EXHIBIT 10.26
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is entered into as of the 22nd day of April, 2002 by and among the banks that
are or may from time to time become parties hereto (individually a "Bank" and
collectively, the "Banks"), LASALLE BANK NATIONAL ASSOCIATION, a national
banking association (in its individual capacity, "LaSalle"), as agent ("Agent")
for the Banks, and SIGMATRON INTERNATIONAL, INC., a Delaware corporation (the
"Borrower").
WITNESSETH:
WHEREAS, LaSalle and Borrower originally entered into that certain Loan
and Security Agreement dated as of August 25, 1999 (the "Agreement");
WHEREAS, LaSalle previously assigned $10,000,000 (as subsequently
reduced to $8,000,000) of the Revolving Credit Commitment (as defined in the
Loan Agreement) to National City Bank of Michigan/Illinois ("National City"),
pursuant to that certain Assignment Agreement dated as of June 30, 2000 between
LaSalle and National City;
WHEREAS, Agent, the Banks and Borrower entered into that certain
Amendment to Loan and Security Agreement dated as of August 31, 2000, that
certain Forbearance Agreement and Second Amendment to Loan and Security
Agreement dated as of February 1, 2001, that certain Forbearance Agreement and
Third Amendment to Loan and Security Agreement dated as of May 31, 2001, that
certain Forbearance Agreement and Fourth Amendment to Loan and Security
Agreement dated as of July 31, 2001 and that certain Fifth Amendment to Loan and
Security Agreement dated as of November 30, 2001 (the Loan Agreement and all of
the foregoing amendments are collectively referred to as the "Agreement"); and
WHEREAS, the Borrower and the Banks have agreed to further amend the
Agreement in accordance with the terms and conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements herein contained and for the purposes of setting forth the terms and
conditions of this Amendment, the parties, intending to be bound, hereby agree
as follows:
1. Incorporation of the Agreement. All capitalized terms which are not
defined hereunder shall have the same meanings as set forth in the Agreement,
and the Agreement, to the extent not inconsistent with this Amendment, is
incorporated herein by this reference as though the same were set forth in its
entirety. To the extent any terms and provisions of the Agreement are
inconsistent with the amendments set forth in Paragraph 2 below, such terms and
provisions shall be deemed superseded hereby. Except as specifically set forth
herein, the Agreement shall remain in full force and effect and its provisions
shall be binding on the parties hereto.
2. Amendment of the Agreement.
(a) The definition of the terms "Base Rate Margin", "Maturity
Date", "Revolving Loan Borrowing Base" and "Revolving Note" appearing in
Paragraph 1.1 of the Agreement are hereby amended and restated to read as
follows:
"Base Rate Margin" shall mean (i) 1.50% for the period
beginning May 1, 2002 through October 31, 2002; 1.75% for the period
beginning November 1, 2002 through January 31, 2003 and 2.00% for the
period beginning February 1, 2003 through May 1, 2003.
"Maturity Date" means May 1, 2003 with respect to all Loans.
"Revolving Loan Borrowing Base" means, as at any date of
determination thereof, an amount equal to the lesser of (i) the amount
then available under the Revolving Credit Commitment and (ii) an amount
equal to the sum of (A) eighty-five percent (85%) of the net amount of
Eligible Accounts Receivable outstanding at such date and (B) fifty
percent (50%) (the "Inventory Advance Rate") of Eligible Inventory at
such date; provided, however, that the aggregate amount of advances for
Eligible Inventory under the Revolving Credit Commitment shall not
exceed $9,000,000 at any time. Notwithstanding the foregoing, the
Inventory Advance Rate shall be decreased to (x) 45% for the period
beginning November 1, 2002 through January 31, 2003 and (ii) 40%
beginning February 1, 2003 and at all times thereafter.
"Revolving Note" means those certain Substitute Revolving
Notes dated as of April __, 2002 payable by Borrower to each of LaSalle
Bank National Association and National City Bank of Michigan/Illinois
in the maximum principal amounts of $12,000,000 and $8,000,000,
respectively, as amended, modified, substituted or restated from time
to time, together with all renewals and exchanges therefore.
