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EXHIBIT 10.1
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment") executed
December 20, 1996 but effective as of the Effective Date, is among THE DII
GROUP, INC., a Delaware corporation, formerly known as DOVatron International,
Inc. ("DII"), DOVATRON INTERNATIONAL, INC., a Delaware corporation, formerly
known as DOVatron, Inc., CENCORP INC., a Delaware corporation, MULTILAYER
TECHNOLOGY, INC., a California corporation, and TTI TESTRON, INC., a Delaware
corporation, formerly known as TTI Merger Corporation, as successor to TTI
Testron, Inc., a Rhode Island corporation, by virtue of its merger with TTI
Merger Corporation (collectively, "Existing Borrowers"), and Orbit
Semiconductor, Inc., a Delaware corporation ("OSI"), and NORWEST BANK COLORADO,
NATIONAL ASSOCIATION, a national banking association ("Norwest"), THE CHASE
MANHATTAN BANK, a New York state bank, as successor to The Chase Manhattan
Bank, N.A., a national banking association, XXXXXX TRUST AND SAVINGS BANK, an
Illinois state bank, and NBD BANK, a Michigan banking corporation (together
with their respective successors and permitted assigns, if any, from time to
time, individually, a "Lender" and collectively, the "Lenders"), and Norwest,
as agent for the Lenders (in such capacity, the "Agent").
RECITALS
A. Existing Borrowers, the Lenders and the Agent are parties to
the Loan Agreement, dated as of April 4, 1996 (as amended, and as it may
hereafter be amended, restated or supplemented from time to time, the "Loan
Agreement"), providing for a Loan from the Lenders to Existing Borrowers.
Capitalized terms that are used but not defined herein have the meanings set
forth in the Loan Agreement.
B. Pursuant to a letter agreement dated June 5, 1996 (the "OSI
Letter Agreement"), Existing Borrowers, the Lenders and the Agent agreed to
modify the Loan Agreement, subject to satisfaction of certain conditions, if
DII elected to proceed with the acquisition (the "OSI Acquisition") of OSI.
DII has now completed the OSI Acquisition, and the parties desire to enter into
this Amendment to give effect to their agreement.
C. Pursuant to a letter agreement dated November 14, 1996 (the
"Paradigm Letter Agreement"), Existing Borrowers, OSI, the Lenders and the
Agent agreed to modify the Loan Agreement, subject to satisfaction of certain
conditions, if OSI elected to proceed with the purchase of the assets (the
"Paradigm Asset Acquisition") of Paradigm Technology, Inc., a Delaware
corporation ("Paradigm"). OSI has now completed the Paradigm Asset
Acquisition, and the parties desire to enter into this Amendment to give effect
to their agreement.
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AGREEMENT
IN CONSIDERATION of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Existing Borrowers, OSI, the Lenders and the Agent agree as follows:
1. Capitalized Terms. Capitalized terms that are used but not
defined in this Amendment have the meanings given to them in the Loan
Agreement.
2. Addition of OSI as Co-Borrower.
(a) OSI is hereafter a co-borrower with respect to the
Loan, jointly and severally liable with the Existing Borrowers pursuant to the
terms of the Loan Agreement, as amended by this Amendment, the Note (as made by
OSI and amended concurrent herewith) and the other Loan Documents (as amended
concurrent herewith). Accordingly, all references in this Amendment and the
Loan Agreement to the term "Borrower" hereafter mean and refer to OSI as well
as to each of the Existing Borrowers, and to the term "Borrowers" hereafter
mean and refer to OSI and the Existing Borrowers, collectively.
(b) OSI hereby represents that there is nothing
preventing OSI from entering into this Amendment or assuming all obligations of
co-Borrower under the Loan Documents and co-Maker of the Notes. OSI further
represents and warrants that all representations and warranties of "Borrowers"
set forth in the Loan Documents are true and correct with respect to OSI as of
the Effective Date as if such representations and warranties were being made by
OSI.
