Exhibit No. 10.31
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT, effective as of the Effective Date (as
defined in Paragraph 28), by and among (A) Southern Electronics
Corporation, a Delaware corporation, and Southern Electronics
Distributors, Inc., a Delaware corporation (collectively the "Original
Borrowers"), (B) National City Bank, Columbus, a national banking
association ("NCB"), and Wachovia Bank of Georgia, N.A., a national
banking association ("WB") (collectively, the "Banks"), and USC
Acquisition Corporation (being renamed U.S. Computer of North America,
Inc.), a Delaware corporation and wholly owned subsidiary of Southern
Electronics Corporation (the "New Borrower"), amending the Revolving
Credit Agreement dated as of June 29, 1995 by and among the Original
Borrowers and the Banks (the "Credit Agreement"). Capitalized terms
used herein and not otherwise defined shall have the meanings given to
them in the Credit Agreement.
The parties hereto hereby agree as follows:
1. The New Borrower shall hereby become and hereafter be a party
to the Credit Agreement bound thereby as one of the Borrowers
thereunder. In connection therewith, the Borrowers (both the Original
Borrowers and the New Borrower) are concurrently herewith executing and
delivering replacement Notes in the form of the Revolving Credit Note
attached hereto as Exhibit 2.10 (the "Replacement Notes") in exchange
for and to replace the existing Notes executed previously by the
Original Borrowers.
2. Subsection 1.01 of the Credit Agreement shall be and it hereby
is amended by modifying the definition of "Applicable Margin" to read
in its entirety as follows:
"Applicable Margin" means, with respect to any Performance
Pricing Determination Date, the percentage set forth below as the
Applicable Margin based upon the L/TNW Ratio of the Borrowers set forth
below, determined pursuant to subsection 2.12(E).
Applicable
L/TNW Ratio Margin
Not more than .80 to 1 .75%
Greater than .80 to 1 but not more than 1 to 1 1.00%
Greater than 1 to 1 but not more than 1.33 to 1 1.25%
Greater than 1.33 to 1 but not more than 1.6 to 1 1.50%
Greater than 1.6 to 1 but not more than 2 to 1 1.75%
Greater than 2 to 1 but not more than 2.25 to 1 2.00%
Greater than 2.25 to 1 2.25%
3. Subsection 1.01 of the Credit Agreement shall be and it hereby
is amended by adding the definitions of "Approved Transaction" and
"Authorized Approved Transaction Financing" which shall read in their
entirety as follows:
"Approved Transaction" means any transaction consented to or
approved in writing by the Banks.
"Authorized Approved Transaction Financing" means any
financing in connection with an Approved Transaction which is
consented to or approved in writing by the Banks.
4. Subsection 1.01 of the Credit Agreement shall be and it hereby
is amended by modifying the definition of "Borrowers" to read in its
entirety as follows:
"Borrowers" means Southern Electronics Corporation, a Delaware
corporation, Southern Electronics Distributors, Inc., a Delaware
corporation and USC Acquisition Corporation (being renamed U.S.
Computer of North America, Inc.), a Delaware corporation.
5. Subsection 1.01 of the Credit Agreement shall be and it hereby
is amended by modifying the definition of "Loan Commitment" to read in
its entirety as follows:
"Loan Commitment" means the sum of Thirty Million Dollars
($30,000,000) or such lesser amount as shall hereafter be
determined from time to time pursuant to subsection 2.16. The
outstanding amount of any Authorized Approved Transaction Financing
shall be given effect in the calculation of and thereby reduce the
remaining Loan Commitment available for Loans and issuance of
Letters of Credit, with each Bank's Share of the Commitment
available for Loans and issuance of Letters of Credit being reduced
by such Bank's share of such outstanding amount of the Authorized
Approved Transaction Financing determined by multiplying such
outstanding amount by the Bank's Percentage. In computing the
Commitment Fee payable under subsection 2.15(A), the unused portion
of the Share of the Commitment of each Bank shall not be reduced by
a Bank's share of such outstanding amount of the Authorized Approved
Transaction Financing.
