AMENDMENT NO. 7
TO
CREDIT AGREEMENT
This Amendment No. 7 to Credit Agreement, dated as of August 1, 2000
(the "Amendment"), among PEMSTAR INC. (the "Borrower"), U.S. Bank National
Association, as administrative bank (in such capacity, the "Administrative
Bank"), and U.S. Bank National Association as the sole "Banks" party to that
certain Credit Agreement dated as of June 4, 1999, among the Borrower, the
Administrative Bank and the Banks, as amended by an Amendment No. 1 dated as of
August 31, 1999, an Amendment No. 2 dated as of October 14, 1999, an Amendment
No. 3 dated as of November 23 , 1999, an Amendment No. 4 dated as of December
20, 1999, an Amendment No. 5 dated as of March 10, 2000, and an Amendment No. 6
dated as of May 5, 2000 (as so amended, the "Original Agreement").
RECITALS:
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A. The Borrower has requested that the Administrative Bank and the
Banks further amend certain provisions of the Original Agreement.
B. Subject to the terms and conditions of this Amendment, the
Administrative Bank and the Banks will agree to the Borrower's foregoing
request.
NOW, THEREFORE, the parties agree as follows:
1. Defined Terms. All capitalized terms used in this Amendment shall,
except where the context otherwise requires, have the meanings set forth in the
Original Agreement as amended hereby.
2. Amendment. The Original Agreement is hereby amended as follows:
a. The definition of "Revolving Credit B Termination Date"
appearing in Section 1.1 is amended in its entirety to read as follows:
"`Revolving Credit B Termination Date': The date
which is the earliest of: (a) October 31, 2000; (b) the IPO
Date; (c) the date on which the Borrower terminates the
Revolving Credit B Commitment pursuant to Section 4.3; or (d)
the date upon which the obligation of U. S. Bank to make
Revolving B Loans is terminated pursuant to Section 10.2."
b. Section 1.1 of the Original Agreement is amended by adding
the following definitions of "IPO", "IPO Date", "IPO Deferral Fee",
"Turtle Mountain" , "Turtle Mountain Transaction" in the proper
alphabetical order to read as follows:
"`IPO': An initial public offering of the Borrower's
shares of capital stock in which such shares shall be listed
and traded on a national or regional exchange or traded on the
NASDAQ National Market System or the NASDAQ over the counter
market or a private sale of the Borrower's shares of capital
stock
or other equity issuance from which the Borrower receives Net
Proceeds of at least $85,000,000.00.
`IPO Date': The date on which the Borrower
consummates its IPO."
`IPO Deferral Fee': The fee described in Section 3.7.
`Turtle Mountain': Turtle Mountain Corporation, a
North Dakota corporation.
`Turtle Mountain Transaction": The Borrower's
acquisition of substantially all of the shares of Turtle
Mountain.
c. ARTICLE III of the Original Agreement is amended by adding
the following new Section 3.7:
"Section 3.7 IPO Deferral Fee. On demand, the
Borrower shall pay to the Administrative Bank a fee (the `IPO
Deferral Fee'), solely for the benefit of U.S. Bank, of
$3,000,000.00 in the event that the IPO Date does not occur
prior to September 30, 2000 and either: (a) the Borrower fails
to comply with Sections 9.8, 9.16, 9.18 and 9.19 hereof on the
August 31, 2000 and the September 30, 2000 Monthly Measurement
Dates and with Section 9.17 hereof as of the September 30,
2000 Quarterly Measurement Date; or (b) the Borrower fails to
comply with Section 8.11."
d. ARTICLE IV is amended by adding the following new Section
4.2(b)(v) to read as follows:
"(v) Contemporaneously with the Borrower's receipt of
any proceeds of the IPO or any other equity offering, the
Borrower shall prepay first the Revolving Loans B and then the
Revolving Loans by an amount equal to such proceeds."
e. ARTICLE VIII is amended by adding the following new Section
8.11 to read as follows:
"Section 8.11 Equity Injection. If the IPO Date does
not occur by August 31, 2000, the Borrower shall receive new
cash equity by no later than August 31, 2000 in an amount that
is not less than $19,000,000.00, net of any costs and expenses
incurred by Borrower in raising such additional capital."
