FIFTH AMENDMENT AND WAIVERS TO CREDIT AGREEMENT
FIFTH AMENDMENT AND WAIVERS
TO CREDIT AGREEMENT
FIFTH
AMENDMENT AND WAIVER TO AMENDED AND RESTATED CREDIT AGREEMENT dated as of April
27, 2009 (the “Fifth Amendment”) by and among NU HORIZONS ELECTRONICS
CORP., a Delaware corporation having its executive offices at 00 Xxxxxx Xxxx,
Xxxxxxxx, Xxx Xxxx (the “Borrower”), each of the lenders that is a signatory
thereto identified under the caption “Lenders” on the
signature pages to the Credit Agreement (as defined below) (individually, a
“Lender”, and collectively, the “Lenders”), BANK OF AMERICA, N.A., a national
banking association, as Documentation Agent for the Lenders, JPMORGAN
CHASE BANK, N.A., a national banking association, as Syndication Agent for the
Lenders, ISRAEL DISCOUNT BANK OF NEW YORK, a New York bank, as Syndication Agent
for the Lenders and CITIBANK, N.A., a national banking association, as
administrative agent for the Lenders (the “Administrative Agent”).
RECITALS
The
Borrower, the Lenders, the Documentation Agent, the Syndication Agents and the
Administrative Agent entered into an Amended and Restated Credit Agreement dated
as of January 31, 2007, as amended by a Consent and First Amendment to Credit
Agreement dated as of June 6, 2007, a Second Amendment dated as of January 4,
2008, a Third Amendment dated as of May 30, 2008 and a Fourth Amendment dated
August 29, 2008 (collectively, the “Credit Agreement”), pursuant to which
certain financial accommodations were made available to the
Borrower.
The
Borrower has requested that the Lenders and the Administrative Agent modify
certain of the terms set forth in the Credit Agreement and waive certain terms
thereof and the Lenders and the Administrative Agent are willing to modify such
terms and provide such waivers but only upon and subject to the following terms
and conditions.
NOW THEREFORE, in
consideration of the premises and mutual covenants and promises exchanged
herein, the parties hereto mutually agree as follows:
Section
1.
Definitions. Except
as otherwise defined in this Fifth Amendment, terms defined in the Credit
Agreement are used herein as defined therein.
Section
2. Amendment. Subject
to the satisfaction of the conditions precedent specified in Section 4
below:
(A) Section
1.1 of the Credit Agreement is hereby amended by deleting the definitions of
“Borrowing Base” and “Eligible Inventory” and substituting the following
therefore:
“Borrowing
Base” shall mean the lesser of (i) the amount of the Total Revolving Credit
Commitment or (ii) 80% of the Eligible Accounts plus the lesser of (a) 40% of
the Eligible Inventory as reported on the most recent Borrowing Base Certificate
delivered pursuant to Section 5.1 (12) hereof or (b) $40,000,000; provided,
however, if such certificate has not been provided the Borrowing Base shall be
deemed to be zero.
“Eligible
Inventory” shall mean all unencumbered inventory of raw material, work in
process and finished goods of the Borrower and its Domestic Subsidiaries in
which the Administrative Agent has a valid and perfected first priority security
interest except for End of Life Inventory, other than up to $20,000,000.00 of
the value of Eligible End of Life Inventory, as each of such terms is herein
defined, from time to time on hand valued at the lowest of (a) cost, (b) market
value, or (c) the valuation consistent with that employed in the preparation of
the financial statements of the Borrower referred to in Section 5.1
hereof. “End of Life Inventory” shall mean inventory that the vendor
of which has discontinued or declared obsolete and whose sale is final and
without return privileges. “Eligible End of Life Inventory” means End
of Life Inventory located in the United States for which the Borrower or its
Domestic Subsidiaries have irrevocable purchase orders to sell to creditworthy
Account Debtors who are obligated to take delivery of same within two years of
the date of the relevant purchase order.
