EIGHTH AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
June 5, 1997
Effective: March 31, 1997
THIS EIGHTH AMENDMENT IS made to the Amended and Restated Loan and Security
Agreement (the "LOAN AGREEMENT"), which Amended and Restated Loan and Security
Agreement took effect on April 6, 1995 as an amendment and restatement of the
December 16, 1994 Loan and Security Agreement made between
BankBoston, N.A. (Formerly known as "The First National Bank of
Boston"), a national banking association with offices at 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, as agent for the ratable benefit of the
"LENDERS" being:
BankBoston, N.A.;
and
State Street Bank and Trust Company, a Massachusetts trust
company with offices at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000;
and
Citizens Bank of Massachusetts, a Massachusetts savings bank with
offices at 00 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
and
ACT Manufacturing, Inc., a Massachusetts corporation with its
principal executive offices at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
1. AGREEMENT TO AMEND
------------------
Provided each of those "Conditions to Amendment" set forth in Section 2,
below, is satisfied on or before May 23, 1997, the Loan Agreement shall be
amended, as set forth below, such amendment to take effect as of March 31,
1997.
/May 14, 1997/ /1/
SECTION 1-1(a) of the Loan Agreement is amended to read as follows:
(a) As used herein, the term "AVAILABILITY" refers at any time to the
lesser of (i) or (ii), below, where:
(i) Is the Loan Cap (defined below).
(ii) Is
(A) 80% of the face amount of each of the Borrower's
Acceptable Accounts (as defined below).
plus
(B) The lesser of
(I) The Inventory Cap (defined below),
or
(II) 45% of the value of the Borrower's Acceptable Raw
Materials Inventory, as defined below (Acceptable
Raw Materials Inventory being valued at the lower
of cost or market after deducting all
transportation, processing, handling charges, and
all other costs and expenses affecting the value
thereof).
Minus
(C) The aggregate Stated Amount (defined below) of any L/C
(defined below).
SECTION 1-1(c) of the Loan Agreement is amended to read as follows:
(c) The proceeds of borrowings under the Revolving Credit shall be
used solely for the following:
(i) Working capital for the Borrower.
(ii) Capital Expenditures otherwise permitted by the within
Agreement.
(iii) Payments otherwise permitted pursuant to any of the
following Sections of the within Agreement:
: Indebtedness
5-18A: Permitted Acquisitions.
: Permitted Distributions
/May 14, 1997/ /2/
SECTION 1-1(d) of the Loan Agreement is amended to read as follows:
"INVENTORY CAP": Until May 31, 1998 : $7,500,000.00.
Thereafter : 10,000,000.00.
"LOAN CAP": Fifty Million Dollars ($50,000,000.00)
minus,
the then aggregate Stated Amount of all L/C's.
minus
Fifty Percent (50%) of the net proceeds of any issuance, after
April 30, 1997, of capital stock by the Borrower or of
subordinated indebtedness permitted to be incurred pursuant to
the within Agreement.
SECTION 1-13(b) of the Loan Agreement is amended to read as follows:
(b) As compensation for its services rendered as Agent hereunder, the
Agent shall have earned an agency fee, which fee shall be determined as follows:
(i) Until December 31, 1996, at a rate equal to One Eighth of One
Percent per annum of the Loan Cap.
(ii) Commencing with calendar year 1997, at a rate of $6,250.00
per calendar quarter.
The agency fee shall be payable in arrears, with the first payment due on the
first Business Day of January, 1995 and subsequent payments due on the first
Business Day of each calendar quarter thereafter, on the Termination Date, and
on that date on which all Liabilities are paid in full.