6. Subsection 1.01 of the Credit Agreement shall be and it hereby
is amended by modifying Item (F) in the definition of "Permitted Liens"
to read in its entirety as follows:
(F) Existing liens set forth on Schedule 1.01-1 attached
hereto and any liens relating to liabilities assumed by any of the
Borrowers in an Approved Transaction;
7. Subsection 3.07 of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:
(C) In lieu of any other letter of credit commissions and
fees provided for in any Letter of Credit Application, the
Borrowers agree to pay to the Issuing Bank for the account of the
Banks (pro rata based upon their respective Percentages) a
commission (the "Stand-By Letter of Credit Commission") on the
undrawn and unexpired amount of each irrevocable Stand-By Letter of
Credit at a rate of 1.50% per annum or at such other rate as agreed
to in writing by the Banks and the Borrowers from time to time
(provided that the Borrowers shall pay to the Issuing Bank for the
account of the Banks in each case a minimum Stand-By Letter of
Credit Commission equal to $250.00), plus reimbursement of any and
all reasonable fees and out-of-pocket costs and expenses incurred
by the Issuing Bank in connection with the issuance of each
Stand-By Letter of Credit. The Stand-By Letter of Credit
Commission and such reimbursement shall be payable on the date
of issuance of each such Stand-By Letter of Credit.
8. Subsection 5.01(P) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:
(P) Southern Electronics Corporation has no Subsidiaries,
other than Southern Electronics Distributors, Inc. and USC
Acquisition Corporation (being renamed U.S. Computer of North
America, Inc.) and any other approved Subsidiaries created in an
Approved Transaction, and no Subsidiary has any Subsidiaries; and
9. Subsection 6.01(F)(2) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:
(2) Maintain a ratio of Liabilities to Tangible Net Worth
(the "L/TNW Ratio") of not more than 2.6 to 1 at all times through
June 29, 1996, 2.5 to 1 at all times from June 30, 1996 through
September 29, 1996, 2.4 to 1 at all times from September 30, 1996
through December 30, 1996, 2.3 to 1 at all times from December 31,
1996 through March 30, 1997, 2.2 to 1 at all times from March 31,
1997 through June 29, 1997 and 2 to 1 at all times thereafter.
10. Subsection 6.01(F)(4) of the Credit Agreement shall be an it
hereby is amended to read in its entirety as follows:
(4) Maintain at all items a minimum Tangible Net Worth of not
less than (a)Twenty-Nine Million Dollars ($29,000,000) plus
(b) Seventy-Five Percent (75%) of Consolidated Net Profit After
Tax for each fiscal quarter of the Borrowers completed after
December 31, 1995. As used herein, "Consolidated Net Profit After
Tax" means the Borrowers' current consolidated earnings (excluding
extraordinary items) less the amount of consolidated income tax
that the Borrowers paid with respect to such earnings.
11. Subsection 6.01(F)(7) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:
(7) Be prohibited from making Restricted Payments at any time
during the Loan Commitment Period and while any obligations are
outstanding hereunder or under the Notes, which in the aggregate
exceed 25% of the aggregate Consolidated Net Profit After Tax
earned after the Unaudited Financial Statements Date, excluding
dividends paid by a Subsidiary of Southern Electronics Corporation
to Southern Electronics Corporation.
12. Subsection 6.02(A) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:
(A) None of the Borrowers will dissolve or liquidate, or
enter into any merger, consolidation, reorganization or
recapitalization or reclassify its capital stock, except that any
of the Borrowers may merge into or consolidate with another
Borrower or participate in an Approved Transaction.
13. Subsection 6.02(B) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:
(B) None of the Borrowers will sell, transfer, lease or
otherwise dispose of all or (except in the ordinary course of
business) any material part of its assets except to another
Borrower in an Approved Transaction.
14. Subsection 6.02(D) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:
(D) None of the Borrowers will become liable, directly or
indirectly, as guarantor or otherwise, for any obligation of any
other Person other than another Borrower, except pursuant to an
Approved Transaction.
15. Subsection 6.02(E) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:
(E) None of the Borrowers will incur, create, assume or
permit to exist any Indebtedness except: (1) the Loans; (2) the
Letters of Credit; (3)existing Indebtedness as set forth in
Schedule 5.01(L); (4) trade Indebtedness incurred in the ordinary
course of business; (5) contingent Indebtedness permitted by
subsection 6.02(D); (6) Indebtedness secured by Permitted Liens;
and (7) Indebtedness incurred, created or assumed in an Approved
Transaction, including any Authorized Approved Transaction
Financing.
16. Subsection 6.02(F) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:
(F) None of the Borrowers will form any Subsidiary or make
any investment in or make any loan in the nature of any investment
to any Person, except pursuant to an Approved Transaction.