(B) Section
2.4 of the Credit Agreement is hereby amended by deleting same and substituting
the following therefor:
“2.4 Interest. Interest
on each Revolving Credit Loan shall be at a per annum rate to be elected by the
Borrower, in accordance with Section 2.5 hereof, and shall be either (y) a
fluctuating rate equal to the Prime Rate for the period up to and including
April 26, 2009 and the Prime Rate plus 1.75% for all periods after April 26,
2009 or, (z) subject to availability, Reserve Adjusted LIBOR for Interest
Periods selected by the Borrower plus 1.75% for the periods up to and including
April 26, 2009 and plus 3.5% for all periods after April 26, 2009 (including
Interest Periods already in effect on such date). Interest on each
Prime Rate Loan shall be payable monthly in arrears to the Administrative Agent
for the pro rata benefit of the Lenders, on the first Business Day of each
month, commencing on the first such day to occur after the pertinent Revolving
Credit Loan is made and upon payment in full thereof. Interest on
each Eurodollar Loan shall be payable to the Administrative Agent for the pro
rata benefit of the Lenders in arrears (i) in the case of Eurodollar Loans with
Interest Periods of three months or less, at the end of each applicable Interest
Period and (ii) in the case of Eurodollar Loans with Interest Periods of more
than three months, on the numerically corresponding day that falls three months
after the beginning of such Interest Period and at the end of the applicable
Interest Period. Whenever the unpaid principal balance of any
Revolving Credit Loan shall become due and payable (whether at the stated
maturity thereof, by acceleration or otherwise) interest shall thereafter be
payable, on demand, to the Administrative Agent for the pro rata benefit of the
Lenders at the Involuntary Rate. Interest on each Revolving Credit
Loan shall be calculated on the basis of a year of 360 days for the actual
number of days elapsed.”
(C) Section
2.8(a) of the Credit Agreement is hereby amended by deleting same and
substituting the following therefor:
“(a) Commitment
Fees. As
additional compensation for the Revolving Credit Commitments, the Borrower
agrees to pay to the Administrative Agent for the pro rata benefit of the
Lenders a commitment fee for the Commitment Period based on the average daily
unused portion of the Total Revolving Credit Commitment (without reference to
the Borrowing Base) of .25% for the period up to and including April 26, 2009
and .5% for all periods commencing after April 26, 2009.”
(D) Section
5.11 (ii) of the Credit Agreement is hereby amended deleting same and substitute
the following therefore:
At all times relevant hereto the
Borrower shall grant reasonable access to the Administrative Agent and/or its
duly authorized representatives or agents, and cooperate fully with the
Administrative Agent in any inspection of the Borrower’s and its Subsidiaries
books and records and all collateral wherever located (“Field Audit”), provided
that, prior to an Event of Default, such Field Audits will be limited to two in
each 12 month period, provided that the second such Field Audit in any 12 month
period will be at the request of the Required Lenders, and to a review of
Accounts, Inventory, accounts payable, taxes and insurance of the Borrower and
its Domestic Subsidiaries.
(E) Section
6.4 of the Credit Agreement is hereby amended by deleting same and substituting
the following therefor:
“6.4
Maximum Net
Loss. Not incur a net loss, except as specifically permitted,
as at the end of any fiscal quarter as follows: (i) for the rolling three fiscal
quarters ended 11/30/09 no cumulative net loss in excess of $1,000,000 nor more
than an individual net loss in excess of $1,250,000 in the
fiscal quarter ended 5/31/09, an individual net loss in excess of $1,000,000 for
the fiscal quarter ended 8/31/09 and an individual net loss in excess
of $750,000 for the fiscal quarter ended 11/30/09, (ii) for the
fiscal quarter ended 2/28/10 and for each fiscal quarter thereafter, no
cumulative net loss for the rolling four fiscal quarters then ended. For the
purpose of the aforesaid calculation of net loss, non cash charges related to
intangible assets, including without limitation, good will impairment, which are
not amortized on a ratable basis, or otherwise in accordance with
GAAP, will be excluded and not subtracted from gross income in
determining net loss.”
(F) Section
7.1 (vi) of the Credit Agreement is hereby amended by deleting same and
substituting the following therefor:
“(vi)
indebtedness incurred by the Foreign Subsidiaries to institutional lenders not
to exceed an aggregate of $65,000,000.00.”
(G) Section
7.3 (vii) of the Credit Agreement is hereby deleted and the following is
substituted therefor:
“(vii) investments by the Borrower and
its Domestic Subsidiaries in stocks, securities or assets of Foreign
Subsidiaries or loans to Foreign Subsidiaries provided that such investments and
loans do not exceed an aggregate amount of $79,909,000. In
determining investments and loans for purposes of this Section, the Borrower’s
investment in its Foreign Subsidiaries shall exclude retained earnings of such
Foreign Subsidiaries accrued after 2/28/09 and any accounts payable of such
Foreign Subsidiaries to the Borrower or its Domestic Subsidiaries incurred and
payable on regular trade terms in the ordinary course of business inclusive of
intercompany accounts due for accounts payable to third parties that settle at
least as frequently as regular trade terms.”