3. Definitional and Other Amendments.
(a) The definition of the term "EBITDA" in Section 1.1 of
the Loan Agreement is hereby amended and restated to read in its entirety as
follows:
"EBITDA" means earnings before interest expense,
income taxes, extraordinary expenses related to (a) the
repayment of the Revenue Bonds, (b) the repayment of the Prior
Loans, (c) the acquisition of OSI (provided that such expenses
do not exceed $4,649,000.00) and (d) the Paradigm Asset
Acquisition (provided that such expenses do not exceed
$11,300,000.00), depreciation and amortization expense for
Borrowers and their Subsidiaries, calculated on a Consolidated
basis in accordance with GAAP, calculated in each case on the
basis of the four Quarters immediately preceding the date of
calculation.
(b) The definition of the term "Fixed Charge Coverage
Ratio" in Section 1.1 of the Loan Agreement is hereby amended and restated to
read in its entirety as follows:
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"Fixed Charge Coverage Ratio" means the ratio of
EBITDA (for the most recent four Quarters including the
Quarter in which the determination is being made and the
preceding three Quarters) to Fixed Charges.
(c) Section 7.2(b) of the Loan Agreement is hereby
amended by deleting the words "calendar month" the first line thereof, and
substituting in its place the word "Quarter" and deleting the word "monthly" in
the second line thereof, and substituting in its place the word "quarterly,"
and deleting the word "month" in the third line thereof, and substituting in
its place the word "Quarter."
(d) Section 7.11(b) of the Loan Agreement is hereby
amended and restated to read in its entirety as follows:
(b) Fixed Charge Coverage Ratio. Borrowers shall
maintain a Fixed Charge Coverage Ratio not less than the ratio
set forth below for the four Quarters ending with the
applicable Quarter end set forth below:
Four-Quarter
Period Ending: Ratio
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6/30/96 2.0 to 1
9/30/96 2.0 to 1
12/31/96 2.10 to 1
3/31/97 2.20 to 1
6/30/97 2.20 to 1
9/30/97 2.20 to 1
12/31/97 2.20 to 1
3/31/98 2.30 to 1
(e) Section 7.11(e) of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
(e) Minimum Tangible Net Worth. Borrowers'
minimum Tangible Net Worth at all times after January 1, 1997
shall be not less than (i) an amount equal to the greater of:
(A) $87,500,000 and (B) Borrowers' Tangible Net Worth at
December 31, 1996, plus (ii) an amount equal to 50 percent of
net income (but not net loss) for the period from January 1,
1997 to the date of determination, plus (iii) 75 percent of
new equity proceeds (excluding the OSI Acquisition).
Borrowers' minimum Tangible Net Worth at all times prior to
and including December 31, 1996 shall be not less than (i) an
amount equal to $46,618,000 plus (ii) an amount equal to fifty
percent (50%) of net income (but not loss) for the period from
December 31, 1995 to the date of
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determination, plus (iii) seventy-five percent (75%) of new
equity proceeds.
(f) Sections 8.1(d) and 8.1(e) of the Loan Agreement are
hereby amended and restated in their entirety to read as follows:
(d) during the period expiring on September 30,
1996, Indebtedness (which may include Accommodation
Obligations for the benefit of Affiliates and related parties
but no other Accommodation Obligations), not exceeding
$14,000,000 in the aggregate outstanding at any one time
(including (c) above, but excluding (a) and (b) above); and
(e) during the period commencing on October 1,
1996 and expiring on the date of expiration or termination of
this Agreement, Indebtedness (which may include Accommodation
Obligations for the benefit of Affiliates and related parties
but no other Accommodation Obligations) in the aggregate
outstanding at any one time (including (c) above, but
excluding (a) and (b) above) not exceeding the amount set
forth below at any time during such period:
Period Indebtedness
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October 1, 1996-December 31, 1996 $35,000,000
January 1, 1997-March 31, 1997 $35,000,000
April 1, 1997-June 30, 1997 $30,000,000
July 1, 1997-September 30, 1997 $30,000,000
October 1, 1997-December 31, 1997 $25,000,000
January 1, 1998-June 30, 1998 $25,000,000
(g) Section 8.2 of the Loan Agreement is hereby amended
by adding a new Section 8.2(e) reading in its entirety as follows:
(e) liens encumbering the property described on
EXHIBIT A attached to the First Amendment to Loan Agreement,
dated December 20, 1996, securing the Indebtedness described
on EXHIBIT A attached to such First Amendment to Loan
Agreement; to the extent, but only to the extent, that such
liens encumber equipment or other assets acquired with the
proceeds of such Indebtedness.
