THIRD AMENDED AND RESTATED CREDIT AGREEMENT

THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is entered
into as of October 31, 2014, by and between SIGMATRON INTERNATIONAL, INC., a
Delaware corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION
(“Bank”).

RECITALS

Borrower and Bank entered into that certain Credit Agreement dated January 8,
2010 (the “Original Credit Agreement”) pursuant to which Bank extended credit to
Borrower.

Borrower and Bank entered into that certain Amended and Restated Credit
Agreement dated January 31, 2011 (as further amended from time to time, the
“Amended and Restated Credit Agreement”) amending and restating the Original
Credit Agreement and pursuant to which Bank continued to extend credit to
Borrower.

Borrower and Bank entered into that certain Second Amended and Restated Credit
Agreement dated October 24, 2013 (as further amended from time to time, the
“Second Amended and Restated Credit Agreement”) amending and restating the
Amended and Restated Credit Agreement and pursuant to which Bank continued to
extend credit to Borrower.

Borrower has requested that Bank extend or continue credit to Borrower, and
Borrower and Bank have agreed to further amend and restate the Second Amended
and Restated Credit Agreement on the terms and conditions contained herein.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Bank and Borrower hereby agree as follows:

ARTICLE I
CREDIT TERMS

SECTION 1.1.LINE OF CREDIT.

(a)Line of Credit.  Subject to the terms and conditions of this Agreement, Bank
hereby agrees to make advances to Borrower from time to time up to and including
October 31, 2017, not to exceed at any time the aggregate principal amount of
the lesser of Thirty Million Dollars ($30,000,000.00) and the Borrowing Base
(the “Line of Credit”), the proceeds of which shall be used to finance
Borrower's working capital requirements and for general corporate
purposes.  Borrower's obligation to repay advances under the Line of Credit
shall be evidenced by an amended and restated promissory note dated as of
October 31, 2014 (as may be further amended, amended and restated, or otherwise
modified from time to time, the “Line of Credit Note”), all terms of which are
incorporated herein by this reference.

(b)Letter of Credit Subfeature.  As a subfeature under the Line of Credit, Bank
agrees from time to time during the term thereof to issue or cause an affiliate
to issue standby and sight commercial letters of credit for the account of
Borrower (“Subfeature LCs”); provided however, that the aggregate undrawn amount
of all outstanding Subfeature LCs shall not at any

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time exceed Two Million Dollars ($2,000,000.00).  The form and substance of each
Subfeature LC shall be subject to approval by Bank, in its sole
discretion.  Each standby letter of credit shall be issued for a term not to
exceed three hundred sixty five (365) days and each sight commercial letter of
credit shall be issued for a term not to exceed ninety (90) days, as designated
by Borrower.  The undrawn amount of all Subfeature LCs shall be reserved under
the Line of Credit and shall not be available for borrowings thereunder.  Each
Subfeature LC shall be subject to the additional terms and conditions of Bank's
standard Standby Letter of Credit agreement or Commercial Letter of Credit
agreement as applicable, and all applications and related documents required by
Bank in connection with the issuance thereof.  Each drawing paid under a
Subfeature LC shall be deemed an advance under the Line of Credit and shall be
repaid by Borrower in accordance with the terms and conditions of this Agreement
applicable to such advances; provided however, that if advances under the Line
of Credit are not available, for any reason, at the time any drawing is paid,
then Borrower shall immediately pay to Bank the full amount drawn, together with
interest thereon from the date such drawing is paid to the date such amount is
fully repaid by Borrower, at the rate of interest applicable to advances under
the Line of Credit.

(c)Overadvance Subfeature. As a subfeature under the Line of Credit, Bank hereby
agrees to make advances to Borrower from time to time up to and including
October 30, 2015, not to exceed at any time the aggregate principal amount of
Five Million Dollars ($5,000,000.00) (the “Overadvance Sublimit”). Bank hereby
agrees to make advances up to the Overadvance Sublimit (each such advance, an
“Overadvance”), notwithstanding  that any of the other applicable conditions
precedent set forth in Section 3.2 hereof have not been satisfied, to the extent
of a monetary amount not to exceed the Overadvance Sublimit.

(d)Borrowing and Repayment; Borrowing Base.  Borrower may from time to time
during the term of the Line of Credit borrow, partially or wholly repay its
outstanding borrowings, and reborrow, subject to all of the limitations, terms
and conditions contained herein or in the Line of Credit Note or any other
document or instrument required hereby; provided however, that the total
outstanding borrowings under the Line of Credit shall not at any time exceed the
lesser of (i) the maximum principal amount available thereunder, as set forth
above, or (ii) the Borrowing Base (as defined below).

(e)Borrowing Base Defined Terms. Each defined term set forth below has its
meaning wherever used in this Agreement as follows:

(i)“Account” has the meaning assigned to such term in the UCC.

(ii)“Account Debtor” means the Person or entity who is obligated on or under any
of Borrower’s Accounts.

(iii)“Borrowing Base” is defined, on any given date, without duplication, as an
amount equal to the sum of (A) and (B) below:

A.an amount equal to 85% of the face amount (less reserves, maximum discounts,
credits and allowances that may be taken by or granted in each case by Borrower
to the Account Debtor thereof in connection therewith) of all existing Eligible

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Accounts that are set forth in the Borrowing Base Certificate then most recently
delivered by Borrower to Bank; and

B.an amount equal to 40% of the Value of all Eligible Inventory as set forth in
the Borrowing Base Certificate then most recently delivered by Borrower to Bank
less any reserves established pursuant to an agreement between Borrower and
Bank; provided, however, that such amount shall on any given date be equal to or
less than 50% of the total Borrowing Base.

(iv)“Borrowing Base Certificate” means a certificate setting forth Borrower’s
Borrowing Base as of the date of such certificate substantially in the form of
Exhibit A.

(v)“Business Day” means any day other than a Saturday, Sunday or other day on
which commercial banks in Chicago, Illinois are authorized or required by law to
close and, if the applicable Business Day relates to any LIBOR Loan, means such
a day on which dealings are carried on in the London interbank market.

(vi)“Eligible Account” means any of Borrower’s Accounts that meet each of the
following requirements: 

A.it arises from either (a) the performance of services by Borrower, which
services have been fully performed and, if applicable, acknowledged and/or
accepted by the Account Debtor with respect thereto or (b) the sale or lease of
goods by Borrower, and if it arises from the sale of goods, such goods have been
shipped or delivered to the Account Debtor thereof;

B.it is a valid, legally enforceable obligation of the Account Debtor
thereunder, and is not subject to any reserve, discount, credit, allowance
(except any reserve, discount, credit or allowance that has been deducted in
computing the net amount thereof), offset, counterclaim or other defense on such
Account Debtor’s part or to any claim on such Account Debtor’s part denying
liability thereunder in whole or in part, but only to the extent of such offset,
counterclaim, defense or claim;  

C.it is subject to a perfected Lien in Bank’s favor and is not subject to any
other Lien whatsoever, except for Permitted Liens;

D.it is evidenced by an invoice (dated not later than the date of shipment to
the Account Debtor or performance and having a due date not more than thirty
(30) days after the date of invoice) rendered to such Account Debtor, and is not
evidenced by any instrument or chattel paper unless such instrument or chattel
paper is delivered to Bank;

E.it is payable in Dollars;

F.it is not owing by any Governmental Authority unless rights to payment have
been assigned to Bank pursuant to the Assignment of Claims Act of

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1940, 31 USC § 3272 et seq and 41 USC § 15 et seq or pursuant to an analogous
state or local law;

G.it is not owing by any Account Debtor located outside the United States,
unless the sale of goods giving rise to such Account is credit enhanced by means
of a letter of credit, bankers’ acceptance, insurance or other credit support
that is satisfactory to Bank;