17. Subsection 6.02(G) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:
(G) None of the Borrowers will acquire any stock in, or all
or substantially all of the assets of, any Person, except pursuant
to an Approved Transaction.
18. Subsection 9.05(A) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:
(A) If to the Borrowers: Southern Electronics Corporation,
Southern Electronics Distributors,
Inc. and U.S. Computer of North
America, Inc.
0000 Xxxxx Xxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Vice President-Finance
Telecopier: 000-000-0000
Confirmation: 000-000-0000
19. The words "either Borrower" and "either of the Borrowers,"
wherever they appear in the Credit Agreement, shall be and they hereby
are amended to read in their entirety as "any of the Borrowers." Also,
the words "neither Borrower" and "neither of the Borrowers," wherever
they appear in the Credit Agreement, shall be and they hereby are
amended to read in their entirety as "none of the Borrowers." Further,
the words "the other Borrower," wherever they appear in the Credit
Agreement, shall be and they hereby are amended to read in their
entirety as "another Borrower."
20. The Borrowers and the Banks acknowledge and agree that
stand-by letter of credit no. LC870-065200, in the amount of $2,000,000,
dated November 24, 1995, for the New Borrower as the applicant and with
Hewlett-Packard Company as the beneficiary, a copy of which is attached
hereto, was issued as a Stand-By Letter of Credit under and shall for
all purposes be treated as a Stand-By Letter of Credit issued under the
Credit Agreement.
21. Concurrently with the execution hereof, the Borrowers shall
deliver to the Banks the following:
(a) The Replacement Notes;
(b) A certified (as of the Effective Date) copy of
resolutions of the Borrowers' boards of directors authorizing the
execution, delivery and performance of this First Amendment, the
Replacement Notes and each other document to be delivered pursuant
hereto;
(c) A certified (as of the Effective Date) copy of each of
the Borrowers' by-laws;
(d) A certificate (dated as of the Effective Date) of each
of the Borrowers' corporate secretary as to the incumbency and
signatures of the officers of such Borrower signing this First
Amendment, the Replacement Notes and each other document to be delivered
pursuant hereto;
(e) A copy, certified as of the most recent date
practicable, by the Secretary of State of Delaware, of each of the
Borrowers' certificate of incorporation, together with a certificate
(dated as of the Effective Date) of each of the Borrowers' corporate
secretary to the effect that such certificate of incorporation has not
been amended since the date of the aforesaid certification;
(f) Certificates, as of the most recent dates practicable,
of the aforesaid secretary of state, the secretary of state of each
state in which the Borrowers are qualified as a foreign corporation and
the department of revenue or taxation of each of the foregoing states,
as to the good standing or valid existence of the Borrowers;
(g) A written opinion of Messrs. Long, Xxxxxxxx & Xxxxxx,
the Borrower's counsel, dated the Effective Date and addressed to the
Banks, substantially in form satisfactory to the Banks, to the effect
that:
(1) Each Borrower is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Delaware, is qualified to transact business
and validly exists and is in good standing as a foreign
corporation in the State of Georgia (with respect to the
Original Borrowers) and the State of Florida (with respect
to the New Borrower). Each Borrower has the corporate
power (a) to own its properties and to carry on its
business; and (b) to execute and deliver the First
Amendment and the Replacement Notes (the "Additional Loan
Documents") and perform under the Credit Agreement, the
Additional Loan Documents and all other related loan
documents.
(2) The execution and delivery by each Borrower of
the Additional Loan Documents and their performance under
the Credit Agreement, the Additional Loan Documents and
all other related loan documents have been duly authorized
by all requisite corporate action.
(3) The execution and delivery by each Borrower of
the Additional Loan Documents and the performance by each
Borrower under the Credit Agreement, the Additional Loan
Documents and al other related loan documents will not (a)
violate the certificate of incorporation, by-laws or other
organizational documents of each Borrower; (b) violate any
material applicable constitution, rule, regulation, order
or law; (c) to counsel's knowledge, violate any material
order, writ, injunction or decree of any court or
governmental authority or agency, (d) to counsel's
knowledge, result in the breach of or constitute (with the
giving of notice, lapse of time or both) a default under
any material instrument, document or agreement to which
any Borrower is a party, including agreements for borrowed
money or among the shareholders; or (e) to counsel's
knowledge, result in the creation or imposition of any
lien, security interest or other encumbrance upon any of
the revenues or assets of any of the Borrowers pursuant to
the terms of any such instrument, documents or agreement.
