EXHIBIT 10.47
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment") is dated and is effective as of the 30th day of
June, 1998, among SED INTERNATIONAL HOLDINGS, INC. (formerly known as
SOUTHERN ELECTRONICS CORPORATION) and SED INTERNATIONAL, INC., jointly
and severally (collectively, the "Borrowers"), WACHOVIA BANK, N.A., as
Agent (the "Agent") and WACHOVIA BANK, N.A. and NATIONAL CITY BANK, as
Banks (collectively, the "Banks");
W I T N E S S E T H:
WHEREAS, the Borrowers, the Agent and the Banks executed and
delivered that certain $100,000,000 Amended and Restated Credit
Agreement, dated as of the 13th day of August, 1997, as amended by
that certain First Amendment to Amended and Restated Credit Agreement,
dated as of September 22, 1997, that certain Second Amendment to
Amended and Restated Credit Agreement, dated as of October 15, 1997,
that certain Third Amendment to Amended and Restated Credit Agreement,
dated as of January 8, 1998, and that certain Fourth Amendment to
Amended and Restated Credit Agreement, dated as of June 30, 1998 (as
so amended, the "Credit Agreement");
WHEREAS, the Borrowers have requested and the Agent and the Banks
have agreed to make certain amendments to the Credit Agreement,
subject to the terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the above premises
and other good and valuable consideration, the receipt and sufficiency
of which hereby is acknowledged by the parties hereto, the Borrowers,
the Agent and the Banks hereby covenant and agree as follows:
1. Definitions. (a) Unless otherwise specifically defined
herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each
other similar reference and each reference to "this Agreement" and
each other similar reference contained in the Credit Agreement from
and after the date hereof refer to the Credit Agreement as amended
hereby.
(b) The following new definition is added to Section 1.01 of the
Credit Agreement in proper alphabetical order:
"Fixed Charge Coverage Ratio" has the meaning set forth in
Section 6.21.
2. Amendment to Section 2.05(a). Section 2.05(a) of the Credit
Agreement is hereby amended by deleting such Section in its entirety
and substituting therefor the following:
(a) "Applicable Margin" means:
(i) with respect to Euro-Dollar Loans, for the period
commencing on June 30, 1998, to and including the first
Performance Pricing Determination Date thereafter, 1.00%;
(ii) with respect to Base Rate Loans on and after June 30,
1998, and with respect to Euro-Dollar Loans, from and after the
first Performance Pricing Determination Date after June 30, 1998,
the percentage determined on each Performance Pricing
Determination Date by reference to the table set forth below as
to such type of Loan and the Leverage Ratio (as calculated by the
Agent from the most recent 10-Q quarterly statement described in
Section 6.01(i) for the quarterly period ending immediately prior
to such Performance Pricing Determination Date); and
Leverage Applicable Base Rate Base Rate
Ratio Margin for Loans Loans
Euro-Dollar (Other than (Overnight
Loans Overnight Loans Only)
Loans)
LESS THAN OR EQUAL TO 1.0 0.75% 0.0% -0.50%
GREATER THAN 1.0 and
LESS THAN OR EQUAL TO 2.0 1.00% 0.0% -0.50%
GREATER THAN 2.0 and
LESS THAN OR EQUAL TO 2.5 1.25% 0.0% -0.50%
GREATER THAN 2.5 and
LESS THAN OR EQUAL TO 3.5 1.50% 0.0% -0.50%
GREATER THAN 3.5 and
LESS THAN OR EQUAL TO 5.0 1.75% 0.0% -0.50%
GREATER THAN 5.0 2.00% 0.0% -0.50%
(iii) in the event the Fixed Charge Coverage Ratio is equal
to or less than 3.0 to 1.0 (as calculated by the Agent from the
most recent 10-Q quarterly statement described in Section 6.01(i)
for the quarterly period ending immediately prior to such
Performance Pricing Determination Date), then in such event, the
Applicable Margin shall be increased by 0.25%.
In determining interest for purposes of this Section 2.05
and fees for purposes of Section 2.06, the Borrowers and the
Banks shall refer to the Borrowers' most recent 10-Q consolidated
quarterly financial statements delivered pursuant to Section
6.01(i). If such financial statements require a change in
interest pursuant to this Section 2.05 or fees pursuant to
Section 2.06, the Borrowers shall deliver to the Agent, along
with such financial statements, a notice to that effect, which
notice shall set forth in reasonable detail the calculations
supporting the required change. The "Performance Pricing
Determination Date" is the fifth day after the date of receipt of
such financial statements pursuant to Section 6.01(i). Any such
required change in interest and fees shall become effective on
such Performance Pricing Determination Date, and shall be in
effect until the next Performance Pricing Determination Date,
provided that: (i) for Euro-Dollar Loans, changes in interest
shall only be effective for Interest Periods commencing on or
after the Performance Pricing Determination Date; and (ii) no
fees or interest shall be decreased pursuant to this Section 2.05
or Section 2.06 if a Default is in existence on the Performance
Pricing Determination Date. In the event that the Borrowers fail
to deliver their 10-Q quarterly financial statements to the Agent
and the Banks on or before the 45th day after the end of any
Fiscal Quarter, then the Applicable Margin shall be the highest
Applicable Margin then in effect until the next Performance
Pricing Determination Date.