H.it is not owing by any Account Debtor involved in any Insolvency Proceeding
unless such Account arose with the written consent of Bank after the occurrence
of such Insolvency Proceeding; 

I.it is not owing by any employee, affiliate, partner, member, shareholder,
parent or Subsidiary of Borrower; 

J.it is not unpaid more than ninety (90) days after the invoice date;

K.it is not owing by an Account Debtor that shall have failed to pay in full any
invoice evidencing any Account within ninety (90) days after the due date of
such invoice, unless the total invoice amounts of such Account Debtor that have
not been paid within ninety (90) days of the due date of such invoice represent
less than twenty percent (20%) of the total invoice amounts then outstanding of
such Account Debtor;

L.it is owing by an Account Debtor for which the aggregate invoice amounts of
the Accounts then owing by such Account Debtor do not exceed twenty-five percent
(25%) of the total invoice amounts then outstanding of all of the Borrower’s
Accounts, but only to the extent of such excess;

M.it is not an Account arising in a transaction where goods are sold on
consignment or are sold pursuant to a sale on approval, sale or return, a bill
and hold, or any other terms by reason of which the payment by the Account
Debtor may be conditional. Provided the foregoing is true and that all other
clauses of this definition of Eligible Account have been satisfied,  an Account
arising in a transaction where (i) goods have been sold to an Account Debtor
from Inventory held by such Account Debtor at the Account Debtor’s place of
business, and (ii) such Account Debtor holds such Inventory pursuant to a
written agreement between Borrower and such Account Debtor (an “Account Debtor
Agreement”), which agreement has been provided to Bank, shall constitute an
Eligible Account;  

N.it is not owing by an Account Debtor resident in a State denying creditors
access to its courts in the absence of qualification to transact business
therein or the filing of a so called “notice of business activities report” or
similar filing, unless Borrower has taken all action required by the
jurisdiction in question to have access to its courts; and

O.it is not an Account as to which Bank, at any time or times hereafter,
determines, in its reasonable commercial judgment and in good faith, that the
prospect of payment or performance by the Account Debtor thereof is or will be
impaired in any material

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respect, provided that Bank gives Borrower at least ten (10) days advance notice
of such determination. 

An Account of Borrower that is at any time an Eligible Account, but which
subsequently fails to meet any of the foregoing requirements, shall forthwith
cease to be an Eligible Account; provided, however, that if such an ineligible
Account subsequently meets all of the foregoing requirements, it shall again be
deemed an Eligible Account.

(vii)“Eligible Inventory” means Borrower’s Inventory that meets each of the
following requirements: 

A.it is finished goods, works in process, or raw materials, and, in the case of
finished goods, is in such condition that it may be sold in the ordinary course
of Borrower’s business;

B.in the case of goods held for sale, it is new and unused (except as Bank may
otherwise consent in writing);

C.it is owned by Borrower and is subject to a perfected Lien in Bank’s favor and
is not subject to any other Lien whatsoever, except for Permitted Liens;

D.if manufactured by Borrower, it has been produced by Borrower in compliance
with the Fair Labor Standards Act of 1938, if applicable;

E.it is not defective and is not subject to any product warranty claim that in
Bank’s reasonable judgment materially and adversely affects the value thereof;

F.it is not rejected, returned, “dropship” items returned to stock, consigned
Inventory or Inventory sold on a sale or return or sale on approval basis;

G.it is available, or will be made available, for sale in the ordinary course of
business of Borrower and is not excess, obsolete or slow moving in the ordinary
course of Borrower’s business except to the extent subject to customer
agreements provided to Bank to buy back such items;  

H.it is located (i) only at premises owned or leased by Borrower within the
United States, or (ii) is held by an Account Debtor at one or more places of
business of such Account Debtor in the United States if Borrower has delivered
to Bank the corresponding Account Debtor Agreement and the Account Debtor has
executed and delivered a Waiver Letter in form and substance satisfactory to
Bank; provided, however, that in the case of clause (ii) hereof, all Inventory
of Borrower located at the place of business of any Account Debtor in the United
States shall not exceed twenty-five percent (25%) of Borrower’s total Inventory;
 

I.it is not covered by a Document unless the Document is in the possession and
control of Bank;

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J.it is not in the possession of a bailee, warehouse or other third party unless
Bank has received from such party assurances as to access, disposition and
claims to Inventory acceptable to Bank in its sole and absolute discretion
including, without limitation, bailee, landlord’s or warehousemen’s letters or
collateral access agreements from such parties in favor of Bank  (“Waiver
Letters”); and

K.Bank, in its reasonable judgment and in good faith, has not determined that it
is unacceptable in any material respect due to type and/or category. 

Any of Borrower’s Inventory that is Eligible Inventory at any time, but which
subsequently fails to meet any of the foregoing requirements, shall forthwith
cease to be Eligible Inventory; provided, however, that if such ineligible
Inventory subsequently meets all of the foregoing requirements, it shall again
be deemed to be Eligible Inventory.

(viii)“Inventory” has the meaning assigned to such term in the UCC.

(ix)“Lien” means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as “debtor,” and not as “lessee,” “bailee,” “consignee” or words of similar
import, under the UCC or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not including the interest of a
lessor under an operating lease.

(x)“Permitted Lien” shall have the meaning assigned to such term in Section 5.7
hereof.

(xi)“Subsidiary” of an entity means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than 50% of the voting stock, membership interests or other equity interests (in
the case of entities other than corporations), is owned or controlled directly
or indirectly by the entity, or one or more of the Subsidiaries of the entity,
or a combination thereof.  Unless the context otherwise clearly requires,
references herein to a “Subsidiary” refer to a Subsidiary of Borrower.

(xii)“UCC” means the Uniform Commercial Code as in effect in the State of
Illinois.

(xiii)“U.S. Subsidiary” means any Subsidiary organized under the laws of any
political subdivision of the United States.

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(xiv)“Value” means, with respect to any Inventory or other goods, Borrower’s
cost thereof calculated on a first-in, first-out basis in accordance with GAAP;
deductions and other adjustments that Borrower has historically made from the
value of Inventory as set forth on Borrower’s balance sheet to determine the
value of Inventory per Borrower’s perpetual inventory system (including, without
limitation, deductions and other adjustments relating to freight-in charges,
capitalization charges, staged inventory, inventory in transit and raw materials
inventory) shall continue to be made in determining the Value of Inventory.

(f)Mandatory Repayment: Borrowing Base Deficiency. If at any time the sum of the
unpaid principal balance of the Line of Credit (excluding any available
Overadvance) then outstanding shall be in excess of the Borrowing Base based on
the most recent Borrowing Base Certificate, Borrower shall immediately and
without notice or demand pay over the amount of the excess to Bank as and for a
mandatory repayment on such obligations of Borrower subject hereto, with each
such repayment first to be applied to the Line of Credit.

(g)Permanent Reduction of the Line of Credit. Borrower shall have the right at
any time and from time to time, upon at least five (5) Business Days prior
written notice to Bank, to permanently reduce, without premium or penalty,
(i) the entire Line of Credit at any time or (ii) portions of the Line of
Credit, from time to time, in an aggregate principal amount not less than
$5,000,000 or any whole multiple of $1,000,000 in excess thereof. 

SECTION 1.2.TERM LOANS.

(a)Term Loan A.  Subject to the terms and conditions of this Agreement, Bank
hereby agrees to make a loan to Borrower in the principal amount as calculated
below (“Term Loan A”), the proceeds of which shall be used to refinance
Borrower's outstanding credit accommodations and finance office and warehouse
facilities in Elk Grove Village, Illinois.  Borrower's obligation to repay the
Term Loan A shall be evidenced by a promissory note dated as of January 31, 2011
(as may be amended, amended and restated, or otherwise modified from time to
time, “Term Note A”), all terms of which are incorporated herein by this
reference.  The Term Loan A shall be in an amount equal to $2,500,000.00.

