Exhibit 10.1
SIXTH AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
This SIXTH AMENDMENT TO CREDIT AGREEMENT ("Amendment") is
dated as of November 14, 2006, by and among All American Semiconductor, Inc., a
Delaware corporation (the "Company"), Xxxxxx X.X., successor by merger to Xxxxxx
Trust and Savings Bank, as Administrative Agent (the "Agent"), U.S. Bank
National Association, as Co-Agent (the "Co-Agent"), and the lenders from time to
time party thereto (the "Lenders").
WHEREAS, the Company, the Agent, the Co-Agent and the Lenders
are parties to a certain Credit Agreement dated as of May 14, 2003, as amended
by that certain First Amendment to Credit Agreement dated as of June 11, 2004,
as amended by that certain Second Amendment to Credit Agreement dated as of
August 8, 2005, as amended by that certain Third Amendment to Credit Agreement
dated as of March 31, 2006, as amended by that certain Fourth Amendment to
Credit Agreement dated as of May 22, 2006, and as amended by that certain Fifth
Amendment to Credit Agreement dated as of August 14, 2006; and
WHEREAS, the Company has requested that the Agent and the
Lenders agree to amend certain provisions of the Credit Agreement, as more
particularly set forth herein;
NOW THEREFORE, in consideration of the mutual conditions and
agreements set forth in the Credit Agreement and this Amendment, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows effective as of
September 30, 2006:
1. Definitions. Capitalized terms used in this
Amendment, unless otherwise defined herein, shall have the meanings ascribed to
such terms in the Credit Agreement.
2. Amendments. Subject to prior satisfaction of the
conditions set forth in Section 3 below and in reliance on the representations
and warranties set forth in Section 4 below, the Credit Agreement is hereby
amended as follows:
(a) Clause (b) of the definition of "Borrowing Base" set
forth in Section 5.1 of the Credit Agreement (Definitions) is hereby amended by
deleting the reference to "$53,000,000" in subparagraph (i) thereof and
replacing it with "$46,000,000".
(b) The grid contained in the definition of "Applicable
Margin" set forth in Section 5.1 of the Credit Agreement (Definitions) is hereby
amended and restated in its entirety as follows:
----------------------------------------------------------------------------------------------------------
Level Debt Service Applicable Margin for Applicable Margin for Applicable Margin
Coverage Ratio for Base Rate Loans Under Eurodollar Loans Under for Commitment
such Pricing Date Revolving Credit and Revolving Credit and Fees Shall be:
Reimbursement Letter of Credit Fees
Obligations Shall be: Shall be:
----------------------------------------------------------------------------------------------------------
I Greater than 2.75 0.00% 2.00% 0.15%
to 1.00
----------------------------------------------------------------------------------------------------------
II Less than or equal 0.25% 2.25% 0.15%
to 2.75 to 1.0, but
greater than 2.00
to 1.00
----------------------------------------------------------------------------------------------------------
III Less than or equal 0.50% 2.50% 0.15%
to 2.00 to 1.0, but
greater than 1.25
to 1.00
----------------------------------------------------------------------------------------------------------
IV Less than or equal 0.75% 2.75% 0.15%
to 1.25 to 1.0, but
greater than 1.05
to 1.00
----------------------------------------------------------------------------------------------------------
V Less than or equal 1.00% 3.00% 0.15%
to 1.05 to 1.00
----------------------------------------------------------------------------------------------------------
(c) Section 8.5(b) of the Credit Agreement (Financial
Reports) is hereby amended by amending and restating the proviso at the end of
such Section in its entirety as follows:
"; provided, that for each calendar month ending on or after August 31,
2006, the Borrower shall furnish such consolidated Receivables and
accounts payable agings as soon as available, and in any event within
12 days after the last day of such calendar month."
(d) Section 8.5 of the Credit Agreement (Financial
Reports) is hereby further amended by deleting the word "and" at the end of
subsection (l) thereof, replacing the "." at the end of subsection (m) thereof
with "; and", and inserting as a new subsection (n) thereof the following:
"(n) on December 15, 2006 and each Wednesday thereafter (or on the
next succeeding Business Day if such Wednesday is not a Business Day),
a 13-week cash flow forecast in form, substance and detail reasonably
satisfactory to the Administrative Agent, which sets forth: (i) the
projected cash receipts and disbursements of the Designated Companies
for the immediately following 13 weeks, and (ii) a reconciliation of
the projected cash receipts and disbursements for the immediately
preceding week with the actual cash receipts and disbursements for such
week."
