Exhibit 10.3
THIRD AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment"),
dated as of May 3, 2002, amends and modifies a certain Loan and Security
Agreement dated as of June 28, 2001 as amended by Amendments dated as of
December 20, 2001 and March 25, 2002 (as amended, the "Credit Agreement") by and
between PEMSTAR INC. (the "Borrower") and U.S. BANK NATIONAL ASSOCIATION (the
"Lender"). Terms not otherwise expressly defined herein shall have the meanings
set forth in the Credit Agreement.
FOR VALUE RECEIVED, the Borrower and the Lender agree that the Credit
Agreement is amended as follows.
ARTICLE I - AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Definitions. The following new definitions are added to Section 1.1
of the Credit Agreement:
"`Convertible Agreement' and `Convertible Notes' are defined
in the definition of Convertible Subordinated Indebtedness."
"`Convertible Subordinated Indebtedness' means indebtedness
incurred by the Borrower in principal amounts of up to $50,000,000
pursuant to the terms of that certain Securities Purchase Agreement,
dated as of May 3, 2002 (the `Convertible Agreement'), among the
Borrower, Smithfield Fiduciary LLC and Citadel Equity Fund Ltd. and the
Senior Subordinated Convertible Notes issued thereunder (the
`Convertible Notes'), which Securities Purchase Agreement and
Subordinated Convertible Notes shall be substantially identical in form
to the drafts distributed as of May 3, 2002, provided by the Borrower
to the Lender"
1.2 Indebtedness. Section 8.4 is amended by replacing the period at the
end of Section 8.4(h) with "; and", and adding the following new Section 8.4(i):
"(i) The Convertible Subordinated Indebtedness."
1.3 Subordinated Debt. New Section 8.14 is added after Section 8.13 and
shall read as follows:
"Section 8.14 Payment of Subordinated Debt. Directly or
indirectly make any payment on, or redeem, repurchase, defease, or make
any sinking fund payment on account of, or any other provision for, or
otherwise pay, acquire or retire for value, any of the Subordinated
Debt (including, without limitation, the Convertible Subordinated
Indebtedness), except for payment of (a) regularly-scheduled payments
of interest (which shall not include payments due upon the giving of
any Redemption Notice (as defined in the Convertible Notes) that are
not prohibited by the applicable subordination agreement
(including without limitation the subordination provisions of the
Convertible Notes), and (b) Pro Rata Permitted Payments (as defined in
the Convertible Notes). Conversions of the Convertible Notes in
accordance with sections 3, 6 and 7 of the Convertible Notes shall not
be deemed to violate this Section."
1.4 Defaults. Section 9.1 is amended by replacing the period at the end
of Section 9.1(p) with "; or", and adding the following new Section 9.1(q):
"(q) Any Triggering Event or Change of Control shall occur under any of
the Convertible Notes or any holder of the Convertible Subordinated
Indebtedness shall deliver a Triggering Event Redemption Notice, Holder
Redemption Notice or a Change of Control Redemption Notice, or the
Borrower shall deliver a Company Optional Redemption Notice (as such
capitalized terms are defined in the Convertible Notes)."
1.5 Construction. All references in the Credit Agreement to "this
Agreement", "herein" and similar references shall be deemed to refer to the
Credit Agreement as amended by this Amendment. The Loans shall continue to be
evidenced by the Note and it is acknowledged that the amount of the Note is
greater than the Line of Credit Amount, as amended hereby.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Amendment and to make and
maintain the Loans under the Credit Agreement as amended hereby, the Borrower
hereby warrants and represents to the Lender that it is duly authorized to
execute and deliver this Amendment, and to perform its obligations under the
Credit Agreement as amended hereby, and that this Amendment constitutes the
legal, valid and binding obligation of the Borrower, enforceable in accordance
with its terms.
