SECOND AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.1
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS
SECOND AMENDMENT TO CREDIT AGREEMENT (this
“Amendment”), dated as of Februar 12,
2008, is by and among SUNAIR SERVICES CORPORATION (f/k/a SUNAIR ELECTRONICS, INC., a Florida
corporation (the “Borrower”), each of those subsidiaries of the Borrower party hereto
(each a “Guarantor”, and collectively, the “Guarantors”), the several banks and
other financial institutions (the “Lenders”) from time to time party to the Credit
Agreement (defined below) and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent for the
Lenders (the “Agent”).
RECITALS
A. The Borrower, the Guarantors, the Lenders and the Agent have entered into that certain
Credit Agreement, dated as of June 7, 2005, as amended by that certain First Amendment to Credit
Agreement dated May 14, 2007 (as amended, supplemented or otherwise modified, the “Credit
Agreement”).
B. The Borrower, the Guarantors, the Lenders and the Agent have agreed to modify the Credit
Agreement as follows:
NOW, THEREFORE, the parties hereto agree as follows:
1. The Credit Agreement is hereby amended as follows:
(a) Section 1.1 is hereby amended by amending in their entirety the following
definitions so that such definitions now read as follows:
“Applicable
Percentage” shall mean, for any day, five percent (5%).
“Consolidated EBITDA” shall mean, for any applicable period of
computation, (a) Consolidated Net Income for such period plus (b) the sum of the
following to the extent deducted in calculating Consolidated Net Income: (i)
Consolidated Interest Expense for such period, (ii) the provision for Federal,
state, local and foreign income taxes payable by the Borrower and its Subsidiaries
for such period, (iii) depreciation and amortization expense for such period, (iv)
other non-cash expenses of the Borrower and its Subsidiaries, including, but not
limited to, stock based compensation, equity based compensation, bad debt reserves,
goodwill impairment and any other non-cash expenses reflected on the Borrower’s
financial statements, and (v) after October 1, 2007, any accrued but unpaid
management fees due to RPC Financial Advisors, LLC; provided,
however, any such
management fees that are actually paid shall be deducted from the Consolidated
EBITDA during the period paid.
“Funded Debt” shall mean, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, including,
without limitation, all Indebtedness of Borrower to any Seller that is not
Subordinated
Debt, (c) all obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by such Person
(other than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all obligations of
such Person issued or assumed as the deferred purchase price of property or services
purchased by such Person (other than trade debt incurred in the ordinary course of
business and due within six months of the incurrence thereof) which would appear as
liabilities on a balance sheet of such Person, (e) the principal portion of
obligations of such Person under Capital Leases, (f) the maximum amount of all
letters of credit issued or bankers’ acceptances facilities created for the account
of such Person and, without duplication, all drafts drawn thereunder (to the extent
reimbursed), including, without limitation, all LOC Obligations, (g) all preferred
Capital Stock issued by such Person and which by the terms thereof could be (at the
request of the holders thereof or otherwise) subject to mandatory
sinking (fund payments, redemption or other acceleration, (h) the principal balance outstanding
under any synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product, (i) obligations of such Person under
non-compete agreements to the extent such obligations have been determined, (j) all
obligations of such Person under Hedging Agreements, excluding any portion thereof
which would be accounted for as interest expense under GAAP, (k) all Indebtedness
of others of the type described in clauses (a) through (j) hereof secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (l) all Guaranty Obligations of such
Person with respect to Indebtedness of another Person of the type described in
clauses (a) through (j) hereof, and (m) all Indebtedness of the type described in
clauses (a) through (j) hereof of any partnership or unincorporated joint venture in
which such Person is a general partner or a joint venturer;
provided, however, that
Funded Debt shall not include Indebtedness among the Credit Parties.
“Revolving
Commitment Termination Date” shall mean January 7, 2009.