3. Amendment to Section 6.21. Section 6.21 of the Credit
Agreement is hereby amended by deleting such Section in its entirety
and substituting therefor the following:
SECTION 6.21. Fixed Charges Coverage. Tested at the end of
each Fiscal Quarter, the ratio of EBITDA to Consolidated Interest
Expense (such ratio being calculated for the Fiscal Quarter just
ended and the immediately preceding three Fiscal Quarters, the
"Fixed Change Coverage Ratio") shall not at any time be less than
the following:
Fiscal Quarter: Ratio
June 30, 1998 2.0 to 1.0
September 30, 1998 2.0 to 1.0
December 31, 1998 2.0 to 1.0
March 31, 1999 2.0 to 1.0
Each Fiscal Quarter thereafter 3.0 to 1.0
4. Amendment to Section 6.24. Section 6.24 of the Credit
Agreement is hereby amended by deleting such Section in its entirety
and substituting therefor the following:
SECTION 6.24. Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth will not be less than $84,000,000
at all times during the period from June 30, 1998 through and
including September 30, 1998, and at all times thereafter will
not be less than (x) $84,500,000 plus (y) the sum of (i) 100% of
the cumulative Reported Net Income of the Borrowers and the
Consolidated Subsidiaries during any period after June 30, 1998
(taken as one accounting period), calculated monthly at the end
of each month (but excluding from such calculations of Reported
Net Income for purposes of this clause (i), any month in which
the Reported Net Income of the Borrowers and the Consolidated
Subsidiaries is negative), and (ii) 100% of the cumulative Net
Proceeds of Capital Stock received during any period after June
30, 1998, calculated monthly at the end of each month, minus the
sum of (a) amounts paid to date for the redemption or repurchase
of capital stock of SEC not exceeding an aggregate cumulative
amount equal to $12,000,000, plus (b) amounts attributed to
goodwill related to assets acquired after March 31, 1998, not
exceeding an aggregate cumulative amount equal to $6,000,000.
5. Exhibits and Schedules. The Compliance Certificate attached
to Exhibit H of the Credit Agreement is amended and restated in its
entirety as set forth on Exhibit A to this Amendment.
6. Effect of Amendment. Except as set forth expressly
hereinabove, all terms of the Credit Agreement and the other Loan
Documents remain in full force and effect, and constitute the legal,
valid, binding and enforceable obligations of the Borrowers. The
amendments contained herein will be deemed to have prospective
application only, unless otherwise specifically stated herein.
7. Ratification. Each of the Borrowers hereby restates,
ratifies and reaffirms each and every term, covenant and condition set
forth in the Credit Agreement and the other Loan Documents effective
as of the date hereof.
8. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered will be
deemed to be an original and all of which counterparts, taken
together, will constitute but one and the same instrument.
9. Section References. Section titles and references used in
this Amendment have substantive meaning or content of any kind
whatsoever and are not a part of the agreements among the parties
hereto evidenced hereby.
10. No Default; Release. To induce the Agent and the Banks to
enter into this Amendment and to continue to make advances pursuant to
the Credit Agreement, each of the Borrowers hereby acknowledges and
agrees that, as of the date hereof, and after giving effect to the
terms hereof, (i) there exists no Default or Event of Default,
(ii) there exists no right of offset, defense, counterclaim, claim or
objection in favor of the Borrowers arising out of or with respect to
any of the Loans or other obligations of the Borrowers owed to the
Banks under the Credit Agreement, and (iii) the Agent and each of the
Banks has acted in good faith and has conducted its relationships with
each of the Borrowers in a commercially reasonable manner in
connection with the negotiations, execution and delivery of this
Amendment and in all respects in connection with the Credit Agreement,
each of the Borrowers hereby waiving and releasing any such claims to
the contrary. A default or breach of representation or warranty by the
Borrowers under this Amendment shall constitute an Event of Default
under the Credit Agreement.
11. Further Assurances. Each of the Borrowers agrees to take
such further actions as the Agent reasonably requests in connection
herewith to evidence the amendments herein contained to the Borrowers.
12. Governing Law. This Amendment is governed by, and construed
and interpreted in accordance with, the laws of the State of Georgia.
