Exhibit 10.1
FIFTH AMENDMENT TO CREDIT AGREEMENT
This FIFTH AMENDMENT TO CREDIT AGREEMENT ("Amendment") is
dated as of August 14, 2006 by and among All American Semiconductor, Inc., a
Delaware corporation (the "Company"), Harris N.A., successor by merger to Harris
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 and as amended by that certain Fourth Amendment to
Credit Agreement dated as of May 22, 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:
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) A new definition of the term "Specified Event of
Default" is hereby inserted into Section 5.1 (Definitions) of the Credit
Agreement, in appropriate alphabetical order, as follows:
" 'Specified Event of Default' means an Event of Default under
Section 9.1(b) caused by a breach of Section 8.22(e), (f) or (g)."
(b) Section 8.5(b) (Financial Reports) of the Credit
Agreement is hereby amended by inserting the following at the end thereof:
"provided, that for each of the months of August and September, 2006,
the Borrower shall furnish such consolidated Receivables and accounts
payable
aging as soon as available, and in any event within 12 days after the
last day of such calendar month;"
(c) Section 8.5(g) (Financial Reports) of the Credit
Agreement is hereby amended by inserting the following at the end thereof:
"provided, that on or before October 15, 2006, the Borrower shall
provide the Administrative Agent and each Lender with an updated and
revised consolidated business plan of the Designated Companies for the
balance of the 2006 fiscal year, in the form described above and in
form and substance reasonably satisfactory to the Administrative
Agent;"
(d) Section 8.5 (Financial Reports) of the Credit
Agreement is hereby further amended by (i) deleting the word "and" at the end of
clause (k) thereof and (ii) inserting the following at the end of clause (l)
thereof, before the period:
"; and
(m) on or before October 15, 2006, a written description
of the Borrower's long term financial strategy for the Designated
Companies, accompanied by financial models demonstrating how such
strategy is to be achieved, including quantifiable metrics and
assumptions, all in form and substance reasonably satisfactory to the
Administrative Agent."
(e) The last sentence of Section 8.5 (Financial Reports)
of the Credit Agreement 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) and (m) above or any
other reports or notices described above that are at any time requested
by such Lender."
(f) Section 8.22(c) (Debt Service Coverage Ratio) of the
Credit Agreement is hereby amended and restated in its entirety, as follows:
"(d) 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 Ratio
------ -----
June 30, 2006 no test
September 30, 2006 and thereafter 1.10 to 1.0"
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(g) Section 8.22 (Financial Covenants) of the Credit
Agreement is further amended by inserting new clauses (e), (f) and (g) thereto,
as follows:
"(e) Inventory Value. The aggregate book value of the
Inventory of the Designated Companies as of September 30, 2006, 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 $90,730,000.
(f) Aging of Receivables. The aggregate value of
Receivables of the Designated Companies that remain unpaid past the
normal due dates thereof (as offered by the Designated Companies in the
ordinary course of business), 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 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
(g) Excess Availability. On each Business Day during each
period set forth below, other than on up to 7 individual Business Days
during such period, 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), shall be equal to or greater than
the amount set forth below opposite such period:
Period Amount
------ ------
August 15, 2006 through and including September 15, 2006 $2,000,000
September 16, 2006 through and including October 15, 2006 $2,500,000
October 16, 2006 through and including November 15, 2006 $3,000,000"
(h) A new Section 8.28 is hereby added to the Credit
Agreement, as follows:
"Section 8.28 Consultant; Inventory Appraisal.
The Borrower agrees that upon the request of the
Administrative Agent during the existence of a Specified Event of
Default, the Borrower shall (a) within 30 days after such request,
engage (and thereafter continue to retain) at the expense of the
Borrower, a consultant reasonably satisfactory to the Administrative
Agent, to assist the Borrower in developing and implementing
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recommended financial strategies for the Designated Companies, and the
Borrower shall direct such consultant to provide written and oral
information to the Administrative Agent and the Lenders regarding the
status and substance of its efforts on a regular basis and (b) within
30 days after such request, obtain at the expense of the Borrower, a
written appraisal of the Inventory of the Designated Companies,
prepared by an appraiser reasonably satisfactory to the Administrative
Agent, and based on assumptions and standards reasonably acceptable to
the Administrative Agent. The rights provided to the Administrative
Agent in this Section 8.28 shall be in addition to all other rights and
remedies available to the Administrative Agent and the Lenders under
the Loan Documents and applicable law in respect of any applicable
Specified Event of Default."