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f. Section 9.8 of the Original Agreement is hereby amended in
its entirety to read as follows:
"Section 9.8 Capital Expenditures. Make Capital
Expenditures, other than expenditures related to the Turtle
Mountain Transaction, in an amount exceeding: (a)
$30,000,000.00 in the aggregate on a consolidated basis during
the Borrower's 2001 fiscal year; (b) $10,000,000.00 in the
aggregate on a consolidated basis during any of the Borrower's
fiscal years thereafter; or (c) $50,000,000.00 in the
aggregate on a consolidated basis during Borrower's fiscal
year 2001 provided, however, that no Capital Expenditure shall
be made until after the IPO Date if, after giving effect to
such Capital Expenditures, the aggregate amount of Capital
Expenditures made during the Borrower's 2001 fiscal year would
exceed $30,000,000.00 on a consolidated basis."
g. The proviso clause of Section 9.10(j) of the Original
Agreement is amended by increasing the aggregate amount of Indebtedness
permitted pursuant thereby from "$55,000,000.00" to"$65,000,000.00".
h. Section 9.14 of the Original Agreement is amended in its
entirety to read as follows:
"Section 9.14 Use of Proceeds. Permit any proceeds of
the Loans to be used, either directly or indirectly, for
either:
(a) the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying
any margin stock" within the meaning of Regulation U
of the Federal Reserve Board, as amended from time to
time, and furnish to the Administrative Bank upon its
request, a statement in conformity with the
requirements of Federal Reserve Form U-l referred to
in Regulation U; or
(b) to consummate the Turtle Mountain
Transaction or to make any Investment in, or loan to,
Turtle Mountain, or reimburse the Borrower or any of
its Subsidiaries, other than Turtle Mountain, for
making an Investment in, or loan to, Turtle Mountain.
i. Section 9.16 of the Original Agreement is amended in its
entirety to read as follows:
"Section 9.16 Cash Flow Leverage Ratio. Permit, as of
any Monthly Measurement Date, commencing with the Monthly
Measurement Date occurring on December 31, 1999, the Cash Flow
Leverage Ratio to be greater than the ratio
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specified in the following table for any Monthly Measurement
Date occurring in the specified period:
Period Ratio
------ -----
On December 31, 1999 3.50 to 1.00
On and after January 31, 2000
to and including August 31, 2000 5.00 to 1.00
On and after September 30, 2000 3.00 to 1.00
To and including Xxxxx 00, 0000
Xx all times thereafter 2.50 to 1.00;
except that, on and after the first Monthly Measurement Date
and each successive Monthly Measurement Date following the
consummation of the IPO, the maximum allowable Cash Flow
Leverage Ratio is 3.00 to 1.00."
j. Section 9.18 of the Original Agreement is amended by
changing the period at the end thereof to a semi-colon followed by the
following:
"plus (c) 80% of the net proceeds of the IPO."
k. Section 9.19 of the Original Agreement is amended in its
entirety to read as follows:
"Section 9.19 Current Ratio. Permit, as of any
Monthly Measurement Date, commencing with the Monthly
Measurement Date occurring on June 30, 1999, the Current Ratio
to be less than the ratio specified in the following table for
any Monthly Measurement Date occurring in the specified
period:
Period Ratio
------ -----
On and after June 30, 1999
to and including June 30, 2000 1.05 to 1.00
On and after July 31, 2000
to and including September 30, 2000 0.90 to 1.00
On and after October 31, 2000
to and including March 31, 2001 1.05 to 1.00
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At all times thereafter 1.10 to 1.00;
except that, on and after the first Monthly Measurement Date
and each successive Monthly Measurement Date following the
consummation of the IPO, the minimum required Current Ratio is
1.10 to 1.00."
