AMENDMENT NUMBER SIX TO CREDIT AGREEMENT
EXHIBIT 10.m
AMENDMENT NUMBER SIX TO CREDIT AGREEMENT
This AMENDMENT NUMBER SIX TO CREDIT AGREEMENT (this “Amendment”), dated as of March
25, 2009, is entered into by and among XXXX INDUSTRIES, INC., a California corporation
(“Parent”), and each of Parent’s Subsidiaries identified on the signature pages hereof
(such Subsidiaries, together with Parent are referred to hereinafter each individually as a
“Borrower”, and individually and collectively, jointly and severally, as the
“Borrowers”), the lenders signatory hereto (such lenders, together with their respective
successors and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively, the “Lenders”), and XXXXX FARGO FOOTHILL, INC., a
California corporation (“WFF”), as the arranger and administrative agent for the Lenders
(in such capacity, together with its successors and assigns in such capacity, the “Agent”).
Initially capitalized terms used herein and not otherwise defined herein shall have the meaning
ascribed thereto in the Credit Agreement (as defined below).
W I T N E S S E T H
WHEREAS, Borrowers and the Lender Group are parties to that certain Credit Agreement, dated as
of January 31, 2007 (as amended, restated, supplemented, or otherwise modified from time to time,
the “Credit Agreement”);
WHEREAS, the Borrowers have requested that the Agent and the Lenders make certain amendments
to the Credit Agreement; and
WHEREAS, upon the terms and conditions set forth herein, Agent and Lenders are willing to
accommodate the Borrowers’ requests.
NOW THEREFORE, in consideration of the premises and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Amendments to Credit Agreement.
(a) Schedule 1.1 of the Credit Agreement is hereby amended by deleting the following
definitions in their entirety: “Atlanta MDS Availability Block Amount”, “Atlanta MDS Date”,
“Atlanta Net Cash Proceeds”, “Eligible SkyTel Accounts”, “MDS Availability Block Amount”, “NY MDS
Availability Block Amount”, “NY MDS Date”, “NY MDS Net Cash Proceeds”, “Second Amendment Block
Amount”, and “SkyTel Dilution Reserve”.
(b) Schedule 1.1 of the Credit Agreement is hereby amended and modified by amending
and restating, or adding (as applicable) the following definitions in the appropriate alphabetical
order:
““Availability Block” means (a) from March 1, 2009 and up to and including June 30,
2009, $4,500,000, (b) from July 1, 2009 and up to and including October 31, 2009, $3,500,000, and
(c) from and after November 1, 2009, $6,000,000.”
““Base LIBOR Rate” means the greater of (a) 3.0% percent per annum, and (b) the rate
per annum, determined by Agent in accordance with its customary procedures, and utilizing such
electronic or other quotation sources as it considers appropriate, to be the rate at which Dollar
deposits (for delivery on the first day of the requested Interest Period) are offered to major
banks in the London interbank market 2 Business Days prior to the commencement of the requested
Interest Period, for a term and in an amount comparable to the Interest Period and the amount of
the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a
LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Administrative
Borrower or any other Borrower in accordance with the Agreement, which determination shall be
conclusive in the absence of manifest error.”
““Base Rate” means, the greater of (a) 3.50% percent per annum and (b) the rate of
interest announced, from time to time, within Xxxxx Fargo at its principal office in San Francisco
as its “prime rate”, with the understanding that the “prime rate” is one of Xxxxx Fargo’s base
rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates
of interest are calculated for those loans making reference thereto and is evidenced by the
recording thereof after its announcement in such internal publications as Xxxxx Fargo may
designate.”
““Base Rate Margin” means (a) at any time prior to November 1, 2009, 4.00 percentage
points, (b) from November 1, 2009 and up to and including January 31, 2010, 4.25 percentage points,
(c) from and after February 1, 2010, 4.50 percentage points.”
“Borrowing Base” means, as of any date of determination, the result of:
(a) 85% of the amount of Eligible Xxxx Accounts, less the amount, if any, of
the Xxxx Dilution Reserve, plus
(b) 60% of the amount of Eligible Dating Terms Accounts, less the amount, if
any, of the Dating Terms Dilution Reserve, plus
(c) the least of
(i) $4,500,000,
(ii) 50% of the value of Eligible Inventory, and
(iii) 80% times the most recently determined Net Liquidation Percentage
(the “NOLV Percentage”) times the book value of Xxxx Minnesota’s
Eligible Inventory (it being understood that the NOLV Percentage is subject
to seasonal adjustments and Agent may, in its discretion, determine the
periods subject to such adjustments), minus
(d) the sum of (i) the Bank Product Reserve, (ii) the Landlord Reserve,
(iii) the Xxxxxx Micro Reserve, (iv) the GE Reserve, (v) the IBM Reserve,
and (vi) the aggregate amount of reserves, if any, established by Agent
under Section 2.1(b).”