(b)Term Loan B.  Subject to the terms and conditions of this Agreement, Bank
hereby agrees to make a loan to Borrower in the principal amount as calculated
below (“Term Loan B” and together with Term Loan A, collectively referred to as
“Term Loan”), the proceeds of which shall be used to refinance Borrower's
outstanding credit accommodations and finance office and warehouse facilities in
Elgin, Illinois (the “Elgin Property”).  Borrower's obligation to repay the Term
Loan B shall be evidenced by a promissory note dated as of October 24, 2013 (as
may be amended, amended and restated, or otherwise modified from time to time,
the “Term Note B” and, together with Term Note A, collectively referred to as
the “Term Note”), all terms of which are incorporated herein by this
reference.  The Term Loan B shall be in an amount equal to $1,275,000.00.

(c)Repayment.  The principal amount of each of Term Loan A and Term Loan B shall
be repaid in accordance with the provisions of Term Note A and Term Note B
respectively.

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(d)Prepayment.  Borrower may prepay principal on Term Loan A or Term Loan B in
whole or in part, and solely in accordance with the provisions of Term Note A
and Term Note B respectively.

SECTION 1.3.INTEREST/FEES.

(a)Interest.  The outstanding principal balance of each credit subject hereto
shall bear interest at the rate of interest set forth in each promissory note or
other instrument or document executed in connection therewith.

(b)Computation and Payment.  Interest shall be computed on the basis of a
360-day year, actual days elapsed.  Interest shall be payable at the times and
place set forth in each promissory note or other instrument or document required
hereby.

(c)Arrangement Fee.  Bank has acknowledged that Borrower has paid to Bank a
$10,000.00 non-refundable arrangement fee.

(d)Letter of Credit Fees.  Borrower shall pay to Bank (i) fees upon the issuance
of each standby letter of credit issued under any credit subject hereto at the
rate of 2.25% per annum (computed on the basis of a 360-day year, actual days
elapsed) of the average daily stated amount of all such letters of credit, (ii)
fees upon the issuance of each commercial letter of credit issued under any
credit subject hereto at a rate per annum to be determined upon the issuance of
such letter of credit, and (iii) fees upon the payment or negotiation of each
drawing under any letter of credit referenced in the foregoing clauses (i) and
(ii) and fees upon the occurrence of any other activity with respect to any such
letter of credit (including without limitation, the transfer, amendment or
cancellation of any such letter of credit) determined in accordance with Bank's
standard fees and charges then in effect for such activity.

(e)Unused Fee.  Commencing on the date hereof, Borrower shall pay to Bank a
non-refundable fee (the “Unused Fee”) to be calculated at the rate of .125% per
annum on the aggregate unused portion of the Line of Credit. The Unused Fee
shall be payable in arrears on the last Business Day of each fiscal quarter
during the term of this Agreement commencing on October 31, 2014 and ending on
the date upon which all obligations of Borrower arising under the Line of Credit
Note shall have been indefeasibly and irrevocably paid and satisfied in full,
all Subfeature LCs have been terminated or expired, all Overadvances have been
paid in full, and the Line of Credit has been terminated.

(f)Upfront Fee. Bank has acknowledged that Borrower has paid to Bank on the date
hereof a $30,000.00 non-refundable upfront fee.

SECTION 1.4.COLLECTION OF PAYMENTS.  Except to the extent expressly specified
otherwise in any Loan Document (as defined in Section 2.2 hereof) other than
this Agreement, Borrower authorizes Bank to collect all amounts due to Bank from
Borrower under this Agreement or any other Loan Document (whether for principal,
interest or fees, or as reimbursement of drafts paid or other payments made by
Bank under any credit subject to this Agreement) by charging any deposit account
maintained by Borrower with Bank for the full amount thereof.  Should there be
insufficient funds in Borrower's deposit accounts with Bank to

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pay all such sums when due, the full amount of such deficiency shall be
immediately due and payable by Borrower.

SECTION 1.5.COLLATERAL.

(a)As security for all indebtedness and other obligations of Borrower to Bank
arising under the Line of Credit under this Agreement and under the other Loan
Documents (as herein defined), excluding all indebtedness and other obligations
of Borrower to Bank arising under either Term Loan A or Term Loan B,  (i)
Borrower grants, and shall cause each direct and indirect U.S. Subsidiary of
Borrower to grant, to Bank security interests of first priority in all of
Borrower's and such U.S. Subsidiary’s personal property located in the United
States now owned and hereafter acquired, and (ii) Borrower grants to Bank a
security interest in Borrower’s entire Inventory located in Mexico now owned and
hereafter acquired (the “Mexico Inventory”) until such time as the Overadvance
Sublimit expires and each Overadvance shall have been paid to Bank in full with
no outstanding Event of Default.

(b)(i) As security for all indebtedness and other obligations of Borrower to
Bank under  Term Loan A and this Agreement, excluding all indebtedness and other
obligations of Borrower to Bank arising under either the Line of Credit or Term
Loan B, Borrower hereby grants to Bank a Lien of not less than first priority on
that certain real property located at 2201 Landmeier Road, Elk Grove Village, IL
60007 pursuant to the Mortgage and Assignment of Rents and Leases, dated January
8, 2010, as amended and otherwise modified from time to time (the “Elk Grove
Mortgage”)  until such time as any and all amounts owing under Term Note A and
any obligations related to Term Note A under this Agreement have been paid and
satisfied in full, at which time the Elk Grove Mortgage shall be released,  and
(ii) as security for all indebtedness and other obligations of Borrower to Bank
under Term Loan B and this Agreement, excluding all indebtedness and other
obligations of Borrower to Bank arising under either the Line of Credit or Term
Loan A, Borrower hereby grants to Bank a Lien of not less than first priority on
that certain real property located at 1901 South Street, Elgin, IL 60123
pursuant to the Mortgage and Assignment of Rents and Leases, dated October 24,
2013, as amended and otherwise modified from time to time (the “Elgin Mortgage”
and together with the Elk Grove Mortgage, collectively referred to as the
“Mortgage”) until such time as any and all amounts owing under Term Note B and
any obligations related to Term Note B under this Agreement have been paid and
satisfied in full at which time the Elgin Mortgage shall be released.

(c)All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds or mortgages, and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank.

(d)Borrower shall pay to Bank immediately upon demand the full amount of all
reasonable out-of-pocket charges, costs and expenses (to include reasonable
out-of-pocket fees paid to third parties), expended or incurred by Bank in
connection with any of the foregoing security, including without limitation,
filing and recording fees and costs of appraisals, audits and title insurance.

ARTICLE II
REPRESENTATIONS AND WARRANTIES

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Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.

SECTION 2.1.LEGAL STATUS.  Borrower is a corporation, duly organized and
existing and in good standing under the laws of Delaware, and is qualified or
licensed to do business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so licensed could have a
material adverse effect on Borrower.

SECTION 2.2.AUTHORIZATION AND VALIDITY.  This Agreement and each promissory
note, contract, instrument and other document required hereby or at any time
hereafter delivered to Bank in connection herewith, including, without
limitation, each document listed in Section 3.1(b) hereof (collectively, the
“Loan Documents”) have been duly authorized, and upon their execution and
delivery in accordance with the provisions hereof will constitute legal, valid
and binding agreements and obligations of Borrower or the party which executes
the same, enforceable in accordance with their respective terms.