ARTICLE 3 is amended so that the following definitions, which appear therein,
read as follows:
/May 14, 1997/ /3/
"Commitment and Commitment Percentage": the following amounts and
Percentages:
================================================================================
REVOLVING CREDIT:
COMMITMENTS AND PERCENTAGE COMMITMENTS
================================================================================
LENDER
--------------------------------------------------------------------------------
DOLLAR COMMITMENT TO COMMITMENT PERCENTAGE OF
REVOLVING CREDIT LOANS REVOLVING CREDIT LOANS
($ Millions)
BANKBOSTON 25.0 50%
--------------------------------------------------------------------------------
STATE STREET 12.5 25%
--------------------------------------------------------------------------------
CITIZENS 12.5 25%
--------------------------------------------------------------------------------
TOTALS.......... $50.0 100%
================================================================================
"Debt Service Coverage Ratio": The decimal equivalent of the following
fraction, each determined, without duplication, on a rolling Four (4)
quarter basis:
Numerator:
---------
EBITDA
plus
Equipment operating lease expense
plus
Funded Indebtedness, other than
Revolving Credit Loans
minus
Capital expenditures
minus
Distributions
minus
Taxes paid in cash
Denominator:
-----------
Interest expense
plus
Current maturities of long term debt
(including capitalized leases)
plus
Equipment operating lease expense
/May 14, 1997/ /4/
"Eurodollar Rate": that per annum rate determined as the aggregate of the
Eurodollar Offer Rate Plus the Euro/Libor Margin, except that, in the
event that it is determined that any Lender may be subject to the
Reserve Percentage, the Eurodollar Rate shall mean, with respect to
any Eurodollar Rate Loans then outstanding (from the date on which
that Reserve Percentage first became applicable to such loans), and
with respect to all Eurodollar Rate Loans thereafter made, an interest
rate per annum equal the sum of (a) plus (b), where:
(a) is the decimal equivalent of the following fraction:
Eurodollar Offer Rate
--------------------------
1 minus Reserve Percentage
(b) is the Euro/Libor Margin.
"Interest Payment Date": With reference to:
(a) Any Euro/Libor Rate Loan - the last day of the Interest
Period relating thereto (and if the applicable Interest Period is 6
months, then also on the Business Day which is the last day of the
third month of such Interest Period).
(b) Any Base Rate Loan - the first day of each month and the
Termination Date.
"Interest Period": (a) With respect to each Euro/Libor Rate Loan: Subject
to Subsection (c), below, the period commencing on the date of the
making or continuation of, or conversion to, such Euro/Libor Rate Loan
and ending one, two, three, or six months thereafter, as the Borrower
may elect in the applicable Renewal/Conversion/Borrowing Notice.
(b) With respect to each Base Rate Loan: Subject to Subsection
(c), below, the period commencing on the date of the making or
continuation of or conversion to such Base Rate Loan and ending on
that date as of which the subject Base Rate Loan is converted to a
Euro/Libor Rate Loan, as the Borrower may elect in the applicable
Conversion/Renewal/Borrowing Notice.
(c) The setting of Interest Periods is in all instances subject
to the following:
/May 14, 1997/ /5/
(i) Any Interest Period for a Base Rate Loan that would
otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day.
(ii) Any Interest Period for a Euro/Libor Rate Loan that
would otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day, unless that
succeeding Business Day is in the next calendar month, in which
event such Interest Period shall end on the last Business Day of
the month during which the Interest Period ends.
(iii) Subject to Subsection (iv), below, any Interest
Period applicable to a Euro/Libor Rate Loan, which Interest
Period begins on a day for which there is no numerically
corresponding day in the calendar month during which such
Interest Period ends shall end on the last Business Day of the
month during which that Interest Period ends (By way of example,
if a One Month Interest Period were to begin on March 31, 1995,
the last day of that Interest Period would be April 28, 1995 (a
Friday).
(iv) Subject to Subsection (v), any Interest Period which
would otherwise end after the Termination Date shall end on the
Termination Date.
(v) The Borrower shall not submit any
Renewal/Conversion/Borrowing Notice which, if made effective,
would result in a Euro/Libor Rate Loan with an Interest Period of
less than one (1) month.
