EXHIBIT 10.21
EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is entered into as of the 31st day of January, 2004 by and among the banks that
are or may from time to time become parties hereto (individually a "Bank" and
collectively, the "Banks"), LASALLE BANK NATIONAL ASSOCIATION, a national
banking association (in its individual capacity, "LaSalle"), as agent ("Agent")
for the Banks, and SIGMATRON INTERNATIONAL, INC., a Delaware corporation (the
"Borrower").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Agent, the Banks and Borrower are parties to that certain Loan
and Security Agreement dated as of August 25, 1999, as amended by that certain
Amendment to Loan and Security Agreement dated as of August 31, 2000, that
certain Forbearance Agreement and Second Amendment to Loan and Security
Agreement dated as of February 1, 2001, that certain Forbearance Agreement and
Third Amendment to Loan and Security Agreement dated as of May 31, 2001, that
certain Forbearance Agreement and Fourth Amendment to Loan and Security
Agreement dated as of July 31, 2001, that certain Fifth Amendment to Loan and
Security Agreement dated as of November 30, 2001, that certain Sixth Amendment
to Loan and Security Agreement dated as of April 22, 2002 and that certain
Seventh Amendment to Loan and Security Agreement dated as of October 16, 2002
(the Original Agreement and all of the foregoing amendments are collectively
referred to as the "Agreement"); and
WHEREAS, the Borrower and the Banks have agreed to further amend the
Agreement to, among other items, (i) extend the maturity date of the Revolving
Credit Commitment (as defined in the Agreement), (ii) reduce the amount of the
Revolving Credit Commitment from $20,000,000 to $13,000,000 and (iii) modify
certain interest rate provisions, all in accordance with the terms and
conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements herein contained and for the purposes of setting forth the terms and
conditions of this Amendment, the parties, intending to be bound, hereby agree
as follows:
1. Incorporation of the Agreement. All capitalized terms which are not
defined hereunder shall have the same meanings as set forth in the Agreement,
and the Agreement, to the extent not inconsistent with this Amendment, is
incorporated herein by this reference as though the same were set forth in its
entirety. To the extent any terms and provisions of the Agreement are
inconsistent with the amendments set forth in Paragraph 2 below, such terms and
provisions shall be deemed superseded hereby. Except as specifically set forth
herein, the Agreement shall remain in full force and effect and its provisions
shall be binding on the parties hereto.
2. Amendment of the Agreement.
(a) The definition of the term "Funded Debt to EBITDA Ratio" is hereby
added to Paragraph 1.1 of the Agreement to read as follows:
"Funded Debt to EDITDA Ratio" means the ratio of Borrower's total
Funded Debt to EBITDA, as determined in accordance with Borrower's most
recently delivered financial statements.
(b) The definition of the terms "Base Rate Margin", "LIBOR Margin",
"Maturity Date", "Revolving Loan Borrowing Base" and "Revolving Note" appearing
in Paragraph 1.1 of the Agreement are hereby amended and restated to read as
follows:
"Base Rate Margin" - see the Pricing Schedule attached hereto as
Schedule 1.
"LIBOR Margin" - see the Pricing Schedule attached hereto as
Schedule 1.
"Maturity Date" means September 30, 2005 with respect to all Loans.
"Revolving Loan Borrowing Base" means, as at any date of
determination thereof, an amount equal to the lesser of (i) the amount
then available under the Revolving Credit Commitment and (ii) an amount
equal to the sum of (A) eighty-five percent (85%) of the net amount of
Eligible Accounts Receivable outstanding at such date and (B) fifty
percent (50%) (the "Inventory Advance Rate") of Eligible Inventory at
such date; provided, however, that the aggregate amount of advances for
Eligible Inventory under the Revolving Credit Commitment shall not
exceed $6,500,000 at any time.
"Revolving Note" means those certain Substitute Revolving Notes
dated as of February __, 2004 payable by Borrower to each of LaSalle
Bank National Association and Charter One Bank in the maximum principal
amounts of $7,800,000 and $5,200,000, respectively, as each may be
amended, modified, substituted or restated from time to time, together
with all renewals and exchanges therefore.
(c) Paragraph 11.2(d)(ii) is hereby amended and restated to read as
follows:
(ii) as soon as available and in any event within thirty (30) days
after the end of each month, (a) a duly completed and executed
Borrowing Base Certificate, and (b) a detailed final balance of all
then existing Accounts Receivable with a declaration of contra
liabilities, in each case in form and substance acceptable to Bank and
certified as accurate by the President or Chief Financial Officer of
Borrower.
