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EXHIBIT 10.37
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
THIS AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT (as amended, restated and
supplemented from time to time, this "AGREEMENT") between XETEL CORPORATION
("BORROWER") and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION ("BANK," formerly
Texas Commerce Bank National Association) is dated as of June 25, 1998 (the
"EFFECTIVE DATE").
PRELIMINARY STATEMENT. Borrower and Bank have entered into a Credit Agreement
(with Borrowing Base) dated as of August 23, 1996 (as amended, "Prior Credit
Agreement"). The parties desire to amend and restate the Prior Credit Agreement
in its entirety to, among other things, provide for an increase in Bank's
revolving loan commitment to Borrower.
1. THE LOANS.
REVOLVING CREDIT NOTE 1.1.A Subject to the terms and conditions hereof, Bank
agrees to make loans ("REVOLVING LOANS") to Borrower from time to time before
the Termination Date, not to exceed at any one time outstanding the less of the
Borrowing Base or $17,000,000.00 (the "COMMITMENT"). Borrower has the right to
borrow, repay and reborrow. Loans may only be used for supporting Borrower's
accounts receivable and inventory.Chapter 346 of the Texas Finance Code (which
governs certain revolving loan accounts) will not apply to this Agreement, the
Revolving Note or any Revolving Loan. Revolving Loans will be evidenced by, and
will bear interest and be payable as provided in, Borrower's $17,000,000.00
Revolving Credit Note dated the Effective Date (together with any and all
renewals, extensions, modifications and replacements thereof and substitutions
therefor, the "REVOLVING NOTE"), given to renew and increase Borrower's
$10,000,000.00 revolving promissory note dated April 15, 1997 (including all
prior notes of which said note represents a renewal, extension, modification,
increase, substitution, rearrangement or replacement thereof, a "Renewed Note").
"TERMINATION DATE" means the earlier of:
(a) August 31, 1999; or (b) the date specified by Bank pursuant to Section 6.1
hereof.
ADVANCE TERM NOTE 1.1.B Subject to the Prior Credit Agreement, Bank has made
loans ("Advance/Term Loans") to Borrower evidenced by Borrower's $3,250,000.00
Advancing Promissory Note Converting to a Term Note dated November 21, 1997
(together with any and all renewals, extensions, modifications and replacements
thereof and substitutions therefor, the "Advance/Term Note"). The parties agree
that effective upon the execution of this Agreement, the Advance/Term Loans and
Advance/Term Note shall be governed by this Agreement and that each reference in
the Advance/Term Note to the Credit Agreement shall be to this Agreement.
REFERENCES 1.1.C "Loan", "Note", "Commitment" and "Termination Date" in this
Agreement shall refer to each and all of the loans, notes, and commitments, and
their respective termination dates, provided for in this Agreement from time to
time. "Renewed Note" shall include the Renewed Note herein and each Renewed Note
referenced in the Prior Credit Agreement.
BORROWING BASE 1.2 The "BORROWING BASE" will be the amount shown as the
BORROWING BASE on the most recent Borrowing Base Report, subject to verification
by Bank at any time and calculated using the eligibility criteria, borrowing
base factors, dollar ceilings for various components and any deductions
specified in the attached EXHIBIT A, incorporated herein by reference.
REQUIRED PAYMENT 1.3 If the unpaid amount of the Loans at any time exceeds the
Borrowing Base then in effect, Borrower must make a payment on the Note(s) in an
amount sufficient to reduce the unpaid principal balance of the Note(s) to an
amount no greater than the Borrowing Base, unless waived by Bank in writing in
Bank's sole absolute discretion. Such payment shall be accompanied by any
prepayment charge required by the Note and shall be due concurrently with the
Borrowing Base Report.
COMMITMENT FEES 1.4 In consideration of the revolving Commitment, Borrower shall
pay the following non-refundable fees: (a) $41,250 which has been paid by
Borrower prior to the execution of this Agreement; (b) $41,250 due and payable
August 31, 1998; and (c) an unused Commitment fee (computed on the basis of the
actual number of days elapsed in a year comprised of 360 days) of one-eighth
(1/8) of one percent (1%) of the daily average difference between the revolving
Commitment and the principal balance of the Revolving Note from the date hereof
to the Termination Date. The Commitment Fee is due and payable quarterly in
arrears beginning on June 30, 1998..
PAST DUE AMOUNTS 1.5 Each amount due to Bank in connection with the Loan
Documents will bear interest from its due date until paid at the Highest Lawful
Rate unless the applicable Loan Document provides otherwise.
CONFIRMATION OF SECURITY INTERESTS 1.6. Borrower confirms and ratifies each of
the liens, security interests and other interests granted in each and all
security agreements executed in connection with, related to, or securing the
Prior Credit Agreement, Renewed Notes, Revolving Note and the Renewed A/T Note
as extending to and securing all Loans and Notes including but not limited to
each of those interests and liens described in the following listed Security
Agreements. Borrower further agrees and acknowledges that the terms "secured
indebtedness," "indebtedness secured hereby" "Obligations" and any similar
reference used in any security agreement including any supplemental security
agreements executed in connection with or related to, or securing any Renewed
Note, or any other indebtedness of Borrower to Bank, including but not limited
to the following security agreements executed by Borrower and delivered to Bank:
Security Agreement - Accounts dated August 23, 1996; Security Agreement -
Inventory dated August 23, 1996, including any Supplemental Security Agreements
supplementing any of the foregoing, and any other security agreements previously
executed by Borrower and delivered to Bank and not released by Bank and all
security agreements executed as of the Effective Date (each and all "Security
Agreements") include, but are not limited to, each and all indebtedness of all
character and kind related to or evidenced by the Revolving Note, the
Advance/Term Note and related to the Loan Documents.
CAPITAL ADEQUACY 1.6 If Bank determines after the date of this Agreement that
any change in applicable laws, rules or regulations regarding capital adequacy,
or any change in the interpretation or administration thereof by any appropriate
governmental agency, or compliance with any request or directive to Bank
regarding capital adequacy (whether or not having the force of law) of any such
agency, increases the capital required to be maintained with respect to the Loan
or Note and therefore reduces the rate of return on Bank's capital below the
level Bank could have achieved but for such change or compliance (taking into
consideration Bank's policies with respect to capital adequacy), then Borrower
will pay to Bank from time to time, within 15 days of Bank's request, any
additional amount required to compensate Bank for such reduction. Bank will
request any additional amount by delivering to Borrower a certificate of Bank
setting forth the amount necessary to compensate Bank. The certificate will be
conclusive and binding, absent manifest error. Bank may make any assumptions,
and may use any allocations of costs and expenses and any averaging and
attribution methods, which Bank in good faith finds reasonable.