SECTION 2.3.NO VIOLATION.  The execution, delivery and performance by Borrower
of each of the Loan Documents do not violate any provision of any law or
regulation, or contravene any provision of the Articles of Incorporation or
By-Laws of Borrower, or result in any breach of or default under any contract,
obligation, indenture or other instrument to which Borrower is a party or by
which Borrower may be bound.

SECTION 2.4.LITIGATION.  There are no pending, or to the best of Borrower's
knowledge threatened, actions, claims, investigations, suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which could have a material adverse effect on the financial condition or
operation of Borrower other than those disclosed by Borrower to Bank in writing
prior to the date hereof.

SECTION 2.5.CORRECTNESS OF FINANCIAL STATEMENT.  The annual financial statement
of Borrower dated April 30, 2014, and all interim financial statements delivered
to Bank since said date, true copies of which have been delivered by Borrower to
Bank prior to the date hereof, (a) are complete and correct and present fairly
the financial condition of Borrower, (b) disclose all liabilities of Borrower
that are required to be reflected or reserved against under generally accepted
accounting principles, whether liquidated or unliquidated, fixed or contingent,
and (c) have been prepared in accordance with generally accepted accounting
principles consistently applied.  Since the dates of such financial statements
there has been no material adverse change in the financial condition of
Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or
otherwise encumbered any of its domestic personal or real property or properties
except in favor of Bank, equipment leases with Wells Fargo Equipment Finance,
Inc., Associated Bank Leasing Division of Associated Bank, National Association,
and CIT Finance LLC in each case as set forth in Schedule 5.3 hereto or as
otherwise permitted by Bank in writing.

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SECTION 2.6.INCOME TAX RETURNS.  Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect to any year.

SECTION 2.7.NO SUBORDINATION.  There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower's obligations
subject to this Agreement to any other obligation of Borrower.

SECTION 2.8.PERMITS, FRANCHISES.  Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law.

SECTION 2.9.ERISA.  Borrower is in compliance in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time (“ERISA”); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a “Plan”); no Reportable Event
as defined in ERISA has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles.

SECTION 2.10.OTHER OBLIGATIONS.  Borrower is not in default on any obligation
for borrowed money, any material purchase money obligation or any other material
lease, commitment, contract, instrument or obligation.

SECTION 2.11.ENVIRONMENTAL MATTERS.  Except as disclosed by Borrower to Bank in
Schedule 2.11 hereof, Borrower is in compliance in all material respects with
all applicable federal or state environmental, hazardous waste, health and
safety statutes, and any rules or regulations adopted pursuant thereto, which
govern or affect any of Borrower's operations and/or properties, including
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986,
the Federal Resource Conservation and Recovery Act of 1976, and the Federal
Toxic Substances Control Act, as any of the same may be amended, modified or
supplemented from time to time.  None of the operations of Borrower is the
subject of any federal or state investigation evaluating whether any remedial
action involving a material expenditure is needed to respond to a release of any
toxic or hazardous waste or substance into the environment.  Borrower has no
material contingent liability in connection with any release of any toxic or
hazardous waste or substance into the environment.

SECTION 2.12.REAL PROPERTY COLLATERAL.  Except as disclosed by Borrower to Bank
in writing prior to the date hereof, with respect to any real property
collateral required hereby:

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(a)All taxes, governmental assessments, insurance premiums, and water, sewer and
municipal charges, and rents (if any) which previously became due and owing in
respect thereof have been paid as of the date hereof.

(b)There are no mechanics' liens or similar Liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under law
could give rise to any such Lien) which affect all or any interest in any such
real property and which are or may be prior to or equal to the Lien thereon in
favor of Bank.

(c)None of the improvements which were included for purpose of determining the
appraised value of any such real property lies outside of the boundaries and/or
building restriction lines thereof, and no improvements on adjoining properties
materially encroach upon any such real property.

(d)There is no pending, or to the best of Borrower's knowledge threatened,
proceeding for the total or partial condemnation of all or any portion of any
such real property, and all such real property is in good repair and free and
clear of any damage that would materially and adversely affect the value thereof
as security and/or the intended use thereof.

SECTION 2.13.OFAC.  Neither Borrower nor any of its subsidiaries (i) is an
“enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading
with the Enemy Act of the United States (50 U.S.C. App. §§ 1 et seq.), as
amended, (ii) is in violation of (A) the Trading with the Enemy Act, as amended,
(B) any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto or (C) the USA PATRIOT Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended
(the “PATRIOT Act”), (iii) is (a) a person or entity named on the list of
“Specially Designated Nationals and Blocked Persons” maintained by the U.S.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) available
at
http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx,
or as otherwise published from time to time, or (b) (i) an agency of the
government of a Sanctioned Country, (ii) an organization controlled by a country
subject to a sanctions program identified on the list maintained by OFAC and
available at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx,
or as otherwise published from time to time (any such country, a “Sanctioned
Country”), or (iii) a person resident in a Sanctioned Country, to the extent
subject to a sanctions program administered by the U.S. Department of the
Treasury’s Office of Foreign Assets Control (a “Sanctioned Person”), (ii) has
more than 10% of its assets in Sanctioned Countries, or (iii) derives more than
10% of its operating income from investments in, or transactions with Sanctioned
Persons or Sanctioned Countries.  No part of the proceeds of any Extension of
Credit hereunder will be used directly or indirectly to fund any operations in,
finance any investments or activities in or make any payments to, a Sanctioned
Person or a Sanctioned Country that would result in a material violation of OFAC
regulations.

ARTICLE III
CONDITIONS

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SECTION 3.1.CONDITIONS OF INITIAL EXTENSION OF CREDIT.  The obligation of Bank
to extend any credit contemplated by this Agreement is subject to the
fulfillment to Bank's satisfaction of all of the following conditions:

(a)Approval of Bank Counsel.  All legal matters incidental to the extension of
credit by Bank shall be satisfactory to Bank's counsel.

(b)Documentation.  Bank shall have received, in form and substance satisfactory
to Bank, each of the following, duly executed:

(i)This Agreement.

(ii)The Line of Credit Note.

(iii)The Term Note A.

(iv)The Term Note B.

(v)Corporate Resolution: Borrowing.

(vi)Certificate of Incumbency.

(vii)Amended and Restated Security Agreement.

(viii)Mortgage and Assignment of Rents and Leases for the Elk Grove Property.

(ix)Mortgage and Assignment of Rents and Leases for the Elgin Property.

(x)First Modification of Mortgage and Assignment of Rents and Leases for the Elk
Grove Property.

(xi)Second Modification of Mortgage and Assignment of Rents and Leases for the
Elk Grove Property.

(xii)Third Modification of Mortgage and Assignment of Rents and Leases for the
Elk Grove Property.

(xiii)The Non-Possessory Pledge Agreement covering the Mexico Inventory (the
“Mexico Inventory Pledge Agreement”).

(xiv)Updated appraisal of Borrower’s Inventory by a third-party appraiser, which
appraiser and the form and substance of which appraisal shall be satisfactory to
Bank in its sole discretion.

(xv)Borrowing Base Certificate in the form of Exhibit A.

(xvi)Fax Transmission and Acceptance of Requests, Instructions, Documents and
Information.

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(xvii)Such other documents as Bank may require under any other Section of this
Agreement.

Borrower hereby affirms that each of the documents described in clauses (iii)
through (vi), (viii) through (xii), (xiv) and (xvi) above has been duly executed
and delivered to Bank and each is hereby ratified in its entirety and remains in
full force and effect.

(c)Financial Condition.  There shall have been no material adverse change, as
determined by Bank, in the financial condition or business of Borrower, nor any
material decline, as determined by Bank, in the market value of any collateral
required hereunder or a substantial or material portion of the assets of
Borrower.

