EXHIBIT 10.1
SECOND FORBEARANCE AGREEMENT
----------------------------
This SECOND FORBEARANCE AGREEMENT (this "Agreement") is entered
into as
of this 15th day of April, 2007, by and among All American
Semiconductor, Inc.,
a Delaware corporation (the "Borrower"), the other "Designated
Companies,"
Harris N.A., successor by merger to Harris Trust and Savings Bank,
as
administrative agent for the Lenders (in such capacity, the
"Administrative
Agent"), U.S. Bank National Association, as co-administrative agent
for the
Lenders (the "Co-Administrative Agent"), and the lenders from time
to time party
thereto (collectively, the "Lenders"). Capitalized terms used but
not otherwise
defined herein shall have the respective meanings ascribed to such
terms in the
Credit Agreement (as hereinafter defined).
WHEREAS, the Borrower, the Administrative Agent, the
Co-Administrative
Agent and the Lenders are parties to that certain Credit Agreement,
dated as of
May 14, 2003 (as amended, restated or otherwise modified from time
to time,
including, without limitation, pursuant to the First Forbearance
Agreement (as
defined below) and this Agreement, the "Credit Agreement"), 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, as amended by that certain
Fifth Amendment
to Credit Agreement dated as of August 14, 2006, and as amended by
that certain
Sixth Amendment to Credit Agreement dated as of November 14, 2006;
and
WHEREAS, Administrative Agent, Co-Administrative Agent, each
Lender,
Borrower and each other Designated Company are parties to that
certain
Forbearance Agreement, dated as of March 29, 2007 (as amended,
restated or
otherwise modified, the "First Forbearance Agreement"), pursuant to
which
Administrative Agent and Lenders agreed, subject to the terms and
conditions set
forth therein, to (i) forbear from exercising certain
default-related rights and
remedies under the Credit Agreement, other Loan Documents and
applicable law,
and (ii) continue to make certain extensions of credit to Borrower
in the form
of Revolving Loans, in each case through a date no later than April
15, 2007
notwithstanding the continuance or expected occurrence, as
applicable, of
certain Events of Default specified therein;
WHEREAS, by its terms, the "Forbearance Period" (as such term
is
defined in the First Forbearance Agreement) (the "First Forbearance
Period") is
scheduled to expire on the date hereof;
WHEREAS, the Events of Default listed as "Current Defaults" on
Exhibit
A attached hereto have occurred and are continuing under the Credit
Agreement as
of the date hereof (the "Current Defaults"), and the Events of
Default listed as
"Anticipated Defaults" on Exhibit A attached hereto are expected to
occur and
continue under the Credit Agreement during the Forbearance Period
(as defined
below) (if, as and when they become Events of Default, the
"Anticipated
Defaults," and together with the Current Defaults, the "Specified
Defaults");
WHEREAS, the Borrower has advised the Administrative Agent that it
has
been in discussions with product vendors from which it intends to
purchase
Inventory and/or obtain value-added services during the Forbearance
Period
(collectively, the "Product Vendors") and that as of the date
hereof certain of
the Product Vendors have agreed in principle to continue to deliver
new
Inventory or provide additional value-added services, as
applicable, to Borrower
during the Forbearance Period pursuant to "cash on delivery" or
"cash in
advance" payment terms.
WHEREAS, in view of the imminent expiration of the First
Forbearance
Period, the Borrower has requested that Administrative Agent,
Co-Administrative
Agent and Lenders agree, notwithstanding the existence or, as the
case may be,
the occurrence during the Forbearance Period of the Specified
Defaults, to (i)
continue to forbear from exercising certain of their
default-related rights and
remedies under the Credit Agreement, other Loan Documents and
applicable law
through and including April 24, 2007; and (ii) continue to make,
and permit to
remain outstanding, certain additional Revolving Loans to Borrower
during the
Forbearance Period (as defined below); and
WHEREAS, Administrative Agent, Co-Administrative Agent and Lenders
are
willing to continue to forbear and extend additional credit in the
form of
Revolving Loans to Borrower, in each case subject to the terms and
conditions
set forth herein.
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NOW THEREFORE, in consideration of the mutual conditions and
agreements
set forth in the Credit Agreement and this Agreement, and for other
good and
valuable consideration, the receipt and sufficiency of which are
hereby
acknowledged, the parties hereto hereby agree as follows:
Confirmation of Obligations and Specified Defaults.
