Agreement that is not entered into
in connection with a bona fide hedging operation that provides offsetting
benefits to such Person. The amount of any Contingent Obligation shall, relating
to any Guarantee, be deemed equal to the maximum reasonably anticipated
liability in respect thereof, and shall, with respect to item (b)(iii) of this
definition, be marked to market on a current basis.
"CURRENT LIABILITIES" means, with respect to the Borrower and its
Subsidiaries at a particular date, all amounts which would, in conformity with
GAAP, be included under current liabilities on a Consolidated balance sheet of
the Borrower and its Subsidiaries as at such date, but in any event including
the amount of (a) all Debt of any such Person payable on demand or, at the
option of the Person to whom such Debt is owed, not more than twelve months
after such date, (b) any payments in respect of any Debt of any such Person
(whether installment, serial maturity or sinking fund payments or otherwise)
required to be made not more than twelve months after such date, and (c) all
reserves in respect of liabilities or Debt payable on demand or, at the option
of the Person to whom such Debt is owed, not more than twelve months after such
date, the validity of which is contested at such date.
"DEBT" means all liabilities, obligations and indebtedness at any date of
the Borrower and its Subsidiaries of any and every kind and nature, whether now
or hereafter owing or arising and whether primary, secondary, direct,
contingent, fixed or otherwise and whether matured or unmatured, including
without limitation: (a) all obligations for borrowed money (including all notes
payable and drafts accepted representing extensions of credit) and all
obligations evidenced by bonds, debentures, notes or other similar
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instruments on which interest charges are customarily paid; (b) all obligations,
contingent or otherwise, relative to the face amount of all letters of credit,
whether or not drawn, and banker's acceptances issued for the account of the
Borrower and its Subsidiaries; (c) all Capital Lease Obligations; (d) all
obligations to pay the deferred purchase price of property or services, and all
indebtedness secured by a Lien on property owned by the Borrower and its
Subsidiaries whether or not such indebtedness shall have been assumed by the
Borrower and its Subsidiaries or is limited in recourse; (e) all obligations
arising under consulting and non-compete agreements entered into by any Person
with, or for the benefit of, the Borrower and its Subsidiaries; (f) all
liabilities, obligations and indebtedness to trade creditors; (g) all Contingent
Obligations of the Borrower and its Subsidiaries; and (h) all net obligations
under any interest rate cap, collar, swap or other similar interest rate hedging
arrangements.
"DEFAULT" means any of the events specified in Section 11.1 which with the
passage of time, the giving of notice or any other condition, would constitute
an Event of Default.
"DOLLARS" and "$" means dollars in lawful currency of the United States of
America.
"DRAFT" shall have the meaning specified in Section 3.2.
"ELIGIBLE BANK" has the meaning specified in the definition of the term
"Cash Equivalents".
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is maintained for employees of the Borrower
or any ERISA Affiliate or (b) has at any time within the preceding six years
been maintained for the employees of the Borrower or any current or former ERISA
Affiliate.
"ENVIRONMENTAL LAWS" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et. seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 331 et. seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et. seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et. seq.), the
Clean Air Act (42 U.S.C. Section 7401 et. seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et. seq.), the Safe Drinking Water Act (42 U.S.C.
Section 300, et. seq.), the Environmental Protection Agency's regulations
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relating to underground storage tanks (40 C.F.R. Parts 280 and 281), and the
Occupational Safety and Health Act (29 U.S.C. Section 651 et. seq.), and the
rules and regulations thereunder, each as amended, modified or supplemented from
time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, and the
rules and regulations thereunder, each as amended, modified or supplemented from
time to time.
"ERISA AFFILIATE" means any Person, who together with the Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"EVENT OF DEFAULT" means any of the events specified in Section 11.1;
PROVIDED, that any requirement for passage of time, giving of notice or any
other condition has been satisfied.
"EXTENSIONS OF CREDIT" means any advance, extension of credit, or other
financial accommodation extended by the Lender to or for the benefit of the
Borrower or any of its Subsidiaries at any time pursuant to this Agreement,
including any and all Loans, Letters of Credit, and Acceptances from time to
time outstanding.
"FACILITY AMOUNT" means Twenty-five Million Dollars
($25,000,000).
"FEDERAL FUNDS RATE" means, for any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published at 11:00 a.m. (Charlotte time) for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it.
"FISCAL YEAR" means the fiscal year of the Borrower ending on May 31.
"FRANCS" and "L" means francs in lawful currency of the Republic of France.
"GAAP" means generally accepted accounting principles, as recognized by the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, consistently applied and maintained on a consistent basis for
the Borrower and its Subsidiaries throughout the period indicated and consistent
with the prior financial practice of the Borrower and its Subsidiaries.
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"GOVERNMENTAL APPROVALS" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"GOVERNMENTAL AUTHORITY" means any nation, province, state or other
political subdivision thereof, and any government or any Person exercising
executive, legislative, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"GUARANTEE" means, without duplication, any obligation, contingent or
otherwise, of the Borrower or any of its Subsidiaries pursuant to which the
Borrower or any of its Subsidiaries has directly or indirectly guaranteed any
indebtedness, liability or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of the Borrower or any of its Subsidiaries (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
indebtedness, liability or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
condition or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such indebtedness, liability or other obligation of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part); PROVIDED, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"HAZARDOUS MATERIALS" means any substances or materials (a) which are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (b) which are
toxic, explosive, corrosive, flammable, infectious, radioactive, mutagenic or
otherwise hazardous and are or become regulated by any Governmental Authority,
(c) the presence of which require investigation or remediation under any
Environmental Law or common law, (d) which are deemed to constitute a nuisance,
a trespass or pose a health or safety hazard to persons or neighboring
properties, (e) which are materials consisting of underground or aboveground
storage tanks, whether empty, filled or partially filled with any substance, or
(f) which contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"HEDGING AGREEMENT" means any agreement with respect to an interest rate
swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Borrower under this Agreement, and any
confirming
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letter executed pursuant to such hedging agreement, all as amended or modified.
"INTEREST PERIOD" shall have the meaning assigned thereto in Section
5.1(b).
"LENDER" means First Union National Bank of North Carolina, a national
banking association organized under the laws of the United States, its
successors and assigns.
"LETTER OF CREDIT AGREEMENT" means any letter of credit application and
agreement, reimbursement agreement, or similar document or agreement, in form
and substance satisfactory to the Lender, executed by the Borrower in connection
with the issuance of any Letter of Credit.
"LETTER OF CREDIT" means any Trade Letter of Credit or any Standby Letter
of Credit issued by the Lender for the account of the Borrower pursuant to
Section 4.03.
"LETTER OF CREDIT OBLIGATIONS" means any Obligations arising out of any
Letter of Credit Agreement, Application, or otherwise arising pursuant to any
Letter of Credit.
"LIBOR RATE" means (a) LIBOR DIVIDED BY (b) one (1) MINUS the Reserve
Percentage. For purposes of this definition: "LIBOR" means that rate per annum
at which, in the opinion of the Lender, U.S. Dollars in the amount equal to the
applicable Principal Component are being offered to leading banks at
approximately 11:00 a.m. London time two Business Days prior to the commencement
of the applicable Interest Period for settlement in immediately available funds
by leading banks in the London interbank market for a period equal to the
applicable Interest Period; and "Reserve Percentage" means the daily arithmetic
reserve requirement imposed by the Board of Governors of the Federal Reserve
System (or any successor) under Regulation D on eurocurrency liabilities (as
defined in Regulation D) for the applicable Interest Period as of the first day
of such Interest Period, but subject only to any changes in such reserve
requirement becoming effective during the Interest Period. For purposes of
calculating the Reserve Percentage, the reserve requirement shall be as set
forth in Regulation D without benefit of credit for prorations, exemptions or
offsets under Regulation D, and further without regard to whether or not the
Lender elects to actually fund any Loan or portion thereof with eurocurrency
liabilities.
"LIBOR RATE LOAN" means any Loan bearing interest at a rate determined with
reference to the LIBOR Rate as provided in Section 2.6 hereof.
"LIEN" means, with respect to any asset, any mortgage, deed of trust, lien,
pledge, charge, security interest or encumbrance of
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any kind in respect of such asset. For the purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other title retention agreement relating to such
asset.
"LOAN" means any revolving credit loan made or to be made to the Borrower
pursuant to Section 2.1, and all such Loans collectively as the context
requires.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Applications, the Acceptance Agreements, any Hedging Agreement executed by the
Lender, and each other document, instrument and agreement executed and delivered
by the Borrower, its Subsidiaries or their counsel in connection with this
Agreement, all as amended, modified or supplemented from time to time.
"MATERIAL ADVERSE EFFECT" means, with respect to the Borrower or any of
its Subsidiaries, a material adverse effect on any of (a) the properties,
business, prospects, operations or condition (financial or otherwise) of such
Persons taken as a whole; (b) the ability of any such Person to perform its
obligations under the Loan Documents or Material Contracts, in each case to
which it is a party; or (c) the legality, validity, binding effect, or
enforceability of any Loan Document.
"MATERIAL CONTRACT" means (a) any contract or other agreement, written or
oral, of the Borrower or any of its Subsidiaries involving monetary liability to
any such Person in an amount in excess of $2,000,000 per annum, or (b) any other
contract or agreement, written or oral, of the Borrower or any of its
Subsidiaries the failure to comply with which could reasonably be expected to
have a Material Adverse Effect; PROVIDED that Material Contract shall not
include (i) any contract or agreement terminable by the Borrower or any of its
Subsidiaries in accordance with its terms upon notice of thirty (30) days or
less without liability for further payment other than a nominal penalty or (ii)
any purchase contract or purchase order entered into by the Borrower for the
purchase of electronic components and tools for resale in the ordinary course of
the Borrower's business.
"MAXIMUM RATE" shall have the meaning assigned thereto in Section 5.1(f).
"MOODY'S" means Moody's Investors Service, Inc. or any successor rating
agency thereof.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions within the preceding six (6)
years.
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"NET INCOME" means, for any period, the Consolidated net income (or loss)
of the Borrower and its Subsidiaries for such period determined in accordance
with GAAP; PROVIDED, that there shall be excluded from net income any gain or
credit of an extraordinary nature.
"NET LOSS" means, in the event that Net Income is less than $0.00, the
(positive) amount by which Net Income is less than $0.00.
"NOTES" means the separate Revolving Credit Notes made by the Borrower
payable to the order of the Lender, substantially in the form of EXHIBIT A
hereto, evidencing the Revolving Credit Loan Facility, and any amendments,
modifications and supplements thereto, any substitutes therefor, and any
replacements, restatements, renewals or extensions thereof, in whole or in part.
"OBLIGATIONS" means, in each case, whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing
after the filing of any bankruptcy or similar petition) the Loans, (b) the
Letter of Credit Obligations, (c) the Acceptance Obligations, (d) all payment
and other obligations owing by the Borrower to the Lender under any Hedging
Agreement, and (e) all other fees (including attorney's fees), commissions,
charges, indebtedness, loans, liabilities, financial accommodations,
obligations, covenants and duties owing by the Borrower to the Lender, of every
kind, nature and description, direct or indirect, absolute or contingent, due or
to become due, contractual or tortious, liquidated or unliquidated, and whether
or not evidenced by any note, and whether or not for the payment of money under
or in respect of this Agreement, the Note, any Letter of Credit, any Acceptance,
or any of the other Loan Documents.
"OPERATING LEASE" means any lease which the Borrower or its Subsidiaries,
as lessee thereunder, is not, under GAAP, required to classify as a Capital
Lease for financial reporting purposes.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.
"PENSION PLAN" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of
the Code and which (a) is maintained for employees of the Borrower or any ERISA
Affiliate or (b) has at any time within the preceding six years been maintained
for the employees of the Borrower or any of their current or former ERISA
Affiliates.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust, business trust, joint venture, joint stock company,
pool, syndicate, sole propri-
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etorship, unincorporated organization, Governmental Authority or any other form
of entity not specifically listed herein.
"PRIME RATE" means, at any time, the rate of interest per annum publicly
announced from time to time by the Lender as its prime rate. Each change in the
Prime Rate shall be effective as of the opening of business on the day such
change in the Prime Rate occurs. The parties hereto acknowledge that the rate
announced publicly by the Lender as its Prime Rate is an index or base rate and
shall not necessarily be its lowest rate charged to its customers.
"REQUIREMENT OF LAW" means, as to any Person, any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"REVOLVING CREDIT LOAN FACILITY" means the revolving credit loan facility
established by the Lender under Article II hereof.
"SOLVENT" means, as to any Person on a particular date, that such Person
(a) has capital sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage and is able to pay its
debts as they mature, (b) owns property having a value, both at fair valuation
and at present fair saleable value, greater than the amount required to pay its
probable liabilities (including contingencies), and (c) does not believe that it
will incur debts or liabilities beyond its ability to pay such debts or
liabilities as they mature.
"SUBSIDIARY" means as to any Person, any corporation, partnership or other
entity of which more than fifty percent (50%) of the outstanding capital stock
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity is at the time, directly or indirectly, owned by or the management
is otherwise controlled by such Person (irrespective of whether, at the time,
capital stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency). Unless
otherwise qualified references to "Subsidiary" or "Subsidiaries" herein shall
refer to those of the Borrower.
"SUBORDINATED DEBT" means any Debt of Borrower or any Subsidiary
subordinated in right and time of payment to the Obligations on terms
satisfactory to the Lender.
"STANDARD & POOR'S" means Standard & Poor's Corporation and any successor
rating agency thereof.
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"STANDBY LETTER OF CREDIT" means any "clean" or documentary standby letter
of credit from time to time issued by the Lender and outstanding for the account
of the Borrower.
"STANDBY LETTER OF CREDIT COMMITMENT" means Eight Million Five Hundred
Thousand Dollars ($8,500,000).
"STANDBY LETTER OF CREDIT OBLIGATIONS" means any Obligations arising out of
any Letter of Credit Agreement relating to a Standby Letter of Credit, any
Application relating to a Standby Letter of Credit, or otherwise arising
pursuant to any Standby Letter of Credit.
"TANGIBLE NET WORTH" means with respect to the Borrower and its
Subsidiaries the excess of total assets over total liabilities, total assets and
total liabilities each to be determined in accordance with GAAP consistent with
those applied in the preparation of the Consolidated financial statements
referred to in Section 5.1, EXCLUDING, HOWEVER, from the determination of total
assets (i) goodwill, organizational expenses, research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other similar intangibles, (ii) all prepaid expenses,
deferred charges or unamortized debt discount and expenses, (iii) all reserves
carried and not deducted from assets, (iv) treasury stock and capital stock,
obligations or other securities of, or capital contributions to, or investments
in, any Subsidiary, (v) securities which are not readily marketable, (vi) cash
held in a sinking or other analogous fund established for the purpose of
redemption, retirement or prepayment of capital stock or indebtedness, (vii) any
write-up in the book value of any asset resulting from a revaluation thereof
subsequent to August 31, 1995, and (viii) any items not included in clauses (i)
through (vii) above which are treated as intangibles in conformity with GAAP.
"TERMINATION DATE" means September 30, 1998.
"TERMINATION EVENT" means: (a) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder, (b) the withdrawal of the
Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a)(2) or 4068(f) of
ERISA, (c) the termination of a Pension Plan, the filing of a notice of intent
to terminate a Pension Plan or the treatment of a Pension Plan amendment as a
termination under Section 4041 of ERISA, (d) the institution of proceedings to
terminate, or the appointment of a trustee with respect to, any Pension Plan by
the PBGC, (e) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan, (f) the partial or complete withdrawal of the
Borrower or any ERISA Affiliate from a Multiemployer Plan, (g) the imposition of
a Lien pursuant to
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Section 412 of the Code or Section 302 of ERISA, (h) any event or condition
which results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA or (i) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"TOTAL LIABILITIES" of the Borrower and it Subsidiaries on a Consolidated
basis means all obligations which in accordance with GAAP would be included in
determining total liabilities as shown on the liabilities side of a balance
sheet of such Person, including, without limitation, all Debt of such Person.
"TRADE LETTER OF CREDIT" means any commercial documentary trade letter of
credit issued by the Lender pursuant to this Agreement for the account of the
Borrower for the purchase of goods in the ordinary course of business.
"TRADE LETTER OF CREDIT COMMITMENT" means Fifteen Million Dollars
($15,000,000).