2. CONDITIONS PRECEDENT.
ALL LOANS 2.1 Bank is not obligated to make any Loan unless: (a) Bank has
received the following, duly executed and in Proper Form: (1) a Request for
Loan, substantially in the form of Exhibit B, within the time required in the
Note; provided however, Bank may accept and act upon verbal advance requests
received from Borrower's representative reasonably believed by Bank to be
authorized to make such requests; (2) a Borrowing Base Report within the time
required by this Agreement; and (3) such other documents as Bank reasonably may
require; (b) no Event of Default exists; and (c) the making of the Loan is not
prohibited by, or subjects Bank to any penalty or onerous condition under any
Legal Requirement.
FIRST LOAN 2.2 In addition to the matters described in the preceding section,
Bank will not be obligated to make the first Loan unless Bank has received all
of the Loan Documents specified on Annex I in Proper Form.
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3. REPRESENTATIONS AND WARRANTIES. To induce Bank to enter into this Agreement
and to make the Loans, Borrower represents and warrants as of the Effective Date
and the date of each request for a Loan that each of the following statements is
and shall remain true and correct throughout the term of this Agreement:
ORGANIZATION AND STATUS 3.1 Borrower and each Subsidiary of Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; has all power and authority to conduct its
business as presently conducted, and is duly qualified to do business and in
good standing in each jurisdiction in which the nature of the business conducted
by it makes such qualification desirable. Borrower has no Subsidiary other than
those listed on Annex II and each Subsidiary is owned by Borrower in the
percentage set forth on Annex II. If Borrower is subject to the Texas Revised
Partnership Act ("TRPA"), Borrower agrees that Bank is not required to comply
with Section 3.05(d) of TRPA and agrees that Bank may proceed directly against
one or more partners or their property without first seeking satisfaction from
partnership property.
FINANCIAL STATEMENTS 3.2 All financial statements delivered to Bank are complete
and correct and fairly present, in accordance with generally accepted accounting
principles, consistently applied ("GAAP"), the financial condition and the
results of operations of Borrower and each Subsidiary of Borrower as at the
dates and for the periods indicated. No material adverse change has occurred in
the financial condition of the Borrower since the dates of such financial
statements. Neither Borrower nor any Subsidiary of Borrower is subject to any
instrument or agreement materially and adversely affecting its financial
condition, business or affairs.
ENFORCEABILITY 3.3 The Loan Documents are legal, valid and binding obligations
of the Parties enforceable in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency and other similar laws affecting
creditors' rights generally. The execution, delivery and performance of the Loan
Documents have all been duly authorized by all necessary action; are within the
power and authority of the Parties; do not and will not violate any Legal
Requirement, the Organizational Documents of the Parties or any agreement or
instrument binding or affecting the Parties or any of their respective Property.
COMPLIANCE 3.4 Borrower and each Subsidiary of Borrower has filed all applicable
tax returns and paid all taxes shown thereon to be due, except those for which
extensions have been obtained and those which are being contested in good faith
and for which adequate reserves have been established. Borrower and each
Subsidiary of Borrower is in compliance with all applicable Legal Requirements
and manages and operates (and will continue to manage and operate) its business
in accordance with good industry practices. Neither Borrower nor any Subsidiary
of Borrower is in default in the payment of any other indebtedness or under any
agreement to which it is a party. The Parties have obtained all consents of and
registered with all Governmental Authorities or other Persons required to
execute, deliver and perform the Loan Documents.
LITIGATION 3.5 Except as previously disclosed to Bank in writing, there is no
litigation or administrative proceeding pending or, to the knowledge of
Borrower, threatened against, nor any outstanding judgment, order or decree
affecting Borrower or any Subsidiary of Borrower before or by any Governmental
Authority.
TITLE AND RIGHTS 3.6 Borrower and each Subsidiary of Borrower has good and
marketable title to its Property, free and clear of any Lien except for Liens
permitted by this Agreement and the other Loan Documents. Except as otherwise
expressly stated in the Loan Documents or permitted by this Agreement, the Liens
of the Loan Documents will constitute valid and perfected first and prior Liens
on the Property described therein, subject to no other Liens whatsoever.
Borrower and each Subsidiary of Borrower possesses all permits, licenses,
patents, trademarks and copyrights required to conduct its business. All
easements, rights-of-way and other rights necessary to maintain and operate
Borrower's Property have been obtained and are in full force and effect.
REGULATION U; BUSINESS PURPOSE 3.7 None of the proceeds of any Loan will be used
to purchase or carry, directly or indirectly, any margin stock or for any other
purpose which would make this credit a "purpose credit" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System. All Loans
will be used for business, commercial, investment or other similar purpose and
not primarily for personal, family, or household use or primarily for
agricultural purposes as such terms are used in Chapter One of the Texas Credit
Code or any successor statute.
ENVIRONMENT 3.8 To the best of Borrower's knowledge after due inquiry (i)
Borrower and each Subsidiary of Borrower have complied with applicable Legal
Requirements in each instance in which any of them have generated, handled,
used, stored or disposed of any hazardous or toxic waste or substance, on or off
its premises (whether or not owned by any of them); (ii) neither Borrower nor
any Subsidiary of Borrower has any material contingent liability for
non-compliance with environmental or hazardous waste laws and (iii) neither
Borrower nor any Subsidiary of Borrower has received any notice that it or any
of its Property or operations does not comply with, or that any Governmental
Authority is investigating its compliance with, any environmental or hazardous
waste laws.
INVESTMENT COMPANY ACT/PUBLIC UTILITY HOLDING COMPANY ACT 3.9 Neither Borrower
nor any Subsidiary of Borrower is an "investment company" within the meaning of
the Investment Company Act of 1940 or a "holding company" or an "affiliate" of a
"holding company" or a "public utility" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
STATEMENTS BY OTHERS 3.10 All statements made by or on behalf of Borrower, any
Subsidiary of Borrower or any other of the Parties in connection with any Loan
Document constitute the representation and warranty of Borrower hereunder.
4. AFFIRMATIVE COVENANTS. Borrower agrees to do, and if necessary cause to be
done, and cause its Subsidiaries to do, each of the following:
CORPORATE FUNDAMENTALS 4.1 (a) Pay when due all taxes and governmental charges
of every kind upon it or against its income, profits or Property, unless and
only to the extent that the same shall be contested in good faith and adequate
reserves have been established therefor; (b) Renew and keep in full force and
effect all of its licenses, permits and franchises; (c) Do all things necessary
to preserve its corporate existence and its qualifications and rights in all
jurisdictions where such qualification is necessary or desirable; (d) Comply
with all applicable Legal Requirements; and (e) Protect, maintain and keep in
good repair its Property and make all replacements and additions to its Property
as may be reasonably necessary to conduct its business properly and efficiently.
INSURANCE 4.2 Maintain insurance with such reputable financially sound insurers,
on such of its Property and personnel, in such amounts and against such risks as
is customary with similar Persons or as may be reasonably required by Bank, and
furnish Bank satisfactory evidence thereof promptly upon request. These
insurance provisions are cumulative of the insurance provisions of the other
Loan Documents. Bank must be named as a beneficiary, loss payee or additional
insured of such insurance as its interest may appear (Bank having no right to
recover any amount in excess of the Obligations), and Borrower must provide Bank
with copies of the policies of insurance and a certificate of the insurer that
the insurance required by this section may not be canceled, reduced or affected
in any manner without 30 days' prior written notice to Bank.