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Borrower and each other Designated Company acknowledges and agrees
that
as of the close of business on April 11, 2007, the aggregate
principal balance
of the outstanding Obligations under the Credit Agreement was not
less than
$45,875,923.33, broken down as follows:
Revolving Loans (excluding L/C Obligations):
$45,875,923.33
L/C Obligations:
$0.00
The foregoing amounts do not include interest, fees, expenses and
other amounts
which are chargeable or otherwise reimbursable under the Credit
Agreement and
the other Loan Documents.
Borrower and each other Designated Company acknowledges and agrees
that
each of the Current Defaults constitutes a material Event of
Default that has
occurred and is continuing as of the date hereof, and each of the
Anticipated
Defaults is expected to occur and continue during the Forbearance
Period, as the
case may be. Prior to the effectiveness of this Agreement, the
existence of the
Specified Defaults (i) upon the direction of the Required Lenders
to the extent
provided in the Credit Agreement would have relieved Administrative
Agent and
Lenders from any obligation to extend any Loan or provide any other
financial
accommodation to Borrower under the Credit Agreement or other Loan
Documents
(including consenting to Borrower's use of cash collateral), and
(ii) upon the
direction of the Required Lenders to the extent provided in the
Credit Agreement
would have permitted Administrative Agent and Lenders to, among
other things,
(A) suspend or terminate any commitment to provide Loans or make
other
extensions of credit under any or all of the Credit Agreement and
the other Loan
Documents, (B) accelerate all or any portion of the Obligations,
(C) continue to
charge, and demand immediate payment of, interest with respect to
any and all of
the Obligations at the default rate to the fullest extent permitted
under
Section 1.10 of the Credit Agreement, (D) commence any legal or
other action to
collect any or all of the Obligations from Borrower, any other
Designated
Company and/or any Collateral or any other property as to which any
other Person
granted Administrative Agent or any Lender a security interest
therein as
security for the Obligations or any guaranty thereof (collectively,
the "Other
Collateral"), (E) foreclose or otherwise realize on any or all of
the Collateral
and Other Collateral, and/or appropriate, set-off and apply to the
payment of
any or all of the Obligations, any or all of the Collateral and
Other
Collateral, and/or (F) take any other enforcement action or
otherwise exercise
any or all rights and remedies provided for by any or all of the
Credit
Agreement, the other Loan Documents or applicable law.
Forbearance; Forbearance Default Rights and Remedies.
----------------------------------------------------
Effective as of the Forbearance Effective Date (as defined
below),
Administrative Agent, Co-Administrative Agent and each Lender
agrees that until
the expiration or termination of the Forbearance Period as provided
herein, it
will forbear from exercising its default-related rights and
remedies against
Borrower or any other Designated Company and its or their
respective Collateral
and other property solely with respect to the Specified Defaults;
provided,
however:
except as otherwise expressly provided in Section 3(c) hereof,
the
Specified Defaults shall continue to constitute actionable Events
of
Default for the purpose of triggering all limitations, restrictions
or
prohibitions on certain actions that may be taken or omitted or
otherwise
acquiesced to, by or on behalf of, the Borrower or any other
Designated
Company pursuant to the Credit Agreement or any other Loan
Document,
including, without limitation, any limitations, restrictions or
prohibitions with respect to any distribution, advance or other
payment
from
Borrower or any other Designated Company to any other
Designated
Company, any direct or indirect owner of an equity interest in
Borrower or
any
other Designated Company or any Affiliate of any of the foregoing;
and
any
actions or inactions taken or omitted or otherwise acquiesced to,
by or
on
behalf of, any Borrower or any other Designated Company in
violation of
such
provisions while any Event of Default (including any Specified
Default) exists will constitute additional Events of Default under
the
Credit Agreement and the other Loan Documents, as well as a
Forbearance
Default (as defined below) under this Agreement;
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nothing herein shall restrict, impair or otherwise affect
Administrative Agent's or any Lender's rights and remedies under
any
blocked account, control account, bank agency, lock box or
similar
agreement to which Administrative Agent is a party relating to any
deposit
or
other account of Borrower or any other Designated Company;
provided,
that
notwithstanding the provisions of Section 3.1(c) of the Credit
Agreement, during the Forbearance Period the provisions of Section
3.1(b)
of
the Credit Agreement shall, unless otherwise expressly provided
herein
(including, without limitation, in Section 3(a) hereof), govern
the
application of funds and other Collateral proceeds deposited or
held in the
lock
boxes and deposit and other accounts governed by such blocked
account,
control account, bank agency, lock box or similar agreements;
and
(iii)
nothing herein shall restrict, impair or otherwise affect
Administrative Agent's or any Lender's right to file, record,
publish or
deliver a notice of default or document of similar effect, except
for
Specified Defaults during the Forbearance Period unless a
Forbearance
Default has occurred.