-2-
(e) Section 8.5(g) of the Credit Agreement (Financial
Reports) is hereby amended and restated in its entirety as follows:
"(g) as soon as available, and in any event within 45 days after
the end of each fiscal year of the Borrower, a copy of a consolidated
business plan of the Designated Companies for the following fiscal
year, such business plan to show the projected consolidated revenues,
expenses, balance sheet, financial covenant calculations, cash flows
and Borrowing Base calculations of the Designated Companies on an
annual basis and on a fiscal month-by-month basis; in each case such
business plans shall be in reasonable detail and otherwise in form,
substance and scope reasonably satisfactory to the Administrative Agent
and shall include a summary of all assumptions and qualifications made
in preparing such business plans; provided, that: (i) on or prior to
January 15, 2007, the Borrower shall provide the Administrative Agent
and each Lender with a business plan of the Designated Companies for
fiscal year 2007 in the form described above and otherwise in form and
substance reasonably satisfactory to the Administrative Agent; and (ii)
on or prior to January 31, 2007, Borrower shall make necessary and
appropriate representatives available for a meeting with the
Administrative Agent, the Lenders and their advisors to review such
fiscal year 2007 business plan and answer questions of the
Administrative Agent and Lenders with respect thereto."
(f) The last sentence of Section 8.5 of the Credit
Agreement (Financial Reports) is hereby amended and restated in its entirety as
follows:
"The Administrative Agent agrees to promptly forward to each Lender any
of the foregoing reports or notices received by the Administrative
Agent under clauses (a), (e), (f), (h), (i), (j), (m) and (n) above or
any other reports or notices described above that are at any time
requested by such Lender."
(g) Section 8.6 of the Credit Agreement (Inspection;
Appraisals) is hereby amended by adding the parenthetical "(including, without
limitation, a professional consulting firm retained by Administrative Agent at
its discretion or at the direction of the Required Lenders, in each case during
the existence and continuance of any Event of Default)" immediately following
the text "Administrative Agent and each of its duly authorized representatives
and agents" in the first sentence thereof.
(h) Section 8.22(a) of the Credit Agreement (Tangible Net
Worth) is hereby amended and restated in its entirety as follows:
"(a) Tangible Net Worth. Tangible Net Worth shall not, on the last
day of any calendar quarter in any period set forth below, be less than
the amount set forth below such period:
Period Amount
------ ------
March 31, 2006 through and including $21,000,000
-3-
June 30, 2006
September 30, 2006 No test required
December 31, 2006 $20,000,000
March 31, 2007 and thereafter $21,000,000"
(i) Section 8.22(c) of the Credit Agreement (Debt Service
Coverage Ratio) is hereby amended and restated in its entirety as follows:
"(c) Debt Service Coverage Ratio. The Debt Service Coverage Ratio
shall not, on the last day of any calendar quarter in any period set
forth below, for the 12 month period ending on such date, be less than
the ratio set forth below opposite such period:
Period Amount
------ ------
June 30, 2006 through and including No test required
September 30, 2006
December 31, 2006 and thereafter 1.10 to 1.0"
(j) Section 8.22(e) of the Credit Agreement (Inventory
Value) is hereby amended and restated in its entirety as follows:
"(e) Inventory Value. The aggregate book value of the Inventory of
the Designated Companies as of each date set forth below, as reflected
in the consolidated Inventory stock status report with respect to such
date to be delivered by the Borrower pursuant to Section 8.5(b), shall
not be greater than the amount set forth below opposite such date:
Date Amount
---- ------
September 30, 2006 $90,730,000
October 31, 2006 $88,000,000
November 30, 2006 $85,000,000
December 31, 2006 and the last day of $83,000,000"
each calendar month thereafter
(k) Section 8.22(f) of the Credit Agreement (Aging of
Receivables) is hereby amended and restated in its entirety as follows:
"(f) Aging of Receivables. The aggregate value of ineligible
Receivables of the Designated Companies that remain unpaid ninety or
more days past the applicable invoice dates, as reflected in the
consolidated Receivables agings for the months ended on such dates to
be delivered by the Borrower pursuant to Section 8.5(b), on
-4-
each date set forth below, shall not be greater than the amount set
forth below opposite such date:
Date Amount
---- ------
August 31, 2006 Amount at July 31, 2006, minus
$750,000
September 30, 2006 Amount at July 31, 2006, minus
$1,500,000
October 31, 2006 Amount at September 30, 2006,
minus $200,000
November 30, 2006 Amount at September 30, 2006,
minus $400,000
December 31, 2006 Amount at September 30, 2006,
minus $800,000
January 31, 2007 Amount at September 30, 2006,
minus $1,200,000
February 28, 2007, and the last day of Amount at September 30, 2006,
each calendar month thereafter minus $1,600,000"
(l) Section 8.22(g) of the Credit Agreement (Excess
Availability) is hereby amended and restated in its entirety as follows:
"(g) Excess Availability. On each Business Day from and including
October 16, 2006 through and including November 14, 2006, other than up
to 7 individual Business Days during such period, Excess Availability
for such day, as evidenced by the Administrative Agent's records and
Borrowing Base Certificates delivered pursuant to Section 8.5(a) (with
the Administrative Agent's records controlling in the event of any
conflict with any such Borrowing Base Certificate), shall be equal to
or greater than $3,000,000. On each Business Day on and after November
15, 2006, Excess Availability for such day, as evidenced by the
Administrative Agent's records and the Borrowing Base Certificates
delivered pursuant to Section 8.5(a) (with the Administrative Agent's
records controlling in the event of any conflict with any such
Borrowing Base Certificate), shall be equal to or greater than
$1,500,000."