l. Section 10.1(c) of the Original Agreement is amended in its
entirety to read as follows:
"(c) The Borrower shall fail to comply with Section
8.1(f), Section 8.2, or Section 8.11, or any Section of
Article IX hereof; or"
3. Conditions to Effectiveness. This Amendment shall become effective
on the date (the "Effective Date") when, and only when, the Administrative Bank
shall have received:
a. Counterparts of this Amendment executed by the Borrower and
U. S. Bank;
b. A Replacement Revolving Note (the "Replacement Revolving
Note") payable to the order of U.S. Bank in the form provided by the
Administrative Bank appropriately completed and duly executed by the
Borrower;
c. A Certificate by the Borrower's Secretary or any Assistant
Secretary in form and substance satisfactory to the Administrative Bank
and the Banks;
d. An opinion of counsel to the Borrower, addressed to the
Administrative Bank and the Banks, in form and substance satisfactory
to the Administrative Bank and the Banks;
e. The payment, in immediately available funds, of an
amendment fee of $75,000.00 to the Administrative Bank solely for the
benefit of U. S. Bank;
f. The execution and delivery to the Administrative Bank of an
Assignment and Assumption Agreement by M&I Xxxxxxxx & Xxxxxx Bank,
substantially in the form provided by the Administrative Bank;
g. Such other documents, certificates or other items as the
Administrative Bank or the Bank may reasonably request.
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4. Representations and Warranties. To induce the Administrative Bank
and the Banks to enter into this Amendment, the Borrower represents and warrants
to the Administrative Bank and the Banks as follows:
a. The execution, delivery and performance by the Borrower of
this Amendment, the Replacement Revolving Note and any other document
required to be executed and/or delivered by the Borrower by the terms
of this Amendment have been duly authorized by all necessary corporate
action, do not require any approval or consent of, or any registration,
qualification or filing with, any government agency or authority or any
approval or consent of any other person (including, without limitation,
any stockholder), do not and will not conflict with, result in any
violation of or constitute any default under, any provision of the
Borrower's articles of incorporation or bylaws, any agreement binding
on or applicable to the Borrower or any of its property, or any law or
governmental regulation or court decree or order, binding upon or
applicable to the Borrower or of any of its property and will not
result in the creation or imposition of any security interest or other
lien or encumbrance in or on any of its property pursuant to the
provisions of any agreement applicable to the Borrower or any of its
property except pursuant to the Loan Documents to which the Borrower is
a party;
b. The representations and warranties contained in the
Original Agreement are true and correct as of the date hereof as though
made on that date;
c. (i) No events have taken place and no circumstances exist
at the date hereof which would give the Borrower the right to assert a
defense, offset or counterclaim to any claim by the Administrative Bank
or any Bank for payment of the Obligations now existing or hereafter
arising under the Original Agreement, as amended by this Amendment or
any other Loan Document; and (ii) the Borrower hereby releases and
forever discharges the Administrative Bank, each Bank and their
respective successors, assigns, directors, officers, agents, employees
and participants from any and all actions, causes of action, suits,
proceedings, debts, sums of money, covenants, contracts, controversies,
claims and demands, at law or in equity, which the Borrower ever had or
now has against the Administrative Bank, any Bank or their respective
successors, assigns, directors, officers, agents, employees or
participants by virtue of their relationship to the Borrower in
connection with the Original Agreement, as amended by this Amendment,
the other Loan Documents and the transactions related thereto;
d. The Original Agreement, as amended by this Amendment, the
Replacement Revolving Note, and each other Loan Document to which the
Borrower is a party remain in full force and effect and are the legal,
valid and binding obligations of the Borrower and are enforceable in
accordance with their respective terms, subject only to bankruptcy,
insolvency, reorganization, moratorium or similar laws, rulings or
decisions
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at the time in effect affecting the enforceability of rights of
creditors generally and to general equitable principles which may limit
the right to obtain equitable remedies; and
e. After giving effect to this Amendment, there does not exist
any Default, Event of Default or Adverse Event.
5. Reference to and Effect on the Loan Documents.
a. From and after the date of this Amendment, each reference
in:
(i) the Original Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import
referring to the Original Agreement, and each reference to the
"Credit Agreement", "Loan Agreement," "thereunder", "thereof",
"therein" or words of like import referring to the Original
Agreement in any other Loan Document shall mean and be a
reference to the Original Agreement as amended hereby; and
(ii) any Loan Document to "the Revolving Note"
payable to U.S. Bank, "thereunder", "thereof", "therein" or
words of like import referring to such Revolving Note shall
mean and be a reference to the Replacement Revolving Note
executed and delivered to U.S. Bank pursuant to this
Amendment.
b. The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of the Administrative Bank or any Bank under
the Original Agreement or any other Loan Document, nor constitute a
waiver of any provision of the Original Agreement or any such other
Loan Document.
