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EXHIBIT 10.1
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment") dated as of
August 1, 1997, 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 ("MTI"), 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, the "Original
Borrowers"), Orbit Semiconductor, Inc., a Delaware corporation (collectively
with the Original Borrowers, the "Existing Borrowers"), and MULTILAYER TEK,
L.P., a Texas limited partnership ("MTLP") (MTLP collectively with the Existing
Borrowers, the "Borrowers") 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. Original Borrowers, the Lenders and the Agent are parties to the
Loan Agreement, dated as of April 4, 1996, as amended by a First Amendment to
Loan Agreement executed December 20, 1996 by and among the Existing Borrowers,
the Lenders and the Agent (as further 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. The parties desire to enter into this Amendment in order to (i)
increase the Maximum Loan Amount from $60,000,000 to $80,000,000, (ii) revise
certain financial covenants contained in the Loan Agreement as described herein,
(iii) extend the Maturity Date, (iv) provide for a pledge of the assets,
including real estate, acquired in connection with the Multilayer Tek Asset
Acquisition (as defined below), and (v) add MTLP as a co-Borrower under the Loan
Documents.
AGREEMENT
IN CONSIDERATION of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrowers, 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. Definitions. The following definitions in Section 1.1 of the
Loan Agreement are hereby amended and restated in their
entirety to read as follows:
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a. "Fixed Charges" means income taxes and interest expense for
Borrowers and their Subsidiaries, calculated on a Consolidated
basis in accordance with GAAP; plus the sum of regularly
scheduled payments of principal under any promissory notes
delivered in consideration for acquisition of Multilayer
Technology, Inc. and TTI TesTron (meaning notes payable to the
sellers of such companies in consideration of the purchase),
respectively; plus long-term debt principal payments and
redemption payments (except as set forth below); plus all
other payments of principal, interest and other amounts if the
failure to pay such amounts would have a material adverse
impact on any Borrower or its operations, calculated in each
case on the basis of the four Quarters immediately preceding
the date of calculation. Fixed Charges excludes earn-out
payments which the Borrowers are obligated to make arising out
of any acquisitions.
b. "Maturity Date" means the earlier of (i) acceleration, or
(ii) June 30, 2002.
c. "Maximum Loan Amount" means $80,000,000, subject to
reductions in such amount pursuant to Section 2.1(j) below,
minus the Letter of Credit Liability (taking into account the
face amount of any requested Letter of Credit).
d. "Notes" means the promissory notes made by Borrowers and
evidencing the Loan, as they may be amended, restated,
extended or supplemented from time to time and all notes given
in substitution therefor, including without limitation: (a)
the Promissory Note, as amended by Amendment to Promissory
Note executed December 20, 1996, as further amended by Second
Amendment to Promissory Note dated as of even date herewith,
in the amended principal amount of $20,000,000 from Borrowers
payable to Norwest evidencing Norwest's Percentage Interest of
the Loan, (b) the Promissory Note, as amended by Amendment to
Promissory Note executed December 20, 1996, as further amended
by Second Amendment to Promissory Note dated as of even date
herewith, in the amended principal amount of $20,000,000 from
Borrowers payable to Chase evidencing Chase's Percentage
Interest in the Loan, (c) the Promissory Note, as amended by
Amendment to Promissory Note executed December 20, 1996, as
further amended by Second Amendment to Promissory Note dated
as of even date herewith, in the amended principal amount of
$20,000,000 from Borrowers payable to Xxxxxx evidencing
Xxxxxx'x Percentage Interest in the Loan, and (d) the
Promissory Note, as amended by Amendment to Promissory Note
executed December 20, 1996, as further amended by Second
Amendment to Promissory Note dated as of even date herewith,
in the amended principal amount of $20,000,000 from Borrowers
payable to NBD evidencing NBD's Percentage Interest in the
Loan, together with any and all renewals, extensions,
amendments and changes of, or substitutions for such notes.
3. Request for Advance under the Loan. Section 2.1(g)(i) of the
Loan Agreement is amended and restated in its entirety to read
as follows:
(i) Each request for an Advance under the Loan must
be substantially in the form of the Request for
Advance (subject to modifications approved by
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Agent) and submitted to the Agent on or before noon
Denver, Colorado time on (A) the Business Day such
Advance is requested to be made if such Advance is a
Base Rate Advance, or (B) three Business Days
preceding the date such Advance is requested to be
made if such Advance is a LIBOR Rate Advance. Upon
receipt of a Request for Advance, the Agent shall
promptly provide a copy thereof to each Lender. If
all conditions precedent to each Advance have been
met by noon Denver time on the Business Day such
Advance is requested to be made, each Lender shall
make available to the Agent, by 3:00 p.m. Denver,
Colorado time on such Business Day, in immediately
available funds the amount of such Lender's
Percentage Interest of the amount specified in the
Request for Advance; provided, however, that the
Lenders shall not be obligated to make any Advance to
Borrowers that would result in the aggregate unpaid
principal balance outstanding under the Loan
exceeding the Maximum Loan Amount (other than
Advances to the Agent to fund draws under a Letter of
Credit).