"Libor Rate": that per annum rate determined as the aggregate of the Libor
Offer Rate Plus the Euro/Libor Margin, except that, in the event that
it is determined that any Lender may be subject to the Reserve
Percentage, the Libor Rate shall mean, with respect to any Libor Rate
Loans then outstanding (from the date on which that Reserve Percentage
first became applicable to such loans), and with respect to all Libor
Rate Loans thereafter made, an interest rate per annum equal the sum
of (a) plus (b), where:
/May 14, 1997/ /6/
(a) is the decimal equivalent of the following fraction:
Libor Offer Rate
---------------------
1 minus Reserve Percentage
(b) is the Euro/Libor Margin.
"Termination Date": The earliest of (a) Xxxxx 00, 0000, (x) the entry of an
order for relief, with respect to the Borrower, under the Bankruptcy Code,
or (c) the Agent's giving of notice to the Borrower of the termination of
the Revolving Credit on account of the occurrence of an Event of Default.
ARTICLE 3 of the Loan Agreement is amended by the addition of the following
definition in alphabetical order
therein:
"EBITDA": The Borrower's earnings from continuing operations, before
interest, taxes, depreciation, and amortization, each as determined in
accordance with GAAP.
"Euro/Libor Margin": The "Margin" referenced below, based upon the ratio of
the Borrower's Total Debt to the Borrower's EBITDA on the last day of the
fiscal quarter immediately preceding the fiscal quarter during which the
subject Euro/Libor Margin is to be effective. Any change in such "Margin"
will become effective on that date which is the sooner of (a) not more than
Three (3) Business Days after the date on which the Agent shall have
received a compliance certificate for the fiscal quarter in respect of
whose ratio the Margin is to be set or (b) that date on which the Agent
determines, based upon financial information then available to the Agent,
that the Margin is to be increased or decreased from that which is then in
effect:
==============================================================================
LEVEL TOTAL DEBT / EBITDA MARGIN (% Per annum)
-------------------------------------------------------------------------------
I Less than 2.0 1.25
-------------------------------------------------------------------------------
II 2.0 to less than 2.5 1.75
-------------------------------------------------------------------------------
III 2.5 to less than 3.0 2.00
-------------------------------------------------------------------------------
IV 3.0 or greater 2.25
==============================================================================
"Tangible Net Worth": The result, on the day on which compliance with any
financial performance covenant applicable to Tangible Net Worth is being
determined, of (a) the difference between the Borrower's assets and its
liabilities, respectively as would be reflected on a balance sheet prepared
in accordance
/May 14, 1997/ /7/
with the requirements of Section 9-1, , below, minus (b) the aggregate of
those of the Borrower's assets as may be deemed intangible in accordance
with GAAP.
SECTION 5-6 of the Loan Agreement is amended to read as follows:
5-6. Indebtedness. The Borrower does not and shall not hereafter have any
------------
Indebtedness with the exceptions of:
(a) Any Indebtedness to the Lenders under the Revolving Credit.
(b) The Indebtedness (if any) listed on EXHIBIT, annexed hereto.
(c) Ordinary trade indebtedness incurred in the normal course of the
Borrower's business and consistent with the Borrower's prior practices.
(d) Indebtedness on account of equipment leases and/or secured by
purchase money security interests in Equipment, the acquisition of which is
permitted within the limitations on Capital Expenditures included herein
(Section 9-11 ).
(e) Indebtedness subordinated to the Liabilities pursuant to such
documentation as is acceptable to the Agent and each Lender.
(f) Indebtedness not otherwise described in this Section and not in
excess of $5,000,000.00 outstanding at any one time.
SECTION 5-18 of the Loan Agreement is amended to read as follows:
5-18. Dividends or Investments. The Borrower shall not
------------------------
(a) Pay any dividend or make any other distributions of cash and/or
property with respect to any class of the Borrower's capital stock, other than a
common stock dividend of the Borrower's own capital stock.