As used herein, the term "Forbearance Period" shall mean the
period
beginning on the Forbearance Effective Date and ending on the
earlier to occur
of: (i) any Forbearance Default (as hereinafter defined), or (ii)
April 24,
2007. As used herein, the term "Forbearance Default" shall mean any
of: (A) the
occurrence of any Default or Event of Default other than the
Specified Defaults,
(B) the failure of Borrower or any other Designated Company to
timely and
strictly comply with any term, condition, covenant, agreement or
other
obligation set forth in this Agreement, (C) the failure of any
representation or
warranty made by Borrower or any other Designated Company under or
in connection
with this Agreement to be true and complete in all material
respects as of the
date when made or any other material breach of any such
representation or
warranty, (D) the taking of any action by Borrower or any other
Designated
Company to in any way repudiate or assert a defense to any
Obligation under the
Credit Agreement, this Agreement or any of the other Loan Documents
or the
assertion of any claim or cause of action against Administrative
Agent,
Co-Administrative Agent or any Lender relating in any way thereto,
(E) the date
on which Administrative Agent, in its sole discretion or at the
direction of the
Required Lenders, delivers to Borrower a written notice terminating
the
Forbearance Period, which notice may be delivered at any time upon
or after the
delivery of any Proposed Vendor Payment Schedule Rejection Notice
(as defined
below) by the Administrative Agent in accordance with Section
3(c)(ii) hereof,
or (F) Borrower fails to receive Inventory purchased with a CIA
Payment (as
defined below) within six (6) Business Days of the making of such
CIA Payment.
The occurrence of any Forbearance Default shall constitute an
immediate Event of
Default under the Credit Agreement and other Loan Documents.
Upon the termination or expiration of the Forbearance Period,
the
agreement of Administrative Agent, Co-Administrative Agent and each
Lender
hereunder to forbear from exercising its default-related rights and
remedies
shall immediately terminate without the requirement of any demand,
presentment,
protest, or notice of any kind, all of which Borrower and each
other Designated
Company hereby waives. Borrower and each other Designated Company
further agrees
that any of Administrative Agent (upon direction of the Required
Lenders to the
extent provided in the Credit Agreement) and each Lender may at any
time after
the expiration or termination of the Forbearance Period proceed to
exercise any
and all of its rights and remedies under any or all of the Credit
Agreement, any
other Loan Document and/or applicable law, all of which rights and
remedies are
hereby fully reserved by Administrative Agent and each Lender.
Any agreement by Administrative Agent and the Lenders to extend
the
Forbearance Period, if any, must be set forth in writing and signed
by
Administrative Agent and the Lenders. Borrower and each other
Designated Company
acknowledges that none of Administrative Agent or any Lender has
made any
assurances concerning any possibility of any extension of the
Forbearance
Period.
Borrower and each other Designated Company acknowledges and agrees
that
any Loan or other financial accommodation which Administrative
Agent,
Co-Administrative Agent or any Lender makes to or for the benefit
of Borrower or
any other Designated Company on or after the Forbearance Effective
Date has been
made by such party in reliance upon, and is consideration for,
among other
things, the general releases and indemnities contained in Section 5
hereof and
the other covenants, agreements, representations and warranties of
Borrower and
each other Designated Company hereunder.
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Supplemental Terms, Conditions and Covenants During the Forbearance
Period.
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The parties hereto hereby agree to comply with the following
terms,
conditions, covenants, agreements and other obligations in each
case
notwithstanding any provision to the contrary set forth in this
Agreement, the
Credit Agreement or any other Loan Document, including, without
limitation,
Sections 1.1 and 7.1 of the Credit Agreement:
[Intentionally omitted.]
Delivery of Weekly Proposed Vendor Payment Schedules. On or prior
to
12:00 p.m. prevailing Central time on April 16, 2007, and on or
prior to each
Thursday thereafter during the Forbearance Period, Borrower shall
prepare and
deliver to Administrative Agent a schedule in the form attached
hereto as
Exhibit B, which sets forth each and every product vendor payment
that Borrower
proposes to make during the immediately following week (or portion
thereof) in
accordance with the Forbearance Budget (as defined below) (each, a
"Proposed
Vender Payment Schedule").