(h) Section 8.4 of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:
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8.4 Capital Expenditures.
Make or incur, directly or indirectly, any
capital expenditures (as such term is defined in accordance
with GAAP, but excluding capital expenditures for investment
in new businesses, which are the subject of the limitations in
Section 8.5 below), exceeding the aggregate limit set forth
below for any four Quarter period (based on the Quarter in
which the determination is being made and the preceding three
Quarters).
Four-Quarter
Period Ending: Amount
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6/30/96 $20,000,000
9/30/96 $35,000,000
12/31/96 $55,000,000
3/31/97 $57,000,000
6/30/97 $57,000,000
9/30/97 $55,000,000
12/31/97 $35,000,000
3/31/98 $35,000,000
4. Exclusion from Acquisition Limitation. Lenders hereby agree
that the OSI Acquisition constitutes an exception to the limitations on
acquisitions contained in Section 8.5 of the Loan Agreement, such that (a) the
payment of consideration exceeding $15,000,000 in connection with the OSI
Acquisition shall not be deemed a violation of Section 8.5, and (b) the
consideration paid for and the costs of acquiring OSI shall not be considered
for purposes of determining whether Borrower has exceeded the aggregate ceiling
on acquisition costs of $50,000,000 as specified in Section 8.5 of the Loan
Agreement.
5. Waiver of Merger Restriction. Lenders hereby waive the
restrictions contained in Section 8.6 of the Loan Agreement regarding merger
with respect to the merger of OSI into DII for the sole purpose of effecting
the OSI Acquisition.
6. Conditions Precedent. All of Lenders' obligations under this
Amendment and the effectiveness of the amendments, agreements and waivers
stated in Sections 2 through 5 above are conditioned upon and subject to
satisfaction of all of the following conditions precedent in a manner
acceptable to Agent on or before December 24, 1996:
(a) Borrowers' pledge to Agent, as agent for Lenders, as
additional security for the Loan, of all of the assets of OSI (including all of
the assets of Paradigm acquired by OSI), subject to only those liens and
encumbrances listed on EXHIBIT A, which may secure only the Indebtedness listed
on EXHIBIT A to the extent, but only to the extent that the subject assets were
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acquired using the proceeds of such Indebtedness (the "Permitted Orbit
Encumbrances");
(b) Borrower's pledge to Agent, as Agent for Lenders, as
additional security for the Loan all of the outstanding stock of OSI, subject
to no liens or encumbrances.
(c) Borrowers' execution and delivery to Agent of the
following documents, in form and substance satisfactory to Agent, to effect the
pledges contemplated by paragraphs (a) and (b) above, together with such other
documents as Agent may reasonably request: (1) General Security Agreement and
UCC-1 financing statements, (2) Pledge Agreement, (3) original stock
certificates representing 100 percent of the capital stock of OSI, together
with stock powers, and (4) copy of the corporate resolutions authorizing the
merger and the pledges contemplated hereby, articles of incorporation, bylaws,
certificate of good standing and merger documents, certified as true, complete
and correct by authorized officers of OSI and DII;
(d) Receipt by the Agent, as agent for the Lenders, of a
copy of the Merger Agreement governing DII's acquisition of OSI.
(e) Execution and delivery by OSI and Existing Borrowers
and their affiliates (as the case may be) of amendments to the Note and the
other Loan Documents, to give effect to the amendments effected by this
Amendment, and the execution and delivery by OSI, as co-maker, of the Note;
(f) Receipt by the Agent, as agent for the Lenders, of a
copy of the agreements governing the Paradigm Asset Acquisition.