"TRADE LETTER OF CREDIT OBLIGATIONS" means any Obligations arising out of
any Letter of Credit Agreement relating to a Trade Letter of Credit, any
Application relating to a Trade Letter of Credit, or otherwise arising pursuant
to any Trade Letter of Credit.
"UCC" means the Uniform Commercial Code as in effect in the State of North
Carolina
"UNIFORM CUSTOMS" means the Uniform Customs and Practice for Documentary
Credits (1983 Revision), International Chamber of Commerce Publication No. 400,
and, after January 1, 1994, if referenced in the Application, the Uniform
Customs and Practice for Documentary Credits (1994 Revision), International
Chamber of Commerce Publication No. 500.
"UNITED STATES" and "U.S." each mean the United States of America.
SECTION 1.2. GENERAL. All terms of an accounting nature not specifically
defined herein shall have the meaning assigned thereto by GAAP. Unless
otherwise specified, a reference in this Agreement to a particular section,
subsection, Schedule or Exhibit is a reference to that section, subsection,
Schedule or Exhibit of this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include the
singular and plural, and pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, the feminine and the neuter. Any reference
herein to "Charlotte time" shall refer to the applicable time of day in
Charlotte, North Carolina.
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SECTION 1.3. OTHER DEFINITIONS AND PROVISIONS.
(a) USE OF CAPITALIZED TERMS. Unless otherwise defined therein, all terms
defined in this Agreement shall have the defined meanings when used in the Note
and the other Loan Documents or any certificate, report or other document made
or delivered pursuant to this Agreement.
(b) MISCELLANEOUS. The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
ARTICLE II
REVOLVING CREDIT LOAN FACILITY
SECTION 2.1. REVOLVING CREDIT LOANS. Subject to the terms and conditions
of this Agreement, the Lender agrees to make Loans to the Borrower from time to
time from the Closing Date through the Termination Date as requested by the
Borrower in accordance with the terms of Section 2.2; PROVIDED, that the
aggregate principal amount of all outstanding Loans (after giving effect to any
amount requested) shall not exceed the Aggregate Commitment LESS the Letter of
Credit Obligations LESS the Acceptance Facility Obligations. Subject to the
terms and conditions hereof, the Borrower may borrow, repay and reborrow Loans
hereunder until the Termination Date.
SECTION 2.2. PROCEDURE FOR ADVANCES OF LOANS.
(a) REQUESTS FOR BORROWING. The Borrower shall give the Lender
irrevocable prior written notice in the form attached hereto as EXHIBIT B (a
"Notice of Borrowing") not later than 2:00 p.m. (Charlotte time) (i) on the same
Business Day as each Base Rate Loan, (ii) at least two (2) Business Days before
each CD Rate Loan and (iii) at least three (3) Business Days before each LIBOR
Rate Loan, of its intention to borrow, specifying (A) the date of such
borrowing, which shall be a Business Day, (B) the amount of such borrowing,
which shall be (x) with respect to Base Rate Loans in an aggregate principal
amount of $1,000,000 or a whole multiple of $500,000 in excess thereof, (y) with
respect to CD Rate Loans in an aggregate principal amount of $1,000,000 or a
whole multiple of $500,000 in excess thereof, and (z) with respect to LIBOR Rate
Loans in an aggregate principal amount of $1,000,000 or a whole multiple of
$500,000 in excess thereof, (C) whether the Loans are to be LIBOR Rate Loans,
Base Rate Loans, or CD Rate Loans, and (D) in the case of a LIBOR Rate Loan or a
CD Rate Loan, the duration of the Interest Period applicable thereto. Notices
received after 2:00 p.m. (Charlotte time) shall be deemed received on the next
Business Day.
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(b) DISBURSEMENT OF LOANS. Not later than 5:00 p.m. (Charlotte time) on
the proposed borrowing date, the Lender will make available at the office of the
Lender in funds immediately available to the Lender, the amount of the Loans to
be made on such borrowing date. The Borrower hereby irrevocably authorizes the
Lender to disburse the proceeds of each borrowing requested pursuant to this
Section 2.2 in immediately available funds by crediting such proceeds to a
deposit account of the Borrower maintained with the Lender or by wire transfer
to such account as may be agreed upon by the Borrower and the Lender from time
to time.
SECTION 2.3. REPAYMENT OF LOANS.
(a) REPAYMENT ON TERMINATION DATE. The Borrower shall repay the
outstanding principal amount of all Loans in full, together with all accrued but
unpaid interest thereon, on the Termination Date.
(b) MANDATORY REPAYMENT OF EXCESS LOANS. If at any time the outstanding
principal amount of all Loans exceeds the Aggregate Commitment LESS the Letter
of Credit Obligations LESS the Acceptance Facility Obligations, the Borrower
shall repay immediately upon notice from the Lender, by payment to the Lender
for the account of the Lender, the Loans in an amount equal to such excess.
Each such repayment shall be accompanied by accrued interest on the amount
repaid and any amount required to be paid pursuant to Section 5.7 hereof.
(c) OPTIONAL REPAYMENTS. The Borrower may at any time and from time to
time repay the Loans, in whole or in part, upon at least three (3) Business
Days' irrevocable notice to the Lender with respect to LIBOR Rate Loans and CD
Rate Loans and one (1) Business Day irrevocable notice with respect to Base Rate
Loans, specifying the date and amount of repayment and whether the repayment is
of LIBOR Rate Loans, CD Rate Loans, Base Rate Loans, or a combination thereof,
and, if of a combination thereof, the amount allocable to each. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date set forth in such notice. Partial repayments shall be in the
applicable minimum amounts for borrowings specified in Section 2.2(a).
(d) LIMITATION ON REPAYMENT OF LIBOR RATE LOANS AND CD RATE LOANS. The
Borrower may not repay any LIBOR Rate Loan or any CD Rate Loan on any day other
than on the last day of the Interest Period applicable thereto unless such
repayment is accompanied by any amount required to be paid pursuant to Section
5.7 hereof.
SECTION 2.4. REVOLVING CREDIT NOTES. The Lender's Loans and the
obligation of the Borrower to repay such Loans shall be evidenced by a Note
executed by the Borrower payable to the order of the Lender representing the
Borrower's obligation to pay the
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Lender's Commitment or, if less, the aggregate unpaid principal amount of all
Loans made and to be made by the Lender to the Borrower hereunder, PLUS interest
and all other fees, charges and other amounts due thereon. Each Note shall be
dated the date hereof and shall bear interest on the unpaid principal amount
thereof at the applicable interest rate per annum specified in Section 5.1.
SECTION 2.5. PERMANENT REDUCTION OF THE AGGREGATE COMMITMENT.
(a) The Borrower shall have the right at any time and from time to time,
upon at least five (5) Business Days prior written notice to the Lender, to
permanently reduce, in whole at any time or in part from time to time, without
premium or penalty, the Aggregate Commitment in an aggregate principal amount
not less than $500,000 or any whole multiple of $100,000 in excess thereof. The
amount of each partial permanent reduction shall be applied PRO RATA to reduce
the remaining mandatory reduction amounts required under Section 2.5(b).
(b) Each permanent reduction permitted or required pursuant to this
Section 2.5 shall be accompanied by a payment of principal sufficient to reduce
the aggregate outstanding Extensions of Credit of the Lender after such
reduction to the Aggregate Commitment as so reduced and by payment of accrued
interest on the amount of such repaid principal. Any reduction of the Aggregate
Commitment to zero shall be accompanied by payment of all outstanding
Obligations (and furnishing of cash collateral satisfactory to the Lender for
all Letter of Credit Obligations) and, if such reduction is permanent,
termination of the Commitments and the Revolving Credit Loan Facility. Such
cash collateral shall be applied in accordance with Section 11.2(b). If the
reduction of the Aggregate Commitment requires the repayment of any LIBOR Rate
Loan or CD Rate Loan, such reduction may be made only on the last day of the
then current Interest Period applicable thereto unless such repayment is
accompanied by any amount required to be paid pursuant to Section 5.7 hereof.
SECTION 2.6. TERMINATION OF CREDIT FACILITY. The Credit Facility shall
terminate on the earliest of (a) the Termination Date, (b) the date of
termination by the Borrower pursuant to Section 2.5(a), and (c) the date of
termination by the Lender on pursuant to Section 11.2.
SECTION 2.7. USE OF PROCEEDS. The Borrower shall use the proceeds of the
Loans solely for working capital and general corporate requirements of the
Borrower and its Subsidiaries, including the payment of certain fees and
expenses incurred in connection with the transactions contemplated herein.
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ARTICLE III
ACCEPTANCE FACILITY
SECTION 3.1. AVAILABILITY. On the terms and conditions contained herein
and in any applicable Acceptance Agreement, the Borrower may, from the Closing
Date through the Termination Date, present drafts for acceptance by the Lender
to finance specified shipments of goods, whether import, export or domestic
shipment; PROVIDED, THAT the Lender shall not be obligated to accept any draft
if the Acceptance Facility Obligations shall exceed the Aggregate Commitment
LESS the aggregate principal amount of all outstanding Loans LESS the Letter of
Credit Obligations.
SECTION 3.2. ACCEPTANCE PROCEDURES. The Borrower may request an
acceptance pursuant to Section 3.1 of any draft drawn by such Person on the
Lender to finance a specific shipment of goods (as presented, a "DRAFT", and as
accepted by the Lender, an "ACCEPTANCE") by satisfying the following conditions:
(a) giving the Lender at least two (2) Business Days' prior notice of the
requested Acceptance, which notice shall be in writing or shall be by telephone
or telecopy and confirmed promptly in writing, and which notice shall specify
(i) the date on which the acceptance of the Draft is desired (the proposed
"ACCEPTANCE DATE"), (ii) the aggregate principal amount of the presented Draft,
and (iii) whether the Lender should complete and deliver a pre-signed blank
draft in its possession for the proposed Acceptance, and if so, specifying the
proposed amount, issuance date and maturity date;
(b) delivering to the Lender (unless already done so) a duly executed
Acceptance Agreement and such other documents and agreements as may be
referenced therein; and
(c) delivering to the Lender the specified Draft and an eligibility
certificate describing the underlying goods and indicating their origin and
destination or other evidence of the underlying transaction, each in such form
and substance as may be acceptable to the Lender. Each Draft shall be for an
integral multiple of $100,000 in an amount that is not less than $1,000,000. No
Draft shall be dated or accepted more than thirty (30) days before or more than
thirty (30) days after the date of the shipment of goods to which it relates.
Each Draft shall mature on a Business Day, which shall be at least thirty (30)
days after the Acceptance Date. No Draft shall mature (x) more than 180 days
after the Acceptance Date, or (y) later than is reasonably estimated to be
required to complete the underlying transaction.
SECTION 3.3. ELIGIBLE ACCEPTANCES. Each Draft shall relate to one or more
specific transactions involving the importation or exportation of goods or the
domestic shipment of goods within the
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United States. The goods relating to each Draft shall have a c.i.f. value
equaling or exceeding the amount of the Draft, shall be of good and merchantable
quality, shall be fully insured in accordance with prudent industry practice and
shall not be the subject of any security interest granted by the Borrower. No
other source shall have financed the transaction underlying the Draft. The
Borrower shall have procured all import, export and other licenses essential to
the underlying transaction and shall have complied with all applicable laws
pertaining to the underlying goods and transaction. Each Draft shall qualify
(upon acceptance) in all respects with the requirements for eligibility for
discount of the Federal Reserve Banks of the United States. With regard to each
Draft presented by itself, the Borrower represents and warrants to the Lender
that, as of the date of presentment, the Draft and underlying goods and
transaction conform to the requirements of this subsection, and the Borrower
covenants and agrees that it will continue to conform to those requirements for
so long as the Acceptance is outstanding.
SECTION 3.4. LIMITATION OF LIABILITY OF THE LENDER. Neither the Lender
nor any of its affiliates, correspondents, participants or designees, or any of
their respective officers, directors or employees, shall be responsible or have
any liability for: (i) the existence, character, quantity, quality, condition,
packing, value or delivery of any goods or other property relating to any Draft
or Acceptance; (ii) the validity, sufficiency or genuineness of any documents or
endorsements or other notations thereon; (iii) the time, place, manner or order
in which shipment is made; (iv) any insurance or insurer; or (v) any act or
omission of any shipper, warehouseman, carrier, correspondent or other party
involved in any transaction related to any Draft or Acceptance.
SECTION 3.5. CHANGED CIRCUMSTANCES. If, on or before the date off
acceptance of any Draft, the Lender shall have determined (which determination
shall be final, conclusive and binding on the Borrower) that (a) it is
impermissible for the Lender to accept any Draft due to the introduction of any
Requirement of Law or any change in or in the interpretation or administration
thereof has made it unlawful, or that any central bank or other Governmental
Authority has asserted that it is unlawful, for the Lender to make or extend any
Acceptance, or any order, judgment, or decree of any Governmental Authority or
arbitrator purports by its terms to enjoin or restrain the Lender from making or
extending any Acceptance, (b) acceptances in amounts or for durations
corresponding to the proposed Acceptance(s) are not being readily traded in the
applicable market, or (c) by reason of changes affecting the applicable market,
the discount rate to be in effect for that period will not adequately and fairly
reflect the cost to the Lender of accepting or discounting the Draft, then the
Lender shall be under no obligation to accept the requested Draft
notwithstanding anything to the contrary in this Article III. The Lender shall
notify the Borrower in the event the Lender makes such a
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determination; PROVIDED, HOWEVER, that the failure to give such notice shall not
affect the validity of that determination or the rejection of any Draft
submitted for acceptance. No determination made under this subsection, however,
shall in and of itself reduce the unused portion of the Aggregate Commitment or
limit the Borrower's ability to request other Extensions of Credit hereunder in
accordance with the terms and provisions of this Agreement.
SECTION 3.6. DISCOUNT AND COMMISSIONS. The discount and commissions
payable by the Borrower to the Lender for each Draft shall be as specified by
the Lender from time to time and will be based upon the Acceptance Rate PLUS the
Applicable Margin as provided in Section 5.1. Unless a different rate is
otherwise expressly provided in any Acceptance Agreement, any amount not paid by
the Borrower to the Lender on the maturity date of any Acceptance, including the
face amount of any Acceptance and any charges and expenses relating thereto,
shall bear interest at the per annum rate equal to the Base Rate plus two
percent (2.0%).
ARTICLE IV
LETTER OF CREDIT FACILITY
SECTION 4.1. LETTER OF CREDIT COMMITMENT. Subject to the terms and
conditions hereof, the Lender agrees for the account of the Borrower on any
Business Day from the Closing Date through the Termination Date, (a) to issue
Letters of Credit for the account of the Borrower, (b) to amend any Letters of
Credit in accordance with Section 4.5 and (c) to honor drafts under the Letters
of Credit in accordance with the terms thereof; PROVIDED, HOWEVER, that:
(A) each Trade Letter of Credit shall have an expiration date not
later than the earlier of six (6) months after the date of issuance thereof
or the Termination Date;
(B) each Standby Letter of Credit shall have an expiration date not
later than the earlier of twelve (12) months after the date of issuance
thereof or the Termination Date;
(C) the Trade Letter of Credit Obligations shall not exceed the Trade
Letter of Credit Commitment;
(D) the Standby Letter of Credit Obligations shall not exceed the
Standby Letter of Credit Commitment;
(E) the face or stated amount of such Letter of Credit together with
the amount of all other Letter of Credit Obligations shall not exceed the
Aggregate Commitment LESS the aggregate principal amount of all outstanding
Loans LESS the Acceptance Facility Obligations;
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(F) the Available Commitment of the Lender shall be greater than
zero;
(G) each Letter of Credit shall be denominated in Dollars in a
minimum amount of $100,000 and whole multiples of $50,000 in excess
thereof;
(H) each Letter of Credit shall provide for drafts in form and
substance acceptable to the Lender and shall be otherwise in form and
substance acceptable to the Lender; and
(I) each Letter of Credit shall be subject to Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of North
Carolina.
The Lender shall not at any time be obligated to issue any Letter of Credit
hereunder if such issuance would conflict with, or cause the Lender to exceed
any limits imposed by, any Applicable Law. References herein to "issue" and
derivations thereof with respect to Letters of Credit shall also include
extensions or modifications of any existing Letters of Credit, unless the
context otherwise requires.
SECTION 4.2. LETTER OF CREDIT AGREEMENT. Each Letter of Credit shall be
issued pursuant to a Letter of Credit Agreement or other agreement in form and
substance satisfactory to the Lender.
SECTION 4.3. PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT.
