EX-10.1






Exhibit 10.1




THIRD AMENDMENT TO CREDIT AGREEMENT




     THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of January 22,
2009, is by and among SUNAIR SERVICES CORPORATION (f/k/a SUNAIR ELECTRONICS, INC.), a Florida
corporation (the “Borrower”), each of those subsidiaries of the Borrower party hereto (each
a “Guarantor”, and collectively, the “Guarantors”), the several banks and other
financial institutions (the “Lenders”) from time to time party to the Credit Agreement
(defined below) and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders
(the “Agent”). Capitalized terms used herein without definition have the respective
meanings set forth in the Credit Agreement. References herein to “Sections” are to Sections of the
Credit Agreement unless otherwise indicated.



RECITALS




     A. The Borrower, the Guarantors, the Lenders and the Agent have entered into that certain
Credit Agreement, dated as of June 7, 2005, as amended by that certain First Amendment to Credit
Agreement dated May 14, 2007 and Second Amendment to Credit Agreement dated as of February 12, 2008
(as amended, supplemented or otherwise modified, the “Credit Agreement”).



     B. The Borrower, the Guarantors, the Lenders and the Agent have agreed to modify the Credit
Agreement in the manner hereinafter set forth:



     NOW, THEREFORE, the parties hereto agree as follows:



     1. The Credit Agreement is hereby amended as follows:




     (a) Section 1.1 is hereby amended by amending in its entirety the
following definition so that such definition now reads as follows.




     “Revolving Commitment Termination Date” shall mean January 2,
2010.




     (b) Section 2.1(a) is amended in its entirety so that such Section now
reads as follows.




     (a) Revolving Commitment. During the Commitment Period,
subject to the terms and conditions hereof, each Lender severally agrees to
make revolving credit loans (“Revolving Loans”) to the Borrower from
time to time for the purposes hereinafter set forth; provided, however, that
(i) with regard to each Lender individually, the sum of such Lender’s share
of outstanding Revolving Loans [p] such Lender’s LOC Commitment Percentage
of LOC Obligations shall not exceed such Lender’s Revolving Commitment
Percentage of the aggregate Revolving Committed Amount, and (ii) with regard
to the Lenders collectively, the sum of the aggregate amount of outstanding
Revolving Loans plus LOC Obligations shall not exceed the aggregate
Revolving Committed Amount then in effect. For



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purposes hereof, the aggregate amount available hereunder shall be
SEVEN MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($7,750,000) (as such
aggregate maximum amount may be reduced from time to time as provided in
Section 2.4 including, without limitation, scheduled mandatory
reductions and the maintenance of Reserves, the “Revolving Committed
Amount”). Revolving Loans shall consist solely of Fixed LIBOR Rate
Loans and may be repaid and re- borrowed in accordance with the provisions
hereof. Fixed LIBOR Rate Loans shall be made by each Lender at its LIBOR
Lending Office.




     (c) Section 2.1(d) is amended by deleting subsection (1) thereof. Such
deletion is intended to remove the Floating LIBOR Rate option from the Credit
Agreement in its entirety. Consequently, all references to the Floating LIBOR Rate
option and the right to convert from one Type of Loan to another Type of Loan are
deleted from the Credit Agreement and each other Loan Document. From and after the
date of this Third Amendment, all outstanding Loans and all Loans hereafter advanced
under the Credit Agreement shall be Fixed LIBOR Rate Loans, notwithstanding anything
to the contrary contained in any of the Loan Documents. There shall not be more
than five (5) Tranches of Fixed LIBOR Rate Loans outstanding at any time.




     (d) Section 2.1(d)(ii) is renumbered as Section 2.1(d)(i).




     (e) Section 2.2(a) is amended to reduce the LOC Committed Amount from
THREE MILLION DOLLARS ($3,000,000) to ONE MILLION DOLLARS ($1,000,000).




     (f) Section 2.3(a) is deleted in its entirety. All unpaid Commitment
Fees payable thereunder for periods prior to January 1, 2009 shall be paid upon
execution by the Credit Parties of this Third Amendment. No Commitment Fees shall
accrue or be payable for any period commencing on or after January 1, 2009.




     (g) Section 2.4(b) is amended in its entirety so that such Section now
reads as follows:




     (b) Mandatory Reductions. The Revolving Commitment Amount
shall be reduced to $7,500,000 on March 31, 2009, to $6,750,000 on June 30,
2009, and to $5,500,000 on September 30, 2009 and thereafter.