4. Funded Debt to EBITDA. Section 7.11(a) of the Loan Agreement
is amended and restated in its entirety to read as follows:
(a) Funded Debt to EBITDA. (i) For the four-Quarter
period ending September 30, 1997 (based on the
Quarter ending such date and the preceding three
Quarters) and for the four-Quarter period ending
December 31, 1997 (based on the Quarter ending such
date and the preceding three Quarters), Borrowers
shall maintain a ratio of Funded Debt (as of the last
day of such Quarter) to EBITDA (excluding from EBITDA
an amount equal to four Quarters of interest due and
payable on the Convertible Subordinated Debt) of less
than or equal to 2.0 to 1.0. For each four-Quarter
period (based on the Quarter in which the
determination is being made and the preceding three
Quarters) after January 1, 1998, Borrowers shall
maintain a ratio of Funded Debt (as of the last day
of such Quarter) to EBITDA (excluding from EBITDA an
amount equal to four Quarters of interest due and
payable on the Convertible Subordinated Debt) of less
than or equal to 1.75 to 1.0.
5. Fixed Charge Coverage Ratio. Section 7.11(b) of the Loan
Agreement is hereby deleted; however, the LIBOR Rate shall
continue to be determined based on the ratio of EBITDA to
Fixed Charges.
6. Interest Coverage Ratio.
a. The Loan Agreement is amended by adding a new Section
7.11(f) of the Loan Agreement as follows:
(f) For each four-Quarter period (based on
the Quarter in which the determination is
being made and the preceding
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three Quarters), the Borrowers shall
maintain an Interest Coverage Ratio of at
least 2.0 to 1.0.
b. The following definitions are added to Section 1.1 of
the Loan Agreement:
i. "Interest Coverage Ratio" means for the
applicable period the ratio of (a) EBITDA
for such period to (b) Interest Expense for
such period.
ii. "Interest Expense" means all interest
expense of the Borrowers and their
Subsidiaries, including without limitation
interest expense attributable to capital
leases and operating leases, amortization of
debt discount and debt issuance costs,
capitalized interest, interest actually paid
by the Borrowers on the debt of any other
person or entity which is guaranteed by the
Borrowers or their Subsidiaries and any and
all other interest expense regardless of
form or amount; but excluding interest on
the Convertible Subordinated Debt.
7. Current Ratio. Section 7.11(c) of the Loan Agreement is
amended and restated in its entirety to read as follows:
(c) Current Ratio. [INTENTIONALLY DELETED]
8. Minimum Tangible Net Worth. Section 7.11(e) of the Loan
Agreement is amended and restated in its entirety to read as
follows:
(e) Minimum Tangible Net Worth. [INTENTIONALLY
DELETED]
9. Capital Expenditures.
a. Section 8.4 of the Loan Agreement is amended and
restated in its entirety to read as follows:
8.4 Capital Expenditures. [INTENTIONALLY DELETED]
10. Investments in New Business.
a. Section 8.5(a) of the Loan Agreement is amended and
restated in its entirety to read as follows:
"(a) Make any acquisitions of or capital
contributions to or other investments in any
Person, except that acquisitions are
permitted within the Industry; provided that
acquisitions within the Industry shall only
be permitted to the extent that the
Consolidated Net
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Worth of DII after the acquisition is not
less than the Consolidated Net Worth of DII
immediately prior to such acquisition; all
acquisitions of or capital contributions to
or other investments in any Person outside
of the Industry and all other investments
require the prior written consent of the
Lenders,"
b. Section 8.5(b) remains unchanged.
c. The following definitions are added to Section 1.1 of the
Loan Agreement:
i. "Industry" means the same business engaged
in by the Borrowers, as determined by Agent
in its reasonable discretion, which
industries include but are not limited to
printed circuit board contract
manufacturing, electronic interconnect
technologies, electronics process
technologies and semi-conductor
manufacturing.
ii. "Consolidated Net Worth" means the
consolidated net worth of Borrowers and
their Subsidiaries as determined in
accordance with GAAP.
11. Indebtedness. Section 8.1(e) of the Loan Agreement is amended
and restated in its entirety to read as follows:
(e) 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 $40,000,000.
12. Addition of MTLP as Co-Borrower.
a. MTLP 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 MTLP 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 MTLP as well
as to each of the Existing Borrowers, and to the term
"Borrowers" hereafter mean and refer to MTLP and the
Existing Borrowers, collectively.
b. MTLP hereby represents that there is nothing
preventing MTLP from entering into this Amendment or
assuming all obligations of co-Borrower under the
Loan Documents and co-Maker of the Notes. MTLP
further represents and warrants that all
representations and warranties of "Borrowers" set
forth in the Loan Documents are true and correct with
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respect to MTLP as of the date hereof as if such
representations and warranties were being made by
MTLP.