FINANCIAL INFORMATION/BORROWING BASE REPORT 4.3 Furnish to Bank in Proper Form
(i) the financial statements prepared in conformity with GAAP on consolidated
and consolidating bases and the other information described in, and within the
times required by, Exhibit C, Reporting Requirements, Financial Covenants and
Compliance Certificate attached hereto and incorporated herein by reference;
(ii) the Borrowing Base Report substantially in the form of, and within the time
required by, Exhibit A along with the other information required by Exhibit A to
be submitted; (iii) within the time required by Exhibit C, Exhibit C signed and
certified by the chief financial officer or president of Borrower; (iv) promptly
after such request is submitted to the appropriate Governmental Authority, any
request for waiver of funding standards
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or extension of amortization periods with respect to any employee benefit plan;
and (v) copies of materially significant special audits, studies, reports and
analyses prepared for the management of Borrower by outside parties, and such
other information materially relating to the financial and operating condition
of Borrower and its Subsidiaries as Bank may reasonably request from time to
time in its discretion.
MATTERS REQUIRING NOTICE 4.4 Notify Bank immediately, upon acquiring knowledge
of (a) the institution or threatened institution of any material lawsuit or
administrative proceeding which, if adversely determined, might materially
adversely affect Borrower; (b) any material adverse change in the assets,
liabilities, financial condition, business or affairs of Borrower; (c) any Event
of Default; or (d) any reportable event or any prohibited transaction in
connection with any employee benefit plan.
INSPECTION 4.5 Permit Bank and its affiliates to inspect and photograph its
Property, to examine and copy its files, books and records, and to discuss its
affairs with its officers and accountants, at such times and intervals and to
such extent as Bank reasonably desires.
ASSURANCES 4.6 Promptly execute and deliver any and all further agreements,
documents, instruments, and other writings that Bank may request to cure any
defect in the execution and delivery of any Loan Document or more fully to
describe particular aspects of the agreements set forth or intended to be set
forth in the Loan Documents.
CERTAIN CHANGES 4.7 Notify Bank at least 30 days prior to the date that any of
the Parties changes its name or the location of its chief executive office or
principal place of business or the place where it keeps its books and records or
the location of any of the Collateral.
EXHIBIT C 4.8 Comply with each of the other affirmative covenants set forth in
Exhibit C.
ENVIRONMENT 3.8 Comply with applicable Legal Requirements in each instance in
which any of them have generated, handled, used, stored or disposed of any
hazardous or toxic waste or substance, on or off its premises (whether or not
owned by any of them), and incur no material liability with respect to such
activities.
5. NEGATIVE COVENANTS. The Borrower will not, and no Subsidiary of Borrower
will:
INDEBTEDNESS 5.1 Except as approved in Bank's sole discretion in writing,
create, incur, or permit to exist, or assume or guarantee, directly or
indirectly, or become or remain liable with respect to, any Indebtedness,
contingent or otherwise unless there is a permitted amount set forth in Exhibit
C, except: (a) Indebtedness to Bank, or secured by Liens permitted by this
Agreement, (b) Indebtedness otherwise approved in writing by Bank, and renewals
and extensions (but not increases) thereof; (c) current accounts payable and
unsecured current liabilities, not the result of borrowing, to vendors,
suppliers and Persons providing services, for expenditures for goods and
services normally required by it in the ordinary course of business and on
ordinary trade terms; (d) operating leases incurred during the ordinary course
of business; (e) Indebtedness associated with an acquired entity or Subsidiary
as defined in Section 8, and (f) certain loans from Rohm U.S.A., Inc. which are
approved by the Bank in writing from time to time.
LIENS 5.2 Create or permit to exist any Lien upon any of its Property now owned
or hereafter acquired, or acquire any Property upon any conditional sale or
other title retention device or arrangement or any purchase money security
agreement; or in any manner directly or indirectly sell, assign, pledge or
otherwise transfer any of its accounts or other Property unless approved in
writing by Bank in Bank's sole discretion, except: (a) Liens, not for borrowed
money, arising in the ordinary course of business; (b) Liens for taxes not
delinquent or being contested in good faith by appropriate proceedings; (c)
Liens in effect on the date hereof and disclosed to Bank in writing, so long as
neither the indebtedness secured thereby nor the Property covered thereby
increases; and (d) Liens in favor of Bank, permitted in Exhibit C, or otherwise
approved in writing by Bank. Notwithstanding anything to the contrary herein,
Borrower will not, and no Subsidiary of Borrower will permit any Lien on any
accounts receivable and inventory that secures the Loans unless Bank shall
provide Borrower with Bank's prior written consent.
FINANCIAL AND OTHER COVENANTS 5.3 Fail to comply with the required financial
covenants and other covenants described, and calculated as set forth, in Exhibit
C. Unless otherwise provided on Exhibit C, all such amounts and ratios will be
calculated: (a) on the basis of GAAP; and (b) on a consolidated basis.
Compliance with the requirements of Exhibit C will be determined as of the dates
of the financial statements to be provided to Bank.
CORPORATE CHANGES 5.4 Unless approved by the Bank in Bank's sole discretion in
writing, in any single transaction, directly or indirectly: (a) liquidate or
dissolve; (b) be a party to any merger or consolidation affecting more than 10%
of the Borrower's total assets; (c) sell or dispose of any interest in any of
its Subsidiaries affecting more than 10% of the Borrower's total assets, or
permit any of its Subsidiaries to issue any additional equity other than to
Borrower; (d) sell, convey or lease all or any substantial part of its assets,
except for sale of inventory or equipment in the ordinary course of business; or
(e) materially change the number of outstanding shares of Borrower.
RESTRICTED PAYMENTS 5.5 Unless otherwise permitted on Exhibit C, at any time
declare or pay any dividend (except stock dividends and dividends paid to
Borrower).
NATURE OF BUSINESS 5.6 Change the nature of its business or enter into any
business which is substantially different from the business in which it is
presently engaged.
AFFILIATE TRANSACTIONS 5.7 Enter into any transaction or agreement with any
Affiliate which might materially affect the Borrower's financial condition
except upon terms substantially similar to those obtainable from wholly
unrelated sources. Note: This provision does not apply for transactions with
management of the Borrower which do not materially affect the Borrower's
financial condition.
SUBSIDIARIES 5.8 Form, create, acquire or divest of any Subsidiary except in
compliance with Exhibit C.