13. Conditions Precedent. This Amendment becomes effective as
of June 30, 1998 only upon (i) execution and delivery of this
Amendment by each of the parties hereto, and (ii) payment in
immediately available funds of an amendment fee equal to $25,000, to
be paid to each Bank pro rata with its commitment.
IN WITNESS WHEREOF, the Borrowers, the Agent and each of the
Banks has caused this Amendment to be duly executed, under seal, by
its duly authorized officer as of the day and year first above
written.
SED INTERNATIONAL HOLDINGS, INC.
By:/s/ ▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
Title: President & COO
SED INTERNATIONAL, INC.
By:/s/ ▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
Title: President & COO
WACHOVIA BANK, N.A.,
as Agent and as a Bank
By:/s/ ▇▇▇▇ ▇. Shawl (SEAL)
Title: Vice President
NATIONAL CITY BANK
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (SEAL)
Title: Vice President
Exhibit "H"
EXHIBIT A TO FIFTH AMENDMENT
COMPLIANCE CHECK LIST
SOUTHERN ELECTRONICS CORPORATION
SED INTERNATIONAL, INC.
______________________
____________ ,_____
1. Consolidations, Mergers and Sales of Assets. (Section 6.05.)
The Borrowers will not, nor will it permit any Subsidiary to,
consolidate or merge with or into, or sell, lease or otherwise
transfer all or any substantial part of its assets to, any other
Person, or discontinue or eliminate any business line or segment,
provided that (a) either Borrower may merge with another Person
if (i) such Person was organized under the laws of the United
States of America or one of its states, (ii) such Borrower is the
corporation surviving such merger and (iii) immediately after
giving effect to such merger, no Default shall have occurred and
be continuing, (b) the Borrowers may merge with one another and
Subsidiaries of the Borrowers may merge with one another, and (c)
the foregoing limitation on the sale, lease or other transfer of
assets and on the discontinuation or elimination of a business
line or segment shall not prohibit (A) transfers of Accounts to
insurers permitted by Section 6.26 or (B) during any Fiscal
Quarter, a transfer of assets or the discontinuance or
elimination of a business line or segment (in a single
transaction or in a series of related transactions) unless the
aggregate assets to be so transferred or utilized in a business
line or segment to be so discontinued, when combined with all
other assets transferred, and all other assets utilized in all
other business lines or segments discontinued, during such Fiscal
Quarter and the immediately preceding 3 Fiscal Quarters, either
(x) constituted more than 2% of Consolidated Total Assets at the
end of the most recent Fiscal Year immediately preceding such
Fiscal Quarter, or (y) contributed more than 2% of Consolidated
Operating Profits during the 4 Fiscal Quarters immediately
preceding such Fiscal Quarter.
(a) Value of assets transferred or business
lines or segments discontinued $__________
(b) Consolidated Total Assets $__________
(c) 2% of (b) $__________
(d) Consolidated Operating Profits - Schedule 1 $__________
(e) 2% of (d) $__________
Limitation (a) not to exceed (c) or (e)
2. Restricted Payments (Section 6.15)
SEC will not declare or make any Restricted Payment in any Fiscal
Year after December 31, 1996 unless (a) such Restricted Payments
are made for the redemption or repurchase of capital stock of SEC
and do not exceed an aggregate cumulative amount equal to
$12,000,000, or (b) if the aggregate amount of such Restricted
Payments (exclusive of Restricted Payments allowed in the
foregoing clause (a)) for such Fiscal Year would exceed 15% of
cumulative Consolidated Net Income for the prior Fiscal Year
(commencing after December 31, 1996); provided that after giving
effect to the payment of any such Restricted Payments in such
clauses (a) or (b), no Default shall be in existence or be
created thereby.
(a) Restricted Payments after
December 31, 1996 $__________
(b) cumulative Consolidated Net Income
after December 31, 1996 $__________
(c) 15% of (b) $__________
Limitation: (a) may not exceed (c)
(d) Aggregate cumulative redemption and
repurchases of SEC capital stock to date $__________
(e) Limitation $12,000,000
3. Priority Debt (Section 6.18)
None of the Borrowers' nor any Consolidated Subsidiary's property
is subject to any Lien securing Debt, except for:
Description of Lien and Property Amount of Debt
subject to same Secured
a. ___________________________ $_____________
b. ___________________________ $_____________
c. ___________________________ $_____________
d. ___________________________ $_____________
e. ___________________________ $_____________
f. ___________________________ $_____________
Total $=============
Aggregate Debt secured by purchase
money Liens permitted by
Section 6.18(k) $__________
Limitation: $1,500,000
4. Leverage Ratio (Section 6.20)
Tested at the end of each Fiscal Month, the Leverage Ratio shall
not at any time exceed 5.5 to 1.0.