““LIBOR Rate Margin” means (a) at any time prior to November 1, 2009, 4.00 percentage
points, (b) from November 1, 2009 and up to and including January 31, 2010, 4.25 percentage points,
(c) from and after February 1, 2010, 4.50 percentage points.”
(c) Section 2.1(a) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
“(a) Subject to the terms and conditions of this Agreement,
and during the term of this Agreement, each Lender with a
Revolver Commitment agrees (severally, not jointly or
jointly and severally) to make advances (“Advances”)
to Borrowers in an amount at any one time outstanding not to
exceed such Lender’s Pro Rata Share of an amount equal to
the lesser of (i) the result of (y) the Maximum Revolver
Amount at such time less (z) the Letter of Credit Usage at
such time, and (ii) the result of (y) the Borrowing Base at
such time less (z) the sum of (A) the Availability Block at
such time plus (B) the Letter of Credit Usage at such time.”
(d) Section 2.6(b) of the Credit Agreement is hereby amended and restated in its
entirety as follows:
“(b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable benefit of the
Lenders with a Revolver Commitment, subject to any agreements between Agent and individual
Lenders), a Letter of Credit fee (in addition to the charges, commissions, fees, and costs set
forth in Section 2.12(e)) which shall accrue at a rate equal to the LIBOR Rate Margin times
the Daily Balance of the undrawn amount of all outstanding Letters of Credit.”
(e) Section 2.12(a)(i) of the Credit Agreement is hereby amended and restated in its
entirety as follows:
“(i) the Letter of Credit Usage would exceed the result of (y) the Borrowing Base less (z) the
sum of (A) the Availability Block plus (B) the outstanding amount of Advances, or”
(f) Section 3.3 of the Credit Agreement is hereby amended and restated in its entirety
as follows:
“3.3 Term. This Agreement shall continue in full force and effect for a term ending
on March 31, 2010 (the “Maturity Date”). The foregoing notwithstanding, the Lender Group,
upon the election of the Required Lenders, shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the continuation of an
Event of Default.”
(g) Section 5.9 of the Credit Agreement is hereby amended and modified by adding the
following new provision at the end thereof:
“The foregoing to the contrary notwithstanding, Borrowers’ failure to provide Agent with a
Collateral Access Agreement with respect to the following location shall not constitute an Event of
Default under the Credit Agreement or any other Loan Document: 000 Xxxxxx Xxxxxx Xxxx, Xxxxx, XX
00000.”
(h) Section 6.16(a) of the Credit Agreement hereby is amended and restated in its
entirety to read as follows:
“(a) Minimum Adjusted EBITDA.
Fail to achieve Adjusted EBITDA, measured on a month-end basis, of at least the required
amount set forth in the following table for the applicable period set forth opposite thereto:
| Applicable Amount | Applicable Period | |
| $ (839,000) | For the 12 month period ending December 31, 2008 |
|
| $(1,400,000) | For the 2 month period ending February 28, 2009 | |
| $(2,100,000) | For the 3 month period ending March 31, 2009 | |
| $(2,400,000) | For the 4 month period ending April 30, 2009 | |
| $(2,000,000) | For the 5 month period ending May 30, 2009 | |
| $(1,900,000) | For the 6 month period ending June 30, 2009 | |
| $(1,300,000) | For the 7 month period ending July 31, 2009 | |
| $ (500,000) | For the 8 month period ending August 31, 2009 |
| Applicable Amount | Applicable Period | |
| $(500,000) | For the 9 month period ending September 30, 2009 | |
| $(500,000) | For the 10 month period ending October 31, 2009 | |
| $(500,000) | For the 11 month period ending November 30, 2009 | |
| $(500,000) | For the 12 month period ending December 31, 2009 |
Agent, in its Permitted Discretion, shall establish the minimum Adjusted EBITDA covenant for
each trailing 12 month period after December 31, 2009, which covenant levels will be based upon
Borrowers’ projections for such trailing 12 month period delivered to Agent pursuant to Section
5.3 of this Agreement and utilizing criteria similar to the criteria that Agent used to
establish the Adjusted EBITDA covenants in the above table. Borrowers shall execute any amendment
to this Section 6.16(a) reasonably requested by Agent in order to document the inclusion of
such minimum Adjusted EBITDA covenant levels for such periods in the covenant set forth in this
Section 6.16(a). If Borrowers fail to timely deliver the projections pursuant to
Section 5.3 of this Agreement, the Adjusted EBITDA covenant for each succeeding trailing
twelve month period, measured on a monthly basis, after December 31, 2009 shall be $10,000,000,
until such time as the projections required by Section 5.3 for such periods have been
delivered to Agent and Borrowers have executed an amendment requested by Agent to document the
inclusion of new Adjusted EBITDA covenant levels (to be set in the manner set forth in the first
sentence of this paragraph) for such periods in the Adjusted EBITDA covenant set forth in this
Section 6.16(a).”