LOANS AND INVESTMENTS 5.9 Unless otherwise provided on Exhibit C, make any
advance, loan, extension of credit, or capital contribution to or investment in,
or purchase, any stock, bonds, notes, debentures, or other securities of, any
Person, except: (a) readily marketable direct obligations of the United States
of America or any agency thereof with maturities of two years or less from the
date of acquisition; (b) fully insured certificates of deposit with maturities
of one year or less from the date of acquisition issued by any commercial bank
operating in the United States of America having capital and surplus in excess
of $50,000,000.00; (c) commercial paper of a domestic issuer if at the time of
purchase such paper is rated in one of the two highest rating categories of
Standard and Poor's Corporation or Xxxxx'x Investors Service; (d) money market
mutual funds that invest in items of the type described in (a), (b) and (c)
above; and (e) financial instruments purchased from the loan participation
programs of either the Bank or Chase Securities, Inc. provided that the
instruments purchased through such program are obligations of borrower's which
have a rating in one of the two highest rating categories of Standard and Poor's
Corporation or Xxxxx'x Investors Service.
6. EVENTS OF DEFAULT AND REMEDIES.
EVENTS OF DEFAULT 6.1 Each of the following is an "EVENT OF DEFAULT":
(a) Any Obligor fails to pay any principal of or interest on the Note or any
other obligation under any Loan Document as and when due; or
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(b) Any Obligor or any Subsidiary of Borrower fails to pay at maturity, or
within any applicable period of grace, any principal of or interest on any other
borrowed money obligation or fails to observe or perform any term, covenant or
agreement contained in any agreement or obligation by which it is bound; or
(c) Any material representation or warranty made in connection with any Loan
Document was incorrect, false or misleading when made; or
(d) Any Obligor violates any covenant contained in any Loan Document; or
(e) An event of default occurs under any other Loan Document; or
(f) Final judgment for the payment of money is rendered against Obligor or any
Subsidiary of Borrower and remains undischarged for a period of 30 days during
which execution is not effectively stayed; or
(g) The sale, encumbrance or abandonment (except as otherwise expressly
permitted by this Agreement) of any of the Collateral or the making of any levy,
seizure, garnishment, sequestration or attachment thereof or thereon; or the
loss, theft, substantial damage, or destruction of any material portion of such
Collateral which is not covered by insurance proceeds for which the Bank is
shown as loss payee; or
(h) Any order is entered in any proceeding against Borrower or any Subsidiary of
Borrower decreeing the dissolution, liquidation or split-up thereof, and such
order shall remain in effect for 30 days; or
(i) Any Obligor or any subsidiary of Borrower makes a general assignment for the
benefit of creditors or shall petition or apply to any tribunal for the
appointment of a trustee, custodian, receiver or liquidator of all or any
substantial part of its business, estate or assets or shall commence any
proceeding under any bankruptcy, insolvency, dissolution or liquidation law of
any jurisdiction, whether now or hereafter in effect; or any such petition or
application shall be filed or any such proceeding shall be commenced against any
Obligor or any subsidiary of Borrower and the Obligor or such subsidiary by any
act or omission shall indicate approval thereof, consent thereto or acquiescence
therein, or an order shall be entered appointing a trustee, custodian, receiver
or liquidator of all or any substantial part of the assets of any Obligor or any
subsidiary of Borrower or granting relief to any Obligor or any subsidiary of
Borrower or approving the petition in any such proceeding, and such order shall
remain in effect for more than 30 days; or any Obligor or any subsidiary of
Borrower shall fail generally to pay its debts as they become due or suffer any
writ of attachment or execution or any similar process to be issued or levied
against it or any substantial part of its property which is not released,
stayed, bonded or vacated within 30 days after its issue or levy; or
(j) Any Obligor or any Subsidiary of Borrower conceals or removes any part of
its Property, with intent to hinder, delay or defraud any of its creditors,
makes or permits a transfer of any of its Property which may be fraudulent under
any bankruptcy, fraudulent conveyance or similar law; or makes any transfer of
its Property to or for the benefit of a creditor at a time when other creditors
similarly situated have not been paid; or
(k) A material adverse change occurs in the financial condition of any Obligor
or any Subsidiary of Borrower; or in the assets, liabilities or operations of
any of the foregoing to the extent reasonably likely to materially and adversely
affect the financial condition of any Obligor; or
(l) Any individual Obligor dies or any Obligor that is not an individual
dissolves.
IF ANY EVENT OF DEFAULT OCCURS, then Bank may do any or all of the following:
(1)declare the Obligations to be immediately due and payable without notice of
acceleration or of intention to accelerate, presentment and demand or protest,
all of which are hereby expressly waived; (2) without notice to any Obligor,
terminate the Commitment and accelerate the Termination Date; (3) set off, in
any order, against the indebtedness of Borrower under the Loan Documents any
debt owing by Bank to Borrower (whether such debt is owed individually or
jointly), including, but not limited to, any deposit account, which right is
hereby granted by Borrower to Bank; and (4) exercise any and all other rights
pursuant to the Loan Documents, at law, in equity or otherwise.
REMEDIES CUMULATIVE 6.2 No remedy, right or power of Bank is exclusive of any
other remedy, right or power now or hereafter existing by contract, at law, in
equity, or otherwise, and all remedies, rights and powers are cumulative.
7. MISCELLANEOUS.
NO WAIVER 7.1 No waiver of any default or Event of Default will
be a waiver of any other default or Event of Default. No failure to exercise or
delay in exercising any right or power under any Loan Document will be a waiver
thereof, nor shall any single or partial exercise of any such right or power
preclude any further or other exercise thereof or the exercise of any other
right or power. The making of any Loan during either the existence of any
default or Event of Default, or subsequent to the occurrence of an Event of
Default will not be a waiver of any such default or Event of Default. No
amendment, modification or waiver of any Loan Document will be effective unless
the same is in writing and signed by the Person against whom such amendment,
modification or waiver is sought to be enforced. No notice to or demand on any
Person shall entitle any Person to any other or further notice or demand in
similar or other circumstances.
NOTICES 7.2 All notices required under the Loan Documents shall be in writing
and either delivered against receipt therefor, or mailed by registered or
certified mail, return receipt requested, in each case addressed to the address
shown on the signature page hereof or to such other address as a party may
designate. Except for the notices required by Section 2.1, which shall be given
only upon actual receipt by Bank, notices shall be deemed to have been given
(whether actually received or not) when delivered (or, if mailed, on the next
Business Day).
GOVERNING LAW/ARBITRATION 7.3 (a) UNLESS OTHERWISE SPECIFIED THEREIN, EACH LOAN
DOCUMENT IS GOVERNED BY TEXAS LAWS AND THE APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA. To the maximum extent permitted by law, any controversy or claim
arising out of or relating to the Loans or any Loan Document, including but not
limited to any claim based on or arising from an alleged tort or an alleged
breach of any agreement contained in any of the Loan Documents, shall, at the
request of any party to the Loan or Loan Documents (either before or after the
commencement of judicial proceedings), be settled by mandatory and binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA Rules") and pursuant to Title 9 of the United
States Code, or if Title 9 does not apply, the Texas General Arbitration Act. In
any arbitration proceeding: (i) all statutes of limitations which would
otherwise be applicable shall apply; and (ii) the proceeding shall be conducted
in Austin, Texas, by a single arbitrator if the amount in controversy is $1
million or less, or by a panel of three arbitrators if the amount in controversy
(including but not limited to all charges, principal, interest fees and
expenses) is over $1 million. Arbitrators are empowered to resolve any
controversy by summary rulings substantially similar to summary judgments and
motions to dismiss. Arbitrators may order discovery conducted in accordance with
the Federal Rules of Civil Procedures. All arbitrators will be selected by the
process of appointment from a panel, pursuant to the AAA Rules. Any award
rendered in the arbitration proceeding will be final and binding, and judgment
upon any such award may be entered in any court having jurisdiction.