6. Costs, Expenses and Taxes. The Borrower agrees to pay on demand all
costs and expenses of the Administrative Bank in connection with the
preparation, reproduction, execution and delivery of this Amendment and the
other documents to be delivered hereunder or thereunder, including the
Administrative Bank's reasonable attorneys' fees and legal expenses. In
addition, the Borrower shall pay any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution and
delivery, filing or recording of this Amendment and the other instruments and
documents to be delivered hereunder, and agrees to hold the Administrative Bank
and the Banks harmless from and against any and all liabilities with respect to,
or resulting from, any delay in the Borrower's paying or omission to pay, such
taxes or fees.
7. Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS
AMENDMENT AND THE REPLACEMENT REVOLVING NOTE SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF
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MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT
GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS.
8. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
9. Counterparts. This Amendment may be executed in separate
counterparts and by separate parties in separate counterparts, each of which
shall be an original and all of which taken together shall constitute one and
the same Amendment.
10. Recitals. The Recitals hereto are incorporated herein by reference.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
PEMSTAR Inc.
By: /s/ Xxxxxx X. Xxxxxx
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Title: Treasurer
-------------------------------
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------
Title: Secretary
-------------------------------
U.S. Bank National Association, as
Administrative Bank and the sole Bank
By:__________________________________________
Title:_________________________________________
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REPLACEMENT REVOLVING NOTE
--------------------------
$45,000,000.00 Rochester, Minnesota
August 1, 2000
FOR VALUE RECEIVED, the undersigned, PEMSTAR INC., a Minnesota
corporation (the "Borrower"), promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION (the "Bank"), on the "Revolving Credit Termination Date" (as defined
in the Credit Agreement hereinafter described (the "Credit Agreement")), the
principal sum of FORTY FIVE MILLION AND NO/100THS DOLLARS ($45,000,000.00) or if
less, the then aggregate unpaid principal amount of the Revolving Loans (as such
term is defined in the Credit Agreement) as may be borrowed by the Borrower from
the Bank under the Credit Agreement. All Revolving Loans and all payments of
principal shall be recorded by the holder in its records which records shall be
conclusive evidence of the subject matter thereof, absent manifest error.
The Borrower further promises to pay to the order of the Bank interest
on each Revolving Loan from time to time outstanding from the date hereof until
paid in full at the rates per annum which shall be determined in accordance with
the provisions of the Credit Agreement. Accrued interest shall be payable on the
dates specified in the Credit Agreement.
All payments of principal and interest under this Note shall be made in
lawful money of the United States of America in immediately available funds to
U.S. Bank National Association, as the Administrative Bank (the "Administrative
Bank"), at the Administrative Bank's office at 000 Xxxxx Xxxxxx Xxxxxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, or at such other place as may be designated by the
Administrative Bank to the Borrower in writing.
This Note is one of the Revolving Notes referred to in, and evidences
indebtedness incurred under, a Credit Agreement dated as of June 4, 1999
(herein, as it may be amended, modified or supplemented from time to time,
called the "Credit Agreement;" capitalized terms not otherwise defined herein
being used herein as therein defined) among the Borrower, the Administrative
Bank, the Bank and the other bank parties thereto, to which Credit Agreement
reference is made for a statement of the terms and provisions thereof, including
those under which the Borrower is permitted and required to make prepayments and
repayments of principal of such indebtedness and under which such indebtedness
may be declared to be immediately due and payable.
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REPLACEMENT REVOLVING NOTE
--------------------------
Page 2
$45,000,000.00 Rochester, Minnesota
August 1, 2000
All parties hereto, whether as makers, endorsers or otherwise,
severally waive presentment, demand, protest and notice of dishonor in
connection with this Note.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS.