(g) Receipt by the Agent, as agent for the Lenders, of an
opinion of counsel with respect to the loan modifications effected by this
Amendment and the amendments executed concurrent herewith, the addition of OSI
as a co-borrower and co-maker, and the pledges contemplated by the foregoing,
which opinion must be acceptable in form and substance to Agent, in Agent's
reasonable discretion;
(h) Borrowers shall pay all Loan Expenses incurred by the
Agent and the Lenders in connection with the transactions contemplated by this
Amendment; and
(i) As of the date of this Amendment, and as of the
Effective Date, there was and is no Default or Unmatured Event of Default,
except as specifically set forth in Section 4 and Section 5 above.
7. Repayment of Existing Financing. Borrowers represent and
warrant to the Lenders that, as of the execution date hereof, (i) the
Indebtedness identified on EXHIBIT A is the only Indebtedness of OSI or
Indebtedness of Paradigm (A) assumed by OSI or (B) secured by any assets of
Paradigm acquired by OSI, and (ii) the terms and conditions of such
Indebtedness are not more restrictive than the terms and conditions of the Loan
and do not contain any covenants or place any obligations on Borrower that are
more restrictive than the covenants and
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obligations set forth in the Loan Document (as amended hereby and concurrent
herewith), and (iii) no term, condition or requirement governing or relating to
such Indebtedness violates or conflicts with any of the terms, conditions or
requirements of the Loan Agreement (as amended hereby) and the other Loan
Documents (as amended concurrent herewith).
8. Further Assurances. Borrowers shall execute all documents and
instruments and take all actions, and shall use its best efforts to cause any
other party (including without limitation, Paradigm), to execute all documents
and instruments and take all actions as the Agent may reasonably require to
effect the transactions contemplated by this Amendment. Without limiting the
generality of the foregoing, within sixty days of the date hereof, Borrowers
shall provide to the Agent original stock certificates in the name of TTI
TesTron, a Delaware corporation (formerly known as TTI Merger Corporation, a
Delaware corporation), and Orbit Semiconductor, Inc. (formerly known as Orbit
Merger, Inc.), to replace the existing stock certificates currently held by the
Agent in the name of TTI Merger Corporation and DII Merger, Inc., respectively
and execute all documents required by Agent in connection therewith.
9. Representations and Warranties.
(a) Borrowers hereby certify to the Lenders that as of
the date of this Amendment (taking into consideration the transactions
contemplated by this Amendment), all of Borrowers' representations and
warranties contained in the Loan Documents are true, accurate and complete in
all material respects, and no Event of Default or Unmatured Event of Default
has occurred under any Loan Document (as amended concurrent herewith). Without
limiting the generality of the foregoing, Borrowers represent and warrant to
the Lenders that the execution and delivery of this Amendment has been
authorized by all necessary action on the part of Borrowers, that each person
executing this Amendment on behalf of Borrowers is duly authorized to do so,
and that this Amendment constitutes the legal, valid, binding and enforceable
obligation of Borrowers.
(b) Each of the Borrowers, on their own behalf and on
behalf of OSI, represent and warrant that (i) there are no effective financing
statements of record (A) against any assets of Orbit (including the assets
acquired from Paradigm) other than the assets described in Exhibit A attached
hereto or (B) securing any Indebtedness of Orbit (including Indebtedness of
Paradigm acquired by Orbit) other than the Indebtedness described in Exhibit A
attached hereto.
10. Loan Documents.
(a) The Lenders, the Agent, and Borrowers agree that all
of the Loan Documents shall be amended to reflect the amendments set forth
herein.
(b) All references in any document to the Loan Agreement
hereafter refer to the Loan Agreement as amended pursuant to this Amendment.
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(c) All references in the Loan Agreement to the Loan
Documents, or any particular Loan Document, hereby refer to such Loan Documents
as amended pursuant to the amendments executed concurrent herewith.
11. Continuation of the Loan Agreement Except as specified in
this Amendment, the provisions of the Loan Agreement remain in full force and
effect, and if there is a conflict between the terms of this Amendment and
those of the Loan Agreement, the terms of this Amendment control.
12. Miscellaneous.
(a) This Amendment shall be governed by and construed
under the laws of the State of Colorado and shall be binding upon and inure to
the benefit of the parties hereto and their successors and permissible assigns.