(m) A new section 8.22(h) is hereby added to the Credit
Agreement, as follows:
"(h) EBITDA. EBITDA for the Designated Companies for the twelve
month period ending on any date set forth below shall not be less than
the amount set forth below opposite such date:
Period Amount
------ ------
-5-
September 30, 2006 No test required
December 31, 2006 $2,850,000
March 31, 2007 and the last day of each $3,000,000"
calendar quarter thereafter
(n) Section 8.28 of the Credit Agreement is hereby
amended by amending and restating the remainder of clause (a) thereof
immediately following the words "recommended financial strategies for the
Designated Companies" as follows:
"and the consolidated business plan for fiscal year 2007 required to be
delivered pursuant to Section 8.5(g), and the Borrower shall direct
such consultant to provide to the Administrative Agent and the Lenders
written and oral information reasonably requested by the Administrative
Agent and the Lenders regarding the status and substance of its efforts
on a regular basis, and"
(o) Section 9.1(c) of the Credit Agreement (Events of
Default) is hereby amended and restated in its entirety as follows:
"(c) default in the observance or performance of any covenant set
forth in (i) Section 8.5(a) or Section 8.5(n) hereof, which failure
continues for 2 days after the occurrence thereof; (ii) Section 8.5(b)
hereof, which failure continues for 3 days after the occurrence
thereof; (iii) Section 8.5(c), (d), (e) or (f) hereof, which failure
continues for 5 days after the occurrence thereof; (iv) Section 8.28
hereof, which failure continues for 10 days after the occurrence
thereof; or (v) any provision hereof other than as set forth in clause
(b) above or subclauses (i), (ii), (iii) or (iv) of this clause (c),
which is not remedied within 15 days after the occurrence thereof."
(p) Section 12.15 of the Credit Agreement (Costs and
Expenses; Indemnification) is hereby amended by amending and restating the first
sentence of subsection (a) thereof as follows:
"(a) The Borrower agrees to pay all costs and expenses of the
Administrative Agent in connection with the preparation, negotiation,
and administration of the Loan Documents and any amendment, waiver or
consent thereto, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent and, during the
existence and continuance of any Event of Default, a professional
consulting firm retained by Administrative Agent to assess the
Designated Companies' businesses and Property, together with any fees
and charges suffered or incurred by Administrative Agent in connection
with the periodic collateral filing fees and lien searches."
-6-
3. Conditions. The effectiveness of this Amendment is
subject to the following conditions precedent:
(a) the Company shall have executed and delivered this
Amendment, together with executed copies of each Reaffirmation of Guaranty
attached hereto;
(b) no Default or Event of Default shall have occurred
and be continuing; and
(c) the Company shall have paid to the Agent in
immediately available funds, for the pro rata benefit of each Lender that has
executed and delivered this Amendment to the Agent on or before 12 noon (Central
time) on November 14, 2006, an amendment fee equal to $100,000, which fee shall
be fully earned and non-refundable upon payment.