(b) If any party to the Loan or Loan Documents files a proceeding in any court
to resolve any controversy or claim, such action will not constitute a waiver of
the right of such party or a bar to the right of any other party to seek
arbitration under the provisions of this Section or that of any other claim or
controversy, and the court shall, upon motion of any party to the proceeding,
direct that the controversy or claim be arbitrated in accordance with this
Section.
(c) No provision of, or the exercise of any rights under, this Section shall
limit or impair the right of any party to the Loan Documents before, during or
after any arbitration proceeding to: (i) exercise self-help remedies including
but not limited to setoff or repossession; (ii) foreclose any Lien on or
security interest in any Collateral; or (iii) obtain relief from a court of
competent jurisdiction to prevent the dissipation, damage, destruction,
transfer, hypothecation, pledging or concealment of assets or Collateral
including, but not limited to attachments, garnishments, sequestrations,
appointments of receivers, injunctions or other relief to preserve the status
quo.
(d) To the maximum extent permitted by applicable law and the AAA Rules, neither
Bank nor any Obligor or any Affiliate, officer, director, employee, attorney, or
agent of either shall have any liability with respect to, and Bank and each
Obligor waives, releases, and agrees not to xxx any of them upon, any claim for
any special, indirect, incidental and consequential damages suffered or incurred
by such Person in connection with, arising out of, or in any way related to,
this Agreement or any of the other Loan Documents. Each of Bank and each Obligor
waives, releases, and agrees not to xxx each other or any of their Affiliates,
officers, directors, employees, attorneys, or agents for punitive damages in
respect of any claim in connection with, arising out of, or in any way related
to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Nothing contained herein, however, shall be construed as a waiver of any
Obligor's or the Bank's right to compel arbitration of disputes pursuant to
subparagraphs (a) and (b), above.
Page 4 of 6 Pages
5
Amendment and Restatement
of Credit Agreement XeTel Corporation June 25, 1998
(e) Nothing herein shall be considered a waiver of the right or protections
afforded Bank by 12 U.S.C. 91, Texas Banking Code Art. 342-609 or any similar
statute.
(f) Each party agrees that any other party may proceed against any other liable
Person, jointly or severally, or against one or more of them, less than all,
without impairing rights against any other liable Persons. A party shall not be
required to join the principal Obligor or any other liable Persons (e.g.,
sureties or guarantors) in any proceeding against any Person. A party may
release or settle with one or more liable Persons as the party deems fit without
releasing or impairing right to proceed against any Persons not so released.
SURVIVAL; PARTIES BOUND; TERM OF AGREEMENT 7.4 All representations, warranties,
covenants and agreements made by or on behalf of Borrower in connection with the
Loan Documents will survive the execution and delivery of the Loan Documents;
will not be affected by any investigation made by any Person, and will bind
Borrower and the successors, trustees, receivers and assigns of Borrower and
will benefit the successors and assigns of the Bank; provided that Bank's
agreement to make Loans to Borrower will not inure to the benefit of any
successor or assign of Borrower except for an approved merger or business
combination. Except as otherwise provided herein, the term of this Agreement
will be until the later of the final maturity of the Revolving Note or the
Advance/Term Note, whichever is later and the full and final payment of all
Obligations and all amounts due under the Loan Documents.
DOCUMENTARY MATTERS 7.5 This Agreement may be executed in several identical
counterparts, on separate counterparts; each counterpart will constitute an
original instrument, and all separate counterparts will constitute but one and
the same instrument. The headings and captions in the Loan Documents have been
included solely for convenience and should not be considered in construing the
Loan Documents. If any provision of any Loan Document is invalid, illegal or
unenforceable in any respect under any applicable law, the remaining provisions
will remain effective. The Loans and all other obligations and indebtedness of
Borrower to Bank are entitled to the benefit of the Loan Documents.
EXPENSES 7.6 Any provision to the contrary notwithstanding, and whether or not
the transactions contemplated by this Agreement are consummated, Borrower agrees
to pay on demand all reasonable, direct out-of-pocket expenses (including,
without limitation, the fees and expenses of counsel for Bank) in connection
with the negotiation, preparation, execution, filing, recording, modification,
supplementing and waiver of the Loan Documents and the making, servicing and
collection of the Loans. Notwithstanding anything contained herein to the
contrary, Borrower shall not pay more than $3,000.00 for any single, annual
field analysis of Borrower's assets. Borrower agrees to pay Bank's standard
Documentation Preparation and Processing Fee for preparation, negotiation and
handling of this Agreement not to exceed the amount of $1,500.00. The
obligations of the Borrower under this and the following section will survive
the termination of this Agreement. Upon request by Borrower, Bank will provide
an invoice of charges at least as detailed as customarily provided by Bank to
comparably situated clients.
INDEMNIFICATION 7.7 BORROWER AGREES TO INDEMNIFY, DEFEND AND HOLD BANK HARMLESS
FROM AND AGAINST ANY AND ALL LOSS, LIABILITY, OBLIGATION, DAMAGE, PENALTY,
JUDGMENT, CLAIM, DEFICIENCY AND EXPENSE (INCLUDING INTEREST, PENALTIES,
ATTORNEYS' FEES AND AMOUNTS PAID IN SETTLEMENT) TO WHICH BANK MAY BECOME SUBJECT
ARISING OUT OF OR BASED UPON THE LOAN DOCUMENTS, OR ANY LOAN, INCLUDING THAT
RESULTING FROM BANK'S OWN NEGLIGENCE, EXCEPT AND TO THE EXTENT CAUSED BY BANK'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
USURY NOT INTENDED 7.8 Borrower and Bank intend to conform strictly to
applicable usury laws. Therefore, the total amount of interest (as defined under
applicable law) contracted for, charged or collected under this Agreement or any
other Loan Document will never exceed the Highest Lawful Rate. If Bank contracts
for, charges or receives any excess interest, it will be deemed a mistake. Bank
will automatically reform the Loan Document or charge to conform to applicable
law, and if excess interest has been received, Bank will either refund the
excess to Borrower or credit the excess on any unpaid principal amount of the
Note or any other Loan Document. All amounts constituting interest will be
spread throughout the full term of the Loan Document or applicable Note in
determining whether interest exceeds lawful amounts.
NO COURSE OF DEALING 7.9 NO COURSE OF DEALING BY BORROWER WITH BANK, NO COURSE
OF PERFORMANCE AND NO TRADE PRACTICES OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE
MAY BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
AGREEMENT.
