FIFTH AMENDMENT TO LOAN AND
SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO LOAN
AND SECURITY AGREEMENT (this “Amendment”) is made and
entered as of January 21, 2008, by and among SED INTERNATIONAL
HOLDINGS, INC. , a Georgia corporation (“Parent”),
SED INTERNATIONAL, INC. , a Georgia corporation
(“SED”), SED MAGNA (MIAMI), INC. , a Delaware
corporation (“Magna”; Parent, SED and Magna are
collectively referred to herein as “Borrowers” and each
individually as a “Borrower”), the parties to the Loan
Agreement (as hereinafter defined) from time to time as lenders
(collectively, “Lenders” and each individually, a
“Lender”) and WACHOVIA BANK, NATIONAL
ASSOCIATION , a national banking association, in its capacity
as agent for Lenders (in such capacity,
“Agent”).
Recitals
:
Borrowers, Agent and Lenders
are parties to that certain Loan and Security Agreement dated
September 21, 2005, as amended by that certain letter amendment
dated January 24, 2006, that certain Second Amendment to Loan and
Security Agreement dated May 17, 2006, that certain letter
amendment dated May 17, 2006, that certain letter amendment dated
December 21, 2006, that certain letter amendment dated February 1,
2007, that certain Third Amendment to Loan and Security Agreement
dated March 1, 2007, that certain letter amendment dated April 25,
2007, that certain letter amendment dated May 18, 2007, that
certain Fourth Amendment dated August 23, 2007 and that certain
letter amendment dated October 15, 2007 (as so amended, and as at
any other time amended, restated, modified or supplemented, the
“Loan Agreement”), pursuant to which Lenders have made
certain revolving credit loans and other financial accommodations
to Borrowers.
The parties desire to amend
the Loan Agreement as hereinafter set forth.
NOW, THEREFORE, for TEN
DOLLARS ($10.00) in hand paid and other good and valuable
consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:
1.
Definitions . All capitalized terms used in
this Amendment, unless otherwise defined herein, shall have the
meaning ascribed to such terms in the Loan Agreement.
2.
Amendments to Loan Agreement . The Loan Agreement is hereby
amended as follows:
(a) By
deleting the definition of “Borrowing Base” contained
in Section 1.19 of the Loan Agreement and by substituting the
following in lieu thereof:
1.19 “Borrowing
Base” shall mean, at any time, the amount equal to the sum
of:
(1) (a) eighty-five percent
(85%) of the Eligible Accounts, plus (b) the lesser of (i)
the Foreign Accounts Loan Limit or (ii) eighty-five percent (85%)
of the Eligible Foreign Accounts, plus (2) the lesser of (a)
the Inventory Loan Limit or (b) the sum of: (i) the lesser of (A)
sixty percent (60%) multiplied by the Value of the Eligible
Inventory on hand 90 days or less or (B) eighty-five percent (85%)
of the Net Recovery Percentage of such Eligible Inventory,
plus (ii) the lesser of (A) twenty-five percent (25%)
multiplied by the Value of the Eligible Inventory on hand more than
90 days but not more than 180 days or (B) eighty-
five percent (85%) of the Net
Recovery Percentage of such Eligible Inventory, plus (iii)
the lesser of (A) the Westinghouse Inventory Loan Limit, (B) 70% of
the Value of Eligible Westinghouse Inventory, or (C) 115% of the
Net Recovery Percentage of such Eligible Westinghouse Inventory
(using the general television category on the Agent’s
appraisal to determine the applicable Net Recovery Percentage
fraction), plus (iv) the Acer/QVC Inventory Formula Amount,
minus (3) Reserves.
For purposes only of applying
the Inventory Loan Limit, Agent may treat the then undrawn amounts
of outstanding Letters of Credit for the purpose of purchasing
Eligible Inventory as Revolving Loans to the extent Agent is in
effect basing the issuance of the Letter of Credit on the Value of
the Eligible Inventory being purchased with such Letter of Credit.
In determining the actual amounts of such Letter of Credit to be so
treated for purposes of the sublimit, the outstanding Revolving
Loans and Reserves shall be attributed first to any components of
the lending formulas set forth above that are not subject to such
sublimit, before being attributed to the components of the lending
formulas subject to such sublimit. The amounts of Eligible
Inventory of any Borrower shall, at Agent’s option, be
determined based on the lesser of the amount of Inventory set forth
in the general ledger of such Borrower or the perpetual inventory
record maintained by such Borrower.
(b) By
deleting subclause (n) from the definition of “Eligible
Accounts” set forth in Section 1.39 of the Loan Agreement and
by substituting the following in lieu thereof:
(n) the
aggregate amount of such Accounts owing by QVC Inc. do not
constitute more than thirty-six percent (36%) of the aggregate
amount of all otherwise Eligible Accounts (so long as Accounts
owing by QVC Inc. are subject to credit insurance payable to Agent
issued by an insurer and on terms and in an amount acceptable to
Agent), and the aggregate amount of such Accounts owing by any
single account debtor other than QVC Inc. do not constitute more
than fifteen percent (15%) of the aggregate amount of all otherwise
Eligible Accounts (but the portion of the Accounts not in excess of
the applicable percentages may be deemed Eligible
Accounts);
(c) By
deleting the last sentence in the definition of “Eligible
Inventory” contained in Section 1.40 of the Loan Agreement
and by substituting in lieu thereof the following:
Any amount which is included
as “Eligible Westinghouse Inventory” or “Eligible
Acer/QVC Inventory” on any Borrowing Base certificate shall
not also be included as Eligible Inventory on the same Borrowing
Base certificate, any amount which is included as “Eligible
Acer/QVC Inventory” on any Borrowing Base certificate shall
not also be included as Eligible Acer/QVC In-Transit Inventory on
the same Borrowing Base certificate, and any amount which is
included as “Eligible Acer/QVC In-Transit Inventory” on
any Borrowing Base certificate shall not also be included as
Eligible Acer/QVC Inventory or Eligible Inventory on the same
Borrowing Base certificate.
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(d) By
adding the following new definitions of “Acer/QVC Inventory
Formula Amount”, “Eligible Acer/QVC Inventory”
and “Eligible Acer/QVC In-Transit Inventory”,
respectively, as a new Section 1.129 of the Loan Agreement
immediately following Section 1.128 thereof:
1.129 Additional Definitions
(Fifth Amendment to Loan and Security Agreement):
“Acer/QVC Inventory
Formula Amount” means an amount equal to the lesser of (1)
the sum of (a) the lesser of $5,500,000 or 70% of the Value of
Eligible Acer/QVC Inventory, plus (b) the lesser of $2,500,000 or
70% of the Value of Eligible Acer/QVC In-Transit Inventory, or (2)
103% of the Net Recovery Percentage of Eligible Acer/QVC Inventory
and Eligible Acer/QVC In-Transit Inventory (using the general
notebooks category on the Agent’s appraisal to determine the
applicable Net Recovery Percentage fraction)].
“Eligible Acer/QVC
Inventory” means Inventory which satisfies all of the
criteria for “Eligible Inventory” set forth in the
definition thereof and which (i) consists of Acer branded notebook
or desktop personal computers aged less than 45 days, (ii) is
subject