13. Conditions Precedent. All of Lenders' agreements and
obligations under this Amendment are conditioned upon and
subject to satisfaction of all the following conditions in a
manner acceptable to Agent in its sole discretion on or before
August 8, 1997 (except as set forth below):
a. Borrowers shall have paid each of the Lenders a
facility fee in the amount of $15,000.00.
b. Borrowers shall have paid Agent such additional fee
as has been mutually agreed upon by Borrowers and
Agent.
c. No Event of Default or Unmatured Event of Default
shall have occurred as of the date hereof.
d. Borrowers shall have executed and delivered the
documents described on Schedule I attached hereto.
14. Failure of Conditions Precedent. In the event that any of the
conditions set forth above are not satisfied as of the date
hereof, all of Lenders' obligations hereunder shall be, at the
option of the Agent, null and void and of no further force and
effect whatsoever.
15. Multilayer Tek Asset Acquisition.
a. DII through MTLP, or another entity owned or
controlled by DII, intends to acquire certain circuit
board manufacturing assets (the "Multilayer Tek Asset
Acquisition") from International Business Machines,
Inc. ("IBM") in connection with IBM's existing
operation in Austin, Texas.
b. On or before 30 days after the closing of the
Multilayer Tek Asset Acquisition, Borrowers shall
have pledged or caused to be pledged to Agent, as
agent for Lenders, as additional security for the
Loan, all assets (including, without limitation, all
inventory, accounts receivable, equipment, general
intangibles, notes receivable and real estate)
acquired in the Multilayer Tek Asset Acquisition (the
"Collateral"), subject to only those liens and
encumbrances approved in writing by Agent.
c. On or before 30 days after the closing of the
Multilayer Tek Asset Acquisition, Borrowers shall
deliver such opinions of counsel and shall execute
all such documents and take all such actions or cause
any other party to execute all such documents and
take all such actions as Agent may reasonably require
in connection with the provisions of this Section 15
or the Multilayer Tek Asset Acquisition.
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d. On or before 30 days after the closing of the
Multilayer Tek Asset Acquisition, Borrower shall
obtain a landlord waiver, in form and substance
satisfactory to Agent, from the lessor of any
facilities at which any Collateral is located.
e. In the event that MTLP or any other subsidiary of DII
acquires any real estate in connection with the
Multilayer Tek Asset Acquisition at any time after
the closing of such acquisition, immediately upon
acquiring such real estate, MTLP shall grant to the
Agent or DII shall cause such other subsidiary to
grant to the Agent, as agent for the Lenders, a valid
perfected first priority lien on such real estate
subject only to exceptions approved by Agent in its
sole discretion and execute all documents required in
connection therewith, including, without limitation,
Environmental Indemnity Agreement.
16. Fees and Expenses. Borrowers shall pay all costs and expenses
incurred by Agent in connection with this Amendment and the
amendments to the other Loan Documents within 15 days after
request by Agent. At the option of the Agent, failure to pay
such costs and expenses shall constitute an Event of Default
under the Loan Agreement.
17. Further Assurances. Borrowers shall execute all documents and
instruments and take all actions, and shall use its best
efforts to cause any other party, to execute all documents and
instruments and take all actions as the Agent may reasonably
require to effect the transactions contemplated by this
Amendment.
18. Representations and Warranties. 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.
19. 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.
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b. All references in any document to the Loan Agreement
hereafter refer to the Loan Agreement as amended
pursuant to this Amendment.
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.
20. 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.
21. 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.
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EXECUTED as of the date first set forth above.
LENDERS:
NORWEST BANK COLORADO, NATIONAL ASSOCIATION
By:
---------------------------------------
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:
---------------------------------------
Xxxxxxx Xxxxxxx
Vice President
XXXXXX TRUST AND SAVINGS BANK, an Illinois
state bank
By:
---------------------------------------
Xxxxx X. Xxxxxx
Vice President
NBD BANK, a Michigan banking corporation
By:
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Xxxxxxxxxx X. Xxxxxxx
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:
---------------------------------------
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
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MULTILAYER TECHNOLOGY, INC., a
California corporation
By:
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Xxxx X. Xxxxxxx Xx.
Senior Vice President and
Chief Financial Officer
TTI TESTRON, INC., (formerly known as
TTI Merger Corporation), a Delaware
corporation, as successor to TTI
TesTron, Inc., a Rhode Island corporation
By:
---------------------------------------
Xxxx X. Xxxxxxx Xx.
Senior Vice President and
Chief Financial Officer
ORBIT SEMICONDUCTOR, INC., a Delaware
corporation (formerly known as DII
Merger, Inc.
By:
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Xxxx X. Xxxxxxx Xx.
Senior Vice President and
Chief Financial Officer
MULTILAYER TEK, LP,
a Texas limited partnership
By:
---------------------------------------
Name:
----------------------------------
Title:
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SCHEDULE I
Attached to and forming a part of the Second Amendment to Loan Agreement,
dated August __, 1997,
among The DII Group, Inc.; DOVatron International, Inc.; CENCORP Inc.;
Multilayer Technology, Inc.; TTI TesTron, Inc.;
Orbit Semiconductor, Inc.; Multilayer Technology, LP;
Norwest Bank Colorado, National Association;
The Chase Manhattan Bank; Xxxxxx Trust and Savings Bank; and NBD Bank
(See Attached)
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