(a) The Borrower may from time to time request that the Lender issue a
Letter of Credit by delivering to the Lender at the Lender's Office an
Application therefor, completed to the satisfaction of the Lender, and such
other certificates, documents and other papers and information as the Lender may
request. Each Application for the issuance of a Letter of Credit shall be in
writing (including by telecopy, confirmed immediately in writing), and shall
specify: (i) the proposed date of issuance (which shall be a Business Day);
(ii) the face amount of the Letter of Credit; (iii) the date of expiration of
the Letter of Credit; (iv) the name and address of the beneficiary thereof; (v)
the documents to be presented by the beneficiary of the Letter of Credit in case
of any drawing thereunder; (vi) the full text of any certificate to be presented
by the beneficiary in case of any drawing thereunder; and (vii) such other
matters as the Lender may request.
(b) Upon receipt of any Application, the Lender shall process such
Application and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall, subject to Section 4.1 and Article VI hereof, promptly
issue the Letter of Credit requested thereby (but in no event shall the Lender
be required to issue any Letter of Credit earlier than three (3) Business Days
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after its receipt of the Application therefor and all such other certificates,
documents and other papers and information relating thereto) by issuing the
original of such Letter of Credit to the beneficiary thereof or as otherwise may
be agreed by the Lender and the Borrower. The Lender shall furnish to the
Borrower a copy of such Letter of Credit promptly following the issuance of such
Letter of Credit.
SECTION 4.4. ISSUANCE FEES. The Borrower shall pay the Lender an issuance
fee calculated on an annual basis with respect to each Standby Letter of Credit
and each Trade Letter of Credit in such amounts customarily charged by the
Lender from time to time, said fees to be payable quarterly in arrears on the
last Business Day of each fiscal quarter of the Borrower and on the Termination
Date.
SECTION 4.5. AMENDMENT OF LETTERS OF CREDIT. From time to time during the
term of any Letter of Credit, the Lender shall, upon the written request of the
Borrower in form and substance satisfactory to the Lender, accompanied by
payment of an amendment fee as specified from time to time by the Lender, amend
any Letter of Credit; PROVIDED that the Lender shall be under no obligation to
amend any Letter of Credit if:
(a) the face amount thereof is to be increased pursuant to a request
received by the Lender after the Termination Date;
(b) the Lender would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms of this Agreement; or
(c) the beneficiary does not accept the Letter of Credit as amended.
SECTION 4.6. REIMBURSEMENT OBLIGATION OF THE BORROWER. The Borrower
agrees to reimburse the Lender on each date on which the Lender notifies the
Borrower of the date and amount of a draft paid under any Letter of Credit for
the amount of (a) such draft so paid and (b) any taxes, fees, charges or other
costs or expenses incurred by the Lender in connection with such payment. Each
such payment shall be made to the Lender at its address for notices specified
herein in lawful money of the United States and in immediately available funds.
Interest shall be payable on any and all amounts remaining unpaid by the
Borrower under this Article IV from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in full
at the rate which would be payable on any outstanding Base Rate Loans which were
then overdue. If the Borrower fails to timely reimburse the Lender on the date
the Borrower receives the notice referred to in this Section 4.6, the Borrower
shall be deemed to have timely given a Notice of Borrowing hereunder to the
Lender requesting the Lender to make a Base Rate Loan on such date in an amount
equal to
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the amount of such drawing and, subject to the satisfaction or waiver of the
conditions precedent specified in Article VI, the Lender shall make Base Rate
Loans in such amount, the proceeds of which shall be applied to reimburse the
Lender for the amount of the related drawing and costs and expenses.
SECTION 4.7. OBLIGATIONS ABSOLUTE. The Borrower's obligations under this
Article IV (including without limitation the Reimbursement Obligation) shall be
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment which the Borrower may have or
have had against the Lender or any beneficiary of a Letter of Credit. The
Borrower also agrees with the Lender that the Lender shall not be responsible
for, and the Borrower's Reimbursement Obligation under Section 4.6 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of a Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Lender shall
not be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit, except for errors or omissions caused by
the Lender's gross negligence or willful misconduct. The Borrower agrees that
any action taken or omitted by the Lender under or in connection with any Letter
of Credit or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of care
specified in the Uniform Customs and, to the extent not inconsistent therewith,
the UCC shall be binding on the Borrower and shall not result in any liability
of the Lender to the Borrower. The responsibility of the Lender to the Borrower
in connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.
SECTION 4.8. EFFECT OF APPLICATION. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent with the
provisions of this Article IV, the provisions of this Article IV shall apply.
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ARTICLE V
GENERAL LOAN PROVISIONS
SECTION 5.1. INTEREST.
(a) INTEREST RATE OPTIONS.
(i) Subject to the provisions of this Section 5.1, at the election of
the Borrower, the aggregate principal balance of the Notes or any portion
thereof shall bear interest at the Base Rate, the LIBOR Rate, or the CD-Based
Rate PLUS, in each case, the Applicable Margin as set forth below in subsection
5.1(c). The Borrower shall select the rate of interest and Interest Period, if
any, applicable to any Loan at the time a Notice of Borrowing is given pursuant
to Section 2.2 or at the time a Notice of Conversion/Continuation is given
pursuant to Section 5.2. Each Loan or portion thereof bearing interest based on
the Base Rate shall be a "Base Rate Loan", each Loan or portion thereof bearing
interest based on the LIBOR Rate shall be a "LIBOR Rate Loan", and each Loan or
portion thereof bearing interest based on the CD-Based Rate shall be a "CD Rate
Loan". Any Loan or any portion thereof as to which the Borrower has not duly
specified an interest rate as provided herein shall be deemed a Base Rate Loan.
(ii) Subject to the provisions of this Section 4.1, at the election of
the Borrower, the aggregate principal balance of any Acceptance issued pursuant
to Article III hereof shall bear interest at the Acceptance Rate PLUS the
Applicable Margin as set forth below in subsection 5.1(c).
(b) INTEREST PERIODS. In connection with each LIBOR Rate Loan and CD Rate
Loan, the Borrower, by giving notice at the times described in Section 5.1(a),
shall elect an interest period (each, an "Interest Period") to be applicable to
such Loan, which Interest Period shall be a period of one (1), two (2), three
(3), six (6), nine (9) or twelve (12) months with respect to each LIBOR Rate
Loan and thirty (30), sixty (60), ninety (90), one hundred-eighty (180), two
hundred-seventy (270) or three hundred-sixty (360) days with respect to each CD
Rate Loan; PROVIDED that:
(i) the Interest Period shall commence on the date of advance of or
conversion to any LIBOR Rate Loan or CD Rate Loan and, in the case of
immediately successive Interest Periods, each successive Interest Period shall
commence on the date on which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; PROVIDED, that if any Interest Period with respect to a LIBOR Rate
Loan would otherwise expire on a day that is not a Business Day but is a day of
the month after
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which no further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate Loan that begins
on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period;
(iv) no Interest Period shall extend beyond the Termination Date; and
(v) there shall be no more than five (5) Interest Periods outstanding
at any time.
(c) APPLICABLE MARGIN. The Applicable Margin provided for in Section
5.1(a) with respect to the Loans and the Acceptances (the "Applicable Margin")
shall be determined as follows:
Applicable Margin Per Annum
BASE RATE + LIBOR RATE + CD-BASED RATE + ACCEPTANCE RATE +
- --------------------------------------------------------------------------------
0% .50% .50% .50%
(d) DEFAULT RATE. Upon the occurrence and during the continuance of an
Event of Default, (i) the Borrower shall no longer have the option to request
LIBOR Rate Loans or CD Rate Loans, (ii) all outstanding LIBOR Rate Loans and CD
Rate Loans shall bear interest at a rate per annum two percent (2%) in excess of
the rate then applicable to LIBOR Rate Loans or CD Rate Loans, as applicable,
until the end of the applicable Interest Period and thereafter at a rate equal
to two percent (2%) in excess of the rate then applicable to Base Rate Loans,
and (iii) all outstanding Base Rate Loans shall bear interest at a rate per
annum equal to two percent (2%) in excess of the rate then applicable to Base
Rate Loans. Interest shall continue to accrue on the Notes after the filing by
or against the Borrower of any petition seeking any relief in bankruptcy or
under any act or law pertaining to insolvency or debtor relief, whether state,
federal or foreign.
(e) INTEREST PAYMENT AND COMPUTATION. Interest on each Base Rate Loan
shall be payable in arrears on the last Business Day of each fiscal month
commencing October 31, 1995; interest on each LIBOR Rate Loan shall be payable
on the last day of each Interest Period applicable thereto, and if such Interest
Period extends over one (1) month, at the end of each one (1) month interval
during such Interest Period; and interest on each CD Rate Loan shall be payable
on the last day of each Interest Period applicable thereto, and if such Interest
Period extends over thirty (30) days, at the
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end of each thirty (30) day interval during such Interest Period. All interest
rates, fees and commissions provided hereunder shall be computed on the basis of
a 360-day year and assessed for the actual number of days elapsed.
(f) MAXIMUM RATE. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lender
has charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the maximum
rate permitted by Applicable Law and the Lender shall at the Lender's option
promptly refund to the Borrower any interest received by Lender in excess of the
maximum lawful rate or shall apply such excess to the principal balance of the
Obligations. It is the intent hereof that the Borrower not pay or contract to
pay, and that the Lender not receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may be
paid by the Borrower under Applicable Law.
SECTION 5.2. NOTICE AND MANNER OF CONVERSION OR CONTINUATION OF LOANS.
Provided that no Event of Default has occurred and is then continuing, the
Borrower shall have the option to (a) (i) convert at any time all or any portion
of its outstanding Base Rate Loans in a principal amount equal to $1,000,000 or
any whole multiple of $500,000 in excess thereof into one or more LIBOR Rate
Loans or (ii) convert at any time all or any portion of its outstanding Base
Rate Loans in a principal amount equal to $1,000,000 or any whole multiple of
$500,000 in excess thereof into one or more CD Rate Loans, (b) upon the
expiration of any Interest Period, (i) convert all or any part of its
outstanding LIBOR Rate Loans in a principal amount equal to $1,000,000 or a
whole multiple of $500,000 in excess thereof into Base Rate Loans, (ii) convert
all or any part of its outstanding LIBOR Rate Loans in a principal amount equal
to $1,000,000 or a whole multiple of $500,000 in excess thereof into CD Rate
Loans, or (iii) continue such LIBOR Rate Loans as LIBOR Rate Loans, (c) upon the
expiration of any Interest Period, (i) convert all or any part of its
outstanding CD Rate Loans in a principal amount equal to $1,000,000 or a whole
multiple of $500,000 in excess thereof into Base Rate Loans, (ii) convert all or
any part of its outstanding CD Rate Loans in a principal amount equal to
$1,000,000 or a whole multiple of $500,000 in excess thereof into Base Rate
Loans or (iii) continue such CD Rate Loans as CD Rate Loans. Whenever the
Borrower desires to convert or continue Loans as provided above, the Borrower
shall give the Lender irrevocable prior written notice in the form attached as
EXHIBIT C (a "Notice of Conversion/Continuation") not later than 11:00 a.m.
(Charlotte time) three (3) Business Days
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before the day on which a proposed conversion or continuation of such Loan is to
be effective specifying (i) the Loans to be converted or continued, and, in the
case of any LIBOR Rate Loan or a CD Rate Loan to be converted or continued, the
last day of the Interest Period therefor, (ii) the effective date of such
conversion or continuation (which shall be a Business Day), (iii) the principal
amount of such Loans to be converted or continued, and (iv) the Interest Period
to be applicable to such converted or continued LIBOR Rate Loan or CD Rate Loan,
as applicable.
SECTION 5.3. COMMITMENT FEE AND FACILITY FEE.
(a) COMMITMENT FEE. Commencing on the Closing Date, in consideration of
the making of the Loans under this Agreement and in order to compensate the
Lender for certain costs associated with processing, approving and closing the
Loans, the Borrower shall pay to the Lender a non-refundable commitment fee at a
rate per annum equal to one-fourth of one percent (1/4%) on the average daily
unused portion of the Aggregate Commitment. The commitment fee shall be payable
in arrears on the last Business Day of each Fiscal Year during the term of this
Agreement commencing December 31, 1995, and on the Termination Date.
(b) FACILITY FEE. Commencing on the Closing Date, in consideration of the
making of the Loans under this Agreement and in order to compensate the Lender
for certain costs associated with processing, approving and closing the Loans,
the Borrower shall pay to Lender a facility fee in an amount equal to one-eighth
of one percent (1/8%) on the Aggregate Commitment, whether or not utilized. The
commitment fee shall be payable in arrears on the last Business Day of each
fiscal quarter during the term of this Agreement commencing December 31, 1995,
and on the Termination Date.
SECTION 5.4. MANNER OF PAYMENT. Each payment (including repayments
described in Article II) by the Borrower on account of the principal of or
interest on the Loans or of any fee, commission or other amounts (including the
Reimbursement Obligation) payable to the Lender under this Agreement or any Note
shall be made not later than 1:00 p.m. (Charlotte time) on the date specified
for payment under this Agreement to the Lender, in Dollars, in immediately
available funds and shall be made without any set-off, counterclaim or deduction
whatsoever. Any payment received after such time but before 2:00 p.m.
(Charlotte time) on such day shall be deemed a payment on such date for the
purposes of Section 11.1, but for all other purposes shall be deemed to have
been made on the next succeeding Business Day. Any payment received after 2:00
p.m. (Charlotte time) shall be deemed to have been made on the next succeeding
Business Day for all purposes. Each payment to the Lender of the Lender's fees
or commissions shall be made in like manner, but for the account of the Lender.
Subject to Section 5.1(b)(ii), if any payment under this Agreement or any Note
shall
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<PAGE>
be specified to be made upon a day which is not a Business Day, it shall be made
on the next succeeding day which is a Business Day and such extension of time
shall in such case be included in computing any interest if payable along with
such payment.
SECTION 5.5. CREDITING OF PAYMENTS AND PROCEEDS. In the event that the
Borrower shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant to Section 11.2, all payments received by the
Lender upon the Notes and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be applied first to all expenses then due
and payable by the Borrower hereunder, then to all indemnity obligations then
due and payable by the Borrower hereunder, then to all the Lender's fees then
due and payable, then to all commitment and other fees and commissions then due
and payable, then to accrued and unpaid interest on the Notes, the Reimbursement
Obligation and any termination payments due in respect of a Hedging Agreement
with the Lender (PRO RATA in accordance with all such amounts due), then to the
principal amount of the Notes and Reimbursement Obligation, then to the cash
collateral account described in Section 11.2(b) hereof to the extent of any
Letter of Credit Obligations then outstanding, then to the principal amount of
the Acceptances, in that order.
SECTION 5.6. CHANGED CIRCUMSTANCES.
(a) CIRCUMSTANCES AFFECTING LIBOR RATE AVAILABILITY. If, with respect to
any Interest Period, the Lender shall determine that, by reason of circumstances
affecting the foreign exchange and interbank markets generally, deposits in
eurodollars in the applicable amounts are not being offered to the Lender for
such Interest Period, then the Lender shall forthwith give notice thereof to the
Borrower. Thereafter, until the Lender notifies the Borrower that such
circumstances no longer exist, the right of the Borrower to continue any Loan as
a LIBOR Rate Loan, shall be suspended, and the Borrower shall repay in full (or
cause to be repaid in full) the then outstanding principal amount of the Loan,
together with accrued interest thereon, on the last day of the then current
Interest Period applicable to the Loan or convert the then outstanding principal
amount of the Loan to a Base Rate Loan as of the last day of such Interest
Period.
(b) LAWS AFFECTING LIBOR RATE AVAILABILITY. If, after the date hereof,
the introduction of, or any change in, any Applicable Law or in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Lender (or its respective lending office) with any
request or directive (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, shall make it
unlawful or impossible for the Lender (or its lending office) to honor its
obligations hereunder to maintain the Loan as
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a LIBOR Rate Loan, the Lender shall forthwith give notice thereof to the
Borrower. Thereafter, until the Lender notifies the Borrower that such
circumstances no longer exist, (i) the obligations of the Lender to maintain the
Loan as a LIBOR Rate Loan and the right of the Borrower to continue the Loan as
a LIBOR Rate Loan shall be suspended, and (ii) if the Lender may not lawfully
continue to maintain the Loan as a LIBOR Rate Loan to the end of the then
current Interest Period applicable thereto the Loan shall immediately be
converted to a Base Rate Loan for the remainder of such Interest Period. For
purposes of this Section 5.6(b), a change in law, rule, regulation,
interpretation or administration shall include, without limitation, any change
made or which becomes effective on the basis of a law, rule, regulation,
interpretation or administration presently in force, the effective date of which
change is delayed by the terms of such law, rule, regulation, interpretation or
administration.