(b) This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(c) This Amendment and all documents to be executed and
delivered hereunder may be delivered in the form of a facsimile copy,
subsequently confirmed by delivery of the originally executed document.
(d) Time is of the essence hereof with respect to the
dates, terms and conditions of this Amendment and the documents to be delivered
pursuant hereto.
(e) This Amendment constitutes the entire agreement
between Borrowers, the Agent, and the Lenders concerning the subject matter of
this Amendment. This Amendment may not be amended or modified orally, but only
by a written agreement executed by Borrowers, the Agent and the Lenders and
designated as an amendment or modification of the Loan Agreement.
(f) If any provision of this Amendment is held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Amendment shall not be impaired thereby.
(g) The section headings herein are for convenience only
and shall not affect the construction hereof.
(h) Execution of this Amendment is not intended to and
shall not constitute a waiver by the Lenders of any Event of Default or
Unmatured Event of Default, except as expressly contemplated by Sections 4 and
5 (subject to the conditions precedent stated in Section 6).
(i) This Agreement is effective as of the Effective Date.
Effective Date as used here means August 22, 1996, which is the date that The
DII Group, Inc. completed the acquisition of Orbit Semiconductor, Inc.
("Orbit"); except that with respect to any matters
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relating to the acquisition of the assets of Paradigm Technology, Inc.
("Paradigm") by Orbit (including, but without limitation, the pledge by Orbit
of all of the assets of Paradigm acquired by Orbit), Effective Date shall mean
November 18, 1996, which is the date Orbit acquired the assets of Paradigm.
EXECUTED as of the date first set forth above.
LENDERS: NORWEST BANK COLORADO, NATIONAL ASSOCIATION
By:
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Xxxxx X. Xxxxx
Vice President
THE CHASE MANHATTAN BANK, a New York state
bank, as successor to The Chase Manhattan
Bank, N.A., a national banking association
By:
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Xxxxxxx Xxxxxxx
Vice President
XXXXXX TRUST AND SAVINGS BANK, an Illinois
state bank
By:
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Xxxxx X. Xxxxxx
Vice President
NBD BANK, a Michigan banking corporation
By:
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Xxxxxxx X'Xxxx
Vice President
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AGENT: NORWEST BANK COLORADO, NATIONAL ASSOCIATION,
a national banking association
By:
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Xxxxx X. Xxxxx
Vice President
BORROWERS:
THE DII GROUP, INC. (formerly known as
DOVatron International, Inc.), a
Delaware corporation
By:
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Xxxx X. Xxxxxxx Xx.
Senior Vice President and
Chief Financial Officer
DOVATRON INTERNATIONAL, INC.,
(formerly known as DOVatron, Inc.),
a Delaware corporation
By:
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Xxxx X. Xxxxxxx Xx.
Senior Vice President and
Chief Financial Officer
CENCORP INC., a Delaware corporation
By:
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Xxxx X. Xxxxxxx Xx.
Senior Vice President and
Chief Financial Officer
MULTILAYER TECHNOLOGY, INC., a
California corporation
By:
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Xxxx X. Xxxxxxx Xx.
Senior Vice President and
Chief Financial Officer
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TTI TESTRON, INC., (formerly known as
TTI Merger Corporation), a Delaware corporation,
as successor to TTI TesTron, Inc., a
Rhode Island corporation
By:
------------------------------------
Name:
------------------------------
Title:
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ORBIT SEMICONDUCTOR, INC.,
a Delaware corporation (formerly known as
DII Merger, Inc.
By:
------------------------------------
Name:
------------------------------
Title:
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EXHIBIT A
Attached to and forming a part of the First Amendment to Loan Agreement, dated
December __, 1996, among The DII Group, Inc.; DOVatron International, Inc.;
CENCORP Inc.; Multilayer Technology, Inc.; TTI TesTron, Inc.; Orbit
Semiconductor, Inc.; Norwest Bank Colorado, National Association; The Chase
Manhattan Bank; Xxxxxx Trust and Savings Bank; and NBD Bank
(See Attached)
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