EXECUTION VERSION
FOURTH AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment"), dated as of December 8 1999, is entered into by and among:
(1) XXXX MICROPRODUCTS INC., a California corporation
("Borrower");
(2) Each of the financial institutions listed in Schedule I to
the Restated Credit Agreement referred to in Recital A below (such
financial institutions to be referred to herein collectively as the
"Existing Banks");
(3) CALIFORNIA BANK & TRUST, a California banking corporation,
as administrative agent for the Banks (in such capacity,
"Administrative Agent");
(4) UNION BANK OF CALIFORNIA, N.A., a national banking
association ("UBOC"), as collateral agent thereunder (in such capacity,
"Collateral Agent"); and
(5) IBM CREDIT CORPORATION, a Delaware corporation, that will
become a Bank (as defined in the Restated Credit Agreement) under the
Restated Credit Agreement pursuant to this Amendment (the "New Bank").
RECITALS
A. Borrower, the Existing Banks, Administrative Agent and Collateral
Agent are parties to a Third Amended and Restated Credit Agreement dated as of
November 12, 1998, as amended by (i) that certain First Amendment to Third
Amended and Restated Credit Agreement dated as of May 13, 1999, (ii) that
certain Second Amendment to Third Amended and Restated Credit Agreement dated as
of July 21, 1999 and (iii) that certain Third Amendment to Third Amended and
Restated Credit Agreement dated as of October 15, 1999 (as amended, the
"Restated Credit Agreement").
B. Borrower has requested Administrative Agent, Collateral Agent and
the Existing Banks to increase the Total Revolving Loan Commitment and to
restructure and amend the Restated Credit Agreement in certain other respects.
C. In addition, Borrower has requested that the New Bank become a party
to the Restated Credit Agreement upon the terms and subject to the conditions
set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower,
the Collateral Agent, the Administrative Agent, the Existing Banks and the New
Bank hereby agree as follows:
1. Definitions, Interpretation. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Restated Credit Agreement, as
amended by this Amendment. The rules of construction set forth in Section I of
the Restated Credit Agreement shall, to the extent not inconsistent with the
terms of this Amendment, apply to this Amendment and are hereby incorporated by
reference.
2. Allocation of Outstanding Revolving Loans Among Existing Banks and
New Bank. Subject to the conditions set forth in paragraph 5 below, Borrower,
the Existing Banks, the New Bank, Collateral Agent and Administrative Agent
hereby agree that on and after the Fourth Amendment Effective Date (as defined
herein), each Existing Bank and the New Bank shall be a Bank under the Restated
Credit Agreement and the other Credit Documents with Revolving Loan Commitments
as set forth on Schedule I of the Restated Credit Agreement (as amended pursuant
to this Amendment), with the rights, duties and obligations of such a Bank under
the Restated Credit Agreement and the other Credit Documents. To effectuate the
foregoing, on the Fourth Amendment Effective Date Administrative Agent shall
calculate the Proportionate Share of each Existing Bank and the New Bank in each
Revolving Loan Borrowing then outstanding. Based upon such calculation, the New
Bank shall purchase from the Existing Banks such shares in the outstanding
Revolving Loans as Administrative Agent determines is necessary to cause each
Existing Bank and the New Bank to hold Revolving Loans in each outstanding
Revolving Loan Borrowing in a principal amount equal to such Existing Bank's and
such New Bank's Proportionate Share of such Revolving Loan Borrowings.
3. Amendments to Restated Credit Agreement. Subject to the conditions
set forth in paragraph 5 below, the Restated Credit Agreement is hereby amended
as follows:
(a) Paragraph 1.09 is hereby amended by adding a new sentence
to the end thereof to read as follows:
Notwithstanding references herein and in the other Credit
Documents to each of the financial institutions listed from
time to time on Schedule I hereto as a "Bank," such references
are not intended to indicate, and should not be construed to
mean, that each of such financial institutions is in fact a
federally regulated "bank".
(b) Subparagraph 2.01(a) is hereby amended by changing the
definition of "Revolving Loan Maturity Date" set forth therein from
"October 31, 2000" to "May 31, 2001."
(c) Clause (i) of Subparagraph 2.01(e) is hereby amended by
deleting the text "one (1), two (2), three (3) or six (6) months" set
forth therein and replacing it with the following text: "thirty (30),
sixty (60), ninety (90), one-hundred twenty (120), one-hundred fifty
(150) or one-hundred eighty (180) days."
(d) Subparagraph 2.01(f) is hereby amended to read in its
entirety as follows:
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(f) Scheduled Revolving Loan Payments.