(b) Own, redeem, retire, purchase, or acquire any of the Borrower's
capital stock.
(c) Except as otherwise permitted pursuant to Section 5-18A, below:
(i) Invest in or purchase any stock or securities or rights to
purchase any such stock or securities, of any corporation or other entity.
(ii) Merge or consolidate or be merged or consolidated with or
into any other corporation or other entity.
(iii) Consolidate any of the Borrower's operations with those of
any other corporation or other entity.
(iv) Organize or create any Related Entity.
/May 14, 1997/ /8/
(d) Subordinate any debts or obligations owed to the Borrower by any
third party to any other debts owed by such third party to any other Person.
SECTION 5-18A, to read as follows, is added to the Loan Agreement:
5-18A. Permitted Acquisitions. Subject to the satisfaction of each of the
-----------------------
following conditions, the Borrower may acquire a Person which is engaged solely
in the same business as that of the Borrower, or in a business reasonably allied
thereto, which acquisition may be in such form or structure as the Borrower
determines as being advantageous to the Borrower's business interests:
(a) The Borrower shall have given the Agent and each Lender written
notice, with reasonable details, of the proposed acquisition not less than the
earliest of (i) the date on which the Borrower would have been required, under
applicable securities law, to have made disclosure of such proposed acquisition;
(ii) the date on which the Borrower effects a filing seeking any required
consent, no action letter, or the like with respect to such proposed
acquisition; (iii) the date on which the Borrower first became legally obligated
in respect of such proposed acquisition (such as by its execution of a
nondisclosure agreement); or (iv) Thirty (30) days prior to the date of such
acquisition's closing. The Borrower shall promptly respond to reasonable
inquiries from the Agent or any Lender concerning the financial condition,
operations, and properties of the proposed target of such acquisition and the
terms and conditions by which the proposed acquisition will be effected.
(b) In the event that the consideration to be paid by the Borrower on
account of such acquisition (which, for such purposes shall include the
aggregate present value of all cash consideration to be paid and all
indebtedness and obligations to be assumed in connection with such acquisition)
is equal to or greater than Ten Million Dollars ($10,000,000.00), then
(i) With the written notice required pursuant to Subsection (a),
above, the Borrower shall provide the Agent and each Lender with a pro
forma forecast of the operations of the Borrower for the Twenty Four (24)
months following such acquisition, which forecast shall reflect that the
Borrower shall not breach any financial performance covenant included
herein; and
(ii) The subject acquisition shall be subject to the prior
written consent of the Lenders.
(c) No Event of Default is extant immediately prior to such
acquisition and none will occur in consequence of such acquisition.
/May 14, 1997/ /9/
(d) The subject acquisition is to be effected with the consent of the
target thereof.
(e) The Borrower and the target of such proposed acquisition shall
have executed such instruments and documents as required by Section 5-24 below
(additional assurances) as the Agent may request.
SECTION 5-24 of the Loan Agreement is amended to read as follows:
5-24. Additional Assurances.
----------------------
(a) The Borrower is not the owner of, nor has it any interest in, any
property or asset which, immediately upon the satisfaction of the conditions
precedent to the effectiveness of the loan arrangement contemplated hereby
(Article 4), will be not be subject to a perfected security interest in favor of
the Agent (subject only to those Encumbrances (if any) described on EXHIBIT 5-5,
annexed hereto) to secure the Liabilities.
(b) Neither the Borrower, nor any target which is acquired by the
Borrower (as to which, see Section 5-18A, above) will acquire any asset or any
interest in property which is not, immediately upon such acquisition, subject to
a perfected security interest in favor of the Agent to secure the Liabilities
(subject only to Encumbrances (if any) permitted pursuant to Section 5-5,
above).