(d)Insurance.  Borrower shall have delivered to Bank evidence of insurance
coverage on all Borrower's property, in form, substance, amounts, covering risks
and issued by companies satisfactory to Bank, and where required by Bank, with
loss payable endorsements in favor of Bank, including without limitation,
policies of marine cargo insurance, accounts receivable insurance and business
personal property insurance, and policies of fire and extended coverage
insurance covering all real property collateral required hereby, with
replacement cost and mortgagee loss payable endorsements, and such policies of
insurance against specific hazards affecting any such real property, as may be
required by governmental regulation or Bank.

(e)Real Property Appraisals.  Bank shall have obtained, at Borrower's cost, an
appraisal of all real property collateral required hereby, and all improvements
thereon, issued by an appraiser acceptable to Bank and in form, substance and
reflecting values satisfactory to Bank, in its discretion.

(f)Title Insurance.  Bank shall have received an ALTA Policy of Title Insurance,
with such endorsements as Bank may require, issued by a company and in form and
substance satisfactory to Bank, in such amount as Bank shall require, insuring
Bank's Lien on the real property collateral required hereby to be of first
priority, subject only to such exceptions as Bank shall approve in its
discretion, with all costs thereof to be paid by Borrower.

(g)Phase I Environmental Survey.  A Phase I environmental survey of each of the
Elk Grove Property and the Elgin Property, each in form and substance
satisfactory to Bank; and

(h)Field Audit.  A completed field audit of Borrower covering areas customarily
examined by Bank in form and substance satisfactory to Bank.

SECTION 3.2.CONDITIONS OF EACH EXTENSION OF CREDIT.  The obligation of Bank to
make each extension of credit requested by Borrower hereunder shall be subject
to the fulfillment to Bank's satisfaction of each of the following conditions:

(a)Compliance.  The representations and warranties contained herein and in each
of the other Loan Documents shall be true on and as of the date of the signing
of this Agreement and on the date of each extension of credit by Bank pursuant
hereto, with the same effect as though such representations and warranties had
been made on and as of each such date, and on each such date, no Event of
Default as defined herein, and no condition, event or act which with

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the giving of notice or the passage of time or both would constitute such an
Event of Default, shall have occurred and be continuing or shall exist.

(b)Documentation.  Bank shall have received all additional documents which may
be required in connection with such extension of credit, including without
limitation, the following:

(i)For the issuance of a commercial letter of credit under any credit subject to
this Agreement, Bank's standard Application for Commercial Letter of Credit.

(ii)For the issuance of a standby letter of credit under any credit subject to
this Agreement, Bank's standard Application for Standby Letter of Credit.

(c)Payment of Fees.  Bank shall have received payment in full of any fee
required by any of the Loan Documents to be paid at the time such credit
extension is made.

ARTICLE IV
AFFIRMATIVE COVENANTS

Borrower covenants that so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

SECTION 4.1.PUNCTUAL PAYMENTS.  Punctually pay all principal, interest, fees or
other liabilities due under any of the Loan Documents at the times and place and
in the manner specified therein, and immediately upon demand by Bank, the amount
by which the outstanding principal balance of any credit subject hereto at any
time exceeds any limitation on borrowings applicable thereto.

SECTION 4.2.ACCOUNTING RECORDS.  Maintain adequate books and records in
accordance with generally accepted accounting principles consistently applied,
and permit any representative of Bank, at any reasonable time, during regular
business hours, with a reasonable prior notice, to inspect, audit and examine
such books and records, to make copies of the same, and to inspect the
properties of Borrower.

SECTION 4.3.FINANCIAL STATEMENTS.  Provide to Bank all of the following, in form
and detail satisfactory to Bank:

(a)not later than 120 days after and as of the end of each fiscal year, an
unqualified audited consolidated and consolidating financial statement of
Borrower, prepared by a certified public accountant acceptable to Bank in
accordance with generally accepted accounting principles, to include balance
sheet, income statement, and statement of cash flow;

(b)not later than 30 days after and as of the end of month, a financial
statement of Borrower, prepared by Borrower, to include balance sheet and income
statement and statement of cash flow;

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(c)not later than 45 days after the end of each fiscal quarter, consolidated and
consolidating financial statements of Borrower prepared by Borrower, to include
balance sheet, income statement and statement of cash flow;

(d)not later than 25 days after and as of the end of each month, an inventory
report showing the types, locations and unit or dollar values of all the
inventory collateral, including all Mexico Inventory, an aged listing of
accounts receivable to include both factored and unfactored accounts, an aged
listing of account payable, a reconciliation of accounts and a signed statement
from an officer of Borrower confirming that AbleMex, S.A. de C.V. (“Ablemex”) is
not in default under its lease with Vesta Baja California, S. de R.L. de C.V
(“Vesta”);

(e)contemporaneously with each annual and fiscal quarter end financial statement
of Borrower required hereby, a certificate of the president or chief financial
officer of Borrower that said financial statements are accurate and that there
exists no Event of Default nor any condition, act or event which with the giving
of notice or the passage of time or both would constitute an Event of Default;

(f)as soon as available, but not later than twenty-five (25) days after the end
of each month of each fiscal year, a Borrowing Base Certificate as of the last
Business Day of the immediately preceding month in form and substance
satisfactory to the Bank;

(g)from time to time such other information as Bank may reasonably request.

SECTION 4.4.COMPLIANCE.  Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws, rules, regulations and orders
of any governmental authority applicable to Borrower and/or its business.

SECTION 4.5.INSURANCE.  Maintain and keep in force, for each business in which
Borrower is engaged, insurance of the types and in amounts customarily carried
in similar lines of business, including but not limited to fire, extended
coverage, public liability, flood, property damage and workers' compensation,
with all such insurance carried with companies and in amounts satisfactory to
Bank, and deliver to Bank from time to time at Bank's request schedules setting
forth all insurance then in effect.

SECTION 4.6.FACILITIES.  Keep all properties useful or necessary to Borrower's
business in good repair and condition, and from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.

SECTION 4.7.TAXES AND OTHER LIABILITIES.  Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower may in good faith
contest or as to which a bona fide

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dispute may arise, and (b) for which Borrower has made provision, to Bank's
satisfaction, for eventual payment thereof in the event Borrower is obligated to
make such payment.

SECTION 4.8.LITIGATION.  Promptly give notice in writing to Bank of any material
litigation pending or threatened against Borrower.

SECTION 4.9.FINANCIAL CONDITION.  Maintain Borrower's financial condition as
follows using generally accepted accounting principles consistently applied and
used consistently with prior practices (except to the extent modified by the
definitions herein), with compliance determined commencing with Borrower's
consolidated financial statements for the period ending October 31, 2014:

(a)Total Liabilities divided by Tangible Net Worth not greater than 2.00 to 1.00
at each fiscal quarter end, with “Total Liabilities” defined as the aggregate of
current liabilities and noncurrent liabilities less subordinated debt, and with
“Tangible Net Worth” defined as the aggregate of total stockholders' equity plus
subordinated debt less any intangible assets.

(b)Fixed Charge Coverage Ratio not less than 1.10 to 1.0 as of each fiscal
quarter end, except for the fiscal quarters ending on January 31, 2015 and April
30, 2015 when the Fixed Charge Coverage Ratio shall not be less than 1.00 to
1.00, determined on a rolling 4-quarter basis, with “Fixed Charge Coverage
Ratio” defined as the aggregate of net profit after taxes plus interest expense,
tax expense, depreciation expense, amortization expense, cash capital
contributions minus dividends and distributions, divided by the aggregate of
interest expense, tax expense, unfunded capital expenditure, the current portion
of long-term debt, the current portion of capitalized lease payments, and the
current portion of contingent consideration. In calculating the Fixed Charge
Coverage Ratio, the denominator will be adjusted by adding thereto capital
expenditures in the amount of (i) $5,000,000 for the fiscal quarters ending
October 31, 2014, January 31, 2015 and April 30, 2015, (ii) $3,500,000 for the
fiscal quarter ending July 31, 2015 and (iii) $2,500,000 for the fiscal quarter
ending October 31, 2015.