Borrower shall repay to each Bank on the Revolving
Loan Maturity Date the unpaid principal amount of
each Revolving Loan made by such Bank. Borrower shall
pay accrued interest on the unpaid principal amount
of each Revolving Loan on the last Business Day in
each month and upon prepayment (to the extent
thereof) and at maturity.
(e) Clause (i) of Subparagraph 2.02(a) is hereby amended to
read in its entirety as follows:
(i) The aggregate principal amount of all Revolving
Loans outstanding at any time shall not exceed an amount (the
"Borrowing Base") equal to the lesser of:
(A) The Total Revolving Loan Commitment at such
time; and
(B) The sum at such time of:
(1) eighty percent (80%) of Eligible
Accounts; and
(2) The lesser of (y) forty percent (40%) of
Eligible Inventory and (z) $60,000,000.
(f) Clause (iv) of Subparagraph 5.01(a) is hereby amended by
deleting the text "fifteen (15) days" and substituting therefor the
text "twenty (20) days."
(g) Subparagraph 5.01(c) is hereby amended to read in its
entirety as follows:
(c) Inspections. Borrower and its Subsidiaries shall
permit any Person designated by Collateral Agent in its sole
discretion (including without limitation any Bank that so
requests, which request shall not be unreasonably denied),
upon reasonable notice and during normal business hours, to
visit and inspect any of the properties and offices of
Borrower and its Subsidiaries, to conduct audits of any or all
of the Collateral at Borrower's expense, to examine the books
of account of Borrower and its Subsidiaries and to discuss the
affairs, finances and accounts of Borrower and its
Subsidiaries with, and to be advised as to the same by, their
officers, auditors and accountants, all at such times and
intervals as Collateral Agent may reasonably request,
including, without limitation, an annual audit of the accounts
and inventory of Borrower and its Subsidiaries, the fees and
expenses of which shall be payable by Borrower pursuant to
Subparagraph 8.02(b). Audit fees payable by Borrower in
connection with audits of all or any portion of the Collateral
shall be charged at a rate of $750 per day per person plus
direct costs of travel, lodging and out-of-pocket expenses.
(h) Paragraph 5.01 is hereby amended by adding thereto,
immediately following clause (j) thereof, a new clause (k) to read in
its entirety as follows:
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(k) Inventory Appraisal. Borrower covenants that it
will complete and deliver to the Collateral Agent and the
Banks an inventory appraisal, in form and substance
satisfactory to the Collateral Agent and the Banks, within 90
days of the Fourth Amendment Effective Date.
(i) Subparagraph 5.02(m) is hereby amended to read in its
entirety as follows:
(m) Financial Covenants. Borrower shall not permit:
(i) Its Quick Ratio to be less than 0.50 to 1.00 for
any fiscal quarter;
(ii) Its Working Capital to be less than $60,000,000
for any fiscal quarter;
(iii) Its Tangible Net Worth, for any fiscal quarter,
to be less than the sum of (1) $70,000,000 plus (2) fifty
percent (50%) of the sum of Borrower's Net Income After Tax
for each quarter (excluding any quarter in which such amount
was negative) beginning with the quarter ending June 30, 1998
plus (3) one hundred percent (100%) of the Net Proceeds
derived from any issuance by Borrower of Equity Securities
minus (4) the net book value assigned to the Almo Warrants in
accordance with GAAP;
(iv) Its Leverage Ratio to be greater than 3.50 to
1.00 for any fiscal quarter;
(v) Its Interest Coverage Ratio (A) for the three
quarter period beginning on April 1, 1998 and ending on
December 31, 1998 to be less than 2.00 to 1.00; and (B) for
any consecutive four-quarter period thereafter to be less than
2:00 to 1:00; or
(vi) Its Net Operating Income or Net Income After Tax
to be (1) a loss in excess of $350,000 for any quarter or (2)
a loss of any amount for any consecutive two-quarter period.
(j) Section 7 is hereby amended by adding thereto, immediately
following Paragraph 7.09, a new Paragraph 7.10 to read in its entirety
as follows:
7.10 Assignment and Delegation. Collateral Agent may
from time to time (i) assign or transfer all or any portion of
its rights, benefits or privileges as "collateral agent"
hereunder or under any of the other Credit Documents to one or
more Banks and/or (ii) delegate to or subcontract with, or
authorize or appoint one or more Banks to perform all or any
portion of the duties, covenants or obligations to be
performed by Collateral Agent in its capacity as "collateral
agent" hereunder or under any of the other Credit Documents.