(a) Debt - Schedule 3 $__________
(b) Consolidated Tangible Net
Worth - Schedule 4 $__________
Actual Ratio of (a) to (b) __________
Maximum Ratio 5.5 to 1.0
5. Fixed Charges Coverage (Section 6.21)
Tested at the end of each Fiscal Quarter, the ratio of EBITDA to
Consolidated Interest Expense (such ratio being calculated for
the Fiscal Quarter just ended and the immediately preceding three
Fiscal Quarters) shall not at any time be less than the
following:
Fiscal Quarter: Ratio
June 30, 1998 2.0 to 1.0
September 30, 1998 2.0 to 1.0
December 31, 1998 2.0 to 1.0
March 31, 1999 2.0 to 1.0
Each Fiscal Quarter thereafter 3.0 to 1.0
(a) EBITDA - Schedule 2 $_________
(b) Consolidated Interest
Expense - Schedule 2 $_________
Ratio of (a) to (b) _____ to 1.0
Requirement GREATERN THAN OR EQUAL TO [2.0 to 1.0]
[3.0 to 1.0]
6. Minimum Consolidated Tangible Net Worth (Section 6.24)
SECTION 6.24. Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth will not be less than $84,000,000
at all times during the period from June 30, 1998 through and
including September 30, 1998, and at all times thereafter will
not be less than (x) $84,500,000 plus (y) the sum of (i) 100% of
the cumulative Reported Net Income of the Borrowers and the
Consolidated Subsidiaries during any period after June 30, 1998
(taken as one accounting period), calculated monthly at the end
of each month (but excluding from such calculations of Reported
Net Income for purposes of this clause (i), any month in which
the Reported Net Income of the Borrowers and the Consolidated
Subsidiaries is negative), and (ii) 100% of the cumulative Net
Proceeds of Capital Stock received during any period after June
30, 1998, calculated monthly at the end of each month, minus the
sum of (a) amounts paid to date for the redemption or repurchase
of capital stock of SEC not exceeding an aggregate cumulative
amount equal to $12,000,000, plus (b) amounts attributed to
goodwill related to assets acquired after March 31, 1998, not
exceeding an aggregate cumulative amount equal to $6,000,000.
(a) $84,500,000
(b) positive Reported Net Income
after June 30, 1998 $__________
(c) cumulative Net Proceeds of Capital
Stock received after June 30, 1998 $__________
(d) amounts paid to date for the
redemption or repurchase of capital
stock of SEC (limited to an amount not exceeding
an aggregate cumulative amount
equal to $12,000,000) $__________
(e) amounts attributed to goodwill related to
assets acquired after March 31, 1998 not
exceeding an aggregate cumulative amount
equal to $6,000,000 $__________
Actual Consolidated Tangible
Net Worth - Schedule 4 $__________
Required Consolidated Tangible Net
Worth (sum of (a) plus (b) plus (c)
minus (d)) $__________
Schedule 1
Consolidated Operating Profits
Consolidated Operating Profits
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
Total $__________
Schedule 2
EBITDA
Consolidated Net Income for:
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
Total $__________
Income taxes for:
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
Total $__________
Depreciation expense for:
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
Total $__________
Amortization expense for:
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
Total $__________
Consolidated Interest Expense for:
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
__ quarter 199_ $__________
Total $__________
Total EBITDA $__________
Schedule 3
Debt
INTEREST
RATE MATURITY TOTAL
Secured
______________________________ ________ _______ $________
______________________________ ________ _______ $________
______________________________ ________ _______ $________
______________________________ ________ _______ $________
______________________________ ________ _______ $________
Total Secured $___________
Unsecured
______________________________ ________ _______ $________
______________________________ ________ _______ $________
______________________________ ________ _______ $________
______________________________ ________ _______ $________
Total Unsecured $________
Guarantees
_______________________________________________________ $________
_______________________________________________________ $________
Total $__________
Redeemable Preferred Stock $________
Total $________
Other Liabilities
_______________________________________________________ $________
_______________________________________________________ $________
_______________________________________________________ $________
Total Debt $=========
Schedule 4
Consolidated Tangible Net Worth
Stockholders' Equity $__________
Less:
Surplus from write-up of assets subsequent
to _____________ , 19__ $_________
Intangibles $_________
Loans to stockholders, directors
officers or employees $_________
Capital Stock shown as assets $__________
Deferred expenses $_________
Consolidated Tangible Net Worth $=========
Intangibles Description
(a)__________________________________ $__________
(b)__________________________________ $__________
(c)__________________________________ $__________
Other $__________
Total $==========
1 To the extent not included above as an Intangible.