(H) Section
7.5 (iii) of the Credit Agreement is hereby amended by deleting same and
substituting the following therefor:
“(iii)
guarantees
by the Borrower and its Foreign Subsidiaries for obligations of Foreign
Subsidiaries permitted by Section 7.1 (vi) hereof provided that such guarantees
are not secured by any property of the Borrower or its Domestic Subsidiaries,
and, provided further, however, that the guaranteed amount pursuant to
guarantees by the Borrower and/or one or more guarantors of the same
indebtedness or obligations shall only be counted once.”
(I) Schedule
I to the Credit Agreement is amended by deleting same and substituting the
attached Schedule I-1 which is incorporated herewith and made a part
hereof.
Section
3. Waivers. The Lenders
hereby waive non-compliance with the following covenants:
(A)
Section
6.4 of the Credit Agreement, as in effect prior to the date of this Fifth
Amendment,
which requires the Borrower not to incur a net loss as at the end of each fiscal
quarter for the rolling four quarters then ended to the extent that Borrower
incurred a net loss of not more than $9,500,000 for the four fiscal quarters
ended February 28, 2009.
(B)
Section
7.3 (vii) of the Credit Agreement, as in effect prior to the date of this Fifth
Amendment,
which requires that the aggregate amount of the Borrower’s and its Domestic
Subsidiaries’ investments and loans to Foreign Subsidiaries shall not exceed
$60,000,000 at any time, to the extent the aggregate of same was not more than
$77,909,000 as at February 28, 2009.
(C) Section
4.2 of the Credit Agreement, to the extent that the waivers contained in this
Fifth Amendment were not in effect on the date of any extension of credit under
the Credit Agreement prior to the date hereof.
Section
4. (A) Conditions Precedent.
The amendments to the Credit Agreement set forth in Section 2 hereof and
the waiver set forth in Section 3 hereof shall become effective, on the date of
this Fifth Amendment, upon the execution and delivery of this Fifth Amendment by
the Borrower, the Administrative Agent and each of the Required Lenders and the
satisfaction of the following conditions:
(1) Certified Copies and Other
Documents. The Administrative Agent shall have received
certificates of an officer of the Borrower and each Guarantor dated the date of
this Fifth Amendment certifying (x) no changes in their
respective certificates of incorporation or by-laws from the date of
the Agreement or attaching copies of any amendments, (y) true and correct copies
of resolutions adopted by the board of directors of the Borrower and each
Guarantor(1) authorizing the borrowings and the other extensions of credit from
the Lenders under the Agreement as amended hereby, the execution, delivery and
performance by the Borrower and each Guarantor of this Fifth Amendment, and any
related documents (2) approving forms in substantially execution form of this
Fifth Amendment, and any related documents and (3) authorizing officers of
the Borrower and each Guarantor to execute and deliver this
Fifth Amendment, and any related documents, and (z) the incumbency and
specimen signatures of the officers of the Borrower and each Guarantor executing
any documents delivered to the Administrative Agent or a Lender by the Borrower
and each Guarantor in connection herewith.
(2) Approval of the Administrative Agent
and Agent’s Counsel. All other documents and legal
matters in connection with the transactions contemplated by this Fifth Amendment
shall be satisfactory in form and substance to the Administrative Agent and its
counsel.
(B) Conditions
Subsequent. Within ninety (90) days of the date of this Fifth
Amendment the Administrative Agent through its agents will cause to be
conducted a formal inventory study or appraisal of the
Borrower and its Domestic Subsidiaries inventory by a consultant satisfactory to
the Administrative Agent at the Borrower’s sole cost and expense. The
Borrower and its Domestic Subsidiaries shall cooperate fully in such study in
accordance with Section 5.1(11) hereof.
Section
5. Representations and
Warranties. The Borrower represents and warrants to the
Lenders that the representations and warranties set forth in the Credit
Agreement and in the other Loan Documents are true and complete on the date of
this Fifth Amendment and as if made on and as of the date hereof (or, if such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date) except for the representation contained
in Section 3.2 of the Credit Agreement, to the extent that the net loss
described in Section 3(A) of this Fifth Amendment could be deemed to be a breach
of such representation.
Section
6. Borrower’s
Acknowledgments. The Borrower acknowledges and agrees that the
Borrower has no claims, counterclaims, offsets, or defenses to the Loan
Documents and the performance of the Borrower’s obligations thereunder or if the
Borrower did have any such claims, counterclaims, offsets or defenses to the
Loan Documents or any transaction related to the Loan Documents, the same are
hereby waived, relinquished and released in consideration of execution and
delivery of this Fifth Amendment.