(c) INCREASED COST OF LIBOR RATE LOAN. If, after the date hereof, the
introduction of, or any change in, any Applicable Law or in the interpretation
or administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Lender (or its lending offices) with any request or directive
(whether or not having the force of law) of such Governmental Authority, central
bank or comparable agency:
(i) shall subject the Lender (or any of its lending offices) to any
tax, duty or other charge with respect to any LIBOR Rate Loan or the Note
or shall change the basis of taxation of payments to the Lender (or its
lending offices) of the principal of or interest on any LIBOR Rate Loan or
the Note or any other amounts due under this Agreement in respect thereof
(except for changes in the rate of tax on the overall net income of the
Lender or its lending offices imposed by the jurisdiction in which the
Lender's principal executive office or lending office is located); or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by the Lender (or
its lending offices) or shall impose on the Lender (or its lending offices)
or the foreign exchange and interbank markets any other condition affecting
any LIBOR Rate Loan or the Note;
and the result of any of the foregoing is to increase the cost to the Lender of
maintaining any LIBOR Rate Loan or to reduce the amount of any sum received or
receivable by the Lender under this Agreement or under the Note in respect of a
LIBOR Rate Loan, then the Lender shall promptly notify the Borrower of such fact
and demand compensation therefor and, within fifteen (15) days after
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such notice by Lender, the Borrower agrees to pay to the Lender such additional
amount or amounts as will compensate the Lender for such increased cost or
reduction. The Lender will promptly notify the Borrower of any event of which
it has knowledge which will entitle the Lender to compensation pursuant to this
Section 5.6(c); PROVIDED, that the Lender shall incur no liability whatsoever to
the Borrower in the event it fails to do so. A certificate of the Lender
setting forth the basis for determining such additional amount or amounts
necessary to compensate the Lender shall be conclusively presumed to be correct
save for manifest error. For purposes of this Section, a change in Applicable
Law, interpretation, administration, request or directive shall include, without
limitation, any change made or which becomes effective on the basis of a law,
rule, regulation, interpretation, administration, request or directive presently
in force, the effective date of which change is delayed by the terms of such
law, rule, regulation, interpretation, administration, request or directive.
SECTION 5.7. INDEMNITY. The Borrower hereby indemnifies the Lender
against any loss or expense which may arise or be attributable to the Lender's
obtaining, liquidating or employing deposits or other funds acquired to effect,
fund or maintain any Loan (a) as a consequence of any failure by the Borrower to
make any payment when due of any amount due hereunder in connection with a LIBOR
Rate Loan or a CD Rate Loan, (b) due to any failure of the Borrower to borrow on
a date specified therefor in a Notice of Borrowing or Notice of
Continuation/Conversion or (c) due to any payment, prepayment or conversion of
any LIBOR Rate Loan or CD Rate Loan on a date other than the last day of the
Interest Period therefor. The amount of such loss or expense shall be
determined, in the Lender's sole discretion, based upon the assumption that the
Lender funded the LIBOR Rate Loans and CD Rate Loans in the London interbank or
domestic certificate of deposit market, as applicable, and using any reasonable
attribution or averaging methods which the Lender deems appropriate and
practical. A certificate of the Lender setting forth the basis for determining
such amount or amounts necessary to compensate the Lender shall be forwarded to
the Borrower and shall be conclusively presumed to be correct save for manifest
error.
SECTION 5.8. CAPITAL REQUIREMENTS. If either (a) the introduction of, or
any change in, or in the interpretation of, any Applicable Law or (b) compliance
with any guideline or request from any central bank or comparable agency or
other Governmental Authority (whether or not having the force of law), has or
would have the effect of reducing the rate of return on the capital of, or has
affected or would affect the amount of capital required to be maintained by, the
Lender or any corporation controlling the Lender as a consequence of, or with
reference to the Lender's commitment hereunder and other commitments of this
type, below the rate which the Lender or such other corporation could have
achieved but for such introduction, change or compliance, then within five
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(5) Business Days after written demand by the Lender, the Borrower shall pay to
the Lender from time to time as specified by the Lender additional amounts
sufficient to compensate the Lender or other corporation for such reduction.
SECTION 5.9. TAXES.
(a) PAYMENTS FREE AND CLEAR. Any and all payments by the Borrower
hereunder or under the Note shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholding, and all liabilities with respect thereto excluding (i)
in the case of the Lender, taxes imposed upon its income and franchise taxes
imposed upon it by the jurisdiction under the laws of which the Lender is
organized or is or should be qualified to do business or any political
subdivision thereof, and (ii) in the case of the Lender, taxes imposed upon its
income and franchise taxes imposed upon it by the jurisdiction of the Lender's
lending office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under the
Note to the Lender, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.9) the Lender receives an amount
equal to the amount it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the
full amount deducted to the relevant taxing authority or other authority in
accordance with applicable law, and (iv) the Borrower shall deliver to the
Lender evidence of such payment to the relevant taxing authority or other
authority in the manner provided in Section 5.9(d).
(b) STAMP AND OTHER TAXES. In addition, the Borrower shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes (other than excise and
property taxes to which the Lender would have been subject in the absence of
this Agreement and the provision for security in connection with the execution
of this Agreement), levies of the United States or any state or political
subdivision thereof or any applicable foreign jurisdiction which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement, the Loan, the Loan Documents, or the
perfection of any rights or security interest in respect thereto (hereinafter
referred to as "Other Taxes").
(c) INDEMNITY. The Borrower shall indemnify the Lender for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes and
Other Taxes imposed by any jurisdiction on amounts payable under this Section
5.9) paid by the Lender (as
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the case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted; PROVIDED, that the Borrower shall not
be liable for penalties or interest with respect to delinquent Taxes or Other
Taxes paid by the Lender unless the Lender gave written notice to the Borrower
of the imposition of such Taxes or Other Taxes within thirty (30) days after its
determination that such Taxes or Other Taxes were due; and PROVIDED FURTHER,
that the Borrower shall have the right, at its expense, to contest the
imposition of such Taxes or Other Taxes so long as during the period of such
contest, the payment of such Taxes or Other Taxes is stayed and such contest
would not, in the reasonable judgment of the Lender, have an adverse effect on
the business or financial condition of the Lender. Except as above provided,
such indemnification shall be made within thirty (30) days from the date the
Lender makes written demand therefor.
(d) EVIDENCE OF PAYMENT. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Borrower shall furnish to the Lender, at
its address referred to in Section 12.1, the original or a certified copy of a
receipt evidencing payment thereof or other evidence of payment satisfactory to
the Lender.
(e) SURVIVAL. Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 5.9 shall survive the payment in full of the Obligations.
ARTICLE VI
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 6.1. CLOSING. The closing shall take place at the offices of
Kennedy Covington Lobdell & Hickman in Charlotte, North Carolina or in such
other location as the parties hereto shall mutually agree, on October __, 1995,
or on such other date as the parties hereto shall mutually agree.
SECTION 6.2. CONDITIONS OF LOAN. The obligation of the Lender to make the
initial Loan, to issue the initial Letter of Credit, or to issue the initial
Acceptance, on the Closing Date is subject to the satisfaction of each of the
following conditions:
(a) EXECUTED LOAN DOCUMENTS. This Agreement and the Note, in form and
substance satisfactory to the Lender, shall have been duly authorized, executed
and delivered to the Lender by the Borrower and shall be in full force and
effect and no default shall exist thereunder.
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(b) CLOSING CERTIFICATES; ETC.
(i) OFFICER'S CERTIFICATE OF THE BORROWER. The Lender shall have
received a certificate dated as of the Closing Date from the chief executive
officer or chief financial officer of the Borrower, in form and substance
satisfactory to the Lender, to the effect that all representations and
warranties of the Borrower contained in this Agreement and the other Loan
Documents are true, correct and complete in all material respects; that the
Borrower is not in violation of any of the covenants contained in this Agreement
and the other Loan Documents; that, after giving effect to the transactions
contemplated by this Agreement, no Default or Event of Default has occurred and
is continuing; and that the Borrower has satisfied each of the closing
conditions.
(ii) CERTIFICATE OF THE SECRETARY OF THE BORROWER. The Lender shall
have received a certificate dated as of the Closing Date of the secretary or
assistant secretary of the Borrower certifying that attached thereto is a true
and complete copy of the restated articles of incorporation of the Borrower and
all amendments thereto, certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of incorporation; that attached
thereto is a true and complete copy of the bylaws of the Borrower as in effect
on the date of such certification; that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors of the Borrower
authorizing, the borrowings contemplated hereunder and the execution, delivery
and performance of this Agreement and the other Loan Documents; and as to the
incumbency and genuineness of the signature of each officer of the Borrower
executing this Agreement and the other Loan Documents.
(iii) CERTIFICATES OF GOOD STANDING. The Lender shall have received
long-form certificates as of a recent date of the good standing of the Borrower
under the laws of its jurisdiction of organization and each state where the
Borrower is transacting business.
(iv) OPINIONS OF COUNSEL. The Lender shall have received the
favorable opinion of the law firm of Greenberg, Glusker, Fields, Claman &
Machtinger, counsel to the Borrower, dated as of the Closing Date and addressed
to the Lender, in form and substance satisfactory to the Lender.
(c) CONSENTS; NO ADVERSE CHANGE.
GOVERNMENTAL AND THIRD PARTY APPROVALS. All necessary approvals,
authorizations and consents, if any be required, of any Person and of all
Governmental Authorities and courts having jurisdiction with respect to the
transactions contemplated by this Agreement shall have been obtained.
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(ii) PERMITS AND LICENSES. All permits and licenses, including
permits and licenses required under applicable Environmental Laws, necessary to
the conduct of business by the Borrower shall have been obtained.
(iii) NO INJUNCTION, ETC. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby or which,
in the Lender's discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement.
(iv) NO MATERIAL ADVERSE CHANGE. In the judgment of the Lender, there
shall not have occurred any Material Adverse Change in the business, business
prospects, financial condition or results of operations of the Borrower since
May 31, 1994.
(v) NO EVENT OF DEFAULT. No Default or Event of Default shall have
occurred and be continuing.
(d) FINANCIAL MATTERS.
(i) FINANCIAL STATEMENTS. The Lender shall have received (A) audited
financial statements for the Fiscal Year of the Borrower ended May 31, 1994,
certified by Arthur Andersen & Co., certified public accountants to the
Borrower, and in form and substance satisfactory to the Lender, and (B) such
other financial information including the interim financial statements described
in Section 7.1(o) as may be reasonably requested by the Lender.
(ii) FINANCIAL CONDITION CERTIFICATE. The Borrower shall have
delivered a certificate, in form and substance satisfactory to the Lender, and
certified as accurate in all material respects by the chief executive officer or
chief financial officer of the Borrower, that (A) the Borrower is Solvent and
(B) the liquidity position of the Borrower as of the Closing Date is not
materially different from the financial information previously furnished to the
Lender.
(iii) PAYMENT AT CLOSING. There shall have been paid by the Borrower
to the Lender the facility fee and any other accrued and unpaid fees due
hereunder (including, without limitation, legal fees and expenses) in connection
with the execution, delivery, recording, filing and registration of any of the
Loan Documents.
(e) MISCELLANEOUS.
(i) NOTICE OF BORROWING; DISBURSEMENT INSTRUCTIONS. The Lender shall
have received written instructions from the Borrower
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to the Lender directing the payment of any proceeds of Loans made under this
Agreement that are to be paid on the Closing Date.
(ii) PROCEEDINGS AND DOCUMENTS. All opinions, certificates and other
instruments and all proceedings in connection with the transactions contemplated
by this Agreement shall be satisfactory in form and substance to the Lender.
The Lender shall have received copies of all other instruments and other
evidence as the Lender may reasonably request, in form and substance
satisfactory to the Lender, with respect to the transactions contemplated by
this Agreement and the taking of all actions in connection therewith.
DUE DILIGENCE AND OTHER DOCUMENTS. The Borrower shall have
delivered to the Lender such other documents, certificates and opinions as the
Lender reasonably requests.
(f) REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Borrower contained in Article VII and in the other Loan Documents
shall be true and correct on and as of the Closing Date with the same effect as
if made on and as of such date.
SECTION 6.3. CONDITIONS TO ALL LOANS, LETTERS OF CREDIT AND ACCEPTANCES.
The obligations of the Lender to make any Loan, to issue any Letter of Credit,
or to issue any Acceptance is subject to the satisfaction of the following
conditions precedent on the relevant borrowing or issue date, as applicable:
(a) DOCUMENTATION. The Lender shall have received (i) with respect to any
proposed Loan, a Notice of Borrowing; (ii) with respect to any proposed Letter
of Credit, a Letter of Credit Agreement and such other documentation as may be
referenced therein; (iii) with respect to proposed Acceptance, an Acceptance
Agreement and such other documentation as is described in Article III; and (iv)
with respect to any other credit, such documentation as the Lender shall
request; in each case in form and substance satisfactory to the Lender and duly
executed by the Borrower.
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in Article VII hereof shall be true and correct on and
as of such borrowing or issuance date with the same effect as if made on and as
of such date.
(c) NO EXISTING DEFAULT. No Default or Event of Default shall have
occurred and be continuing hereunder (i) on the borrowing date with respect to
such Loan or after giving effect to the Loans to be made on such date, (ii) on
the issue date with respect to such Letter of Credit or after giving effect to
such Letter of Credit on such date, or (iii) on the issue date with respect to
such Acceptance or after giving effect to such Acceptance on such date.
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(d) PAYMENT OF FEES. Any and all fees, charges, expenses and other
amounts payable by the Borrower in connection with the extension of any such
credit shall have been paid to the Lender.
Each Borrowing by, and receipt of any other extension of credit hereunder
(including without limitation the issuance of any Letter of Credit or any
Acceptance) by, the Borrower shall constitute a representation and warranty by
the Borrower hereunder as of the date of each such Borrowing or extension of
credit that the conditions in this Section 6.3 have been satisfied.
SECTION 6.4. WAIVER OF CONDITIONS PRECEDENT. If the Lender makes the
Loans or advances hereunder, issues Letters of Credit hereunder, or issues
Acceptances hereunder, prior to the fulfillment of any of the conditions
precedent set forth in this Article VI, the making of such Loan or advance, the
issuance of such Letter of Credit, or the issuance of such Acceptance, shall
constitute only an extension of time for the fulfillment of such condition and
not a waiver thereof, and the Borrower shall thereafter use its best efforts to
fulfill each such condition promptly.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BORROWER
SECTION 7.1. REPRESENTATIONS AND WARRANTIES. In order to induce the
Lender to enter into this Agreement and to make the Loans, or extend any other
credit hereunder, the Borrower hereby represents and warrants to the Lender
that:
(a) ORGANIZATION; POWER; QUALIFICATION. The Borrower is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, has the power and authority to own its properties
and to carry on its business as now being and hereafter proposed to be conducted
and is duly qualified and authorized to do business in each jurisdiction in
which the character of its properties or the nature of its business requires
such qualification and authorization.
(b) OWNERSHIP. All outstanding shares of the Borrower have been duly
authorized and validly issued and are fully paid and nonassessable. There are
no outstanding stock purchase warrants, subscriptions, options, securities,
instruments or other rights of any type or nature whatsoever, which are
convertible into, exchangeable for or otherwise provide for or permit the
issuance of capital stock of the Borrower except as described in the Borrower's
financial statements and reports filed with the Securities and Exchange
Commission.
(c) AUTHORIZATION OF AGREEMENT, NOTES, LOAN DOCUMENTS AND BORROWING. The
Borrower has the right, power and authority and has taken all necessary
corporate and other action to authorize the
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execution, delivery and performance of this Agreement, the Note and each of the
other Loan Documents to which it is a party in accordance with their respective
terms. This Agreement, the Note and each of the other Loan Documents have been
duly executed and delivered by the duly authorized officers of the Borrower
thereto and constitute the legal, valid and binding obligation of the Borrower
enforceable in accordance with their respective terms except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors rights
generally, and the availability of equitable remedies.