4. Representations and Warranties. To induce the Agent
and the Lenders to enter into this Amendment, the Company represents and
warrants to the Agent and the Lenders that (a) the execution, delivery and
performance of this Amendment has been duly authorized by all requisite
corporate action on the part of the Company and that this Amendment has been
duly executed and delivered by the Company, (b) each of the representations and
warranties set forth in Section 6 of the Credit Agreement (other than those
which, by their terms, specifically are made as of a certain date prior to the
date hereof) are true and correct in all material respects as of the date hereof
and after giving effect to the terms hereof, (c) no Default or Event of Default
shall have occurred and be continuing immediately after giving effect to this
Amendment, and (d) as of the date hereof, neither Borrower nor any other
Designated Company has any rights of offset, defenses, claims or counterclaims
with respect to any of the Obligations.
5. General Release. In consideration of, among other
things, the execution and delivery of this Amendment by the Administrative
Agent, Co-Agent and Lenders, Borrower, on behalf of itself and its subsidiaries,
successors and assigns (collectively, the "Releasors"), hereby forever agrees
and covenants not to xxx or prosecute against any Lender Releasee (as defined
below) and hereby forever waives, releases and discharges, to the fullest extent
permitted by law, each Lender Releasee (as defined below) from any and all
actions, causes of action and other claims of any kind or nature that such
Releasor now has or hereafter may have, whether known or unknown, against any or
all of the Administrative Agent, Co-Agent or any Lender in any capacity, their
respective successors and assigns, and each and all of the officers, directors,
members, employees, agents, attorneys and other representatives of each of the
foregoing (collectively, the "Lender Releasees"), based in whole or in part on
events, whether known or unknown, existing on or before the date hereof that
relate to, arise out of or otherwise are in connection with the Loan Documents
or the transactions contemplated thereby or any actions or omissions of the
Lender Releasees in connection therewith.
6. References. Any reference to the Credit Agreement
contained in any document, instrument or agreement executed in connection with
the Credit Agreement shall be deemed to be a reference to the Credit Agreement
as modified by this Amendment.
-7-
7. Severability; Counterparts. Any provision of this
Amendment held by a court of competent jurisdiction to be invalid or
unenforceable shall not impair or invalidate the remainder of this Amendment and
the effect thereof shall be confined to the provision so held to be invalid or
unenforceable. This Amendment may be executed in one or more counterparts
(including counterparts delivered by facsimile or other electronic
transmission), each of which shall constitute an original, but all of which
taken together shall be one and the same instrument.
8. Ratification. The terms and provisions set forth in
this Amendment shall modify and supersede all inconsistent terms and provisions
of the Credit Agreement and shall not be deemed to be a consent to the
modification or waiver of any other term or condition of the Credit Agreement.
Except as expressly modified and superseded by this Amendment, the terms and
provisions of the Credit Agreement are ratified and confirmed and shall continue
in full force and effect.
-8-
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed under seal and delivered by their respective duly
authorized officers on the date first written above.
ALL AMERICAN SEMICONDUCTOR, INC.,
a Delaware corporation
By: /s/ XXXXXX X. XXXXXXXX
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: EVP & CFO
XXXXXX X.X., successor by merger to
XXXXXX TRUST AND SAVINGS BANK,
as Administrative Agent and as a Lender
By: /s/ XXXX XXXXXX
-------------------------------------
Name: Xxxx Xxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
U.S. BANK NATIONAL ASSOCIATION,
as Co-Agent and as a Lender
By: /s/ XXXXXX XXXXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
GMAC COMMERCIAL FINANCE LLC,
as a Lender
By: /s/ XXXXXXX XXXXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ XXXXX XXXXXX
-------------------------------------
Name: Xxxxx Xxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
[Sixth Amendment To Credit Agreement]
FIRST BANK BUSINESS CAPITAL, INC.
f/k/a FB Commercial Finance, Inc., as a
Lender
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
[Sixth Amendment To Credit Agreement]
REAFFIRMATION OF GUARANTY
In order to induce Xxxxxx X.X., successor by merger to Xxxxxx
Trust and Savings Bank, as Administrative Agent ("Agent") for various lenders
("Lenders"), and Lenders to execute and deliver that certain Sixth Amendment to
Credit Agreement of even date herewith (the "Amendment"), each of the
undersigned hereby reaffirms its obligations under that certain Master Corporate
Guaranty dated as of May 14, 2003 by it in favor of Agent (the "Guaranty").