(d) Paragraph 11.2(d)(v) of the Agreement is hereby amended by deleting
the words "Ernst &Young LLP" and replacing them the words "▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP".
(e) Paragraphs 11.2(f)(vi) and (v) of the Agreement are hereby amended
and restated to read as follows:
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(vi) Maintain EBITDA of not less than $6,000,000 measured quarterly
on a rolling twelve month period.
(v) Not permit the aggregate amount of Capital Expenditures to
exceed $3,800,000 in any fiscal year (excluding any Capital
Expenditures associated with Borrower's plant located in China).
(f) Schedule 1 to this Amendment is hereby added to the Agreement as
Schedule 1 - Pricing Schedule.
3. Representations and Warranties. The representations and warranties
set forth in Paragraph 11.1 and all covenants set forth in Paragraphs 11.2 and
11.3 of the Agreement shall be deemed remade and affirmed as of the date hereof
by Borrower, except any and all references to the Agreement in such
representations, warranties and covenants shall be deemed to include this
Amendment.
4. Delivery of Documents/Information. Prior to entering into this
Amendment, Agent shall have received from Borrower the following fully executed
documents, in form and substance satisfactory to Agent and each Bank, and all of
the transactions contemplated by each such document shall have been consummated
or each condition contemplated by each such document shall have been satisfied:
(a) this Amendment;
(b) Substitute Revolving Note of each Bank;
(c) Secretary's Certificate of Borrower with resolutions and
incumbency;
(d) Officer's Certificate (Closing Bring-Down) of Borrower; and
(e) such other documents, certificates and opinions as Agent may
request.
5. Reference to the Effect on the Agreement.
(a) References. Upon the date of this Amendment and on and after
the date hereof, each reference in the Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import shall mean and be a
reference to the Agreement, as amended hereby.
(b) Ratification. As specifically modified above, the Agreement and
all other documents, instruments and agreements executed and/or delivered in
connection therewith shall remain in full force and effect, and are hereby
ratified and confirmed.
6. Representations and Warranties of the Borrower. Borrower hereby
represents and warrants to Agent and the Banks as of the date hereof as follows:
(a) The execution and delivery of this Amendment and the
performance by Borrower of its obligations hereunder are within the Borrower's
powers and authority, have been
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duly authorized by all necessary corporate action and do not and will not
contravene or conflict with the Articles of Incorporation or By-laws of
Borrower.
(b) The Agreement (as amended by this Amendment) and the Other
Agreements constitute legal, valid and binding obligations enforceable in
accordance with their terms by Agent and the Banks against Borrower, and
Borrower expressly reaffirms each of its obligations under the Agreement (as
amended by this Amendment) and each of the Other Agreements, including, without
limitation, the Borrower's Liabilities. Borrower further expressly acknowledges
and agrees that Agent has a valid, duly perfected, first priority and fully
enforceable security interest in and lien against each item of Collateral except
as otherwise set forth in the Agreement. Borrower agrees that it shall not
dispute the validity or enforceability of the Agreement (as it was stated before
and after this Amendment) or any of the Other Agreements or any of its
respective obligations thereunder, or the validity, priority, enforceability or
extent of Agent's security interest in or lien against any item of Collateral,
in any judicial, administrative or other proceeding;
(c) No consent, order, qualification, validation, license, approval
or authorization of, or filing, recording, registration or declaration with, or
other action in respect of, any governmental body, authority, bureau or agency
or other Person is required in connection with the execution, delivery or
performance of, or the legality, validity, binding effect or enforceability of,
this Amendment;
(d) The execution, delivery and performance of this Amendment by
Borrower does not and will not violate any law, governmental regulation,
judgment, order or decree applicable to Borrower and does not and will not
violate the provisions of, or constitute a default or any event of default
under, or result in the creation of any security interest or lien upon any
property of Borrower pursuant to, any indenture, mortgage, instrument, contract,
agreement or other undertaking to which Borrower is a party or is subject or by
which Borrower or any of its real or personal property may be bound;