(i) Section 6.16(b) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
“(b) Capital Expenditures. Unless the Required Lenders, in their sole discretion, otherwise
consent thereto in advance in writing, make Capital Expenditures in any fiscal year in excess of
the amount set forth in the following table for the applicable period:
| Fiscal Year 2008 | Fiscal Year 2009 | |
| $2,400,000 | $500,000 |
Agent, in its Permitted Discretion, shall establish the maximum Capital Expenditures covenant
for Fiscal Year 2010, which covenant level will be based upon Borrowers’ projections for Fiscal
Year 2010 delivered to Agent pursuant to Section 5.3 of this Agreement and utilizing
criteria similar to the criteria that Agent used to establish the Capital Expenditures covenants in
the above table. Borrowers shall execute any amendment to this Section 6.16(b) reasonably
requested by Agent in order to document the inclusion of such maximum Capital Expenditures level
for Fiscal Year 2010 in the covenant set forth in this Section 6.16(b). If Borrowers fail
to timely deliver the projections pursuant to Section 5.3 of this Agreement, the Capital
Expenditures covenant for Fiscal Year 2010 shall be $500,000 until the Projections have been
delivered to Agent and Borrowers have executed an amendment requested by Agent to document the
inclusion of a new Capital Expenditures covenant level for Fiscal Year 2010 (to be set in the
manner set forth in the first sentence of this paragraph) in the Capital Expenditures covenant set
forth in this Section 6.16(b).”
2. Conditions Precedent to Agreement. This Amendment shall become effective only upon
satisfaction in full in the reasonable judgment of the Agent of each of the following conditions:
(a) Agent shall have received an amendment to the Newcastle Note, in form and substance
satisfactory to Agent, and duly executed and delivered by the parties thereto.
(b) Agent shall have received the amendment to the fee letter attached hereto as Exhibit
A, duly executed and delivered by an authorized official of each Borrower and the same shall be
in full force and effect.
(c) After giving effect to this Amendment, the representations and warranties herein and in
the Credit Agreement and the other Loan Documents shall be true and correct in all material
respects (except that such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text thereof) on and as of
the date hereof, as though made on such date (except to the extent that such representations and
warranties relate solely to an earlier date, on and as of such earlier date).
(d) No injunction, writ, restraining order, or other order of any nature prohibiting, directly
or indirectly, the consummation of the transactions contemplated herein shall have been issued and
remain in force by any Governmental Authority against any Borrower, Agent, or any Lender.
(e) Borrower shall pay concurrently with the closing of the transactions evidenced by this
Amendment, all Lender Group Expenses then payable pursuant to Section 17.10 of the Credit
Agreement.
(f) No Default or Event of Default shall have occurred and be continuing on the effective date
of this Amendment, nor shall either result immediately after the consummation of the transactions
contemplated herein.
(g) Agent shall have received payment in full in immediately available funds of the Amendment
Fee described in Section 4 of this Amendment.
3. Representations and Warranties. Each Borrower hereby represents and warrants to Agent
and each Lender as follows:
(a) The execution, delivery, and performance by such Borrower of this Amendment and the Loan
Documents to which it is a party have been duly authorized by all necessary action on the part of
such Borrower.
(b) The execution, delivery, and performance by such Borrower of this Amendment and the other
Loan Documents to which it is a party do not and will not (i) violate any provision of federal,
state, or local law or regulation applicable to any Borrower, the Governing Documents of any
Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on
any Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any contract or undertaking of any Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any properties or
assets of any Borrower, other than Permitted Liens, or (iv)
require any approval of any Borrower’s interestholders or any approval or consent of any
Person under any Material Contract of any Borrower, other than consents or approvals that have been
obtained and that are still in force and effect.