(d) COMPLIANCE OF AGREEMENT, NOTE, LOAN DOCUMENTS AND BORROWING WITH LAWS,
ETC. The execution, delivery and performance by the Borrower of this Agreement,
the Note and each of the other Loan Documents to which it is a party, in
accordance with their respective terms, the borrowings hereunder and the
transactions contemplated hereby do not and will not, by the passage of time,
the giving of notice or otherwise, (i) require any Governmental Approval or
violate any Applicable Law relating to the Borrower, as applicable; (ii)
conflict with, result in a breach of or constitute a default under the articles
of incorporation, bylaws, or other organizational documents of the Borrower or
any indenture, agreement or other instrument to which the Borrower is a party or
by which any of their respective properties may be bound or any Governmental
Approval relating to the Borrower; or (iii) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by the Borrower, other than Liens permitted pursuant to
Section 10.4.
(e) COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS. The Borrower (i) has all
material Governmental Approvals required by any Applicable Law for it to conduct
its business, each of which is in full force and effect, is final and not
subject to review on appeal and is not the subject of any pending or, to its
knowledge, threatened attack by direct or collateral proceeding; and (ii) is in
compliance with each Governmental Approval applicable to it and in compliance
with all other Applicable Laws relating to it or any of its respective
properties.
(f) TAX RETURNS AND PAYMENTS. To the best of the Borrower's knowledge,
the Borrower has filed all applicable tax returns (Federal, state and local) and
paid the taxes shown as due thereon, including interest and penalties, or
provided adequate reserves for the payment thereof. There is no proposed tax
assessment against the Borrower or any of its Subsidiaries which would, if the
assessment were made, have a Material Adverse Effect.
(g) ENVIRONMENTAL MATTERS. (i) Neither the Borrower nor any of its
properties and operations is in material violation of any applicable
Environmental Law; (ii) without limitation of clause (i) above, neither the
Borrower nor any of its properties and opera-
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tions is in material violation of any Environmental Law, or subject to any
existing, pending or threatened investigation, inquiry or proceeding by any
Governmental Authority or to any remedial obligations under any Environmental
Law; and (iii) all notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed by the Borrower relating to Hazardous
Materials, including, without limitation, past or present treatment, storage,
disposal or release of any Hazardous Materials or solid waste into the
environment, have been obtained or filed and the Borrower is in full compliance
with the requirements of such permits, licenses or authorizations.
(h) ERISA.
(i) Neither the Borrower nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit Plans;
(ii) The Borrower and each ERISA Affiliate are in compliance with all
applicable provisions of ERISA and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans except where failure to
comply would not result in a material liability to the Borrower and except for
any required amendments for which the remedial amendment period as defined in
Section 401(b) of the Code has not yet expired. Each Employee Benefit Plan that
is intended to be qualified under Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified, and each trust related to
such plan has been determined to be exempt under Section 501(a) of the Code. No
material liability has been incurred by the Borrower or any ERISA Affiliate
which remains unsatisfied for any taxes or penalties with respect to any
Employee Benefit Plan or any Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor has any accumulated
funding deficiency (as defined in Section 412 of the Code) been incurred
(without regard to any waiver granted under Section 412 of the Code), nor has
any funding waiver from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has the Borrower or any ERISA Affiliate
failed to make any contributions or to pay any amounts due and owing as required
by Section 412 of the Code, Section 302 of ERISA or the terms of any Pension
Plan prior to the due dates of such contributions under Section 412 of the Code
or Section 302 of ERISA, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C), 4063(a) or 4068(f) of ERISA with respect to any
Pension Plan;
(iv) Neither the Borrower nor any ERISA Affiliate has: (A) engaged in
a nonexempt prohibited transaction described in Section 406 of the ERISA or
Section 4975 of the Code, (B) incurred any liability to the PBGC which remains
outstanding other than the
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payment of premiums and there are no premium payments which are due and unpaid,
(C) failed to make a required contribution or payment to a Multiemployer Plan or
(D) failed to make a required installment or other required payment under
Section 412 of the Code;
(v) No Termination Event has occurred or is reasonably expected to
occur; and
(vi) No material proceeding, claim, lawsuit and/or investigation is
existing or, to the best knowledge of the Borrower after due inquiry, threatened
concerning or involving any (A) employee welfare benefit plan (as defined in
Section 3(1) of ERISA) currently maintained or contributed to by the Borrower or
any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan.
(i) MARGIN STOCK. The Borrower is not engaged principally or as one of
its activities in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" (as each such term is defined or
used in Regulations G and U of the Board of Governors of the Federal Reserve
System). No part of the proceeds of any of the Loans will be used for
purchasing or carrying margin stock or for any purpose which violates, or which
would be inconsistent with, the provisions of Regulation G, T, U or X of such
Board of Governors. If requested by the Lender, the Borrower will furnish to
the Lender a statement or statements in conformity with the requirements of said
Regulation G, T, U or X to the foregoing effect.
(j) INVESTMENT COMPANY ACT. The Borrower is not an "investment company"
or a company "controlled" by an "investment company" (as each such term is
defined or used in the Investment Company Act of 1940, as amended).
(k) FRANCHISES, LICENSES, PATENTS AND TRADEMARKS. The Borrower owns or
possesses rights to use all franchises, licenses, patents, patent rights or
licenses, patent applications, trademarks, trademark rights, trade names, trade
name rights, copyrights and rights with respect to the foregoing which are
required to conduct its business as now and presently planned to be conducted
without conflict with the rights of others. No event has occurred which
permits, or after notice or lapse of time or both would permit, the revocation
or termination of any such rights.
(l) MATERIAL CONTRACTS. Each Material Contract is, and after giving
effect to the consummation of the transactions contemplated by the Loan
Documents will be, in full force and effect in accordance with the terms
thereof; and there are no material defaults by the Borrower or, to the best of
its knowledge, by any other party under any such Material Contract.
(m) EMPLOYEE RELATIONS. The Borrower is not a party to any collective
bargaining agreement nor has any labor union been
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recognized as the representative of its employees. The Borrower does not know
of any pending, threatened or contemplated strikes, work stoppage or other
collective labor disputes involving its employees.
(n) BURDENSOME PROVISIONS. The Borrower is not a party to any indenture,
agreement, lease or other instrument, or subject to any corporate or partnership
restriction, Governmental Approval or Applicable Law which is so unusual or
burdensome as in the foreseeable future might materially and adversely affect or
impair the business or condition, financial or otherwise, of the Borrower. The
Borrower does not presently anticipate that future expenditures needed to meet
the provisions of federal or state statutes, orders, rules or regulations will
be so burdensome as to affect or impair in a materially adverse manner the
business or condition, financial or otherwise, of the Borrower.
(o) FINANCIAL STATEMENTS. The balance sheet of the Borrower as of May 31,
1994, and the related statements of income and retained earnings and cash flows
for the Fiscal Year then ended, copies of which have been furnished to the
Lender, are complete and correct and fairly present the assets, liabilities and
financial position of the Borrower as at such date, and the results of the
operations and changes of financial position for the Fiscal Year then ended.
The unaudited balance sheet of the Borrower as of February 28, 1995, and the
related unaudited statement of income and retained earnings and cash flows for
the nine (9) month period ended on such date, copies of which have been
furnished to the Lender, are complete and correct and fairly present the assets,
liabilities and financial position of the Borrower as at such date, and the
results of its operations and changes in its financial position for the nine (9)
month period then ended (subject to normal year-end audit adjustments). All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved. The Borrower has no material Debt, obligation or other
unusual forward or long-term commitment which is not fairly reflected in the
foregoing financial statements or in the notes thereto.
(p) NO MATERIAL ADVERSE CHANGE. Since May 31, 1994, there has been no
material adverse change in the properties, businesses, results of operations,
prospects, management or financial or other condition of the Borrower,
including, but not limited to, any material adverse change resulting from any
fire, explosion, accident, drought, storm, hail, earthquake, embargo, act of
God, or of the public enemy or other casualty (whether or not covered by
insurance).
(q) TITLES TO PROPERTIES. The Borrower has good and marketable title to
the real property owned by it and valid and legal title to all of its personal
property and assets, including,
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but not limited to, those reflected on the balance sheet of the Borrower
delivered pursuant to Section 4.1(o), except those which have been disposed of
by the Borrower subsequent to such date which dispositions have been in the
ordinary course of business.
(r) LIENS. None of the properties and assets of the Borrower is subject
to any Lien, except Liens permitted pursuant to Section 10.4.
(s) DEBT, OPERATING LEASES AND GUARANTEES. SCHEDULE 7.1(s) sets forth a
complete and accurate list of all material Debt, Operating Leases and Guarantees
of the Borrower as of the Closing Date. The term "material" as used in this
subsection shall mean such Debt, Operating Leases and Guarantees representing
Obligations individually in excess of $2,000,000 but shall exclude purchase
contracts or purchase orders entered into by the Borrower for the purchase of
electronic components and tools for resale in the ordinary course of the
Borrower's business. The Borrower has performed and is in compliance with all
of the terms of such Debt, Operating Leases and Guarantees and all instruments
and agreements relating thereto, and no default or event of default, or event or
condition which with notice or lapse of time or both would constitute such a
default or event of default on the part of the Borrower exists with respect to
any such Debt, Operating Leases or Guarantees.
(t) SOLVENCY. As of the Closing Date and after giving effect to the Loan
made on the Closing Date and the transactions contemplated by the Loan
Documents, the Borrower will be Solvent.
(u) LITIGATION. Except as set forth on SCHEDULE 7.1(u), there are no
material actions, suits or proceedings pending nor, to the knowledge of the
Borrower, threatened against or in any other way relating adversely to or
affecting the Borrower or any of its properties in any court or before any
arbitrator of any kind or before or by any Governmental Authority; for the
purposes of this subsection (u), the term "material" shall mean with respect to
actions, suits or proceedings, those actions, suits or proceedings (i) in which
injunctive or similar relief is sought and which, if adversely determined, could
have a Material Adverse Effect; or (ii) in which the amount in controversy is
equal to or greater than $1,000,000 per action, suit or proceeding, or in the
aggregate is equal to or greater than $5,000,000, but any such monetary actions,
suits or proceedings, which are covered in full by appropriate insurance and
accepted for defense or payment by reputable insurance companies of national
standing, shall not be deemed "material". There are no outstanding or unpaid
judgments against the Borrower which, individually exceed $1,000,000, or in the
aggregate exceed $5,000,000.
(v) ABSENCE OF DEFAULTS. No event has occurred or is continuing which
constitutes a Default or an Event of Default, or
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which constitutes, or which with the passage of time or giving of notice or both
would constitute, a default or event of default by the Borrower under any
material agreement (other than this Agreement) or judgment, decree or order to
which the Borrower is a party or by which the Borrower or any of its properties
may be bound or which would require the Borrower to make any payment thereunder
prior to the scheduled maturity date therefor.
(w) SUBSIDIARIES. As of the Fiscal Year end immediately preceding the
Closing Date, the Borrower had no Subsidiaries other than those listed on
SCHEDULE 7.1(w) hereto.
(x) BROKER'S; TRANSACTION FEES. The Borrower does not have any obligation
to any Person in respect of any finder's, broker's or investment banker's fee in
connection with the transactions contemplated hereby.
(y) INSURANCE. The properties of the Borrower are insured with
financially sound and reputable insurance companies, or are self-insured by the
Borrower, in such amounts, with such deductibles and covering such risks as is
customarily carried on by companies engaged in similar businesses and owning
similar properties in localities where the Borrower operates.
(z) ACCURACY AND COMPLETENESS OF INFORMATION. All written information,
reports and other papers and data produced by or on behalf of the Borrower and
furnished to the Lender were, at the time the same were so furnished, complete
and correct in all material respects to the extent necessary to give the
recipient a true and accurate knowledge of the subject matter. No document
furnished or written statement made to the Lender by the Borrower in connection
with the negotiation, preparation or execution of this Agreement or any of the
Loan Documents contains or will contain any untrue statement of a fact material
to the creditworthiness of the Borrower or omits or will omit to state a
material fact necessary in order to make the statements contained therein not
misleading. The Borrower is not aware of any facts which it has not disclosed
in writing to the Lender having a material adverse effect, or insofar as the
Borrower can now foresee, could have a material adverse effect, on the
properties, businesses, prospects, results of operations or financial or other
condition of the Borrower or the ability of the Borrower to perform its
obligations under this Agreement, the Notes and the other Loan Documents.
SECTION 7.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties set forth in this Article VII and all
representations and warranties contained in any certificate or any of the Loan
Documents (including but not limited to any such representation or warranty made
in or in connection with any amendment thereto) shall constitute representations
and warranties made under this Agreement. All representations and warranties
made under this Agreement shall be made or deemed to be made at and as
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of the Closing Date, shall survive the Closing Date and shall not be waived by
the execution and delivery of this Agreement.
ARTICLE VIII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly paid and
satisfied in full, unless consent has been obtained in the manner set forth in
Section 12.12 hereof, the Borrower will furnish to the Lender at the Lender's
Office at the address set forth in Section 12.1 hereof, or such other office as
may be designated by the Lender from time to time:
SECTION 8.1. FINANCIAL STATEMENTS.
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as practicable and in any
event within forty-five (45) days after the end of the first three (3) fiscal
quarters of each Fiscal Year, an unaudited Consolidated balance sheet of the
Borrower and its Subsidiaries as of the close of such fiscal quarter and
Consolidated unaudited statements of income, retained earnings and cash flows
for the fiscal quarter then ended and that portion of the Fiscal Year then
ended, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year prepared by the Borrower in
accordance with GAAP applied on a basis consistent with that of the preceding
period and, if applicable, containing disclosure of the effect on the financial
position or results of operations of any change in the application of accounting
principles and practices during the period, and certified by the chief financial
officer of the Borrower to present fairly in all material respects the financial
condition of the Borrower and its Subsidiaries as of their respective dates and
the results of operations of the Borrower and its Subsidiaries for their
respective periods then ended, subject to normal year end adjustments; and
(b) ANNUAL FINANCIAL STATEMENTS. As soon as practicable and in any event
within ninety (90) days after the end of each Fiscal Year, an audited
Consolidated balance sheet of the Borrower and its Subsidiaries as of the close
of such Fiscal Year and audited Consolidated statements of income, retained
earnings and cash flows for the Fiscal Year then ended, including the notes
thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year audited by a nationally
recognized certified public accounting firm in accordance with GAAP applied on a
basis consistent with that of the preceding year, and, if applicable, containing
disclosure to the effect on the financial position or results of operation of
any change in the application of accounting principles and practices during the
year, and accompanied by a report thereon by such certified public accountants
that is not qualified with respect to scope limitations imposed by the Borrower
or any of its Subsidiaries or with respect
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to accounting principles followed by the Borrower or any of its Subsidiaries not
in accordance with GAAP.
SECTION 8.2. OFFICER'S CERTIFICATE. At each time financial statements are
delivered pursuant to Sections 8.1(a) or 8.1(b) and at such other times as the
Lender shall reasonably request, a certificate of the chief financial officer of
the Borrower in the form of EXHIBIT D hereto:
(a) stating that to such officer's knowledge, based on a reasonable
examination sufficient to enable him to make an informed statement, no Default
or Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default and its nature, when it occurred, whether it is continuing
and the steps being taken by the Borrower with respect to such Default or Event
of Default; and
(b) setting forth as at the end of such fiscal quarter or Fiscal Year, as
the case may be, the calculations required to establish whether or not the
Borrower was in compliance with the financial covenants set forth in Article X
hereof as at the end of each respective period.
SECTION 8.3. OTHER REPORTS.
(a) Promptly after the same are sent, copies of all financial statements
and reports which the Borrower sends to its stockholders, and within ten (10)
days after the same are filed (but in any case within forty-five (45) days after
the end of each of the first three fiscal quarters of each fiscal year, with
respect to reports on Form 10-Q, and within ninety (90) days after the end of
each fiscal year, with respect to reports on Form 10-K), copies of all financial
statements and regular, periodical, or special reports which the Borrower may
make to, or file with, the Securities and Exchange Commission or any successor
or analogous state or foreign Governmental Authority, including, without
limitation, reports filed on Forms 10-K, 10-Q, and 8-K;
(b) If requested by the Lender, statements in conformity with the
requirements of Federal Reserve Form G-1 or U-1 referred to in Regulations G and
U, respectively, of the Board of Governors of the Federal Reserve System; and
(c) Such other information regarding the operations, business affairs and
financial condition of the Borrower as the Lender may reasonably request.