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, for the pro
rata benefit of each Lender that has executed and delivered this Amendment to
the Administrative Agent on or before 12 noon (Central time) on August 14, 2006,
an amendment fee equal to .1% of the amount of the aggregate Revolving Credit
Commitments of such executing Lenders.
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, and (c) no Default or Event of
Default shall have occurred and be continuing immediately after giving effect to
this Amendment.
5. 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.
6. 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
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or more counterparts, each of which shall constitute an original, but all of
which taken together shall be one and the same instrument.
7. 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.
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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/ HOWARD L. FLANDERS
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Name: Howard L. Flanders
Title:EVP & CFO
HARRIS N.A., SUCCESSOR BY MERGER TO
HARRIS TRUST AND SAVINGS BANK, as
Administrative Agent and as a Lender
By: /s/ JEAN R. ELIE
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Name: Jean R. Elie
Title:Vice President
U.S. BANK NATIONAL ASSOCIATION, as Co-
Agent and as a Lender
By:
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Name:
--------------------------------
Title:
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GMAC COMMERCIAL FINANCE LLC, as a
Lender
By: /s/ MALCOM FERGUSON
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Name: Malcom Ferguson
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION, as a
Lender
By: /s/ BRUCE METTEL
----------------------------------
Name: Bruce Mettel
Title: Vice President
Signature Page to Fifth Amendment to Credit Agreement
FIRST BANK BUSINESS CAPITAL, INC.
f/k/a FB Commercial Finance, Inc., as
a Lender
By: /s/ WALTER CASTILLO
----------------------------------
Name: Walter Castillo
Title: Vice President
ALL AMERICAN SEMICONDUCTOR, INC.,
a Delaware corporation
By: /s/ HOWARD L. FLANDERS
----------------------------------
Name: Howard L. Flanders
Title:EVP & CFO
HARRIS N.A., SUCCESSOR BY MERGER TO
HARRIS TRUST AND SAVINGS BANK, as
Administrative Agent and as a Lender
By: /s/ JEAN R. ELIE
----------------------------------
Name: Jean R. Elie
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION, as Co-
Agent and as a Lender
By: /s/ THOMAS VISCONTI
----------------------------------
Name: Thomas Visconti
Title: Vice President
GMAC COMMERCIAL FINANCE LLC, as a
Lender
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
PNC BANK, NATIONAL ASSOCIATION, as a
Lender
By: /s/ BRUCE METTEL
----------------------------------
Name: Bruce Mettel
Title: Vice President
Signature Page to Fifth Amendment to Credit Agreement (continued)
REAFFIRMATION OF GUARANTY
In order to induce Harris N.A., successor by merger to Harris
Trust and Savings Bank, as Administrative Agent ("Agent") for various lenders
("Lenders"), and Lenders to execute and deliver that certain Fifth 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 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 and as amended by that certain Fourth
Amendment to Credit Agreement dated as of May 22, 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.
Reaffirmation of Guaranty to Fifth Amendment to Credit Agreement
This Reaffirmation of Guaranty is dated as of August 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/ HOWARD L. FLANDERS
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Its: EVP & CFO
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Signature Page to Reaffirmation of Guaranty to Fifth Amendment to Credit
Agreement
AMERICAPITAL, LLC
By: All American Semiconductor, Inc.,
its sole member
By: /s/ HOWARD L. FLANDERS
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Its: EVP & CFO
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Signature Page to Reaffirmation of Guaranty to Fifth Amendment to Credit
Agreement
REAFFIRMATION OF GUARANTY
In order to induce Harris N.A., successor by merger to Harris
Trust and Savings Bank, as Administrative Agent ("Agent") for various lenders
("Lenders"), and Lenders to execute and deliver that certain Fifth 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 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 and as amended by that certain Fourth Amendment to Credit
Agreement dated as of May 22, 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 August 14, 2006.
ALL AMERICAN SEMICONDUCTOR OF
CANADA, INC.
By: /s/ HOWARD L. FLANDERS
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Its: EVP & CFO
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Reaffirmation of Guaranty to Fifth Amendment to Credit Agreement