This Note is being executed and delivered in replacement of, but not in
payment of: (a) that certain Replacement Revolving Note dated May 5, 2000 made
by the Borrower payable to the order of the Bank in the original principal
amount of $22,500,000.00, and (b) that certain Replacement Revolving Note dated
November 23, 1999 made by the Borrower payable to the order of M&I Xxxxxxxx &
Ilsley Bank in the original principal amount of $22,500,000.00 provided,
however, that interest accrued on such replaced notes through the date hereof
shall be due and payable on the next interest payment date under the Credit
Agreement.
PEMSTAR INC.
By: ______________________________
Its: ______________________________
By: ______________________________
Its: ______________________________
CERTIFICATE
I, Xxxx Xxxxxxxx, do hereby certify that I am the duly appointed or
elected and qualified Secretary and the keeper of the records of PEMSTAR, Inc.,
a corporation organized and existing under the laws of the State of Minnesota
(the "Corporation") and that the following is a true and correct copy of
resolutions duly adopted:
-- at a meeting of the Board of Directors thereof, convened and
held in accordance with law and the by-laws of said
corporation on the ______ day of ___________, 2000;
-- by unanimous written action on the ______ day of ___________,
2000;
and that such resolutions are now in full force and effect, unamended,
unaltered, and unrepealed:
WHEREAS, there has been presented to the board of directors a form of
Amendment No. 7 to Credit Agreement to be dated on or about August 1, 2000 (the
"Seventh Amendment") among this Corporation, U.S. Bank National Association, a
national banking association, as administrative bank (in such capacity, the
"Administrative Bank") and U.S. Bank National Association, a national banking
association as the sole "Banks" party thereto (the "Banks") further amending
that certain Credit Agreement, dated as of June 4, 1999 among this Corporation,
the Administrative Bank and the Banks as amended by an Amendment No. 1 dated as
of August 31, 1999, an Amendment No. 2 dated as of October 14, 1999, an
Amendment No. 3 dated as of November 23 , 1999, an Amendment No. 4 dated as of
December 20, 1999, an Amendment No. 5 dated as of March 10, 2000; and an
Amendment No. 6 dated as of May 5, 2000 (as so amended, the "Credit Agreement");
NOW, THEREFORE, BE IT RESOLVED, that any two of the _______________,
the _______________, the _______________ of this Corporation are authorized to
execute, in the name and on behalf of this Corporation, and deliver the Seventh
Amendment to the Administrative Bank and the Banks, and any promissory note or
other instrument, document or agreement to required by the Administrative Bank
or any Bank in connection with such Seventh Amendment, substantially in the form
reviewed by the directors, except for such changes, additions or deletions as
such authorized officer(s) shall deem proper; execution by such authorized
officer(s) of the Sixth Amendment and related documents to be conclusive
evidence that such authorized officer(s) deem(s) all of the terms and provisions
thereof to be proper (the executed Sixth Amendment being the "Amendment");
FURTHER RESOLVED, that each such authorized officer of this Corporation
be and hereby is authorized to take such action from time to time on behalf of
this Corporation as he/she may deem necessary, advisable or proper in order to
carry out and perform the obligations of this
Corporation under the Credit Agreement as amended by the Amendment and all
related instruments, documents and agreements;
FURTHER RESOLVED, that all authority conferred by these resolutions
shall be deemed retroactive and any and all acts authorized hereunder performed
prior to the adoption of these resolutions are hereby ratified, affirmed,
adopted and approved;
FURTHER RESOLVED, that the ___________ Secretary or any other officer
of this Corporation are authorized to certify to the Administrative Bank and the
Banks a copy of these resolutions and the names and signatures of this
Corporation's officers or employees hereby authorized to act, and the
Administrative Bank and the Banks are hereby authorized to rely upon such
certificate until formally advised by a like certificate of any change therein,
and is hereby authorized to rely on any such additional certificates.
I FURTHER CERTIFY THAT the Bylaws and Articles of Incorporation
previously delivered by this Corporation to the Administrative Bank and the
Banks have not been amended, modified or restated after the date of such
delivery.
I FURTHER CERTIFY THAT the following persons have been appointed or
elected and are now acting as officer or employees of said Corporation in the
capacity set before their respective names:
TITLE NAME SIGNATURE
_____________ _____________ _____________
_____________ _____________ ________________.
IN WITNESS WHEREOF, I have subscribed my name as _____________
Secretary as of the _____________ day of _________________, 2000.
______________________________