SECTION 8.4. NOTICE OF LITIGATION AND OTHER MATTERS. Prompt (but in no
event later than ten (10) days after an officer of the Borrower obtains
knowledge thereof) telephonic and written notice of:
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(a) the commencement of all proceedings and investigations by or before
any Governmental Authority and all actions and proceedings in any court or
before any arbitrator against or involving the Borrower or any Subsidiary
thereof or any of their respective properties, assets or businesses which,
individually involve an amount in controversy in excess of $1,000,000, or in the
aggregate involve an amount in controversy in excess of $5,000,000;
(b) any notice of any violation received by the Borrower or any Subsidiary
thereof from any Governmental Authority, including, without limitation, any
notice of violation of Environmental Laws, which in any such case could
reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens to result in,
a strike or other work action against the Borrower or any Subsidiary thereof;
(d) any attachment, judgment, lien, levy or order which, individually
exceeds $1,000,000, or in the aggregate exceeds $5,000,000, that may be assessed
against or threatened against the Borrower or any Subsidiary thereof;
(e) any Default or Event of Default, or any event which constitutes or
which with the passage of time or giving of notice or both would constitute a
default or event of default under any Material Contract to which the Borrower or
any Subsidiary thereof is a party or by which the Borrower, or any Subsidiary
thereof or any of their respective property may be bound;
(f) (i) the establishment of any new Employee Benefit Plan, the
commencement of contributions to any plan to which the Borrower or any ERISA
Affiliate was not previously contributing or any increase in the benefits of any
existing Employee Benefit Plan, (ii) each funding waiver request filed with
respect to any Employee Benefit Plan and all communications received or sent by
the Borrower or any ERISA Affiliate with respect to such request, (iii) the
failure of the Borrower or any ERISA Affiliate to make a required installment or
payment under Section 302 of ERISA or Section 412 of the Code by the due date,
(iv) any Termination Event or "prohibited transaction", as such term is defined
in Section 406 of ERISA or Section 4975 of the Code, in connection with any
Pension Plan or any trust created thereunder, along with a description of the
nature thereof, what action the Borrower has taken, is taking or proposes to
take with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, (v) any favorable or unfavorable determination letter from the Internal
Revenue Service regarding the qualification of an Employee Benefit Plan under
Section 401(a) of the Code (along with a copy thereof), (vi) all notices
received by the Borrower or any ERISA Affiliate of the PBGC's intent to
terminate any Pension Plan or to have a
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trustee appointed to administer any Pension Plan, (vii) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by the
Borrower or any ERISA Affiliate with the Internal Revenue Service with respect
to each Pension Plan, (viii) all notices received by the Borrower of any ERISA
Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount
of withdrawal liability pursuant to Section 4202 of ERISA and (ix) the Borrower
obtaining knowledge or reason to know that the Borrower or any ERISA Affiliate
has filed or intends to file a notice of intent to terminate any Pension Plan
under a distress termination within the meaning of Section 4041(c) of ERISA;
(g) any event which makes any of the representations set forth in Section
7.1 inaccurate in any material respect; and
(h) any proposed material amendment, change or modification to, or waiver
of any material provision of, or any termination of, any Material Contract.
SECTION 8.5. ACCURACY OF INFORMATION. All written information, reports,
statements and other papers and data furnished by or on behalf of the Borrower
to the Lender (other than financial forecasts) whether pursuant to this Article
VIII or any other provision of this Agreement, or any of the other Loan
Documents, shall be, at the time the same is so furnished, complete and correct
in all material respects to the extent necessary to give the Lender complete,
true and accurate knowledge of the subject matter based on the Borrower's
knowledge thereof.
ARTICLE IX
AFFIRMATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full, unless consent has been obtained in the manner provided for
in Section 12.12, the Borrower will and will cause each of its Subsidiaries to:
SECTION 9.1. PRESERVATION OF CORPORATE EXISTENCE AND RELATED MATTERS.
Preserve and maintain its separate corporate existence and all rights,
franchises, licenses and privileges necessary to the conduct of its business;
and qualify and remain qualified as a foreign corporation and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization.
SECTION 9.2. MAINTENANCE OF PROPERTY. Protect and preserve all properties
useful in and material to its business, including copyrights, patents, trade
names and trademarks; maintain in good working order and condition all
buildings, equipment and other tangible real and personal property, and, from
time to time make or cause to be made all renewals, replacements and additions
to such
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property reasonably necessary for the conduct of its business, so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
SECTION 9.3. INSURANCE. Maintain insurance with responsible insurance
companies against such risks and in such amounts as are customarily maintained
by similar businesses including without limitation, fire, public liability,
property damage, product liability, workers' compensation and interruption of
business insurance, or as may be required by Applicable Law.
SECTION 9.4. ACCOUNTING METHODS AND FINANCIAL RECORDS; VISITS. Maintain a
system of accounting, and keep such books, records and accounts (which shall be
true and complete in all material respects) as may be required or as may be
necessary to permit the preparation of financial statements in accordance with
GAAP consistently applied and in compliance with the regulations of any
Governmental Authority having jurisdiction over it or any of its properties.
SECTION 9.5. PAYMENT AND PERFORMANCE OF OBLIGATIONS. Pay and perform (a)
all Obligations under this Agreement and the other Loan Documents; (b) all
taxes, assessments and other governmental charges that may be levied or assessed
upon it or its property, except to the extent and so long as: (i) the same are
being contested in good faith and by appropriate proceedings in such manner as
not to cause any Material Adverse Effect or the loss of any right of redemption
from any sale thereunder, and (ii) the Borrower shall have set aside on its
books reserves (segregated to the extent required by GAAP) adequate with respect
thereto; and (c) all other indebtedness, obligations and liabilities in
accordance with customary trade practices. Pay all governmental charges or
taxes (except income, franchise or other similar taxes) at any time payable or
ruled to be payable in respect of the existence, execution or delivery of this
Agreement, or the existence or issuance of the Note by reason of any existing or
hereinafter enacted federal or state statute.
SECTION 9.6. COMPLIANCE WITH LAWS AND APPROVALS. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable or necessary to the conduct of
its business including, without limitation, all Environmental Laws and all
Governmental Approvals required thereunder.
SECTION 9.7. ENVIRONMENTAL MANAGEMENT. In addition to and without
limiting the generality of Section 9.6, maintain its business premises (whether
leased or owned in fee) free of any Hazardous Materials the removal of which is
required under Environmental Laws; and adopt and maintain prudent management,
disposal, clean-up and other practices as may be required by Environmental Laws
for all other Hazardous Materials located on its business premises.
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SECTION 9.8. COMPLIANCE WITH ERISA. In addition to and without limiting
the generality of Section 9.6, make timely payment of contributions required to
meet the minimum funding standards set forth in ERISA with respect to any
Employee Benefit Plan; not take any action or fail to take action the result of
which could be a material liability to the PBGC or to a Multiemployer Plan; not
participate in any prohibited transaction that could result in any material
civil penalty under ERISA or material tax under the Code; furnish to the Lender
upon the Lender's request such additional information about any Employee Benefit
Plan as may be reasonably requested by the Lender; and operate each Employee
Benefit Plan in such a manner that will not incur any material tax liability
under Section 4980B of the Code or any material liability to any qualified
beneficiary as defined in Section 4980B of the Code.
SECTION 9.9. COMPLIANCE WITH AGREEMENTS. Comply with each material term,
condition and provision of all Material Contracts.
SECTION 9.10. CONDUCT OF BUSINESS. Engage only in businesses in
substantially the same fields as the businesses conducted on the Closing Date.
SECTION 9.11. VISITS AND INSPECTIONS. Permit representatives of Lender at
all reasonable times to have access to and to examine its properties, books and
records, to make copies of or take extracts therefrom, and to discuss Borrower's
financial condition with both independent accountants and employees of Borrower.
SECTION 9.12. FURTHER ASSURANCES. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the Lender may
reasonably require to document and consummate the transactions contemplated
hereby and to vest completely in and insure the Lender its respective rights
under this Agreement, the Note and the other Loan Documents.
ARTICLE X
NEGATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full, unless consent has been obtained in the manner set forth in
Section 12.12 hereof, the Borrower will not:
SECTION 10.1. FINANCIAL COVENANTS.
(a) TANGIBLE NET WORTH. Permit its Tangible Net Worth on a
Consolidated basis at any time to be less than the sum of (i) $230,000,000
PLUS (ii) 70% of the Borrower's Net Income (but not less any net losses for
any period) earned in each fiscal quarter starting with the fiscal quarter
ended February 28, 1995, PLUS (iii) 70% of the proceeds (whether in cash,
other property, or in
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kind) of equity securities or Subordinated Debt issued by the Borrower from and
after the fiscal quarter ended February 28, 1995, LESS repurchases of the
Borrower's capital stock made after February 28, 1995 and not exceeding
$20,000,000 in the aggregate.
(b) LEVERAGE RATIO. Permit its ratio of (i) Total Liabilities to (ii)
Tangible Net Worth to be greater than 1.00 to 1.00.
(c) QUICK RATIO. Permit its ratio of (i) the aggregate of cash, Cash
Equivalents, and other marketable securities which are not classified as long
term investments according to GAAP, and current net accounts receivable, to
(ii) Current Liabilities, at end of any fiscal quarter, to be less than 1.00 to
1.00.
(d) PROFITABILITY. Incur for any fiscal quarter, on a Consolidated basis,
a Net Loss which is greater than or equal to five percent (5.0%) of the
Borrower's Consolidated Tangible Net Worth at the end of the immediately
preceding fiscal quarter.
(e) CAPITAL EXPENDITURES. Make, commit to make or incur Capital
Expenditures during any Fiscal Year in an aggregate amount in excess of
$15,000,000.
SECTION 10.2. LIMITATIONS ON DEBT. Create or suffer to exist, or permit
any of its Subsidiaries to create or suffer to exist, any Debt except (a) the
Loans and other Extension of Credit provided for herein, (b) indebtedness
described on SCHEDULE 7.1(s), (c) other loans from banks or other financial
institutions, PROVIDED, that the amount of such loans together with the loans
described in (b) above shall not exceed $80,000,000, (d) Subordinated Debt, or
(e) indebtedness incurred for the acquisition of goods, supplies, services or
merchandise in the ordinary course of business. For the purposes of this
Section, "DEBT" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments,
(iii) obligations to pay the deferred purchase price of property or services,
(iv) Capital Lease Obligations, and (v) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clause (i)
through (iv) above.
SECTION 10.3. LIMITATIONS ON GUARANTEES. Guarantee or otherwise become
responsible (including, but not limited to, an agreement to purchase any
obligations, stock, assets, goods or services or to supply or advance any funds,
assets goods or services) for obligations of any Person in excess of an
aggregate sum of $5,000,000 except by endorsement, in the ordinary course of
collection, of negotiable instruments, except for flooring arrangements with
customers to repurchase goods Borrower or its
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Subsidiaries sold to such customers, but not to exceed $5,000,000 in aggregate.
SECTION 10.4. LIMITATIONS ON LIENS. Create or suffer to exist, or permit
any of its Subsidiaries to create or suffer to exist, any lien, security
interest or other charge or encumbrance, or any other type of preferential
arrangement, upon or with respect to any of its properties, whether now owned or
hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any
right to receive income, in each case to secure or provide for the payment of
any Debt (as defined in Section 10.2) of any person or entity, other than (a)
purchase money liens or purchase money security interests upon or in any
property acquired or held by the Borrower or any Subsidiary in the ordinary
course of business to secure the purchase price of such property or to secure
indebtedness incurred solely for the purpose of financing the acquisition of
such property, including the mortgage or remortgage of 9320 Telstar Avenue, El
Monte, California or (b) liens or security interests existing on such property
at the time of its acquisition (other than any such lien or security interest
created in contemplation of such acquisition), or (c) mechanics' workmen's
materialmen's landlord's, carrier's or other like liens arising in the ordinary
and normal course of business with respect to obligations which are not due or
which are being contested in good faith, PROVIDED that the aggregate principal
amount of the indebtedness secured by the liens or security interests referred
to in clauses (a), (b), and (c) above shall not exceed $70,000,000 at any time
outstanding.
SECTION 10.5. LIMITATIONS ON LOANS, ADVANCES AND INVESTMENTS. Lend money
or extend credit other than in the ordinary and normal course of its business as
presently conducted and except for loans to its officers or employees not to
exceed individually the sum of $2,000,000, or in the aggregate the sum of
$5,000,000; invest other than in (a) direct obligations of the United States
Government, (b) interest bearing certificates of deposit issued by any
commercial banking institution with total assets of not less than One Hundred
Fifty Million Dollars ($150,000,000) and organized under the laws of the United
States or any State thereof, (c) prime commercial paper rated Prime 1 or higher
by Moody's or A-1 or higher by Standard and Poors, and F-1 or higher by Fitch,
(d) securities acquired with Borrower contributions as required under the
Marshall Industries Employees Savings and Retirement Plan, (e) common stock of
competitors, suppliers or customers, not to exceed $250,000 in aggregate per
fiscal year and (f) joint venture or investments in affiliates or other Persons
involving the expenditure of cash or notes for all such transactions occurring
in any Fiscal Year of less than 15% of Borrower's Consolidated Tangible Net
Worth.
SECTION 10.6. RESTRICTIONS ON MERGER, SALE OF ASSETS, ETC. Merge or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether now or owned or hereafter acquired)
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to, or acquire all or substantially all of the assets of, any person or entity,
or permit any of its Subsidiaries to do so if the aggregate purchase price (in
cash and notes) for all such transactions occurring in any Fiscal Year is in
excess of 15% of Borrower's Consolidated Tangible Net Worth; or liquidate
dissolve, merge or consolidated or commence any proceeding therefor; sell any
assets except in the ordinary and normal course of its business as now
conducted, including the acquisition and sale of office and warehouse facilities
for use in the business; or lease, assign or transfer any substantial part of
its fixed assets or business, or any property or other assets, necessary for the
continuances of its business, including without limitation, the selling of any
property or other assets which includes the leasing back of such property or
other assets, PROVIDED, HOWEVER, that any Subsidiary of Borrower may merge or
consolidate with or into, or dispose of assets to, or acquire assets of, any
other Subsidiary of Borrower and except that any Subsidiary of Borrower may
merge into or dispose of assets to Borrower and Borrower may merge, or
consolidate with (or into), and any Subsidiary of Borrower.
SECTION 10.7. RESTRICTIONS ON DIVIDENDS AND DISTRIBUTIONS. Declare or
make any dividend payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any shares of any class of
capital stock of the Borrower (or permit any of its Subsidiaries to do so), or
purchase, redeem or otherwise acquire for value (or permit any of its
Subsidiaries to do so) any shares of any class of capital stock of the Borrower
or any warrants, rights or options to acquire any such shares, now or hereafter
outstanding, except that the Borrower or any of its Subsidiaries may (a) declare
and make any dividend payment or other distribution payable solely in common
stock of the Borrower or any of its Subsidiaries, (b) purchase, redeem or
otherwise acquire shares of its common stock or warrants rights or options to
acquire any such shares with the proceeds received from substantially concurrent
issue or new shares of its common stock, (c) declare or pay cash dividends to
its shareholders, and (d) purchase, redeem or otherwise acquire shares of its
capital stock or warrants, rights or options to acquire any such shares for cash
not to exceed in any Fiscal Year 10% of Borrower's Consolidated Tangible Net
Worth; PROVIDED, that, immediately after giving effect to such proposed action,
no Event of Default or Default would exist.
SECTION 10.8. TRANSACTIONS WITH AFFILIATES. Directly or indirectly, (a)
make any loan or advance to, or purchase, assume or guarantee any note or other
obligation to or from, any of its officers, directors, or other Affiliates, or
to or from any member of the immediate family of any of its officers, directors
or other Affiliates, or subcontract any operations to any of its Affiliates, or
(b) enter into, or be a party to, any transaction with any of its Affiliates,
except as permitted by Section 10.5 above or except pursuant to the reasonable
requirements of its business and upon fair and reasonable terms that are fully
disclosed to and approved
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in writing by the Lender and are no less favorable to it than it would obtain in
a comparable arm's length transaction with a Person not its Affiliate.
Furthermore, it is understood that neither the Permitted SEI Transaction nor any
purchase contracts entered into by the Borrower with Amistar, Inc. in the
ordinary course of business shall constitute a transaction with an Affiliate for
the purposes of this Section 10.8.
SECTION 10.9. REGULATIONS G, T AND U. Use of proceeds of the Loan
hereunder, directly or indirectly, to purchase or carry any margin stock (within
the meaning of Regulations G, T and U of the Board of Governors of the Federal
Reserve System) or to extend credit to others for the purpose of purchasing or
carrying, directly or in directly, any margin stock.