Section
7. Acknowledgement of
Guarantors. The Guarantors acknowledge and consent to all of
the terms and conditions of this Fifth Amendment and agree that this Fifth
Amendment and all documents executed in connection herewith do not operate to
reduce or discharge the Guarantors’ obligations under the Credit Agreement or
the other Loan Documents. The Guarantors further acknowledge and
agree that the Guarantors have no claims, counterclaims, offsets, or defenses to
the Loan Documents and the performance of the Guarantors’ obligations thereunder
or if the Guarantors did have any such claims, counterclaims, offsets or
defenses to the Loan Documents or any transaction related to the Loan Documents,
the same are hereby waived, relinquished and released in consideration of
execution and delivery of this Fifth Amendment.
Section
8. Governing Law; Execution in
Counterparts. Except as herein provided, the Credit Agreement
shall remain unchanged and in full force and effect. This Fifth
Amendment may be executed in any number of counterparts, all of which taken
together shall constitute one and the same amendatory instrument and any of the
parties hereto may execute this Fifth Amendment by signing any such
counterpart. This Fifth Amendment shall be governed by, and construed
in accordance with, the internal laws of the State of New York (without regard
to New York conflicts of laws principles).
Section
9. Amendment
Fee. The Borrower agrees that in consideration for the Lenders
executing this Fifth Amendment, it shall pay a fee (the “Amendment Fee”) to the
Administrative Agent for the account of each Lender that executed and delivered
this Fifth Amendment on or prior to 5:00 p.m. (New York City time) on April 27,
2009 (or such later time as the Borrower and the Administrative Agent shall
agree) in an amount equal to $125,000.00 to be shared pro rata among the Lenders
so executing and delivering this Fifth Amendment in proportion to their
Revolving Credit Commitments. The Amendment Fee shall be earned upon
the effective date of this Fifth Amendment and shall be payable on April 28,
2009.
Section
10. Expenses,
etc. The Borrower agrees to pay or reimburse the
Administrative Agent for all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable fees and
expenses of Certilman Balin Xxxxx & Xxxxx, LLP) in connection with the
negotiation, preparation, execution and delivery of this Fifth Amendment and the
transactions contemplated hereby.
Section
11. Effective
Date. This Fifth Amendment is dated for convenience as of
April 27, 2009 and shall be effective as of such date, on the delivery of an
executed counterpart to the Borrower upon satisfaction of the conditions
precedent contained in Section 3 hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the
parties hereto have caused this Fifth Amendment to Credit Agreement to be duly
executed and delivered by their duly authorized officers, all as of the day and
year first above written.
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Borrower:
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By:
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/s/
Xxxx Xxxxxxxxxxx
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Xxxx
Xxxxxxxxxxx
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Executive
Vice President, Treasurer and
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Chief
Financial Officer
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Guarantors:
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NIC
COMPONENTS CORP.
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By:
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/s/
Xxxx Xxxxxxxxxxx
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Xxxx
Xxxxxxxxxxx
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Executive
Vice President, Treasurer and
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Chief
Financial Officer
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NU
HORIZONS INTERNATIONAL CORP.
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By:
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/s/
Xxxx Xxxxxxxxxxx
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Xxxx
Xxxxxxxxxxx
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Executive
Vice President, Treasurer and
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Chief
Financial Officer
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TITAN
SUPPLY CHAIN SERVICES CORP.
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By:
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/s/
Xxxx Xxxxxxxxxxx
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Xxxx
Xxxxxxxxxxx
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Executive
Vice President, Treasurer and
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Chief
Financial Officer
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RAZOR
ELECTRONICS, INC.
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By:
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/s/
Xxxx Xxxxxxxxxxx
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Xxxx
Xxxxxxxxxxx
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Executive
Vice President, Treasurer and
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Chief
Financial Officer
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NuXCHANGE
B2B SERVICES, INC.