Any such other Bank shall be entitled to all of the
indemnities, immunities and other protective provisions that
Collateral Agent is entitled to hereunder as if such other
Bank were named as "Collateral Agent" hereunder. Collateral
Agent shall not be responsible to any other Agent or Bank for
the negligence or misconduct of any
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such other Bank.
(k) Each of Subparagraph 8.05(b), Subparagraph 8.05(c) and
Subparagraph 8.05(d) are hereby amended by deleting the text contained
in the first sentences thereof "in the ordinary course of its
commercial banking business" and substituting therefor the text "in the
ordinary course of its commercial lending business."
(l) Subparagraph 8.05(g) is hereby amended by deleting the
text contained therein "safe and sound banking practices" and
substituting therefor the text "safe and sound lending practices."
(m) Schedule I is hereby amended to read in its entirety as
set forth on Attachment 1 hereto.
(n) Schedule II is hereby amended to read in its entirety as
set forth on Attachment 2 hereto.
(o) Schedule 1.01 of the Restated Credit Agreement is hereby
amended by changing the definition of "Agent's Fee Letter" set forth
therein to read in its entirety as follows:
"Agent's Fee Letter" shall mean the letter agreement
dated as of the Fourth Amendment Effective Date among
Borrower, Administrative Agent, Collateral Agent and Comerica
Bank - California.
(p) Schedule 1.01 of the Restated Credit Agreement is hereby
amended by adding thereto, in the appropriate alphabetical order, the
following definition:
"Fourth Amendment Effective Date" shall mean December 8, 1999.
(q) Schedule 1.01 of the Restated Credit Agreement is hereby
further amended by deleting therefrom the definitions of the terms
"Increased Commitment Period," "Senior Leverage Ratio" and "Capital
Event."
(r) Schedule 1.01 of the Restated Credit Agreement is hereby
amended by changing clause (g) of the definition of "Eligible Accounts"
set forth therein to read in its entirety as follows:
(g) Any account payable by (i) the United States
government or any department, agency or other subdivision
thereof (except to the extent Borrower complies with the
Federal Assignment of Claims Act of 1940, as amended), (ii) a
Person located in any jurisdiction outside the United States
or Canada (excluding the provinces of Newfoundland, Nova
Scotia, Xxxxxx Xxxxxx Island, New Brunswick, Nunavut,
Manitoba, Saskatchewan, Alberta and the Yukon Territory),
except to the extent secured by a letter of credit acceptable
to Collateral Agent, or (iii) an Affiliate of Borrower;
5
(s) Schedule 1.01 of the Restated Credit Agreement is hereby
also amended by further changing the definition of "Eligible Accounts"
by (i) deleting the word "and" at the end of clause (i) thereof, (ii)
adding thereto, immediately following clause (i), a new clause (j) to
read in its entirety as follows, (iii) changing the designation of the
current clause (j) to "(k)" and (iv) amending the parenthetical at the
end of the definition thereof to reflect such new designation:
(j) Any account payable by an account debtor in which
the total accounts payable from such account debtor exceeds
twenty five percent (25%) of the total amount of all Eligible
Accounts, to the extent of such excess (except as approved
from time to time by Collateral Agent); and
(t) Schedule 1.01 of the Restated Credit Agreement is hereby
further amended by changing the definition of "Revolving Loan
Commitment" set forth therein to read in its entirety as follows:
"Revolving Loan Commitment" shall mean, with respect
to each Bank, the amount set forth opposite the name of such
Bank in Schedule I under the column entitled "Revolving Loan
Commitment" or as reduced from time to time pursuant to
Paragraph 2.02 hereof.
(u) Schedule 1.01 of the Restated Credit Agreement is hereby
further amended by changing the definition of "Total Revolving Loan
Commitment" set forth therein to read in its entirety as follows:
"Total Revolving Loan Commitment" shall mean
One Hundred Sixty Million Dollars ($160,000,000) or,
if such amount is reduced pursuant to Subparagraph
2.02(b), the amount to which so reduced and in effect
at such time.
(v) Subparagraph 2(c) of Exhibit A is hereby amended by
deleting the term "months" set forth therein with replacing it with the
term "days".
(w) Subparagraph 2(c) of Exhibit B is hereby amended by
deleting the term "months" set forth therein and replacing it with the
term "days".
(x) Subparagraph 2(c) of Exhibit C is hereby amended by
deleting the term "months" set forth therein and replacing it with the
term "days".