(c) This Amendment has been duly executed and delivered by each Borrower. This Amendment and
each Loan Document is the legal, valid and binding obligation of each Borrower, enforceable against
such Borrower in accordance with its terms, and is in full force and effect except as such validity
and enforceability is limited by the laws of insolvency and bankruptcy, laws affecting creditors’
rights and principles of equity applicable hereto.
(d) No injunction, writ, restraining order, or other order of any nature prohibiting, directly
or indirectly, the consummation of the transactions contemplated herein has been issued and remains
in force by any Governmental Authority against any Borrower, any Guarantor, Agent or any Lender.
(e) No Default or Event of Default has occurred and is continuing on the date hereof or as of
the date of the effectiveness of this Amendment.
(f) The representations and warranties in the Credit Agreement and the other Loan Documents
are true and correct in all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or modified by
materiality in the text thereof) on and as of the date hereof, as though made on such date (except
to the extent that such representations and warranties relate solely to an earlier date).
4. Amendment Fee. The Borrowers shall pay to Agent an amendment fee in the amount of
$100,000 (“Amendment Fee”) in immediately available funds, which Amendment Fee shall be
retained by Agent (solely for its account and not for the account of any Lender). Such Amendment
Fee shall be fully earned and, except as set forth in this Section 4, non refundable on the
date of this Amendment. Agent agrees that if the repayment in full of the Obligations in
accordance with the terms of the Credit Agreement has occurred and all commitments to extend credit
under the Loan Documents have been terminated, in each case, (a) on or prior to June 30, 2009, then
Agent will refund a portion of the Amendment Fee equal to $50,000 to the Borrowers, (b) after June
30, 2009 but on or prior to July 31, 2007, then Agent will refund a portion of the Amendment Fee
equal to $37,500 to the Borrowers, (c) after July 31, 2009 but on or prior to August 31, 2009, then
Agent will refund a portion of the Amendment Fee equal to $25,000 to the Borrowers, or (d) after
August 31, 2009 but on or prior to September 30, 2009, then Agent will refund a portion of the
Amendment Fee equal to $12,500 to the Borrowers.
5. Payment of Costs and Expenses. Borrowers agree to pay all Lender Group Expenses
incurred in connection with the preparation, negotiation and execution of this Amendment and the
review of all documents incidental thereto in accordance with the terms of the Credit Agreement.
6. RELEASE.
Each Borrower hereby waives, releases, remises and forever discharges each member of the
Lender Group, each of their respective Affiliates, and each of their respective officers,
directors, employees, and agents (collectively, the “Releasees”), from any and all claims,
demands, obligations, liabilities, causes of action, damages, losses, costs and expenses of
any kind or character, known or unknown, past or present, liquidated or unliquidated, suspected or
unsuspected, which such Borrower ever had, now has or might hereafter have against any such
Releasee which relates, directly or indirectly, to the Credit Agreement or any other Loan Document,
or to any acts or omissions of any such Releasee with respect to the Credit Agreement or any other
Loan Document, or to the lender-borrower relationship evidenced by the Loan Documents. As to each
and every claim released hereunder, each Borrower hereby represents that it has received the advice
of legal counsel with regard to the releases contained herein, and having been so advised, each
Borrower specifically waives the benefit of the provisions of Section 1542 of the Civil Code of
California which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
As to each and every claim released hereunder, each Borrower also waives the benefit of each other
similar provision of applicable federal or state law, if any, pertaining to general releases after
having been advised by its legal counsel with respect thereto.
7. CONSTRUCTION. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF
CALIFORNIA.
8. Amendments. This Amendment cannot be altered, amended, changed or modified in any
respect or particular unless each such alteration, amendment, change or modification shall have
been agreed to by each of the parties and reduced to writing in its entirety and signed and
delivered by each party.
9. Counterpart Execution. This Amendment may be executed in any number of counterparts, all
of which when taken together shall constitute one and the same instrument, and any of the parties
hereto may execute this Amendment by signing any such counterpart. Delivery of an executed
counterpart of this Amendment by telefacsimile or electronic mail shall be equally as effective as
delivery of an original executed counterpart of this Amendment. Any party delivering an executed
counterpart of this Amendment by telefacsimile or electronic mail also shall deliver an original
executed counterpart of this Amendment, but the failure to deliver an original executed counterpart
shall not affect the validity, enforceability and binding effect of this Amendment.