(b) Paragraph 11.2(f)(ii) is hereby amended and restated to
read as follows:
Maintain an Interest Coverage Ratio, at all times, of
at least 8.0:1.0.
(c) Paragraph 11.2(f)(iv) is hereby amended and restated to
read as follows:
(iv) Maintain a Leverage Ratio, at all times, of not
more than the following amounts for each of the periods set forth
below:
Period Required
------ --------
May 1, 2002 through October 31, 2002 2.00:1.0
November 1, 2002 through January 31, 2003 1.75:1.0
February 1, 2003 and at all times thereafter 1.50:1.0
(d) Paragraph 11.2(f)(vi) is hereby amended and restated to
read as follows:
(vi) Maintain EBITDA of not less than the following
amounts for each of the periods set forth below:
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Period Required
------ --------
May 1, 2002 through July 31, 2002 $1,000,000
May 1, 2002 through October 31, 2002 $3,250,000
May 1, 2002 through January 31, 2003 $5,450,000
May 1, 2002 through April 30, 2003 $6,675,000
(e) Paragraph 11.2(f)(v) is hereby amended and restated to read as
follows:
(v) Borrower will not permit the aggregate amount of Capital
Expenditures to exceed $1,000,000 in any fiscal year.
3. Representations and Warranties. The representations and warranties
set forth in Paragraph 11.1 and all covenants set forth in Paragraphs 11.2 and
11.3 of the Agreement shall be deemed remade and affirmed as of the date hereof
by Borrower, except that any and all references to the Agreement in such
representations, warranties and covenants shall be deemed to include this
Amendment.
4. Delivery of Documents/Information. Prior to entering into this
Amendment, Agent shall have received from Borrower the following fully executed
documents, in form and substance satisfactory to Agent, and all of the
transactions contemplated by each such document shall have been consummated or
each condition contemplated by each such document shall have been satisfied:
(a) Substitute Revolving Note of each Bank;
(b) Secretary's Certificate of Borrower with resolutions
and incumbency; and
(c) Officer's Certificate (Closing Bring-Down) of
Borrower.
5. Reference to the Effect on the Agreement.
(a) References. Upon the date of this Amendment and on and
after the date hereof, each reference in the Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import shall mean and be a
reference to the Agreement, as amended hereby.
(b) Ratification. As specifically modified above, the
Agreement and all other documents, instruments and agreements executed and/or
delivered in connection therewith shall remain in full force and effect, and are
hereby ratified and confirmed.
6. Representations and Warranties of the Borrower. Borrower hereby
represents and warrants to Agent and the Banks as of the date hereof as follows:
(a) The execution and delivery of this Amendment and the
performance by Borrower of its obligations hereunder are within the Borrower's
powers and authority, have been duly authorized by all necessary corporate
action and do not and will not contravene or conflict with the Articles of
Incorporation or By-laws of Borrower.
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(b) The Agreement (as amended by this Amendment) and the Other
Agreements constitute legal, valid and binding obligations enforceable in
accordance with their terms by Agent and the Banks against Borrower, and
Borrower expressly reaffirms each of its obligations under the Agreement (as
amended by this Amendment) and each of the Other Agreements, including, without
limitation, the Borrower's Liabilities. Borrower further expressly acknowledges
and agrees that Agent has a valid, duly perfected, first priority and fully
enforceable security interest in and lien against each item of Collateral except
as otherwise set forth in the Agreement. Borrower agrees that it shall not
dispute the validity or enforceability of the Agreement (as it was stated before
and after this Amendment) or any of the Other Agreements or any of its
respective obligations thereunder, or the validity, priority, enforceability or
extent of Agent's security interest in or lien against any item of Collateral,
in any judicial, administrative or other proceeding;
(c) No consent, order, qualification, validation, license,
approval or authorization of, or filing, recording, registration or declaration
with, or other action in respect of, any governmental body, authority, bureau or
agency or other Person is required in connection with the execution, delivery or
performance of, or the legality, validity, binding effect or enforceability of,
this Amendment;
(d) The execution, delivery and performance of this Amendment
by Borrower does not and will not violate any law, governmental regulation,
judgment, order or decree applicable to Borrower and does not and will not
violate the provisions of, or constitute a default or any event of default
under, or result in the creation of any security interest or lien upon any
property of Borrower pursuant to, any indenture, mortgage, instrument, contract,
agreement or other undertaking to which Borrower is a party or is subject or by
which Borrower or any of its real or personal property may be bound;
7. Waiver of Prior Events of Default. The Banks hereby waive all Events
of Default which have occurred prior to the date of this Amendment. Borrower
hereby represents to the Banks that as of the date hereof, and after giving
effect to the provisions of this Amendment (including, but not limited to, the
waiver set forth above), no Event of Default exists and is continuing. Borrower
acknowledges and agrees that the foregoing waiver shall in no way prevent or
limit the Banks' ability to declare an Event of Default based on any event or
circumstance occurring on or after the date hereof.