(b) Section 2.1(a) is amended in its entirety so that such Section now
reads as follows:
reads as follows:
(a) Revolving Commitment. During the Commitment Period, subject to the terms
and conditions hereof, each Lender severally agrees to make revolving credit loans
(“Revolving Loans”) to the Borrower from time to time for the purposes hereinafter
set forth; provided, however, that (i) with regard to each Lender individually, the sum of
such Lender’s share of outstanding Revolving Loans plus such Lender’s LOC Commitment
Percentage of LOC Obligations shall not exceed such Lender’s Revolving Commitment Percentage
of the aggregate Revolving Committed Amount, and (ii) with regard to the Lenders
collectively, the sum of the aggregate amount of outstanding
Revolving Loans plus LOC
Obligations shall not exceed the aggregate Revolving Committed Amount then in effect. For
purposes hereof, the, aggregate amount available
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hereunder
shall be THIRTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($13,500,000) (as
such aggregate maximum amount may be reduced from time to time as provided in Section 2.4
including, without limitation, scheduled mandatory reductions and the maintenance of
Reserves, the “Revolving Committed Amount”). Revolving Loans may consist of
Floating LIBOR Rate Loans or Fixed LIBOR Rate Loans, or a combination thereof, as the
Borrower may request, and may be repaid and reborrowed in accordance with the provisions
hereof; provided, however, the Revolving Loans made on the Closing Date or on either of the
two Business Days immediately following the Closing Date may only consist of Floating LIBOR
Rate Loans. Fixed LIBOR Rate Loans shall be made by each Lender at its LIBOR Lending Office
and Floating LIBOR Rate Loans at its Domestic Lending Office.
(c) Section 2.4(b) is amended in its entirety so that such Section now reads as
follows:
(b) Mandatory Reductions. The Revolving Commitment Amount shall be reduced to
$12,750,000 on June 30, 2008, and to $11,750,000 on September 30, 2008. In addition, in the
event of the disposition of Telecom FL Limited, all cash proceeds resulting from such
disposition shall be paid to the Agent and shall be applied to permanently reduce the
Revolving Commitment.
(d) Section 5.9(a) is amended in its entirety so that such Section now reads as
follows:
(a) Leverage Ratio. The Leverage Ratio shall be less than or equal to the
following amounts as of the last day of each fiscal quarter ending during the following
periods:
| Period | Maximum Ratio | ||||||
Through December 31, 2007
|
5.68 | ||||||
January 1, 2008 through March 31, 2008
|
10.50 | ||||||
April 1, 2008 through June 30, 2008
|
9.63 | ||||||
July 1, 2008 through January 7, 2009
|
4.22 | ||||||
(e) Section 5.9(b) is amended in its entirety so that such Section now reads as
follows:
(b) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio shall be at
least the following amounts as of the last day of each fiscal quarter ending during the
following periods:
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| Period | Maximum Ratio | ||||||
Through December 31, 2007
|
1.00 | ||||||
January 1, 2008 through March 31, 2008
|
0.95 | ||||||
April 1, 2008 through June 30, 2008
|
1.00 | ||||||
July 1, 2008 through January 7, 2009
|
1.14 | ||||||
(f) Section 5.9(c) is amended in its entirety so that such Section now reads as
follows:
(c) Consolidated EBITDA. Consolidated EBITDA shall be at least each of the following
amounts for each of the following amounts for each of the rolling four fiscal quarterly
periods ending as of the last day of each fiscal quarter ending during the following
periods:
| Period | Minimum Amount | ||||||
Through December 31, 2007
|
$ | 1,690,000 | |||||
January 1, 2008 through March 31, 2008
|
$ | 1,027,000 | |||||
April 1; 2008 through June 30, 2008
|
$ | 1,141,000 | |||||
July 1, 2008 through January 7, 2009
|
$ | 2,373,000 | |||||
2. In connection with the execution of this Second Amendment, Borrower agrees to pay the Agent
a loan modification fee in the amount of $70,000 on the date hereof and this Second Amendment shall
not be effective until the receipt in full of such amount.