10. Effect on Loan Documents.
(a) The Credit Agreement, as amended hereby, and each of the other Loan Documents, as amended
as of the date hereof, shall be and remain in full force and effect in accordance with their
respective terms and hereby are ratified and confirmed in all respects. The execution, delivery,
and performance of this Amendment shall not operate, except as expressly set forth herein, as a
modification or waiver of any right, power, or remedy of Agent or any Lender under the Credit
Agreement or any other Loan Document. Except for the amendments to the Credit Agreement expressly
set forth herein, the Credit Agreement and other Loan Documents shall remain unchanged and in full
force and effect. The amendments, waivers and
modifications set forth herein are limited to the specifics hereof, shall not apply with
respect to any facts or occurrences other than those on which the same are based, shall not excuse
future non-compliance with the Loan Documents, shall not operate as a consent to any further or
other matter under the Loan Documents and shall not be construed as an indication that any future
waiver of covenants or any other provision of the Credit Agreement will be agreed to, it being
understood that the granting or denying of any waiver which may hereafter be requested by the
Borrower remains in the sole and absolute discretion of the Agent and the Lenders.
(b) Upon and after the effectiveness of this Amendment, each reference in the Credit Agreement
to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the
Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”,
“thereunder”, “therein”, “thereof” or words of like import referring to the Credit Agreement, shall
mean and be a reference to the Credit Agreement as modified and amended hereby.
(c) To the extent that any terms and conditions in any of the Loan Documents shall contradict
or be in conflict with any terms or conditions of the Credit Agreement, after giving effect to this
Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect
the terms and conditions of the Credit Agreement as modified or amended hereby.
(d) This Amendment is a Loan Document.
(e) Unless the context of this Amendment clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms “includes” and
“including” are not limiting, and the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or”.
11. Entire Agreement. This Amendment embodies the entire understanding and agreement
between the parties hereto with respect to the subject matter hereof and supersedes any and all
prior or contemporaneous agreements or understandings with respect to the subject matter hereof,
whether express or implied, oral or written.
12. Integration. This Amendment, together with the other Loan Documents, incorporates all
negotiations of the parties hereto with respect to the subject matter hereof and is the final
expression and agreement of the parties hereto with respect to the subject matter hereof.
13. Ratification. Each Borrower hereby restates, ratifies and reaffirms each and every term
and condition set forth in the Credit Agreement and the Loan Documents effective as of the date
hereof and as amended hereby.
14. Reaffirmation of Obligations. Each Borrower hereby reaffirms its obligations under
each Loan Document to which it is a party. Each Borrower hereby further ratifies and reaffirms the
validity and enforceability of all of the liens and security interests heretofore granted, pursuant
to and in connection with the Security Agreement or any other Loan Document to Agent, on behalf of
itself or for the benefit of the Lender Group or the Bank Product Providers, as collateral security
for the obligations under the Loan Documents in accordance with their respective terms, and
acknowledges that all of such liens and security interests, and all collateral
heretofore pledged as security for such obligations, continues to be and remain collateral for such
obligations from and after the date hereof.
15. Severability. In case any provision in this Amendment shall be invalid, illegal or
unenforceable, such provision shall be severable from the remainder of this Amendment and the
validity, legality and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered as of
the date first written above.
| XXXX INDUSTRIES, INC., | ||||||
| a California corporation, as Borrower | ||||||
| By: Name: |
/s/ Xxxxx X Xxxxxxx
|
|||||
| Title: | President & CFO | |||||
| XXXX INDUSTRIES, INC., | ||||||
| a Minnesota corporation, as Borrower | ||||||
| By: | /s/ Xxxxx X Xxxxxxx | |||||
| Name: | Xxxxx X Xxxxxxx | |||||
| Title: | Treasurer | |||||
| XXXX TECHLOGIX, INC., | ||||||
| a Delaware corporation, as Borrower | ||||||
| By: | /s/ Xxxxx X Xxxxxxx | |||||
| Name: | Xxxxx X Xxxxxxx | |||||
| Title: | Treasurer | |||||
[SIGNATURE PAGE TO AMENDMENT NUMBER SIX TO CREDIT AGREEMENT]
| XXXXX FARGO FOOTHILL, INC., | ||||||
| a California corporation, as Agent and as a Lender | ||||||
| By: Name: |
/s/ Xxxxxx Xxxxxx
|
|||||
| Title: | Senior Vice President | |||||
[SIGNATURE PAGE TO AMENDMENT NUMBER SIX TO CREDIT AGREEMENT]