SECTION 10.10. LEASE OBLIGATIONS. Create or suffer to exist, or permit
any of its Subsidiaries to create or suffer to exist, any obligations for the
payment of rental for any property under leases or agreements to lease having a
term of one year or more which would cause the direct or contingent liabilities
of the Borrower and its Subsidiaries, on a Consolidated basis, in respect of all
such obligations to exceed $6,000,000 payable in any period of twelve (12)
consecutive calendar months excluding rentals for Borrower's electronic data
processing equipment but including, without limitation, all other rentals
capitalized under FASB 13.
SECTION 10.11. ACCOUNTING CHANGES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any significant change in accounting
treatment and reporting practices, except as permitted by GAAP, or change the
fiscal year of the Borrower or any of its Subsidiaries.
SECTION 10.12. COMPLIANCE WITH ERISA.
(a) Permit the occurrence of any Termination Event which would result in a
liability to the Borrower or any ERISA Affiliate in excess of $1,000,000;
(b) Permit the present value of all benefit liabilities under all Pension
Plans to exceed the current value of the assets of such Pension Plans allocable
to such benefit liabilities by more than $1,000,000;
(c) Permit any accumulated funding deficiency in excess of $1,000,000 (as
defined in Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived;
(d) Fail to make any contribution or payment to any Multiemployer Plan
which the Borrower or any ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto
which results in or is likely to result in a liability in excess of $1,000,000;
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(e) Engage, or permit the Borrower or any ERISA Affiliate to engage, in
any prohibited transaction under Section 406 of ERISA or Section 4975 of the
Code for which a civil penalty pursuant to Section 502(i) of ERISA or a tax
pursuant to Section 4975 of the Code in excess of $1,000,000 is imposed;
(f) Permit the establishment of any Employee Benefit Plan providing post-
retirement welfare benefits or establish or amend any Employee Benefit Plan
which establishment or amendment could result in liability to the Borrower or
any ERISA Affiliate or increase the obligation of the Borrower or any ERISA
Affiliate to a Multiemployer Plan which liability or increase, individually or
together with all similar liabilities and increases, is material to the Borrower
or any ERISA Affiliate; or
(g) Fail, or permit the Borrower or any ERISA Affiliate to fail, to
establish, maintain and operate each Employee Benefit Plan in compliance in all
material respects with the provisions of ERISA, the Code and all other
applicable laws and the regulations and interpretations thereof.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1. EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:
(a) DEFAULT IN PAYMENT OF LOANS. The Borrower shall default in any
payment of principal of, or interest on, any Loan, Note, or Reimbursement
Obligation, or the principal of, or interest on, any Acceptance, each when and
as due (whether at maturity, by reason of acceleration or otherwise) and such
default shall continue for ten (10) days after such due date.
(b) OTHER PAYMENT DEFAULT. The Borrower shall default in the payment when
and as due of any other Obligation and such default shall continue for five (5)
days after written notice thereof has been given to the Borrower by the Lender
at the address specified herein.
(c) MISREPRESENTATION. Any representation or warranty made or deemed to
be made by the Borrower under this Agreement, any Loan Document, or any
amendment hereto or thereto, shall at any time prove to have been incorrect or
misleading in any material respect when made.
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(d) DEFAULT IN PERFORMANCE OF CERTAIN COVENANTS. The Borrower shall
default in the performance or observance of any covenant or agreement contained
in Sections 8.4, 8.5, 9.1, 9.3, 9.6, or Section 10.1 through and including
Section 10.7 of this Agreement.
(e) DEFAULT IN PERFORMANCE OF OTHER COVENANTS AND CONDITIONS. The
Borrower shall default in the performance or observance of any term, covenant,
condition or agreement contained in this Agreement (other than as specifically
provided for otherwise in this Section 11.1) and such default shall continue for
a period of ten (10) days after written notice thereof has been given to the
Borrower by the Lender; PROVIDED, that if the Borrower shall diligently pursue
the cure of such default during such ten (10) day period and such default would
not, in the reasonable judgment of the Lender, have a material adverse effect on
the business or financial condition of the Borrower, the Borrower shall have
such longer period, not to exceed forty-five (45) days, as may be necessary to
cure such default.
(f) LOAN DOCUMENTS. Any event of default shall occur under any Loan
Document other than this Agreement.
(g) DEBT CROSS-DEFAULT. The Borrower shall (i) default in the payment of
any Debt (other than the Notes) or Operating Leases the aggregate outstanding
amount of which or aggregate obligations in respect of which is in excess of
$2,000,000 beyond the period of grace, if any, provided in the instrument or
agreement under which such Debt or Operating Leases were created; or (ii)
default in the observance or performance of any other agreement or condition
relating to any Debt (other than the Notes) or Operating Leases the aggregate
outstanding amount of which or aggregate obligations in respect of which is in
excess of $2,000,000 or contained in any instrument or agreement evidencing,
securing or relating thereto or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Debt or Operating Leases (or a trustee or
agent on behalf of such holder or holders) to cause, with the giving of notice
if required, any such Debt or Operating Leases to become due prior to its stated
maturity (any applicable grace period having expired).
(h) OTHER CROSS-DEFAULTS. The Borrower shall default in the payment when
due, or in the performance or observance, of any obligation or condition of any
Material Contract the breach of which could have a material adverse effect on
the Borrower unless, but only as long as, the existence of any such default is
being contested by the Borrower in good faith by appropriate proceedings and
adequate reserves in respect thereof have been established on the books of the
Borrower to the extent required by GAAP.
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(i) CHANGE OF CONTROL. (i) Any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934), directly or indirectly, of securities of the Borrower (or other
securities convertible into such securities) representing 35% or more of the
combined voting power of all securities of the Borrower entitled to vote in the
election of directors, other than securities having such power only by reason of
the happening of the contingency; or (ii) any Person or two or more Persons
acting in concert shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that upon consummation, will result in
its or their acquisition of, the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Borrower; or (iii)
the existing directors of the Borrower for any reason, other than the death or
incapacity of any such existing directors, cease to constitute a majority of the
Borrower's board of directors. "Existing directors" means (x) individuals
constituting the Borrower's board of directors on the Closing Date, and (y) any
subsequent director whose election by the Borrower's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then in office, which
directors either were directors on the Closing Date or whose election or
nomination for election was previously so approved.
(j) VOLUNTARY BANKRUPTCY PROCEEDING. The Borrower shall (i) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect); (ii) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition for adjustment of debts; (iii) consent to or fail to contest
in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws; (iv) apply for or
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
or liquidator of itself or of a substantial part of its property, domestic or
foreign; (v) admit in writing its inability to pay its debts as they become due;
(vi) make a general assignment for the benefit of creditors; or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.
(k) INVOLUNTARY BANKRUPTCY PROCEEDING. A case or other proceeding shall
be commenced against the Borrower in any court of competent jurisdiction seeking
(i) relief under the federal bankruptcy laws (as now or hereafter in effect) or
under any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts; or (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like for the Borrower or for all
or any substantial part of their respective assets, domestic or foreign, and
such case or proceeding shall continue undismissed or unstayed for a period of
sixty (60)
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consecutive calendar days, or an order granting the relief requested in such
case or proceeding (including, but not limited to, an order for relief under
such federal bankruptcy laws) shall be entered.
(l) ERISA EVENTS. The occurrence of any of the following events: (i) the
Borrower or any ERISA Affiliate fails to make full payment when due of all
amounts which, under the provisions of any Pension Plan or Section 412 of the
Code, the Borrower or any ERISA Affiliate is required to pay as contributions
thereto; or (ii) an accumulated funding deficiency in excess of $1,000,000,
occurs or exists, whether or not waived, with respect to any Pension Plan; or
(iii) a Termination Event; or (iv) the Borrower or any ERISA Affiliate as
employers under one or more Multiemployer Plans makes a complete or partial
withdrawal from such Multiemployer Plans and the plan sponsor of such
Multiemployer Plans notifies such withdrawing employer that such employer has
incurred a withdrawal liability requiring payments in an amount exceeding
$1,000,000.
(m) JUDGMENT. A judgment or order for the payment of money which exceeds
$1,000,000 in amount, or which when combined with any such other unsatisfied
judgment or order for the payment of money exceeds $5,000,000, shall be entered
against the Borrower by any court and such judgment or order shall continue
undischarged or unstayed for a period of thirty (30) days.
(n) ATTACHMENT. A warrant or writ of attachment or execution or similar
process shall be issued against any property of the Borrower which exceeds
$1,000,000 in value, or which when combined with any such other unsatisfied
warrant, writ or similar process exceeds $5,000,000 in value, and such warrant
or process shall continue undischarged or unstayed for a period of thirty (30)
days.
SECTION 11.2. REMEDIES. Upon the occurrence of an Event of Default, the
Lender may by notice to the Borrower:
(a) ACCELERATION; TERMINATION OF FACILITIES. Declare the principal of
and interest on the Loans and the Note at the time outstanding, and all other
amounts owed to the Lender under this Agreement or any of the other Loan
Documents and all other Obligations, to be forthwith due and payable, whereupon
the same shall immediately become due and payable without presentment, demand,
protest or other notice of any kind, all of which are expressly waived, anything
in this Agreement or the other Loan Documents to the contrary notwithstanding.
(b) LETTERS OF CREDIT. With respect to all Letters of Credit with respect
to which presentment for honor shall not have occurred at the time of any
acceleration pursuant to the preceding paragraph, require the Borrower at such
time to deposit in an interest-bearing cash collateral account opened by the
Lender an amount equal to the aggregate then undrawn and unexpired amount of
such
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Letters of Credit. Amounts held in such cash collateral account shall be
applied by the Lender to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay the
other Obligations. After all such Letters of Credit shall have expired or been
fully drawn upon, the Reimbursement Obligations shall have been satisfied in
full, the balance, if any, in such cash collateral account shall be returned to
the Borrower.
(c) RIGHTS OF COLLECTION. Exercise on behalf of the Lender all of its
other rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Borrower's Obligations.
SECTION 11.3. RIGHTS AND REMEDIES CUMULATIVE; NON-WAIVER; ETC. The
enumeration of the rights and remedies of the Lender set forth in this Agreement
is not intended to be exhaustive and the exercise by the Lender of any right or
remedy shall not preclude the exercise of any other rights or remedies, all of
which shall be cumulative, and shall be in addition to any other right or remedy
given hereunder or under the Loan Documents or that may now or hereafter exist
in law or in equity or by suit or otherwise. No delay or failure to take action
on the part of the Lender in exercising any right, power or privilege shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or privilege preclude other or further exercise thereof or the
exercise of any other right, power or privilege or shall be construed to be a
waiver of any Event of Default. No course of dealing between Borrower and the
Lender or their respective agents or employees shall be effective to change,
modify or discharge any provision of this Agreement or any of the other Loan
Documents or to constitute a waiver of any Event of Default.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. NOTICES.
(a) METHOD OF COMMUNICATION. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested. A telephonic notice to the Lender as
understood by the Lender will be deemed to be the controlling and proper
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notice in the event of a discrepancy with or failure to receive a confirming
written notice.
(b) ADDRESSES FOR NOTICES. Notices to any party shall be sent to it at
the following addresses, or any other address as to which all the other parties
are notified in writing.
If to the Borrower: Marshall Industries
9320 Telstar Avenue
El Monte, California 91731
Attn: Henry W. Chin,
Chief Financial Officer
Telephone No.: (818) 307-6232
Telecopy No.: (818) 307-6257
If to the Lender: First Union National Bank
of North Carolina
One First Union Center
301 South College Street
Charlotte, North Carolina 28288
Attention: Mr. John Reid
Telephone No.: (704) 388-1385
Telecopy No.: (704) 374-2802
(c) LENDER'S OFFICE. The Lender hereby designates its office located at
the address set forth above, or any subsequent office which shall have been
specified for such purpose by written notice to the Borrower, as the Lender's
Office referred to herein, to which payments due are to be made.
SECTION 12.2. EXPENSES. The Borrower will pay all out-of-pocket expenses
of the Lender in connection with: (a) the preparation, execution and delivery
of this Agreement and each of the other Loan Documents, whenever the same shall
be executed and delivered, including appraiser's fees, search fees, recording
fees, taxes and the reasonable fees and disbursements of counsel for the Lender;
(b) the preparation, execution and delivery of any waiver, amendment or consent
by the Lender relating to this Agreement or any of the Loan Documents including
fees and disbursements of counsel for the Lender; and (c) upon an Event of
Default, consulting with one or more Persons, including accountants and
attorneys, concerning or related to the nature, scope or value of any right or
remedy of the Lender hereunder or under any of the other Loan Documents,
including any review of factual matters in connection therewith, which expenses
shall include the fees and disbursements of such Persons. In addition, the
Borrower will pay all out-of-pocket expenses of the Lender in connection with
prosecuting or defending any claim in any way arising out of, related to,
connected with, or enforcing any provision of, this Agreement or any of the
other Loan Documents, which expenses shall include the fees and disbursements of
counsel and of experts and other consultants retained by the Lender.
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SECTION 12.3. STAMP AND OTHER TAXES. The Borrower will pay any and all
stamp, registration, recordation and similar taxes, fees or charges and shall
indemnify the Lender against any and all liabilities with respect to or
resulting from any delay in the payment or omission to pay any such taxes, fees
or charges which may be payable or determined to be payable in connection with
the execution, delivery, performance or enforcement of this Agreement and any of
the other Loan Documents or the perfection of any rights thereunder.
SECTION 12.4. SET-OFF. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, upon and
after the occurrence of any Event of Default and during the continuance thereof,
the Lender, any Affiliates of the Lender and any participant of the Lender in
accordance with Section 12.11 are hereby authorized by the Borrower at any time
or from time to time, without notice to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, time or demand, including, but
not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured, excluding government securities required by Applicable Law
to be held as security for worker's compensation and similar claims) and any
other indebtedness at any time held or owing by the Lender or any Affiliate of
the Lender, or any participant to or for the credit or the account of the
Borrower against and on account of the Obligations (applied to current
Obligations first) irrespective of whether or not (a) the Lender shall have made
any demand under this Agreement or any of the other Loan Documents, or (b) the
Lender shall have declared any or all of the Obligations to be due and payable
as permitted by Section 11.2 and although such Obligations shall be contingent
or unmatured.
SECTION 12.5. GOVERNING LAW. This Agreement, the Note and the other Loan
Documents, unless otherwise expressly set forth therein, shall be governed by,
construed and enforced in accordance with the laws of the State of North
Carolina, without reference to the conflicts or choice of law principles
thereof.
SECTION 12.6. CONSENT TO JURISDICTION. The Borrower hereby irrevocably
consents to the personal jurisdiction of the state and federal courts located in
Mecklenburg County, North Carolina, in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, the Note and the
other Loan Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations. The Borrower hereby irrevocably
consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Lender in connection with this
Agreement, the Note or the other Loan Documents, any rights or obligations
hereunder or thereunder, or the performance of such rights and obligations, on
behalf of itself or its property, in the manner specified in Section 12.1.
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Nothing in this Section 12.6 shall affect the right of the Lender to serve legal
process in any other manner permitted by Applicable Law or affect the right of
the Lender to bring any action or proceeding against the Borrower or its
properties in the courts of any other jurisdictions.
SECTION 12.7. WAIVER OF JURY TRIAL. THE LENDER AND THE BORROWER HEREBY
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY
ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 12.8. REVERSAL OF PAYMENTS. To the extent the Borrower makes a
payment or payments to the Lender or the Lender receives any payment for the
Borrower's benefit, which payments or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Lender.
SECTION 12.9. INJUNCTIVE RELIEF. The Borrower recognizes that, in the
event the Borrower fails to perform, observe or discharge any of its obligations
or liabilities under this Agreement, any remedy of law may prove to be
inadequate relief to the Lender. Therefore, the Borrower agrees that the Lender,
at the Lender's option, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
SECTION 12.10. ACCOUNTING MATTERS. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Borrower to determine whether it is in compliance with any covenant contained
herein, shall, except as otherwise expressly contemplated hereby or unless there
is an express written direction by the Lender to the contrary agreed to by the
Borrower, be performed in accordance with GAAP. In the event that changes in
GAAP shall be mandated by the Financial Accounting Standards Board, or any
similar accounting body of comparable standing, or shall be recommended by the
Borrower's certified public accountants, to the extent that such changes would
modify such accounting terms or the interpretation or computation thereof, such
changes shall be followed in defining such accounting terms only from and after
the date the Borrower and the Lender shall have amended this Agreement to the
extent necessary to reflect any such changes in the financial covenants and
other terms and conditions of this Agreement.