8. DEFINITIONS. Unless the context otherwise requires, capitalized terms used in
Loan Documents and not defined elsewhere shall have the meanings provided by
GAAP, except as follows:
AFFILIATE means, as to any Person, any other Person (a) that directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, such Person; (b) that directly or indirectly
beneficially owns or holds five percent (5%) or more of any class of voting
stock of such Person; or (c) five percent (5%) or more of the voting stock of
which is directly or indirectly beneficially owned or held by the Person in
question. The term "control" means to possess, directly or indirectly, the power
to direct the management and policies of a Person, whether through the ownership
of voting securities, by contract, or otherwise. Bank is not under any
circumstances to be deemed an Affiliate of Borrower or any of its Subsidiaries.
AUTHORITY DOCUMENTS means certificates of authority to transact business,
certificates of good standing, borrowing resolutions (with secretary's
certificate), secretary's certificates of incumbency, and other documents which
empower and enable Borrower or its representatives to enter into agreements
evidenced by Loan Documents or evidence such authority.
BUSINESS DAY means a day when the main office of Bank is open for the conduct of
commercial lending business.
COLLATERAL means all Property, tangible or intangible, real, personal or mixed,
now or hereafter subject to Security Documents, or intended so to be.
CORPORATION means corporations, partnerships, limited liability companies, joint
ventures, joint stock associations, associations, banks, business trusts and
other business entities.
GOVERNMENT ACCOUNTS means receivables owed by the U.S. government or by the
government of any state, county, municipality, or other political subdivision as
to which Bank's security interest or ability to obtain direct payment of the
proceeds is governed by any federal or state statutory requirements other than
those of the Uniform Commercial Code, including, without limitation, the Federal
Assignment of Claims Act of 1940, as amended.
GOVERNMENTAL AUTHORITY means any foreign governmental authority, the United
States of America, any state of the United States and any political subdivision
of any of the foregoing, and any agency, department, commission, board, bureau,
court or other tribunal having jurisdiction over Bank or any Obligor, or any
Subsidiary of Borrower or their respective Property.
HIGHEST LAWFUL RATE means the maximum nonusurious rate of interest permitted to
be charged by applicable Federal or Texas law (whichever permits the higher
lawful rate) from time to time in effect. If Texas law determines the Highest
Lawful Rate, the Highest Lawful Rate is the weekly rate ceiling as defined in
Article 5069-1D.001 et. seq., as amended, of the Texas Revised Civil Statutes.
INDEBTEDNESS means and includes (a) all items which in accordance with GAAP
would be included on the liability side of a balance sheet, including but not
limited to capital leases, on the date as of which Indebtedness is to be
determined (excluding capital stock, surplus, surplus reserves and deferred
credits); (b) all guaranties, endorsements and other contingent obligations in
respect of, or any obligations to purchase or otherwise acquire, Indebtedness of
others, and (c) all Indebtedness secured by any Lien existing on any interest of
the Person with respect to which indebtedness is being determined, in Property
owned subject to such Lien, whether or not the Indebtedness secured thereby has
been assumed.
LEGAL REQUIREMENT means any law, ordinance, decree, requirement, order,
judgment, rule, regulation (or interpretation of any of the foregoing) of, and
the terms of any license or permit issued by, any Governmental Authority.
LIEN shall mean any mortgage, pledge, charge, encumbrance, security interest,
collateral assignment or other lien or restriction of any kind, whether based on
common law, constitutional provision, statute or contract.
LOAN DOCUMENTS means this Agreement, the agreements, documents, instruments and
other writings contemplated by this Agreement or listed on Annex I, all other
assignments, deeds, guaranties, pledges, instruments, certificates and
agreements now or hereafter executed or delivered to
Page 5 of 6 Pages
6
Amendment and Restatement
of Credit Agreement XeTel Corporation June 25, 1998
the Bank pursuant to any of the foregoing, and all amendments, modifications,
renewals, extensions, increases and rearrangements of, and substitutions for,
any of the foregoing.
OBLIGATIONS means all principal, interest and other amounts which are or become
owing under this Agreement, the Note or any other Loan Document.
OBLIGOR means each Borrower and any guarantor, surety, co-signer, general
partner or other person who may now or hereafter be obligated to pay all or any
part of the Obligations.
ORGANIZATIONAL DOCUMENTS means, with respect to a corporation, the certificate
of incorporation, articles of incorporation and bylaws of such corporation; with
respect to a limited liability company, the articles of organization,
regulations and other documents establishing such entity, with respect to a
partnership, joint venture, or trust, the agreement, certificate or instrument
establishing such entity; in each case including all modifications and
supplements thereof as of the date of the Loan Document referring to such
Organizational Document and any and all future modifications thereof which are
consented to by Bank.
PARTIES means all Persons other than Bank executing any Loan Document.
PERSON means any individual, Corporation, trust, unincorporated organization,
Governmental Authority or any other form of entity.
PROPER FORM means in form and substance satisfactory to the Bank.
PROPERTY means any interest in any kind of property or asset, whether real,
personal or mixed, tangible or intangible.
SECURITY DOCUMENTS means those Security Agreements listed on Annex I and all
supplements, modifications, amendment, extensions thereof and all other
agreements hereafter executed and delivered to Bank to secure the Loans.
SUBORDINATED DEBT means any Indebtedness subordinated to Indebtedness due Bank
pursuant to a written subordination agreement in Proper Form by and among Bank,
subordinated creditor and Borrower which at a minimum must prohibit: (a) any
action by subordinated creditor which will result in an occurrence of an Event
of Default or default under this Agreement, the subordination agreement or the
subordinated Indebtedness; and (b) upon the happening of any Event of Default or
default under any Loan Document, the subordination agreement, or any instrument
evidencing the subordinated Indebtedness (i) any payment of principal and
interest on the subordinated Indebtedness; (ii) any act to compel payment of
principal or interest on subordinated Indebtedness; and (iii) any action to
realize upon any Property securing the subordinated Indebtedness.
SUBSIDIARY means, as to a particular parent Corporation, any Corporation of
which 50% or more of the indicia of equity rights is at the time directly or
indirectly owned by such parent Corporation or by one or more Persons controlled
by, controlling or under common control with such parent Corporation.
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN BANK AND THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF BANK AND THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN BANK AND THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
BORROWER: XETEL CORPORATION
By:
----------------------------------------------------------------------------
Name:
--------------------------------------------------------------------------
Title:
-------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
BANK: CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
By:
----------------------------------------------------------------------------
Name:
--------------------------------------------------------------------------
Title:
-------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
EXHIBITS: ANNEXES:
A Borrowing Base Report I Loan Documents
B Request for Loan II Subsidiaries
C Reporting Requirements, Financial Covenants,
and Compliance Certificate
Page 6 of 6 Pages
7
EXHIBIT A
BORROWING BASE REPORT
BORROWING BASE REPORT FOR PERIOD BEGINNING:________ AND ENDING________
("CURRENT PERIOD") REQUIRED BY THE CREDIT AGREEMENT DATED JUNE 25, 1998 BETWEEN
XETEL CORPORATION AND CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
BORROWER WILL DELIVER THIS BORROWING BASE REPORT COMPLETED IN PROPER FORM WITHIN
30 DAYS OF THE LAST DAY OF EACH MONTH END, AND PROVIDE WITH EACH SUCH REPORT AN
ACCOUNTS RECEIVABLE AGING AND LISTING, ACCOUNTS PAYABLE AGING, AND AN INVENTORY
REPORT.