(c)Net profit after taxes of not less than $1.00 as of each fiscal quarter end
on a rolling 4-quarter basis.

SECTION 4.10.NOTICE TO BANK.  Promptly (but in no event more than ten (10) days
after the occurrence of each such event or matter) give written notice to Bank
in reasonable detail of: (a) the occurrence of any Event of Default, or any
condition, event or act which with the giving of notice or the passage of time
or both would constitute an Event of Default; (b) any change in the name or the
organizational structure of Borrower; (c) the occurrence and nature of any
Reportable Event or Prohibited Transaction, each as defined in ERISA, or any
funding deficiency with respect to any Plan; or (d) any termination or
cancellation of any insurance policy which Borrower is required to maintain, or
the occurrence of any loss through liability or property damage, or through
fire, theft or any other cause affecting Borrower's domestic property that is
reasonably estimated to involve a loss of more than $25,000.00 that is not
covered by insurance.

SECTION 4.11.COLLATERAL AUDITS.  Permit Bank to audit all Borrower's collateral
required hereunder, with such audits to be performed from time to time at Bank's

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option by collateral examiners acceptable to Bank and in scope and content
satisfactory to Bank, and with all Bank's costs and expenses of each audit to be
reimbursed in full by Borrower.  Bank shall not be required to share the results
of the audit(s) with Borrower or any third party.

SECTION 4.12.STOCK PLEDGES.  On or before October 1, 2013, Borrower shall have
delivered to Bank documentation in form and substance satisfactory to Bank,
including amendments or acknowledgments to existing pledge agreements,
evidencing Borrower's pledge of 65% of its equity ownership interests in each of
Standard Components de Mexico SA de C.V., Ablemex, and Digital Appliance
Controls de Mexico, S.A. de C.V. (“DAC”) in Mexico, Wujiang SigmaTron
Electronics Co., Ltd. in The People's Republic of China, and Spitfire Controls
(Cayman) Co. Ltd. in the Cayman Islands (“Cayman”).  To the extent applicable,
Borrower shall also provide evidence satisfactory to Bank that the necessary
approvals have been obtained and registration of such documentation has occurred
in each jurisdiction. After the date hereof, upon Bank’s request, in its sole
discretion, Borrower shall promptly deliver to Bank any and all confirmations,
affirmations, re-affirmations, acknowledgements and such other documents, as
appropriate, evidencing and/or affirming the pledge agreements delivered
pursuant to this Section 4.12 and the pledge of the equity ownership interests
thereunder.

SECTION 4.13.REAL PROPERTY TAX COMPLIANCE.  Borrower shall provide evidence of
payment of real property taxes on the Elk Grove Property within fifteen (15)
days of the due date for each installment thereof.

SECTION 4.14.KNOW YOUR CUSTOMER.  Borrower shall promptly upon the request
thereof, deliver to Bank such other information and documentation required by
bank regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations (including, without limitation, the PATRIOT
Act), as from time to time reasonably requested by Bank.

ARTICLE V
NEGATIVE COVENANTS

Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's prior written
consent:

SECTION 5.1.USE OF FUNDS.  Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article I hereof.  Notwithstanding
the foregoing, Borrower may make a tender offer to purchase and consummate the
purchase of 396,000 outstanding options from employees and directors of Borrower
at an aggregate purchase price not exceeding $400,000 and may use the proceeds
of the Line of Credit to pay for part or all of such aggregate purchase price.

SECTION 5.2.[Intentionally Omitted].

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SECTION 5.3.OTHER INDEBTEDNESS.  Create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans, guaranties, or
advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to Bank,
Wells Fargo Equipment Finance, Inc., and Associated Bank Leasing Division of
Associated Bank, National Association, in each case, as set forth in Schedule
5.3 hereto, and up to $7,000,000.00 at any time outstanding to CIT Finance LLC
for capitalized lease obligation(s) (as determined in accordance with generally
accepted accounting principles consistently applied, except as may be modified
by the Financial Accounting Standards Board only with respect to capitalized
leases (each such obligation, a “Capital Lease”)) incurred after the date
hereof, entered into during Borrower's fiscal year ending April 30, 2015, (b)
the liabilities of Borrower to Vesta pursuant to a lease guaranty on behalf of
Ablemex, provided that the lease guaranty shall be in form and substance
satisfactory to Bank and shall contain a subordination clause and third-party
reliance language in favor of Bank, provided further that Borrower shall not
amend or modify the lease guaranty without the written consent of Bank, such
consent not to be unreasonably withheld or delayed, provided further that the
lease guaranty shall be limited to a maximum aggregate amount of $3,200,000.00
at all times, and (c) any other liabilities of Borrower existing as of, and
disclosed Bank prior to, the date hereof.

SECTION 5.4.MERGER, CONSOLIDATION, TRANSFER OF ASSETS.  Merge into or
consolidate with any other entity; make any substantial change in the nature of
Borrower's business as a worldwide seller of electronic products and services;
acquire all or substantially all of the assets of any other entity; nor sell,
lease, transfer or otherwise dispose of all or a substantial or material portion
of Borrower's assets except in the ordinary course of its business. (a)
Notwithstanding the foregoing, Borrower may sell Electrolux Home Products, Inc.
accounts receivable to Deutsche Bank AG, New York Branch in accordance with the
terms of the DB-Supplier Finance Agreement (defined below), as acknowledged
pursuant to that certain Acknowledgement, Consent and Release Agreement dated as
of December 1, 2011 executed by Bank, Borrower and Deutsche Bank AG, New York
Branch, as the same may be amended, supplemented or otherwise modified from time
to time. When used herein, the term “DB-Supplier Finance Agreement” shall mean
that certain agreement (including all annexes, reference guides referred to
therein, and the special terms and conditions related to the furnishing of
Supplier Financing Services) pursuant to which Borrower will sell to Deutsche
Bank AG, New York Branch certain accounts receivable owed to Borrower by
Electrolux Home Products, Inc., as the same may be amended, supplemented or
otherwise modified from time to time.  (b) Further notwithstanding the
foregoing, Borrower may discharge and release the account receivable of Spitfire
Control, Inc., an Illinois corporation (“Spitfire”), in connection with the
consummation of the transactions contemplated by that certain Purchase Agreement
dated May 31, 2012 (the “Spitfire Acquisition Agreement”), of Borrower, as
buyer, and Spitfire, as seller, a true, complete and executed copy of which
agreement, including all schedules and exhibits thereto, has been delivered to
Bank. (c) Further notwithstanding the foregoing, Borrower may sell certain
accounts receivable owed to Borrower by Whirlpool Corporation to Bank in
accordance with the terms of the Accounts Receivable Purchase Agreement dated as
of October 11, 2012 between Bank, as Financial Institution, and Borrower, as
Supplier, the Supplier Agreement dated as of October 11, 2012 between Borrower,
as Supplier, and PrimeRevenue, Inc., as PrimeRevenue, and all related agreements
(including all annexes, exhibits, schedules and reference guides referred to in
any of the foregoing), as any of the same may be amended,

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supplemented or otherwise modified from time to time. (d) Further
notwithstanding the foregoing, Borrower may sell certain accounts receivable
owed to Borrower by Electrolux Home Products, Inc. to UBI in accordance with the
terms of an accounts receivable purchase agreement and all related agreements
(including all annexes, exhibits, schedules and reference guides referred to in
any of the foregoing), as any of the same may be amended, supplemented or
otherwise modified from time to time.