(c) The Borrower shall, and shall cause any such target to, execute
and deliver to the Agent such instruments, documents, and papers, and shall do
all such things, and shall cause such target to do all such things, from time
to time hereafter as the Agent reasonably may request to carry into effect the
provisions and intent of this Agreement; to protect and perfect the Agent's and
the Lenders' security interest in the Collateral (and in any collateral granted
by such target); and to comply with all applicable statutes and laws; and
facilitate the collection of the Receivables Collateral (and the collection of
like assets of any such target). The Borrower shall, and shall cause any such
target to, execute all such instruments as reasonably may be required by the
Agent with respect to the recordation and/or perfection of the security
interests created herein. A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument executed pursuant to
this Section shall be sufficient for filing to perfect the security interests
granted herein.
(d) The Borrower shall, and shall cause any such target to, maintain
all of its principal operating accounts with one or more of the Lenders.
SECTION 9-3 of the Loan Agreement is amended by the addition of the following
subsection:
/May 14, 1997/ /10/
(g) The issuance by the Borrower's accountants of an "auditor's
management letter" or similar communication, which notice shall be accompanied
by a copy of such materials.
SECTION 10-3 of the Loan Agreement is amended to read as follows:
10-3. Failure to Perform Covenant or Liability (No Grace Period). The
----------------------------------------------------------
failure by the Borrower to promptly, punctually, faithfully and timely perform,
discharge, or comply with any covenant or Liability not otherwise described in
Sections or , above, and included in any of the following provisions hereof:
Section Entitled..............:
---------------------------------------------------
5-4 Locations
5-5 Title to Assets
5-6 Indebtedness
5-7 Insurance Policies
5-13 Pay taxes
5-16 Hazardous Materials
5-18 Dividends or Investments
5-18A Permitted Acquisitions
5-19 Permitted Distributions
5-22 Line Of Business
5-23 Affiliate Transactions
ARTICLE 7 Receivables
9-11 Financial Performance Covenants
EXHIBIT 9-11 of the Loan Agreement is replaced by EXHIBIT 9-11 annexed to this
Eighth Amendment.
2. CONDITIONS TO EFFECTIVENESS OF AMENDMENT
----------------------------------------
The within Amendment shall be effective if each of the following conditions
is satisfied on or before May 23, 1997 and on the date on which such amendment
is to take effect, no Suspension Event (as defined in the Loan Agreement) is
extant:
(a) Receipt by the Agent of a Certificate setting forth the text of the
resolutions adopted by the Directors of the Borrower authorizing the Borrower's
execution of the within Amendment, and attesting to the authority of the persons
who executed the within Amendment on behalf of the Borrower.
(b) Receipt by the Agent of a Certificate, executed by the Borrower's
President and its Chief Financial Officer, respectively confirming that no
Suspension Event is then extant.
/May 14, 1997/ /11/
(c) Receipt by the Agent of an opinion of counsel to the Borrower as to the
due execution and effectiveness of the within Amendment (which opinion is
subject only to the same qualifications as had been included in the opinion
delivered by that counsel at the initial execution of the Loan Agreement).
(d) Receipt by the Agent of an Amendment Fee of $25,000.00.
The Borrower hereby represents that, at the execution of the within
Agreement, no Suspension Event has occurred.
Except as amended hereby, or by the First, Second, Third, Fourth,
Fifth, Sixth, and Seventh Amendments to the Loan Agreement, all terms and
conditions of the Loan Agreement shall remain in full force and effect.
ACT MANUFACTURING, INC.
(The "BORROWER")
By: /s/ Xxxxxxxx X. Xxxxxxxx
Its: CFO/VP Finance
BANKBOSTON, N.A.
("AGENT")
By: /s/ Xxxxxx X. Xxxxx
Its: Director/V.P.
The "LENDERS"
BANKBOSTON, N.A. STATE STREET BANK
AND TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxx By: /s/ F. Xxxxxx Xxxxx
Its: Director/V.P. Its: Vice President
CITIZENS BANK/OF MASSACHUSETTS
By: /s/ Xxxx Xxxxxx Van Nest
Its: Vice President
/May 14, 1997/ /12/