3. Borrower agrees to execute such additional documents as are reasonably requested by the
Agent to reflect the terms and conditions of this Second Amendment and will cause to be delivered
such certificates, legal opinions and other documents as are reasonably required by the Agent. In
addition, the Borrower will pay all costs and expenses in connection with the preparation,
execution and delivery of the documents executed in connection with this transaction, including,
without limitation, the reasonable fees and out-of-pocket expenses of special counsel to the Agent
as well as any and all filing and recording fees and stamp and other taxes with respect thereto and
to save the Agent harmless from any and all such costs, expenses and liabilities.
4. Except as expressly amended hereby, all of the provisions of the Credit Agreement and the
Credit Documents shall remain unchanged and shall continue to be, and
shall remain, in full force
and effect in accordance with their respective terms. The amendments set forth herein shall be
limited precisely as provided for herein to the provisions expressly amended herein and any waivers
of any provisions of the Credit Agreement or other Credit Documents granted prior to the date
hereof shall be limited to such waiver on the date waived and, in each case, the amendments and the
waivers shall not be deemed to be a waiver of, an amendment to, consent to or modification of any
other term or provision of the Credit Agreement or any other
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Credit Document or of any transaction or further or future action on the part of the Borrower
which would require the consent of the` Lenders under the Credit Agreement or any of the Credit
Documents.
5. This Second Amendment is a Credit Document executed pursuant to the Credit Agreement and
shall (unless otherwise expressly indicated therein) be construed, administered and applied in
accordance with the terms and provisions of the Credit Agreement.
6. At such time as this Second Amendment shall become effective, all references in the Credit
Documents to the “Credit Agreement” shall be deemed to refer to the Credit Agreement as amended by
this Second Amendment.
7. This Second Amendment shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
8. This Second Amendment may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original, and it shall not be necessary in making proof
of this Second Amendment to produce or account for more than one counterpart.
9. THIS SECOND AMENDMENT AND THE OTHER DOCUMENTS AND AGREEMENTS EXECUTED IN CONNECTION
HEREWITH (UNLESS SPECIFICALLY STIPULATED TO THE CONTRARY IN SUCH
DOCUMENT OR AGREEMENT), AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
[Execution pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed
and delivered by its proper and duly authorized officers as of the day and year first above
written.
| BORROWER: | SUNAIR SERVICES CORPORATION (f/k/a/ SUNAIR ELECTRONICS, INC.) |
|||
| By: | /s/ Xxxx Xxxxx | |||
| Name: | XXXX XXXXX | |||
| Title: | President | |||
| GUARANTORS: | MIDDLETON PEST CONTROL, INC. |
|||
| By: | /s/ Xxxx Xxxxx | |||
| Name: | XXXX XXXXX | |||
| Title: | President | |||
| SUNAIR SOUTHEAST PEST HOLDINGS, INC. |
||||
| By: | /s/ Xxxx Xxxxx | |||
| Name: | XXXX XXXXX | |||
| Title: | President | |||
| SUNAIR PEST HOLDINGS, INC. |
||||
| By: | /s/ Xxxx Xxxxx | |||
| Name: | XXXX XXXXX | |||
| Title: | President | |||
| SUNAIR HOLDINGS, INC. (f/k/a Sunair Services Corporation |
||||
| By: | /s/ Xxxx Xxxxx | |||
| Name: | XXXX XXXXX | |||
| Title: | President | |||
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| SUNAIR COMMUNICATIONS, INC. |
||||
| By: | /s/ Xxxx Xxxxx | |||
| Name: | XXXX XXXXX | |||
| Title: | President | |||
| SUNAIR FLORIDA PEST HOLDINGS, INC. |
||||
| By: | /s/ Xxxx Xxxxx | |||
| Name: | XXXX XXXXX | |||
| Title: | President | |||
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| ADMINISTRATIVE AGENT AND LENDERS: | WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent and as a Lender |
|||
| By: | /s/ Xxxxxxx Xxxx | |||
| Name: | Xxxxxxx Xxxx | |||
| Title: | Senior Vice President | |||
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