SECTION 5.5.LOANS, ADVANCES, INVESTMENTS.  Make any loans or advances to or
investments in any person or entity, except any of the foregoing (a) existing as
of, and disclosed to Bank prior to, the date hereof or (b) in an amount not to
exceed $100,000.00 in the aggregate.  Further notwithstanding the foregoing, as
a consequence of the consummation of the transactions contemplated under the
Spitfire Acquisition Agreement, Borrower may acquire the equity and certain
inter-company indebtedness of and otherwise make loans to or investments in DAC,
Cayman and Cayman’s wholly owned subsidiary, Spitfire Controls Vietnam Co.,
Ltd., a Vietnam corporation, and thereafter, revise the terms of such acquired
indebtedness or convert to equity a portion or all of such acquired
indebtedness, or both, and further may convert retained earnings in a Subsidiary
that is not a U.S. Subsidiary to capital.  

SECTION 5.6.DIVIDENDS, DISTRIBUTIONS.  Declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's stock now
or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire
any shares of any class of Borrower's stock now or hereafter outstanding, and
Borrower shall provide to Bank, upon request, any documentation required by Bank
to substantiate the appropriateness of amounts paid or to be paid.

SECTION 5.7.LIMITATION ON LIENS.  Borrower shall not, and shall not suffer or
permit any U.S. Subsidiary to, including, without limitation, following the
expiration of the Overadvance Subfacility, directly or indirectly, make, create,
incur, assume or suffer to exist any Lien upon or with respect to any part of
its property, whether now owned or hereafter acquired, other than the following
(“Permitted Liens”):

(a)Any Lien created under any Loan Document;

(b)Any Lien in favor of Bank, Wells Fargo Equipment Finance, Inc., Associated
Bank Leasing Division of Associated Bank, National Association, CIT Finance LLC,
any lessor party to a Capital Lease secured solely by property financed under
such Capital Lease, or which is existing as of, and disclosed to Bank in writing
prior to, the date hereof;

(c)Liens for taxes, fees, assessments or other governmental charges which are
not delinquent or remain payable without penalty, or to the extent that
non‑payment thereof is permitted by Section 4.7, provided that no notice of lien
has been filed or recorded under the Internal Revenue Code of 1986, and
regulations promulgated thereunder;

(d)Carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s
or other similar Liens arising in the ordinary course of business which are not
delinquent or remain payable without penalty;

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(e)Liens (other than any Lien imposed by ERISA other than as a result of any
action or inaction taken by Borrower) consisting of pledges or deposits required
in the ordinary course of business in connection with workers’ compensation,
unemployment insurance and other social security legislation;

(f)Liens on the property of Borrower or its U.S. Subsidiaries securing (i) the
non-delinquent performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, (ii) contingent obligations on surety and
appeal bonds, and (iii) other non-delinquent obligations of a like nature; in
each case, incurred in the ordinary course of business, provided that all such
Liens in the aggregate at any time outstanding for Borrower and its Subsidiaries
do not exceed $100,000;

(g)Liens consisting of judgment or judicial attachment liens, provided that the
enforcement of such Liens is effectively stayed and all such Liens in the
aggregate at any time outstanding for Borrower and its U.S. Subsidiaries do not
exceed $100,000; and

(h)Easements, rights‑of‑way, restrictions and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the businesses of Borrower and its U.S. Subsidiaries.

(i)In connection with the sale of the receivables permitted in Section 5.4
above, Borrower is authorized to permit Deutsche Bank AG, New York Branch to
file precautionary financing statements against Borrower in accordance with the
terms of that certain Acknowledgment, Consent and Release Agreement dated as of
December 1, 2011 executed by Bank, Borrower and Deutsche Bank AG, New York
Branch and to permit the purchasers party to the agreements referenced in
Sections 5.4(c) and 5.4(d) above to file UCC financing statements against
Borrower reflecting the interests of such purchasers in the corresponding
receivables.

ARTICLE VI
EVENTS OF DEFAULT

SECTION 6.1.The occurrence of any of the following shall constitute an “Event of
Default” under this Agreement:

(a)Borrower shall fail to pay when due any principal, interest, fees or other
amounts payable under any of the Loan Documents.

(b)Any financial statement or certificate furnished to Bank in connection with,
or any representation or warranty made by Borrower or any other party under this
Agreement or any other Loan Document shall prove to be incorrect, false or
misleading in any material respect when furnished or made.

(c)Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those specifically described as an “Event of Default” in this
section 6.1), and with respect to any such default that by its nature can be
cured, such default shall continue for a period of twenty (20) days after notice
from Bank of its occurrence.

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(d)Any default in the payment or performance of any obligation, or any defined
event of default, under the terms of any material contract, instrument or
document (other than any of the Loan Documents) binding on Borrower, any
guarantor hereunder or any general partner or joint venturer in Borrower if a
partnership or joint venture (with each such guarantor, general partner and/or
joint venturer referred to herein as a “Third Party Obligor”) has incurred any
debt or other liability to any person or entity, including to Bank.

(e)Borrower or any Third Party Obligor shall become insolvent, or shall suffer
or consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to pay its
debts as they become due, or shall make a general assignment for the benefit of
creditors; Borrower or any Third Party Obligor shall file a voluntary petition
in bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Reform Act,
Title 11 of the United States Code, as amended or recodified from time to time
(“Bankruptcy Code”), or under any state or federal law granting relief to
debtors, whether now or hereafter in effect; or Borrower or any Third Party
Obligor shall file an answer admitting the jurisdiction of the court and the
material allegations of any involuntary petition; or Borrower or any Third Party
Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered
against Borrower or any Third Party Obligor by any court of competent
jurisdiction under the Bankruptcy Code or any other applicable state or federal
law relating to bankruptcy, reorganization or other relief for debtors.

(f)The filing of a notice of judgment lien in excess of $50,000.00 against
Borrower or any Third Party Obligor; or the recording of any abstract of
judgment in excess of $50,000.00 against Borrower or any Third Party Obligor in
any county in which Borrower or such Third Party Obligor has an interest in real
property; or the service of a notice of levy and/or of a writ of attachment or
execution, or other like process, in excess of $50,000.00 against the assets of
Borrower or any Third Party Obligor; or the entry of a judgment in excess of
$50,000.00 against Borrower or any Third Party Obligor; or any involuntary
petition or proceeding pursuant to the Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or other relief for
debtors is filed or commenced against Borrower or any Third Party Obligor and is
not vacated or dismissed within 60 days after the filing thereof.

(g)There shall exist or occur any event or condition that Bank in good faith
believes impairs the prospect of payment or performance by Borrower, any Third
Party Obligor, or the general partner of either if such entity is a partnership,
of its obligations under any of the Loan Documents.

(h)The death or incapacity of Borrower or any Third Party Obligor if an
individual.  The dissolution or liquidation of Borrower or any Third Party
Obligor if a corporation, partnership, joint venture or other type of entity; or
Borrower or any such Third Party Obligor, or any of its directors, stockholders
or members, shall take action seeking to effect the dissolution or liquidation
of Borrower or such Third Party Obligor and such action is not dismissed within
60 days after the commencement thereof.

(i)The withdrawal, resignation or expulsion of anyone or more of the general
partners in Borrower; or any change in control of Borrower or any entity or
combination of

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entities that directly or indirectly control Borrower, with “control” defined as
ownership of an aggregate of twenty-five percent (25%) or more of the common
stock, members' equity or other ownership interest (other than a limited
partnership interest) of Borrower.

(j)The sale, transfer, hypothecation, assignment or encumbrance, whether
voluntary, involuntary or by operation of law, without Bank's prior written
consent, of all or any part of or interest in any real property collateral
required hereby.