7. Releases; Indemnities.
(a) In further consideration of the Banks' execution of this
Amendment, Borrower, and on behalf of its successors, assigns, subsidiaries and
Affiliates, hereby forever release Agent and each Bank and their respective
successors, assigns, parents, subsidiaries, Affiliates, officers, employees
directors, agents and attorneys (collectively, the "Releasees") from any and all
debts, claims, demands, liabilities, responsibilities, disputes, causes,
damages, actions and causes of action (whether at law or in equity) and
obligations of every nature whatsoever, whether liquidated or unliquidated,
known or unknown, matured or unmatured, fixed or contingent (collectively,
"Claims"), that Borrower may have against the Releasees which arise from or
relate to any actions which the Releasees may have taken or omitted to take
prior to the date this Amendment was executed, including without limitation with
respect to Borrower's Liabilities, any Collateral, the Agreement, any Other
Agreement and any third parties liable in whole or in part for Borrower's
Liabilities. This provision shall survive and continue in full force and effect
whether or not Borrower shall satisfy all other provisions of this Amendment,
the Other Agreements or the Agreement, including payment in full of Borrower's
Liabilities.
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(b) Borrower hereby agrees that its obligation to indemnify and
hold the Releasees harmless as set forth in Paragraph 7(a) of this Amendment
shall include an obligation to indemnify and hold the Releasees harmless with
respect to any and all liabilities, obligations, losses, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever incurred by the Releasees, or any of them, whether direct, indirect
or consequential, as a result of or arising from or relating to any proceeding
by, or on behalf of, any Person, including, without limitation, officers,
directors, agents, trustees, creditors, partners or shareholders of Borrower,
whether threatened or initiated, asserting any claim for legal or equitable
remedy under any statute, regulation or common law principle arising from or in
connection with the negotiation, preparation, execution, delivery, performance,
administration and enforcement of this Amendment or any other document executed
in connection herewith. The foregoing indemnity shall survive the payment in
full of the Borrower's Liabilities and the termination of this Amendment, the
Agreement and the Other Agreements.
8. Fees and Expenses. The Borrower agrees to pay on demand all costs,
fees and expenses of or incurred by the Agent in connection with the evaluation,
negotiation, preparation, execution and delivery of this Amendment and the other
instruments and documents executed and delivered in connection with the
transactions described herein (including the filing or recording thereof),
including, but not limited to, the reasonable fees and expenses of counsel for
the Agent, search fees and taxes payable in connection with this Amendment and
any future amendments to the Agreement.
9. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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(EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT SIGNATURE PAGE)
IN WITNESS WHEREOF, the parties hereto have duly executed this Eighth
Amendment to Loan and Security Agreement as of the date first above written.
LASALLE BANK NATIONAL ASSOCIATION,
for itself and as Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Its: Assistant Vice President
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CHARTER ONE BANK, N.A., as a Bank
By: /s/ Raullo ▇▇▇▇▇
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Its: Vice President
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SIGMATRON INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Its: Chief Financial Officer
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SCHEDULE 1
SCHEDULE 1.1
PRICING SCHEDULE
The Base Rate Margin and the LIBOR Margin shall be determined as
follows:
(i) Initially, (a) the LIBOR
Margin shall be 2.00% per
annum and (b) the Base Rate
Margin shall be 0.0% per
annum.
(ii) On and after January 31,
2004, the applicable LIBOR
Margin and the applicable
Base Rate Margin shall be
equal to the applicable
rate per annum set forth in
the table below opposite
the applicable Funded Debt
to EBITDA Ratio:
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Funded Debt LIBOR Base Rate
to EBITDA Ratio Margin Margin
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Greater than or equal to 2.50:1.0 2.75% .50%
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Greater than or equal to 2.0:1.0 2.50% .25%
but less than 2.50:1.0
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Greater than or equal to 2.25% 0%
1.00:1.0 but less than 2.00:1.0
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Less than 1.0:1.0 2.00% 0%
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The applicable LIBOR Margin and the Base Rate Margin shall be adjusted, to the
extent applicable, on the 45th (or, in the case of the last fiscal quarter of
each fiscal year, 90th) day after the end of each fiscal quarter based on the
Funded Debt to EBITDA Ratio as of the last day of such fiscal quarter; it being
understood that if the Borrower fails to deliver the financial statements
required by Paragraph 11.2(d) and the related Compliance Certificate, by the
45th day (or, if applicable, the 90th day) after any fiscal quarter, the LIBOR
Margin and Base Rate Margin shall be reset at the highest percentage set forth
above five (5) days following receipt by Borrower of written notice from Bank
until such financial statements and Compliance Certificate are delivered.
Notwithstanding the foregoing, no reduction to the foregoing interest rate
margins shall become effective at any time when an Event of Default has occurred
and is continuing.