(4) The Additional Loan Documents have been duly
executed and delivered by each Borrower, and the Credit
Agreement, the Additional Loan Documents and all other
related loan documents constitute the valid and legally
binding obligations of each of the Borrowers, enforceable
in accordance with their respective terms.
(h) A certificate, dated the Effective Date, signed by the
president or a vice president of each of the Borrowers to the effect
that:
(1) The representations and warranties set forth
in subsection 5.01 of the Credit Agreement are true in all
material respects as of the Effective Date; and
(2) No Event of Default under the Credit Agreement,
and no event which, with the giving of notice or passage of
time or both, would become an Event of Default under the
Credit Agreement, has occurred as of the Effective Date.
(I) A set for each Bank of all of the documents from the
transaction described in Paragraph 22 as the Approved Transaction. For
purposes of the certifications provided for in (c), (d), (e) and (f)
above, the Borrowers shall be required to provide such certifications
with respect to the Original Borrowers only if there have been changes
therein from those delivered at the Closing under the Credit Agreement;
otherwise, such certifications with respect to the Original Borrowers
delivered at the Closing shall be deemed reissued and redelivered by the
Borrowers as of the Effective Date.
22. The Exhibits (2.04, 2.06, 2.10 and 4.02) to the Credit
Agreement are hereby amended to be in the form of such Exhibits attached
hereto.
23. The Banks hereby document their consent and approval, as an
Approved Transaction under the Credit Agreement, to and of the formation
of the New Borrower as a wholly owned subsidiary of Southern Electronics
Corporation and the acquisition by the New Borrower of certain assets of
and the assumption by the New Borrower of certain liabilities of U.S.
Computer of North America, Inc. pursuant to the Agreement and Plan of
Reorganization dated the Effective Date submitted to the Banks. The
Banks further hereby document their consent and approval, as an
Authorized Approved Transaction Financing under the Credit Agreement, to
the financing for the Approved Transaction provided by Hewlett-Packard
Company evidenced by the promissory note attached hereto as Exhibit
23.
24. Concurrently with the execution and delivery of this First
Amendment, the Borrowers shall pay to the Banks an amendment fee of
Fifteen Thousand Dollars ($15,000) for this amendment of the Credit
Agreement and related matters, which amendment fee shall be shared
equally by the Banks. Further, Borrower shall, on demand, reimburse the
Banks for all expenses, including the reasonable fees and expenses of
legal counsel for the Banks, incurred by the Banks in connection with
this First Amendment and related matters.
25. This First Amendment represents the entire understanding of the
parties with respect to the subject matter hereof, and supersedes any
prior oral or written understandings with respect to the subject matter
hereof.
26. Except as set forth expressly herein, all terms of the Credit
Agreement and the other related loan documents shall be and remain in
full force and effect, and shall constitute the legal, valid, binding
and enforceable obligations of the Borrowers. The Borrowers hereby
restate, ratify and reaffirm each and every term, covenant and condition
set forth in the Credit Agreement and the other related loan documents
effective as of the Effective Date, as hereby amended. This Agreement
shall be governed by, and construed and interpreted in accordance with,
the laws of the State of Georgia.
27. This First Amendment may be executed by one of more of the
parties in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the
same instrument. The Borrowers agree to take such further actions as
the Banks shall reasonably request in connection herewith to evidence
the agreements herein contained.
28. This First Amendment shall be effective on the date set forth
below as the Effective Date, which Effective Date is the date of the
closing of the transaction described in Paragraph 23 as the Approved
Transaction (the "Effective Date").
IN WITNESS WHEREOF, the parties have caused this First Amendment to
be duly executed and delivered by their proper and duly authorized
officers effective as of the Effective Date.
Effective Date: December 14, 1995
SOUTHERN ELECTRONICS SOUTHERN ELECTRONICS
CORPORATION DISTRIBUTORS, INC.
By: /s/Xxxxx X. Xxxxx By: /s/Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Vice President-Finance Title: Vice President-Finance
USC ACQUISITION CORPORATION (being renamed
U.S. COMPUTER OF NORTH AMERICA, INC.)
By: /s/Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Vice President-Finance
NATIONAL CITY BANK, COLUMBUS WACHOVIA BANK OF GEORGIA, N.A.
By: /s/Xxxxx X. Xxxxxxxx By: /s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxxxx
Title: Vice President Title: Vice President