Permitted Forbearance Overadvances. Subject to Section 3(a)
hereof,
each Lender severally agrees, solely during the Forbearance Period,
to make
additional Revolving Loans to Borrower up to the amount of such
Lender's
Revolving Credit Commitment and in proportion to its Revolver
Percentage (each,
a "Permitted Forbearance Overadvance"), in each case subject to the
satisfaction
of all the following terms and conditions as determined by
Administrative Agent
in its sole discretion:
Administrative Agent shall have received a written request for
each
such
Borrowing to be made pursuant to this Section 3(c) prior to 1:00
p.m.
prevailing Central time on such date, and such request shall be
accompanied
by a
Borrowing Base Certificate calculating the Borrowing Base (which
shall
include the $1,500,000 of Excess Availability required pursuant to
Section
8.22(g) of the Credit
Agreement) in reasonable detail as at the close of
business on the immediately preceding Business Day. Both the
Eligible
Receivables and Eligible Inventory components of each such
Borrowing Base
shall be determined as at the close of business on the
immediately
preceding Business Day; provided, however, that (A) the
determination of
whether a Receivable is an Eligible Receivable shall be determined
as
currently being done under the Credit Agreement, and (B) the
Eligible
Inventory component as at each Business Day, subject to true-up on
or prior
to
the fifth Business Day of each week using actual Eligible
Inventory
reflected on the then most recently delivered weekly Borrowing
Base
Certificate pursuant to Section 8.5(a) of the Credit Agreement,
shall be
equal to (a) the aggregate amount of Eligible Inventory for the
immediately
preceding Business Day minus (b) the aggregate amount of sales of
Eligible
Inventory booked by Borrower on the such immediately preceding
Business Day
(less the aggregate amount of gross margin associated therewith)
plus (c)
the
aggregate amount of Eligible Inventory purchased during such
immediately preceding Business Day. For the purpose of avoidance of
doubt
and
without in any way limiting the Credit Agreement, "in-transit"
Inventory shall not be included in any Borrowing Base calculated
pursuant
to
this Agreement.
Solely with respect to that portion of any Permitted
Forbearance
Overadvance to be used for product vendor payments, Administrative
Agent
shall not have delivered to Borrower, prior to 12:00 p.m.
prevailing
Central time on Monday of such week, written notice of the Lenders'
refusal
to consent to the use
of any Loan or Collateral proceeds to fund the
payments reflected in the Proposed Vendor Payment Schedule covering
such
week, which notice Administrative Agent shall have the right to
deliver in
its
sole discretion or at the direction of Required Lenders in their
sole
discretion (each, a "Proposed Vendor Payment Schedule Rejection
Notice");
provided, however, that if the Administrative Agent shall have
timely
delivered a Proposed Vendor Payment Schedule Rejection Notice to
Borrower
with
respect to a Proposed Vendor Payment Schedule in accordance with
this
subparagraph (ii), neither Administrative Agent nor any Lender
shall have
any
obligation under this Agreement, the Credit Agreement or otherwise
to
fund
any payments set forth on such Proposed Vendor Payment
Schedule.
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The sum of the aggregate principal amount of all Revolving Loans
and
L/C
Obligations at any time outstanding shall not exceed the lesser of:
(a)
the
aggregate amount of all Lenders' Revolving Credit Commitments in
effect
at
such time, and (b) the sum of (I) the Borrowing Base in effect at
such
time
and reflected on a Borrowing Base Certificate delivered to
Administrative Agent in accordance with Section 3(c)(i) hereof,
plus (II)
an
amount equal to (A) $4,948,000 at all times from and including
April 16,
2007
through and including April 20, 2007, and (B) $4,912,000 at all
times
thereafter during the
Forbearance Period (clause (II) is referred to herein
as
the "Permitted Forbearance Overadvance Amount").
All proceeds of Permitted Forbearance Overadvances shall be used
solely
to
pay the types of disbursements reflected in the respective line
items
set
forth in the Budget (which Borrower represents it prepared in
consultation with RAS Management Advisors, Inc. and which shall be
in form
and
substance acceptable to Administrative Agent and Lenders) provided
by
the
Borrower to the Administrative Agent on the date hereof (the
"Forbearance Budget"), and at no time during the Forbearance Period
shall
Borrower make disbursements (A) for any week that, in the
aggregate, exceed
the
aggregate disbursements for all line items set forth in the
Forbearance
Budget for such week or (B) with respect to any particular line
item set
forth in the Forbearance Budget for any week that exceed by more
than five
percent (5%) the forecasted total disbursements with respect to
such line
item
for such week in the Forbearance Budget. On or prior to 9:00
a.m.
prevailing Eastern time each Tuesday during the Forbearance
Period,
Borrower shall prepare and deliver to Administrative Agent a
reconciliation
of
the projected cash receipts and disbursements for the
immediately
preceding week set forth in the Forbearance Budget with the actual
cash
receipts and disbursements for such week.