     (h) Section 5.9(a) is amended in its entirety, such amendment to be
effective as of September 30, 2008, so that such Section reads as follows:




     (a) Leverage Ratio. The Leverage Ratio shall be less than or
equal to the following amounts as of the last day of each fiscal quarter
ending during the following periods:



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	 	 	 	 	MAXIMUM	 
	 	PERIOD	 	 	RATIO	 
	 	Through September 30, 2008
	 	 	 	6.00	 	 
	 	October 1, 2008 through December 31, 2008
	 	 	 	3.90	 	 
	 	January 1, 2009 through March 31, 2009
	 	 	 	3.25	 	 
	 	April 1, 2009 through June 30, 2009
	 	 	 	2.65	 	 
	 	July 1, 2009 and thereafter
	 	 	 	1.90	 	 
	 






     (i) Section 5.9(b) is amended in its entirety, such amendment to be
effective as of September 30, 2008, so that such Section reads as follows:




     (b) Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio shall be at least the following amounts as of the last day of each
fiscal quarter ending during the following periods:



	 	 	 	 	 	 	 	 
	 
	 	 	 	 	MAXIMUM	 
	 	PERIOD	 	 	RATIO	 
	 	Through September 30, 2008
	 	 	 	1.00	 	 
	 	October 1, 2008 through December 31, 2008
	 	 	 	1.00	 	 
	 	January 1, 2009 through March 31, 2009
	 	 	 	1.05	 	 
	 	April 1, 2009 through June 30, 2009
	 	 	 	1.10	 	 
	 	July 1, 2009 and thereafter
	 	 	 	1.20	 	 
	 






     (j) Section 5.9(c) is amended in its entirety, such amendment to be
effective as of September 30, 2008, so that such Section reads as follows:




     (c) Consolidated EBITDA. Consolidated EBITDA shall not be
less than each of the following amounts for each of the rolling four fiscal
quarterly periods ending as of the last day of each fiscal quarter ending
during the following periods:



	 	 	 	 	 	 	 	 
	 
	 	 	 	 	MAXIMUM	 
	 	PERIOD	 	 	RATIO	 
	 	Through September 30, 2008
	 	 	$	1,700,000.00	 	 
	 	October 1, 2008 through December 31, 2008
	 	 	$	1,800,000.00	 	 
	 	January 1, 2009 through March 31, 2009
	 	 	$	2,050,000.00	 	 
	 	April 1, 2009 through June 30, 2009
	 	 	$	2,300,000.00	 	 
	 	July 1, 2009 and thereafter
	 	 	$	2,800,000.00	 	 
	 






     (k) Section 9.13 is amended in its entirety so that such Section now
reads as follows:




     Section 9.13 Governing Law.




     This Credit Agreement, the Notes and each of the other Credit
Documents, and the rights and obligations of the parties under the Credit
Agreement, the Notes and each of the other Credit Documents, shall be
governed by, and construed and interpreted in accordance with, the laws of
the State of Florida.



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     The foregoing amendment is intended to change the governing law provisions of
all Credit Documents and, as such, shall be deemed an amendment to each Credit
Document.




     The first sentence of Section 9.14 (Consent to Jurisdiction and
Service of Process) is amended in its entirety so that such sentence now reads
as follows:




     Any legal action or proceeding with respect to this Credit Agreement
or any other Credit Document shall be brought in the courts of the State of
Florida in Broward County or of the United States for the Southern District
of Florida, and, by execution of this Credit Agreement, each of the
Borrower and the other Credit Parties accepts, for itself and in connection
with its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and irrevocably agrees to be bound by
any final judgment rendered thereby in connection with this Credit
Agreement or any other Credit Document from which no appeal has been take
or is available.



     2. In connection with the execution of this Third Amendment, Borrower agrees to pay the Agent
a loan modification fee in the amount of $40,000 on the date hereof, and this Third Amendment shall
not be effective until the receipt in full of such amount.



     3. To induce the Agent and the Lenders to enter into this Third Amendment, Borrower represents
and warrants to the Agent and the Lenders that (i) except for Middleton Pest Control, Inc., Sunair
Florida Pest Holdings, Inc., Sunair Pest Holdings, Inc., Sunair Communications, Inc., Sunair
Southeast Pest Holdings, Inc. and Sunair Holdings Inc., there are no other Domestic Subsidiaries
which, pursuant to Section 5.10, are required to be Guarantors, (ii) after giving effect to
this Third Amendment, no Default or Event of Default exists, and (iii) all corporate and other
action necessary to authorize the Credit Parties to enter into and execute this Third Amendment,
and to perform their respective obligations hereunder, have been taken.