Line $
--------
1. Total Accounts as of the end of the Current Period $ --------INELIGIBLE
ACCOUNTS AS OF THE END OF THE CURRENT PERIOD:
2. That portion (e.g., invoice) of all of the Accounts of any Account
Debtor where the Account is more than 90 days from invoice date (net
of unapplied cash and return material authorizations) $
3. That portion of all of the Accounts of any Account Debtor which exceed --------
25% of the dollar amount of the total of all Accounts for all Account
Debtors for the Current Period (Line 1); except that with approval in
writing by Bank in its sole discretion, the percentage specified in
this item shall be higher with respect to such Account Debtors as
Borrower and Bank shall mutually specify $ $
4. Intercompany and Affiliate Accounts (Total Intercompany and Affiliate --------
Accounts = $ --------less $ --------[not to exceed $500,000.00 in the
aggregate] in Intercompany and Affiliate Accounts which Borrower,
by signing below, certifies as arising from "arms length" transactions) $
--------
5. Government Accounts $
--------
6. Foreign Accounts $
--------
7. Accounts subject to any dispute or setoff or contra account $
--------
8. Other Ineligible Accounts $
9. Total Ineligible Accounts for the Current Period --------
(Add Lines 2 through 8) $
10. Total Eligible Accounts for the Current Period (Line 1 - Line 9) --------
80%
11. Multiplied by: Accounts Advance Factor $
========
12. Equals: Accounts Component of Borrowing Base
$
--------
13. Total Foreign Accounts secured by a letter of credit issued by a bank 90%
satisfactory to the Bank or covered by Exim bank insurance ("Secured $
========
Foreign Accounts") $
--------
14. Multiplied by: Secured Foreign Accounts Advance Factor 80%
$
15. Equals: Secured Foreign Accounts Component of Borrowing Base ========
$
16. Accounts of Ericsson, Inc., Dell Computer Corp., Dell International, --------
Inc. and all Subsidiaries of Dell International, Inc. or otherwise 80%
approved by Bank in writing ("Acceptable Foreign Accounts") $ 17. $
Multiplied by: Acceptable Foreign Accounts Advance Factor 80% 18. ========
Equals: Acceptable Foreign Accounts Component of Borrowing Base $
19. Net book value of Inventory as of the end of the Current Period $
20. Less: Ineligible Inventory --------
$
21. Total Eligible Inventory as of the end of the --------
Current Period (Line 19 - Line 20) $
--------
22. Multiplied by: Inventory Advance Factor 25%
$
23. Equals: Inventory Component of Borrowing Base ========
(Not to exceed 40% of the Borrowing Base at any time when the aggregate
amount outstanding under the Notes is equal to or less than
$7,000,000.00 and not to exceed 25% of the Borrowing Base at any time
when the aggregate amount outstanding under the Note is greater than
$7,000,000.00)
24. Total BORROWING BASE as of the end of the Current Period (not to exceed $
$17,000,000) (Line 12 + Line 15 + Line 18 + Line 23) ========
25. Less: Aggregate principal outstanding under Notes as end of Current
Period:
Revolving Note $
Advance/Term Note --------
Total outstanding $
--------
26. Equals: Amount available for borrowing subject to the terms of the $
Agreement, if positive; or amount due, if negative ========
$
--------
The terms "ACCOUNTS" and "INVENTORY" have the respective meanings as set forth
in the Texas Business and Commerce Code in effect as of the date of the
Agreement. Inventory shall be valued at the lesser of: (a) market value; and (b)
cost. "OTHER INELIGIBLE ACCOUNTS" mean all such Accounts of Borrower that are
not subject to a first and prior Lien in favor of Bank, those Accounts that are
subject to any Lien not in favor of Bank and those Accounts of Borrower as shall
be deemed from time to time to be, in the sole judgment of Bank, ineligible for
purposes of determining the Borrowing Base. "INELIGIBLE INVENTORY" means that
Inventory of Borrower that is not subject to a first and prior Lien in favor of
Bank, that Inventory that is subject to any Lien not in favor of Bank and that
Inventory of Borrower as shall be deemed from time to time to be in the sole
judgment of Bank, ineligible for purposes of determining the Borrowing Base. All
other terms not defined herein shall have the respective meanings as in the
Agreement.
Borrower certifies that the above information and computations are true,
correct, complete and not misleading as of the date hereof.
Borrower: XETEL CORPORATION
By:
---------------------------------------------------------------------------
Name:
-------------------------------------------------------------------------
Title:
------------------------------------------------------------------------
Address:
----------------------------------------------------------------------
8
Date:
--------------------------------------------------------------------------
EXHIBIT A
Page 1 of 1 Page
EXHIBIT B
REQUEST FOR LOAN
LETTERHEAD OF BORROWER
Chase Bank of Texas, National Association
700 Lavaca
X.X. Xxx 000
Xxxxxx, Xxxxx 00000-0000
Fax No. (000) 000-0000
Re: Request for Revolving Loan under Agreement
Attention: XXXXX X. XXXXXXX
Gentlemen:
This letter confirms our oral or telephonic request of , 19 , for a Revolving
Loan in accordance with that certain Credit Agreement (as amended, restated and
supplemented from time to time, the "AGREEMENT") dated as of June 25, 1998
between you and us. Any term defined in the Agreement and used in this letter
has the same meaning as in the Agreement.
The proposed Revolving Loan is to be in the amount of $________________ and
is to be made on____________, 19____, which is a Business Day. The proposed
Revolving Loan should bear interest at the (check one:)
[ ] LIBOR Rate with an Interest Period from _________ to __________
(refer to note for conditions); or
[ ] the Base Rate.
The proceeds of the proposed Revolving Loan should be (check one:) |_| deposited
into account number ____________ with the Bank; or
[ ]________________________________________________.
The undersigned hereby certifies that:
(1) The representations and warranties made by the Borrower or by any
other Person in the Agreement and the other Loan Documents are true
and correct on and as of this date as though made on this date.
(2) The proposed Revolving Loan complies with all applicable provisions
of the Agreement.
(3) No Event of Default has occurred and is continuing.
Sincerely,
XETEL CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
EXHIBIT B Page 1 of 1
9
ANNEX I
LOAN DOCUMENTS
"Loan Documents" includes, but is not limited to, the following:
1. Agreement
2. Revolving Note; Advance/Term Note
3. Borrowing Base Report
4. Compliance Certificate
5. Security Agreements
6. Financing Statements
7. Organizational and Authority Documents
8. Insurance policies and certificates
9 Financial Statements of: Borrower
10. UCC search
Loan Documents - ANNEX I Page 1 of 1
10
ANNEX II
SUBSIDIARIES
IF NONE AS OF THE EFFECTIVE DATE, CHECK [ ] NONE
Subsidiary Name State Where
and Address Incorporated % Owned
ANNEX II Page 1 of 1
11
EXHIBIT C to Agreement between
XETEL CORPORATION ("Borrower") and Chase Bank of Texas,
National Association ("Bank") dated June 25, 1998 (as
may be amended, restated and supplemented in
writing).