Provided that Administrative Agent does not timely deliver a
Proposed
Vendor Payment Schedule Rejection Notice with respect to the
Proposed
Vendor Payment Schedule covering any week, Borrower shall only
make
payments to Product Vendors during such week if, and to the extent,
all of
the
following conditions precedent are satisfied to the reasonable
satisfaction of Administrative Agent: (a) each Product Vendor
and
corresponding payment is listed in the Proposed Vendor Payment
Schedule for
such
week (provided, however, that at the Company's request, such
approved
Proposed Vendor Payment Schedule may be amended with the prior
consent of
the
Administrative Agent so long as the amended schedule complies with
all
terms and conditions set forth herein); (b) each such payment is
made
either (I) in contemporaneous exchange for Inventory of equal or
greater
value (i.e., pursuant to "cash on delivery" payment terms) (each, a
"COD
Payment") or (II) in advance by wire transfer for Inventory of
equal or
greater value (i.e., pursuant to "cash in advance" payment terms)
(each, a
"CIA
Payment") and is made subject to a written agreement between
the
Borrower and such Product Vendor, in the form attached hereto as
Exhibit C
or
otherwise in form and substance acceptable to the Administrative
Agent
in
its sole discretion; and (c) all Inventory being purchased by
Borrower
is
at the time of ordering subject to existing customer purchase
orders and
can
be shipped to such customers within two (2) Business Days of
receipt;
provided, however, that if Inventory purchased by Borrower is,
prior to
delivery to a customer, subject to the completion of services
provided to
Borrower by a provider of value-added services, then such provider
of
value-added services shall be deemed to be an additional Product
Vendor
with
respect to such Inventory and Borrower shall have no obligation
to
ship
such Inventory to its customer until two (2) Business Days
after
receipt from such Product Vendor. For the avoidance of doubt,
neither
Administrative Agent nor any Lender shall have any obligation under
this
Agreement, the Credit Agreement or otherwise to fund any payment
set forth
on
any Proposed Vendor Payment Schedule that does not satisfy all of
the
conditions precedent set forth in this Section 3(c)(v).
(vi)
Neither Administrative Agent nor any Lender shall have any
obligation to make any Permitted Forbearance Overadvance to fund
any
payment reflected in the Forbearance Budget that Borrower paid
prior to the
date
hereof.
(vii) No
proceeds of any Collateral or any Permitted Forbearance
Overadvance may be used by Borrower or any other Designated Company
to pay
any
fees or expenses of legal counsel in connection with the
investigation
and/or assertion of or joinder in any claim, counterclaim,
action,
proceeding, application, motion, objection, defense or other
contested
matter, the purpose of which is to seek or the result of which
would be to
obtain any order, judgment, determination, declaration or similar
relief:
(A)
invalidating, setting aside, avoiding or subordinating, in whole or
in
part, any Obligations or Administrative Agent's liens and
security
interests in any Collateral; (B) for monetary, injunctive or
other
affirmative relief against any or all of the Administrative Agent
and any
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Lenders or the Collateral; or (B) preventing, hindering or
otherwise
delaying the exercise by any or all of the Administrative Agent and
the
Lenders of any of their respective rights and remedies under
this
Agreement, any other Loan Document or applicable law, or the
enforcement or
realization (whether by foreclosure, credit bid, court order or
otherwise)
by
Administrative Agent or any Lender upon any Collateral.
Administrative Agent Access and Cooperation. In supplement to,
and
without in any way limiting, the rights of Administrative
Agent,
Co-Administrative Agent and the Lenders under the Credit Agreement
and other
Loan Documents, Borrower and each other Designated Company hereby
agrees to: (A)
give Administrative Agent and its Representatives (defined below)
access to the
offices, properties, officers, employees, accountants, auditors,
counsel and
other representatives, books and records of Borrower and the other
Designated
Companies, (B) furnish to Administrative Agent and its
Representatives such
financial, operating and property related data and other
information as such
persons shall reasonably request, and (C) instruct Borrower's and
any other
Designated Company's employees, accountants, auditors, counsel,
financial
advisors (including, without limitation, Raymond James &
Associates, Inc. and
RAS Management Advisors, Inc.) and other representatives to fully
cooperate
with, and upon request regularly consult with, Administrative Agent
and its
Representatives in respect of the aforementioned clauses (A) and
(B)). For
purposes of this Agreement, the term "Representatives" shall mean
Administrative
Agent's employees, agents, repre