(k)Any default or event of default, however defined, shall occur under the lease
between Ablemex and Vesta.

SECTION 6.2.REMEDIES.  Upon the occurrence of any Event of Default: (a) all
indebtedness of Borrower under each of the Loan Documents, any term thereof to
the contrary notwithstanding, shall at Bank's option and without notice become
immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are hereby expressly waived by Borrower; (b) the
obligation, if any, of Bank to extend any further credit under any of the Loan
Documents shall immediately cease and terminate; and (c) Bank shall have all
rights, powers and remedies available under each of the Loan Documents, or
accorded by law, including without limitation the right to resort to any or all
security for any credit subject hereto and to exercise any or all of the rights
of a beneficiary or secured party pursuant to applicable law.  All rights,
powers and remedies of Bank may be exercised at any time by Bank and from time
to time after the occurrence of an Event of Default, are cumulative and not
exclusive, and shall be in addition to any other rights, powers or remedies
provided by law or equity.

ARTICLE VII
MISCELLANEOUS

SECTION 7.1.NO WAIVER.  No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy.  Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.

SECTION 7.2.NOTICES.  All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:

 

 

BORROWER:

SIGMATRON INTERNATIONAL, INC.

 

2201 Landmeier Road

 

Elk Grove Village, IL 60007

 

Attn: Linda K. Frauendorfer, CFO

 

 

 

With a copy to:

Henry J. Underwood

 

Howard and Howard Attorneys PLLC

 

200 South Michigan Avenue

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Suite 1100

 

Chicago, IL 60604

 

 

 

BANK:

WELLS FARGO BANK NATIONAL ASSOCIATION

 

10 South Wacker Drive, 17th Floor

 

Chicago, IL 60606

 

or to such other address as any party may designate by written notice to all
other parties.  Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) business days after
deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by
telecopy, upon receipt.

SECTION 7.3.COSTS, EXPENSES AND ATTORNEYS' FEES.  Borrower shall pay to Bank
immediately upon demand the full amount of all reasonable out-of-pocket
payments, advances, charges, costs and expenses, including reasonable attorneys'
fees (to include reasonable outside counsel fees), expended or incurred by Bank
in connection with (a) the negotiation and preparation of this Agreement and the
other Loan Documents, and the preparation of any amendments and waivers hereto
and thereto, (b) the enforcement of Bank's rights and/or the collection of any
amounts which become due to Bank under any of the Loan Documents, and (c) the
prosecution or defense of any action in any way related to any of the Loan
Documents, including without limitation, any action for declaratory relief,
whether incurred at the trial or appellate level, in an arbitration proceeding
that may be awarded in favor of Bank or otherwise, and including any of the
foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to Borrower or any other person or entity.

SECTION 7.4.SUCCESSORS, ASSIGNMENT.  This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interests or rights hereunder without
Bank's prior written consent.  Bank reserves the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, Bank's rights and benefits under each of the Loan Documents.  In
connection therewith, Bank may disclose all documents and information which Bank
now has or may hereafter acquire relating to any credit subject hereto, Borrower
or its business or any collateral required hereunder; provided that any
information provided to Bank by Borrower and identified by Borrower as material
non-public information shall not be disclosed to the prospective assignee or
participant unless and until the prospective assignee or participant has agreed
in writing for the benefit of Borrower to maintain the confidentiality of such
non-public information.

SECTION 7.5.ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the other Loan
Documents constitute the entire agreement between Borrower and Bank with respect
to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof.  This Agreement may be amended or modified only in writing signed by
each party hereto.

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SECTION 7.6.NO THIRD PARTY BENEFICIARIES.  This Agreement is made and entered
into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.

SECTION 7.7.TIME.  Time is of the essence of each and every provision of this
Agreement and each other of the Loan Documents.

SECTION 7.8.SEVERABILITY OF PROVISIONS.  If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

SECTION 7.9.COUNTERPARTS.  This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement.

SECTION 7.10.GOVERNING LAW.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois, but giving effect to
federal laws applicable to national banks.

SECTION 7.11.ARBITRATION.

(a)Arbitration.  The parties hereto agree, upon demand by any party, to submit
to binding arbitration all claims, disputes and controversies between or among
them (and their respective employees, officers, directors, attorneys, and other
agents), whether in tort, contract or otherwise in any way arising out of or
relating to (i) any credit subject hereto, or any of the Loan Documents, and
their negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional credit.

(b)Governing Rules.  Any arbitration proceeding will (i) proceed in a location
in Chicago, Illinois selected by the American Arbitration Association (“AAA”);
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein, as applicable, as the
“Rules”).  If there is any inconsistency between the terms hereof and the Rules,
the terms and procedures set forth herein shall control.  Any party who fails or
refuses to submit to arbitration following a demand by any other party shall
bear all costs and expenses incurred by such other party in compelling
arbitration of any dispute.  Nothing contained herein shall be deemed to be a

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waiver by any party that is a bank of the protections afforded to it under 12
U.S.C. §91 or any similar applicable state law.

(c)No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession
to the extent permitted under applicable law; or (iii) obtain provisional or
ancillary remedies such as replevin, injunctive relief, attachment or the
appointment of a receiver, before during or after the pendency of any
arbitration proceeding.  This exclusion does not constitute a waiver of the
right or obligation of any party to submit any dispute to arbitration or
reference hereunder, including those arising from the exercise of the actions
detailed in sections (i), (ii) and (iii) of this paragraph.

(d)Arbitrator Qualifications and Powers.  Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of
greater than $5,000,000.00.  Any dispute in which the amount in controversy
exceeds $5,000,000.00 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations.  The arbitrator will be a neutral
attorney licensed in the State of Illinois or a neutral retired judge of the
state or federal judiciary of Illinois, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated.  The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim.  In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication.  The arbitrator shall resolve all
disputes in accordance with the substantive law of Illinois and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award.  The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Illinois Rules of Civil Procedure or other applicable
law.  Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction.  The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

(e)Discovery.  In any arbitration proceeding, discovery will be permitted in
accordance with the Rules.  All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than 20 days before the hearing date.  Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available.

(f)Class Proceedings and Consolidations.  No party hereto shall be entitled to
join or consolidate disputes by or against others in any arbitration, except
parties who have executed any

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Loan Document, or to include in any arbitration any dispute as a representative
or member of a class, or to act in any arbitration in the interest of the
general public or in a private attorney general capacity.

(g)Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs
and expenses of the arbitration proceeding.

(h)Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA.  No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation.  If more than one agreement for arbitration by or between the
parties potentially applies to a dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the dispute
shall control.  This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties

SECTION 7.12.USA PATRIOT.  Bank hereby notifies Borrower that pursuant to the
requirements of the PATRIOT Act, it is required to obtain, verify and record
information that identifies Borrower and any subsidiary guarantor, which
information includes the name and address of Borrower and each subsidiary
guarantor and other information that will allow Bank to identify Borrower or
such subsidiary guarantor in accordance with the PATRIOT Act.

SECTION 7.13.AMENDMENT AND RESTATEMENT.  This Agreement amends and restates and
supersedes and replaces any prior Agreement between the parties hereto with
respect to the subject matter hereof.  Borrower hereby acknowledges and agrees
that this amendment and restatement of the Original Credit Agreement does not
effectuate a novation or extinguishment of the obligations under the Original
Credit Agreement, but rather an amendment and restatement of all the obligations
under the Original Credit Agreement.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.

SIGMATRON INTERNATIONAL, INC.

WELLS FARGO BANK, NATIONAL ASSOCIATION

By:  /s/ Linda K. Frauendorfer

By:  /s/ Matthew P. Soper

Title: Chief Financial Officer

Title: Vice President

 

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