REPORTING REQUIREMENTS, FINANCIAL COVENANTS AND COMPLIANCE CERTIFICATE
FOR CURRENT REPORTING PERIOD ENDING , 199 ("END DATE")
A. REPORTING PERIOD. THIS EXHIBIT WILL BE IN PROPER FORM AND SUBMITTED AS PROVIDED IN PART B. Borrower's fiscal year ends
March 30.
==================================================================================================================================
B. Financial Reporting. Borrower will provide the following financial information within the times indicated: Compliance
====================================================================================================================
WHEN DUE WHAT Certificate
(Circle)
----------------------------------------------------------------------------------------------------------------------------------
(i) Within 90 days of fiscal year end Annual financial statements (balance sheet, income statement, cash flow Yes No
statement) audited (with unqualified opinion) by independent certified
public accountants satisfactory to Bank, accompanied by Compliance
Certificate.
----------------------------------------------------------------------------------------------------------------------------------
(ii) Within 45 days of each fiscal Unaudited interim financial statements accompanied by Compliance Yes No
quarter End Date, including final quarter Certificate
of fiscal year
----------------------------------------------------------------------------------------------------------------------------------
(iii) As provided in Exhibit A Borrowing Base Report with accounts receivable aging and listing, Yes No
inventory report and accounts payable aging
==================================================================================================================================
C. FINANCIAL COVENANTS. Borrower will comply with the following financial
covenants, defined in accordance with GAAP and the definitions in Section 8,
and incorporating the calculation adjustments indicated on the Compliance
Certificate:
----------------------------------------------------------------------------------------------------------------------------------
REQUIRED: Except as specified otherwise, each COMPLIANCE CERTIFICATE /ACTUAL REPORTED Compliance
covenant will be maintained at all times and For Current Reporting Period/as of the End Date (Circle)
reported for each Reporting Period or as of
each Reporting Period End Date, as appropriate:
----------------------------------------------------------------------------------------------------------------------------------
I. Maintain a Tangible Net Worth as adjusted of Stockholders' Equity $ Yes No
at least $24,000,000.00 plus: (a) 75% of net --------
income after 12/31/97, added at end of each Minus: Goodwill $
fiscal quarter and (b) 100% of the net increase Other Intangible Assets --------
(after deduction of goodwill) in shareholder's $
equity occurring immediately after each issuance Loans/Advances to --------
of equity securities and merger/ acquisition Equity holders $
transaction. Please indicate requirement so --------
calculated below: Loans to Affiliates $
--------
Plus: Subordinated Debt $
= Tangible Net Worth as adjusted --------
$ $
============
-----------------------------------------------------------------------------------------------------------------------------------
II. Have a Cash Flow Coverage Ratio for each Yes No
fiscal quarter of at least 1.60 : 1.00 for the Net income $
fiscal quarter ending 6/30/98; and 1.75 : 1.00 -----------
thereafter. Plus: Depreciation $
-----------
Amortization $
-----------
Tax expense $
-----------
Interest Expense $
-----------
Lease Expense $
-----------
Rent Expense $
-----------
Minus: Federal tax cash
payments $
-----------
Equals: Adjusted EBITAR = $
============
Current Maturities of Long Term Debt
(for the next quarter)
$
-----------
Plus: Interest Expense $
-----------
Lease Expense $
-----------
Rent Expense $
-----------
Equals: Fixed Charges
$
-----------
$
-----------
$ $ =
-------------/ ------- ============
Adjusted EBITAR Fixed Charges Cash Flow Coverage Ratio
-----------------------------------------------------------------------------------------------------------------------------------
D. Other Required Covenants to be maintained and to be certified.
-----------------------------------------------------------------------------------------------------------------------------------
REQUIRED ACTUAL REPORTED/COMPLIANCE CERTIFICATE Compliance
-----------------------------------------------------------------------------------------------------------------------------------
(i) Additional Indebtedness, Liens and capital leases are For fiscal year: Yes No
limited to $2,000,000.00 in the aggregate for each fiscal year. ---------------------------
Debt for borrowed money = $
--------------------,
Plus capital lease payments = $
--------------------,
Plus Other Indebtedness = $
--------------------,
Equals Total of: $
--------------------,
-------------------------------------------------------------------------------
(ii) Borrower shall not make any acquisition (by stock Please indicate
acquisitions and total and cash Yes No purchase, asset purchase, merger or
otherwise) or divestiture consideration here or in attachment:
if: (a) the total purchase or sales price, as the case ma be
(including cash, cash equivalents, stock issued, and
indebtedness assumed), exceeds 10% of the book value of
Borrower's assets before such acquisition or divestiture, (b)
if cash consideration exceeds $3MM, or (c) any Event of
Default otherwise would result from such acquisition or
divestiture; unless Bank in its sole discretion shall have consented in
advance in writing.
-------------------------------------------------------------------------------
(iii) Capital expenditures & capital lease obligations For fiscal quarter
ended _____________: Yes No incurred shall not exceed (a) $2MM in any fiscal
quarter and (b) $4MM in any fiscal year beginning with the fiscal year
$__________________________ ended 3/31/99; provided however that up to $1MM
financed by For fiscal year ended _____________:
another financial institution or capital lease shall be
excluded from the foregoing calculation $__________________________
===============================================================================
THE ABOVE SUMMARY REPRESENTS SOME OF THE COVENANTS AND AGREEMENTS IN THE
AGREEMENT AND DOES NOT IN ANY WAY RESTRICT OR MODIFY THE TERMS AND CONDITIONS OF
THE AGREEMENT. IN CASE OF CONFLICT BETWEEN THIS EXHIBIT AND THE AGREEMENT, THE
AGREEMENT SHALL CONTROL. The undersigned hereby certifies that the above
information and computations are true and correct and not misleading as of the
date hereof, and that since the date of the Borrower's most recent Compliance
Certificate (if any):
[ ] No default or Event of Default has occurred under the
Agreement during the current Reporting Period, or been discovered
from a prior period, and not reported.
[ ] A default or Event of Default (as described below) has occurred during the
current Reporting Period or has been discovered from a prior period and is
being reported for the first time and:
[ ] was cured on . [ ]was waived by Bank in writing on
-------- -----------------
[ ] is continuing.
Description of Event of Default:
------------------------------------------------
-------------------------------------------------------------------------------
Executed this day of , 19 .
------------------------- ----------------- -----------
BORROWER: XETEL CORPORATION
SIGNATURE:
-----------------------------
12
NAME: TITLE (CFO or President)
-------------------------- ------------------------------------
Exhibit C Page 1 of 1