8. Releases; Indemnities.
(a) In further consideration of the Banks' execution of this
Amendment, Borrower, and on behalf of its successors, assigns, subsidiaries and
Affiliates, hereby forever release Agent and each Bank and their respective
successors, assigns, parents, subsidiaries, Affiliates, officers, employees
directors, agents and attorneys (collectively, the "Releasees") from any and all
debts, claims, demands, liabilities, responsibilities, disputes, causes,
damages, actions and causes of action (whether at law or in equity) and
obligations of every nature whatsoever, whether liquidated or unliquidated,
known or unknown, matured or unmatured, fixed or contingent (collectively,
"Claims"), that Borrower may have against the Releasees which arise from or
relate to any actions which the Releasees may have taken or omitted to take
prior to the date this Amendment was executed, including without limitation with
respect to
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Borrower's Liabilities, any Collateral, the Agreement, any Other Agreement and
any third parties liable in whole or in part for Borrower's Liabilities. This
provision shall survive and continue in full force and effect whether or not
Borrower shall satisfy all other provisions of this Amendment, the Other
Agreements or the Agreement, including payment in full of Borrower's
Liabilities.
(b) Borrower hereby agrees that its obligation to indemnify
and hold the Releasees harmless as set forth in Paragraph 8(a) of this Amendment
shall include an obligation to indemnify and hold the Releasees harmless with
respect to any and all liabilities, obligations, losses, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever incurred by the Releasees, or any of them, whether direct, indirect
or consequential, as a result of or arising from or relating to any proceeding
by, or on behalf of, any Person, including, without limitation, officers,
directors, agents, trustees, creditors, partners or shareholders of Borrower,
whether threatened or initiated, asserting any claim for legal or equitable
remedy under any statute, regulation or common law principle arising from or in
connection with the negotiation, preparation, execution, delivery, performance,
administration and enforcement of this Amendment or any other document executed
in connection herewith. The foregoing indemnity shall survive the payment in
full of the Borrower's Liabilities and the termination of this Amendment, the
Agreement and the Other Agreements.
9. Fees and Expenses. The Borrower agrees to pay on demand all costs,
fees and expenses of or incurred by the Agent in connection with the evaluation,
negotiation, preparation, execution and delivery of this Amendment and the other
instruments and documents executed and delivered in connection with the
transactions described herein (including the filing or recording thereof),
including, but not limited to, the reasonable fees and expenses of counsel for
the Agent, search fees and taxes payable in connection with this Amendment and
any future amendments to the Agreement. Borrower also agrees to pay to Agent,
for the benefit of the Banks, a closing fee equal to $50,000 for the financial
accommodations provided to Borrower under this Amendment to be allocated among
the Banks in accordance with their respective pro-rata portions of the Revolving
Credit Commitment, which shall be due and payable in equal quarterly
installments of $12,500 on the first day of each fiscal quarter beginning on May
1, 2002 through February 1, 2003.
10. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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(SIXTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT SIGNATURE PAGE)
IN WITNESS WHEREOF, the parties hereto have duly executed this Sixth
Amendment to
Loan and Security Agreement as of the date first above written.
LASALLE BANK NATIONAL
ASSOCIATION, for itself and as Agent
By:
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Its:
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NATIONAL CITY BANK OF
MICHIGAN/ILLINOIS, as a Bank
By:
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Its:
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SIGMATRON INTERNATIONAL, INC.
By:
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Its:
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