     4. Borrower agrees to execute such additional documents as are reasonably requested by the
Agent to reflect the terms and conditions of this Third Amendment and will cause to be delivered
such certificates, legal opinions and other documents as are reasonably required by the Agent. In
addition, the Borrower will pay all costs and expenses in connection with the preparation,
execution and delivery of the documents executed in connection with this transaction, including,
without limitation, the reasonable fees and out-of-pocket expenses of special counsel to the Agent
as well as any and all filing and recording fees and stamp and other taxes with respect thereto and
to save the Agent harmless from any and all such costs, expenses and liabilities.



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     5. Except as expressly amended hereby, all of the provisions of the Credit Agreement and the
Credit Documents shall remain unchanged and shall continue to be, and shall
remain, in full force and effect in accordance with their respective terms. The amendments
set forth herein are the only amendments being made by this Third Amendment, any waivers of any
provisions of the Credit Agreement or other Credit Documents granted prior to the date hereof shall
be limited to such waiver on the date waived, and, in each case, the amendments and the waivers
shall not be deemed to be a waiver of, an amendment to, consent to or modification of any other
term or provision of the Credit Agreement or any other Credit Document or any transaction or
further or future action on the part of the Borrower which would require the consent of the Lenders
under the Credit Agreement or any of the Credit Documents.



     6. This Third Amendment is a Credit Document executed pursuant to the Credit Agreement and
shall (unless otherwise expressly indicated herein or therein) be construed, administered and
applied in accordance with the terms and provisions of the Credit Agreement.



     7. At such time as this Third Amendment shall become effective, all references in the Credit
Documents to the “Credit Agreement” shall be deemed to refer to the Credit Agreement as amended by
this Third Amendment.



     8. This Third Amendment shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.



     9. This Third Amendment may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original, and it shall not be necessary in making proof
of this Third Amendment to produce or account for more than one counterpart.



     10. THIS THIRD AMENDMENT AND THE OTHER DOCUMENTS AND AGREEMENTS EXECUTED IN CONNECTION
HEREWITH (UNLESS SPECIFICALLY STIPULATED TO THE CONTRARY IN SUCH DOCUMENT OR AGREEMENT), AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES.



[Three execution pages follow]




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     IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed
and delivered by its proper and duly authorized officers as of the day and year first above
written.



	 	 	 	 	 
	BORROWER:                                	SUNAIR SERVICES CORPORATION (Vida

SUNNAIR ELECTRONICS, INC.)

 	 
	 	By:  	/s/ Jack I. Ruff
 	 
	 	 	Name:  	Jack I. Ruff 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 



	 	 	 	 	 
	MIDDLETON PEST CONTROL, INC.



GUARANTORS:

 	 
	By:  	/s/ Jack I. Ruff
 	 
	 	Name:  	Jack I. Ruff 	 
	 	Title:  	President 	 
	 



	 	 	 	 	 
	SUNAIR SOUTHEAST PEST HOLDINGS, INC.

 	 
	By:  	/s/ Jack I. Ruff
 	 
	 	Name:  	Jack I. Ruff 	 
	 	Title:  	President 	 
	 



	 	 	 	 	 
	 	SUNAIR PEST HOLDINGS, INC.

 	 
	 	By:  	/s/ Jack I. Ruff
 	 
	 	 	Name:  	Jack I. Ruff 	 
	 	 	Title:  	President 	 
	 



[Two execution pages follow]





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SUNAIR HOLDINGS, INC. (f/k/a Sunair Services Corporation

SUNAIR FLORIDA PEST HOLDINGS, INC.




[One execution page follows]




	 	 	 	 	 
	 	 	 
	 	By:  	                          /s/ Jack I. Ruff
 	 
	 	 	Name:  	Jack I. Ruff 	 
	 	 	Title:  	President 	 
	 
	 	SUNAIR COMMUNICATIONS, INC.

 	 
	 	By:  	/s/ Jack I. Ruff
 	 
	 	 	Name:  	Jack I. Ruff 	 
	 	 	Title:  	President 	 
	 
	 	 	 
	 	By:  	                         /s/ Jack I. Ruff
 	 
	 	 	Name:  	Jack I. Ruff 	 
	 	 	Title:  	President 	 



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	ADMINISTRATIVE AGENT AND SOLE LENDER:

WACHOVIA BANK, NATIONAL ASSOCIATION

 	 
	By:  	/s/ Pat Schnitzer
 	 
	 	Name:  	Pat Schnitzer, Senior Vice President 	 
	 	 	 
	 




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