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SECTION 12.11. ASSIGNMENT. The terms hereof shall be binding upon and
inure to the benefit of the heirs, successors, assigns, and personal
representatives of the parties hereto; PROVIDED, that the Borrower shall not
assign this Agreement or any of its rights, interests, duties or obligations
hereunder or any Loan proceeds or any other moneys to be advanced hereunder in
whole or in part without the prior written consent of the Lender and that any
such assignment (whether voluntary or by operation of law) without said consent
shall be void. It is expressly recognized and agreed that the Lender may
assign, or grant participation in, this Agreement, the Note and any other Loan
Document, in whole or in part to any other person, firm or legal entity provided
that all of the provisions hereof shall continue in full force and effect and,
in the event of such assignment, the Lender shall thereafter be relieved of all
liability hereunder and any Loan disbursements made by any assignee shall be
deemed made in pursuance and not in modification hereof and shall be evidenced
by the Note.
SECTION 12.12. AMENDMENTS, WAIVERS AND CONSENTS. Any term, covenant,
agreement or condition of this Agreement or of any other Loan Document may be
amended or waived by the Lender, and any consent given by the Lender if, but
only if, such amendment, waiver or consent is in writing signed by the Lender
and, in the case of an amendment, by the Borrower.
SECTION 12.13. PERFORMANCE OF BORROWER'S DUTIES. The Borrower's
obligations under this Agreement and each of the other Loan Documents shall be
performed by the Borrower at its sole cost and expense.
SECTION 12.14. INDEMNIFICATION. The Borrower agrees to reimburse the
Lender for all reasonable costs and expenses, including counsel fees and
disbursements, incurred, and to indemnify and hold the Lender harmless from and
against all losses suffered by the Lender in connection with (a) the exercise by
the Lender of any right (other than the rights described in Section 12.11
hereof) or remedy granted to them under this Agreement or any of the other Loan
Documents, (b) any claim, and the prosecution or defense thereof, arising out of
or in any way connected with this Agreement or any of the other Loan Documents,
and (c) the collection or enforcement of the Obligations or any of them;
PROVIDED, that the Borrower shall not be obligated to reimburse the Lender for
costs and expenses, or indemnify the Lender for any loss, resulting from the bad
faith, gross negligence or willful misconduct of the Lender.
SECTION 12.15. ALL POWERS COUPLED WITH INTEREST. All powers of attorney
and other authorizations granted to the Lender and any Persons designated by the
Lender pursuant to any provisions of this Agreement or any of the other Loan
Documents shall be deemed coupled with an interest and shall be irrevocable so
long as any of the Obligations remain unpaid or unsatisfied.
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SECTION 12.16. SURVIVAL OF INDEMNITIES. Notwithstanding any termination
of this Agreement, the indemnities to which the Lender is entitled under the
provisions of this Article XII and any other provision of this Agreement and the
other Loan Documents shall continue in full force and effect and shall protect
the Lender against events arising after such termination as well as before.
SECTION 12.17. TITLES AND CAPTIONS. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
SECTION 12.18. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 12.19. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement.
SECTION 12.20. TERM OF AGREEMENT. This Agreement shall remain in effect
from the Closing Date through and including the date upon which all Obligations
shall have been indefeasibly and irrevocably paid and satisfied in full. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
SECTION 12.21. INCONSISTENCIES WITH OTHER DOCUMENTS. In the event there
is a conflict or inconsistency between this Agreement, the Note and the other
Loan Documents, the terms of this Agreement shall control.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, all as of the day and year first
written above.
BORROWER:
[CORPORATE SEAL] MARSHALL INDUSTRIES
Attest:
By: _______________________ By:______________________________
Name: ____________________ Name:____________________________
Title: _________ Secretary Title: __________ President
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LENDER:
[CORPORATE SEAL] FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
Attest:
By: ______________________ By:______________________________
Name: ____________________ Name:____________________________
Title: _________ Secretary Title: __________ Vice-President
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LIST OF EXHIBITS
Exhibit A - Form of Revolving Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion/Continuation
Exhibit D - Form of Officer's Certificate
69
<PAGE>
LIST OF SCHEDULES
Schedule 7.1(s) - List of Debt, Operating Leases and Guarantees
Schedule 7.1(u) - Litigation
Schedule 7.1(w) - Subsidiaries of the Borrower
70
<PAGE>
LIST OF EXHIBITS
Exhibit A - Form of Revolving Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion/Continuation
Exhibit D - Form of Officer's Certificate
LIST OF SCHEDULES
Schedule 7.1(s) - List of Debt, Operating Leases and Guarantees
Schedule 7.1(u) - Litigation
Schedule 7.1(w) - Subsidiaries of the Borrower
71
<PAGE>
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the "AMENDMENT"), dated as of
June 1, 1995, effective as of June 1, 1995, is entered into by and between
MARSHALL INDUSTRIES (the "COMPANY") and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION (the "BANK").
RECITALS
A. The Company and the Bank are parties to a Credit Agreement dated as of
March 1, 1993, as amended by that certain First Amendment to Credit Agreement
dated as of May 3, 1993 and by that certain Second Amendment to Credit Agreement
dated as of March 25, 1994 (as so amended,the "CREDIT AGREEMENT") pursuant to
which the Bank has extended certain credit facilities to the Company.
B. The Company has requested that the Bank agree to certain amendments of
the Credit Agreement.
C. The Bank is willing to amend the Credit Agreement, subject to the terms
and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings, if any, assigned to them in the Credit
Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT.
(a) Section 1.01 of the Credit Agreement shall be amended at the
defined term "Applicable Margin" by amending and restating it in its entirety as
follows:
""APPLICABLE MARGIN" means
(i) with respect to Reference Rate Loans, zero percent (0.00%);
and
(ii) with respect to CD Rate Loans, LIBOR Loans, and Offshore
Rate Loans, one-half percent (0.50%)."
(b) Section 1.01 of the Credit Agreement shall be amended at the
defined term "CD Rate" by amending in its entirety the defined term "Assessment
Rate" occurring in such definition as follows:
""ASSESSMENT RATE" means, for any day of such Interest Period, the
rate determined by the Bank as equal to the annual assessment rate in
effect on such day payable to the
<PAGE>
Federal Deposit Insurance Corporation (the "FDIC") by a member of the
Bank Insurance Fund that is classified as adequately capitalized and
within supervisory subgroup "A" (or a comparable successor assessment
risk classification within the meaning of 12 C.F.R. 327.3) for
insuring time deposits at offices of such member in the United States;
or, in the event that the FDIC shall at any time hereafter cease to
assess time deposits based upon such classifications or successor
classifications, equal to the maximum annual assessment rate in effect on
such day that is payable to the FDIC by the Bank for insuring time deposits
at offices of such banks in the United States.
(c) Section 1.01 of the Credit Agreement shall be amended at the
defined term "CD Rate" by amending the defined term "CD Reserve Percentage"
occurring in such definition by deleting the phrase "(expressed as a decimal)"
and replacing it with "(expressed as a decimal, rounded upward to the next
1/100th of 1%)".
(d) Section 1.01 of the Credit Agreement shall be amended at the
defined term "Loan Maturity Date" by deleting the date "December 31, 1996" and
inserting "September 30, 1998" in lieu thereof.
(e) Section 1.01 of the Credit Agreement shall be amended at the
defined term "LIBO Rate" by (i) amending the defined term "London Offered Rate"
occurring in such definition by deleting the word "for" and inserting "in the
approximate amount of the Loan to be made as a LIBOR Loan and having a maturity
comparable to" after the phrase "Dollar deposits, "and (ii) by adding the
following at the end of the defined term "LIBO Rate":
"The LIBO Rate shall be adjusted automatically as to all LIBOR Loans
then outstanding as of the effective date of any change in the Offshore
Reserve Percentage.".
(f) Section 1.01 of the Credit Agreement shall be amended at the
defined term "Offshore Rate" by (i) amending the defined term "Offshore Reserve
Percentage" occurring in such definition in its entirety as follows:
""OFFSHORE RESERVE PERCENTAGE" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded
upward to the next 1/100th of 1%) in effect on such day under regulations
issued from time to time by the Federal Reserve Board for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities").";
2
<PAGE>
and (ii) by adding the following at the end of the defined term "Offshore Rate":
"The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Loans then outstanding as of the effective date of any change in the
Offshore Reserve Percentage."
(g) Section 1.01 of the Credit Agreement shall be amended at the
defined term "Revolving Termination Date" by deleting the date "December 31,
1995" and inserting "September 30, 1998" in lieu thereof.
(h) Section 2.03 of the Credit Agreement shall be amended as follows:
(i) Clause (A) of subsection (a) thereof shall be restated in
its entirety as follows:
"(A) each Trade Letter of Credit shall have an expiration date
not later than 180 days after the date of issuance thereof, but no later
than the Revolving Termination Date, and each Standby Letter of Credit
shall have an expiration date not later than one year after the date of
issuance thereof, but no later than the Revolving Termination Date;";
(ii) the "and" at the end of clause (C) of subsection (a) thereof
shall be deleted, and "; and" shall be added at the end of clause (D) of such
subsection in lieu of the period at the end thereof; and
(iii) the following shall be added as clause (E) at the end of
subsection (a) thereof:
"(E) the face or stated amount of such Trade Letter of Credit
together with the face or stated amount of all other Trade Letters of
Credit outstanding and all unreimbursed drawings under any Trade Letters of
Credit shall not exceed $20,000,000, and the face or stated amount of such
Standby Letter of Credit together with the face or stated amount of all
other Standby Letters of Credit outstanding and all unreimbursed drawings
under any Standby Letters of Credit shall not exceed $10,000,000."
(iv) Subsection (g) thereof shall be amended and restated in its
entirety as follows:
"(g) FEES; INTEREST ON DRAWN AMOUNTS. The Company shall pay to
the Bank a non-refundable issuance fee equal to 1.00% per annum of the face
or stated amount of each Standby Letter of Credit, payable on the date of
issuance thereof. The Company shall also pay to the Bank issuance fees,
negotiation fees, and other fees at the times and in the amounts as the
Bank may advise the Company as
3
<PAGE>
being applicable to such Letter of Credit. Unless a different rate is
otherwise expressly provided in the applicable Letter of Credit Agreement,
the Company shall pay on demand interest on the amount of all drawings
honored or payments made by the Bank under any Letter of Credit and not
reimbursed by the Company, from the date of such drawing or payment,
at the per annum rate equal to the Reference Rate."
(i) Subsection 2.08(a) shall be amended and restated in its entirety
as follows:
"(a) FACILITY FEE. On the Closing Date, on January 1, 1994, January
1, 1995, January 1, 1996 and January 1, 1997, the Company shall pay to the
Bank an irrevocable facility fee equal to 0.125% of the Commitment at such
time."
(j) Subsection 7.03(c) shall be amended by deleting the phrase "ten
percent (10%)" and inserting "fifteen percent (15%)" in lieu thereof.
(k) Section 7.05 shall be amended by deleting the word "and" at the
end of subsection (b) thereof, adding a new subsection (c) after subsection (b)
as follows: "(c) Guaranty Obligations to the Bank; and", and re-lettering the
existing subsection (c) as subsection (d).
(l) Section 7.10 shall be amended and restated in its entirety as
follows:
"7.10 TANGIBLE NET WORTH. The Company shall not permit its Tangible
Net Worth on a consolidated basis at any time to be less than the sum of
(i) $230,000,000 PLUS (ii) 70% of the Company's consolidated net income
(but not less any net losses for any period) earned in each fiscal quarter
starting with the quarter ended February 28, 1995, PLUS (iii) 70% of the
proceeds (whether in cash, other property, or in kind) of equity securities
or subordinated debt issued by the Company from and after the fiscal
quarter ended February 28, 1995, LESS (iv) repurchases of the Company's
capital stock made after March 1, 1995, and not exceeding $20,000,000 in
the aggregate."
(m) Subsection 8.01(e) shall be amended by deleting "$500,000" in
each place where it appears therein and inserting "$2,000,000" in lieu thereof.
3. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to the Bank as follows:
(a) No Default or Event of Default has occurred and is continuing.
(b) The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not
4
<PAGE>
require any registration with, consent or approval of, notice to or action by,
any Person (including any Governmental Authority) in order to be effective and
enforceable. The Credit Agreement as amended by this Amendment constitutes
the legal, valid and binding obligations of the Company, enforceable against
it in accordance with its respective terms, without defense, counterclaim
or offset.
(c) All representations and warranties of the Company contained in
the Credit Agreement are true and correct.
(d) The Company is entering into this Amendment on the basis of its
own investigation and for its own reasons, without reliance upon the Bank or any
other Person.
4. EFFECTIVE DATE. This Amendment will become effective as of June 1,
1995 (the "EFFECTIVE DATE"), PROVIDED THAT each of the following conditions
precedent is satisfied:
(a) The Bank has received from the Company a duly executed original
(or, if elected by the Bank, an executed facsimile copy) of this Amendment.
(b) The Bank has received from the Company a copy of a resolution
passed by the board of directors of such corporation, certified by the Secretary
or an Assistant Secretary of such corporation as being in full force and effect
on the date hereof, authorizing the execution, delivery and performance of this
Amendment.
5. RESERVATION OF RIGHTS. The Company acknowledges and agrees that the
execution and delivery by the Bank of this Amendment shall not be deemed to
create a course of dealing or otherwise obligate the Bank to forbear or execute
similar amendments under the same or similar circumstances in the future.
6. MISCELLANEOUS.
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and effect
and all references therein to such Credit Agreement shall henceforth refer to
the Credit Agreement as amended by this Amendment. This Amendment shall be
deemed incorporated into, and a part of, the Credit Agreement.
(b) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and thereto and their respective successors and assigns. No
third party beneficiaries are intended in connection with this Amendment.
(c) This Amendment shall be governed by and construed in accordance
with the law of the State of California.
(d) This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, but all
5
<PAGE>
such counterparts together shall constitute but one and the same instrument.
Each of the parties hereto understands and agrees that this document (and
any other document required herein) may be delivered by any party thereto
either in the form of an executed original or an executed original sent by
facsimile transmission to be followed promptly by mailing of a hard copy
original, and that receipt by the Bank of a facsimile transmitted document
purportedly bearing the signature of the Company shall bind the Company with
the same force and effect as the delivery of a hard copy original. Any
failure by the Bank to receive the hard copy executed original of such document
shall not diminish the binding effect of receipt of the facsimile transmitted
executed original of such document which hard copy page was not received by
the Bank.
(e) This Amendment, together with the Credit Agreement, contains the
entire and exclusive agreement of the parties hereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior
drafts and communications with respect thereto. This Amendment may not be
amended except in accordance with the provisions of Section 9.03 of the Credit
Agreement.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment or the
Credit Agreement, respectively.
(g) Company covenants to pay to or reimburse the Bank, upon demand,
for all costs and expenses (including allocated costs of in-house counsel)
incurred in connection with the development, preparation, negotiation, execution
and delivery of this Amendment.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment as of the date first above written.
MARSHALL INDUSTRIES
By: ____________________________________
Title: _________________________________
By: ____________________________________
Title: _________________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: ____________________________________
Title: Vice President
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARSHALL
INDUSTRIES QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1995
<PERIOD-END> AUG-31-1995
<CASH> 1,333
<SECURITIES> 0
<RECEIVABLES> 144,262
<ALLOWANCES> (7,526)
<INVENTORY> 217,967
<CURRENT-ASSETS> 368,711
<PP&E> 87,370
<DEPRECIATION> 47,023
<TOTAL-ASSETS> 443,371
<CURRENT-LIABILITIES> 107,799
<BONDS> 39,000
<COMMON> 17,278
0
0
<OTHER-SE> 274,770
<TOTAL-LIABILITY-AND-EQUITY> 443,371
<SALES> 275,870
<TOTAL-REVENUES> 275,870
<CGS> 224,925
<TOTAL-COSTS> 28,981
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 917
<INTEREST-EXPENSE> 308
<INCOME-PRETAX> 20,739
<INCOME-TAX> 8,540
<INCOME-CONTINUING> 12,179
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,199
<EPS-PRIMARY> .70
<EPS-DILUTED> 0
</TABLE>