ARTICLE III - CONDITIONS PRECEDENT
This Amendment shall become effective on the date first set forth
above, provided, however, that the effectiveness of this Amendment is subject to
the satisfaction of each of the following conditions precedent:
3.1 Warranties. Before and after giving effect to this Amendment, the
representations and warranties in Article 6 of the Credit Agreement shall be
true and correct as though made on the date hereof, except for changes that are
permitted by the terms of the Credit Agreement. The execution by the Borrower of
this Amendment shall be deemed a representation that the Borrower has complied
with the foregoing condition.
3.2 Defaults. Before and after giving effect to this Amendment, no
Default and no Event of Default shall have occurred and be continuing under the
Credit Agreement. The execution by the Borrower of this Amendment shall be
deemed a representation that the Borrower has complied with the foregoing
condition.
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3.3 Documents. This Amendment and the acknowledgment by the Guarantor
in the form attached hereto shall have been executed and delivered by the
appropriate parties. The Borrower shall deliver to the Lender the drafts of
documents described in the definition of "Convertible Subordinated Indebtedness"
and shall, promptly upon such documents becoming available, deliver to the
Lender photocopies of the Convertible Agreement and each Convertible Note.
3.4 IBM Credit Consent. Prior to incurrence of the Convertible
Subordinated Indebtedness, IBM Credit shall have consented to such incurrence.
ARTICLE IV - GENERAL
4.1 Expenses. The Borrower agrees to reimburse the Lender upon demand
for all reasonable expenses (including reasonable attorneys' fees and legal
expenses) incurred by the Lender in the preparation, negotiation and execution
of this Amendment and any other document required to be furnished herewith, and
in enforcing the obligations of the Borrower hereunder, and to pay and save the
Lender harmless from all liability for, any stamp or other taxes which may be
payable with respect to the execution or delivery of this Amendment, which
obligations of the Borrower shall survive any termination of the Credit
Agreement.
4.2 Counterparts. This Amendment may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed an original but all such counterparts shall constitute but one and the
same instrument.
4.3 Severability. Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
4.4 Law. This Amendment shall be a contract made under the laws of the
State of Minnesota, which laws shall govern all the rights and duties hereunder.
4.5 Successors; Enforceability. This Amendment shall be binding upon
the Borrower and the Lender and their respective successors and assigns, and
shall inure to the benefit of the Borrower and the Lender and the successors and
assigns of the Lender. Except as hereby amended, the Credit Agreement shall
remain in full force and effect and is hereby ratified and confirmed in all
respects.
(signature page follows)
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed at Minneapolis, Minnesota by their respective officers thereunto duly
authorized as of the date first written above.
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxxxxxxxx X. Xxxxxx
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Title Vice President
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PEMSTAR INC.
By: /s/ Xxxxx X. Xxxxx
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Title Secretary and General Counsel
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GUARANTOR'S ACKNOWLEDGMENT
The undersigned has guaranteed payment and performance of obligations
of PEMSTAR INC. (the "Borrower") to U.S. Bank National Association (the
"Lender") pursuant to the terms of a Guaranty, dated as of June 28, 2001 (the
"Guaranty"), which obligations include without limitation obligations under that
certain Loan and Security Agreement, dated as of June 28, 2001, as thereafter
amended (the "Credit Agreement"). The undersigned acknowledges that its has
received a copy of the proposed Third Amendment to the Credit Agreement, to be
dated on or about May 2, 2002 (the "Amendment"). The undersigned agrees and
acknowledges that the Amendment shall in no way impair or limit the right of the
Lender under the Guaranty, and confirms that by the Guaranty, the undersigned
continues to guaranty payment and performance of the obligations of the Borrower
to the Lender, including without limitation obligations under the Credit
Agreement as amended pursuant to the Amendment. The undersigned hereby confirms
that the Guaranty remains in full force and effect, enforceable against the
undersigned in accordance with its terms.
TURTLE MOUNTAIN CORPORATION
By: /s/ Xxxxx X. Xxxxx
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Title Secretary
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and
By:
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Title
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