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Credit Agreement dated as of May 14, 2003, as
amended by that certain First Amendment to Credit Agreement dated as of June 11,
2004, as amended by that certain Second Amendment to Credit Agreement dated as
of August 8, 2005, as amended by that certain Third Amendment to Credit
Agreement dated as of March 31, 2006, as amended by that certain Fourth
Amendment to Credit Agreement dated as of May 22, 2006, and as amended by that
certain Fifth Amendment to Credit Agreement dated as of August 14, 2006, by and
among Agent, Lenders and All American Semiconductor, Inc. (as the same has been,
and may be from time to time, amended, supplemented or otherwise modified, the
"Credit Agreement").
Each of the undersigned further agrees that the Guaranty shall
remain in full force and effect following the execution and delivery of the
Amendment and that all references to the "Credit Agreement" in the Guaranty
executed by it shall be deemed to refer to the Credit Agreement as amended by
the Amendment. Except as set forth in the immediately preceding sentence, the
Guaranty shall remain unmodified and in full force and effect.
This Reaffirmation of Guaranty is dated as of November 14,
2006.
Access Micro Products, Inc.
All American A.V.E.D., Inc.
All American Added Value, Inc.
All American Semiconductor of Atlanta, Inc.
All American Semiconductor of Chicago, Inc.
All American Semiconductor of Florida, Inc.
All American Semiconductor of Huntsville, Inc.
All American Semiconductor of Massachusetts, Inc.
All American Semiconductor of Michigan, Inc.
All American Semiconductor of Minnesota, Inc.
All American Semiconductor of New York, Inc.
All American Semiconductor of Philadelphia, Inc.
All American Semiconductor of Phoenix, Inc.
All American Semiconductor of Portland, Inc.
All American Semiconductor of Rockville, Inc.
All American Semiconductor of Salt Lake, Inc.
All American Semiconductor of Texas, Inc.
All American Semiconductor-Northern California,
Inc.
All American Semiconductor of Washington, Inc.
All American Technologies, Inc.
All American Transistor of California, Inc.
Aved Industries, Inc.
Palm Electronics Manufacturing Corp.
All American Semiconductor of Ohio, Inc.
All American Semiconductor of Wisconsin, Inc.
All American Semiconductor of Rhode Island, Inc.
All American IDT, Inc.
AGD China, Inc.
Each by: /s/ XXXXXX X. XXXXXXXX
----------------------------
Its: EVP & CFO
[Designated Company Guaranty Reaffirmation]
AMERICAPITAL, LLC
By: All American Semiconductor, Inc.,
its sole member
By: /s/ XXXXXX X. XXXXXXXX
--------------------------
Its: EVP & CFO
[Designated Company Guaranty Reaffirmation]
REAFFIRMATION OF GUARANTY
In order to induce Xxxxxx X.X., successor by merger to Xxxxxx
Trust and Savings Bank, as Administrative Agent ("Agent") for various lenders
("Lenders"), and Lenders to execute and deliver that certain Sixth Amendment to
Credit Agreement of even date herewith (the "Amendment"), the undersigned hereby
reaffirms its obligations under that certain Corporate Guaranty and Covenant
dated as of May 14, 2003 by it in favor of Agent (the "Guaranty"). Capitalized
terms used herein without definition shall have the meanings ascribed to such
terms in the Credit Agreement dated as of May 14, 2003, as amended by that
certain First Amendment to Credit Agreement dated as of June 11, 2004, as
amended by that certain Second Amendment to Credit Agreement dated as of August
8, 2005, as amended by that certain Third Amendment to Credit Agreement dated as
of March 31, 2006, as amended by that certain Fourth Amendment to Credit
Agreement dated as of May 22, 2006, and as amended by that certain Fifth
Amendment to Credit Agreement dated as of August 14, 2006, by and among Agent,
Lenders and All American Semiconductor, Inc. (as the same has been, and may be
from time to time, amended, supplemented or otherwise modified, the "Credit
Agreement").
The undersigned further agrees that the Guaranty shall remain
in full force and effect following the execution and delivery of the Amendment
and that all references to the "Credit Agreement" in the Guaranty executed by it
shall be deemed to refer to the Credit Agreement as amended by the Amendment.
Except as set forth in the immediately preceding sentence, the Guaranty shall
remain unmodified and in full force and effect.
This Reaffirmation of Guaranty is dated as of November 14,
2006.
ALL AMERICAN SEMICONDUCTOR OF
CANADA, INC.
By: /s/ XXXXXX X. XXXXXXXX
---------------------------
Its: EVP & CFO
[All American Semiconductor of Canada, Inc. Guaranty Reaffirmation]