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By:
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/s/
Xxxx Xxxxxxxxxxx
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Xxxx
Xxxxxxxxxxx
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Executive
Vice President, Treasurer and
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Chief
Financial Officer
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Administrative
Agent:
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CITIBANK,
N.A.,
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as
Administrative Agent
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By:
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/s/
Xxxxxx X. Xxxxxx
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Xxxxxx
X. Xxxxxx
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Vice
President
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Documentation
Agent:
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BANK
OF AMERICA, N.A.,
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as
Documentation Agent
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By:
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Xxxxxx
X. Xxxxxxxxxx
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Senior
Vice President
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Syndication
Agent:
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JPMORGAN
CHASE BANK, N.A.,
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as
Syndication Agent
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By:
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Xxxxxx
X. Xxxxxxxxxxxx
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Vice
President
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ISRAEL
DISCOUNT BANK OF NEW YORK,
as
Syndication Agent
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By:
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/s/
Xxxxxxx X. Xxxxxxxx
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Xxxxxxx
X. Xxxxxxxx
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Vice
President
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By:
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/s/
Xxxxx X. Xxxxxx
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Name:
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Xxxxx
X. Xxxxxx
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Title:
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Senior
Vice President
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Notice Addresses:
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Lenders:
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CITIBANK,
N.A.
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CITIBANK,
N.A.
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000
Xxxxxxxx Xxxxxxxx Xxxxxxx
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Xxxxxxxxx,
XX 00000
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By:
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/s/
Xxxxxx X. Xxxxxx
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Xxxxxx
X. Xxxxxx
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Vice
President
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By:
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/s/
Xxxxx X. Xxxxxx
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Name:
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Xxxxx
X. Xxxxxx
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Title:
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Senior
Vice President
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BANK
OF AMERICA, N.A.
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BANK
OF AMERICA, N.A.
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0000
Xxxxxx xx xxx Xxxxxxxx
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Xxx
Xxxx, XX 00000
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By:
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Xxxxxx
X. Xxxxxxxxxx
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Senior
Vice President
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SOVEREIGN
BANK
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SOVEREIGN
BANK
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000
Xxxxx Xxxxxxx Xxxx
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Xxxxxxxx,
XX 00000
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By:
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Xxxxxxxxx
Xxxxxx
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Senior
Vice President
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HSBC
BANK USA, NATIONAL
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HSBC
BANK USA, NATIONAL
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ASSOCIATION
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ASSOCIATION
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000
Xxxxx Xxxxxx Xxxx
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Xxxxxxxx,
XX 00000
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By:
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/s/
Xxxxx X. Xxxxxx
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Xxxxx
X. Xxxxxx
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Vice
President
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CAPITAL
ONE, N.A.,
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CAPITAL ONE, N.A., | ||
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000
Xxxxxxxxxxx Xxxx
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formerly
known as Xxxxx Xxxx Xxxx
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Xxxxxxxx,
XX 00000
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By:
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/s/
Xxxxxx Xxxx
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Xxxxxx
Xxxx
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Senior
Vice President
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BANK
LEUMI USA
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BANK
LEUMI USA
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000
Xxxxx Xxx.
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Xxx
Xxxx, XX 00000
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By:
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/s/
Xxxx Xxxxx
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Xxxxxxxx
Xxxxx
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Vice
President
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By:
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/s/
Xxxx X. Xxxxxxx
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Xxxx
X. Xxxxxxx
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Senior
Vice President and Group Head
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JPMORGAN
CHASE BANK, N.A.
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JPMORGAN
CHASE BANK, N.A.
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000
Xxxxx Xxxxxxx Xxxx, Xxxxx 0
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Xxxxxxxx,
XX 00000
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By:
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Xxxxxx
X. Xxxxxxxxxxxx
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Vice
President
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NEW
YORK COMMERCIAL BANK
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NEW
YORK COMMERCIAL BANK
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0
Xxxxxxx Xxxxx
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Xxxxxxx,
XX 00000
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By:
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/s/
Xxxxxx X. Xxxxxxxxx, Xx.
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Xxxxxx
X. Xxxxxxxxx, Xx.
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Senior
Vice President
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SCHEDULE
I
Revolving Credit Commitments
(Section 2.1)
Facility
Amount: $120,000,000
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Bank
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Revolving Credit
Commitment
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Percentage of
Total
|
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Citibank,
N.A
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$24,000,000
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20%
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Israel
Discount Bank of New York
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$16,800,000
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14%
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Bank
of America, N.A.
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$15,600,000
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13%
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Sovereign
Bank
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$14,400,000
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12%
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HSBC
Bank USA, National Association
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$12,000,000
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10%
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Capital
One, N.A.
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$10,800,000
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9%
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Bank
Leumi USA
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$
9,600,000
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8%
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JPMorgan
Chase Bank, N.A.
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$
8,400,000
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7%
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New
York Commercial Bank
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$
8,400,000
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7%
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