4. Representations and Warranties. Borrower hereby represents and
warrants to Administrative Agent, Collateral Agent, the Existing Banks and the
New Bank that, on the date of this Amendment and after giving effect to the
amendments set forth in paragraph 3 above on the Fourth Amendment Effective Date
(as defined below), the following are and shall be true and correct on each such
date:
(a) The representations and warranties set forth in Paragraph
4.01 of the Restated Credit Agreement are true and correct in all
material respects;
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(b) No Event of Default or Default has occurred and is
continuing; and
(c) Each of the Credit Documents is in full force and effect.
5. Effective Date. The addition of the New Bank as a party to the
Restated Credit Agreement effected by paragraph 2 above and the amendments to
the Restated Credit Agreement effected by paragraph 3 above shall become
effective on December 8, 1999 (the "Fourth Amendment Effective Date"), subject
to receipt by the Existing Banks, the New Bank, Collateral Agent and
Administrative Agent, as applicable, on or prior to the Fourth Amendment
Effective Date of the following, each in form and substance satisfactory to the
Existing Banks, the New Bank, Collateral Agent and Administrative Agent and
their respective counsel, as applicable:
(a) This Amendment duly executed by Borrower, each Existing
Bank, the New Bank, Collateral Agent and Administrative Agent;
(b) The Assignment and Delegation Agreement substantially in
the form attached hereto as Attachment 3 duly executed by Collateral
Agent and IBM Credit Corporation and acknowledged and agreed to by
Administrative Agent, each Bank and Borrower;
(c) An Agent's Fee Letter, in form and substance satisfactory
to the Agents, duly executed by Borrower and the Agents;
(d) New Revolving Loan Notes, appropriately completed and duly
executed by Borrower, payable to the New Bank and, to the extent
required by changes in the Revolving Loan Commitments of the Existing
Banks, the Existing Banks;
(e) A Certificate of the Secretary or an Assistant Secretary
of Borrower, dated the Fourth Amendment Effective Date, certifying that
(i) the Articles of Incorporation and Bylaws of Borrower, in the form
delivered to Administrative Agent on the Closing Date, are in full
force and effect and have not been amended, supplemented, revoked or
repealed since such date, (ii) that the resolution of Borrower, in the
form delivered to Administrative Agent on the Closing Date, is in full
force and effect and has not been amended, supplemented, revoked or
repealed since such date, and (iii) the incumbency, signatures and
authority of the officers of Borrower authorized to execute, deliver
and perform the Restated Credit Agreement, this Amendment, the other
Credit Documents and all other documents, instruments or agreements
relating thereto executed or to be executed by Borrower;
(f) A letter in the form of Attachment 4 hereto appropriately
completed, dated the Fourth Amendment Effective Date and duly executed
by each Guarantor;
(g) An renewal fee of $60,000 to be shared among the Existing
Banks and New Bank pro rata in accordance with such Existing Banks' and
New Bank's respective Proportionate Shares;
(h) A favorable written opinion of Wilson, Sonsini, Xxxxxxxx &
Xxxxxx, counsel to Borrower, dated the Fourth Amendment Effective Date,
addressed to
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Administrative Agent, the Existing Banks and the New Bank and covering
such matters as are set forth on Attachment 5; and
(i) Such other evidence as Administrative Agent, Collateral
Agent, any Existing Bank or the New Bank may reasonably request to
establish the accuracy and completeness of the representations and
warranties and the compliance with the terms and conditions contained
in this Amendment.
6. Effect of this Amendment. On and after the Fourth Amendment
Effective Date, each reference in the Restated Credit Agreement and the other
Credit Documents to the Restated Credit Agreement shall mean the Restated Credit
Agreement as amended hereby. Except as specifically amended above, (a) the
Restated Credit Agreement and the other Credit Documents shall remain in full
force and effect and are hereby ratified and confirmed and (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
Banks, Collateral Agent or Administrative Agent, nor constitute a waiver of any
provision of the Restated Credit Agreement or any other Credit Document.
7. Miscellaneous.
(a) Counterparts. This Amendment may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
(b) Headings. Headings in this Amendment are for convenience
of reference only and are not part of the substance hereof.
(c) Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
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IN WITNESS WHEREOF, Borrower, Collateral Agent, Administrative Agent,
the Existing Banks and the New Bank have caused this Amendment to be executed as
of the day and year first above written.
BORROWER: XXXX MICROPRODUCTS INC.
By: /s/ W. Xxx Xxxx
------------------------------------
Name: W. XXX XXXX
Title: CHAIRMAN, PRESIDENT, & CEO
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Name: XXXX X. XXXXXXX
Title: VICE PRESIDENT OF FINANCE
& CFO
ADMINISTRATIVE AGENT: CALIFORNIA BANK & TRUST,
As Administrative Agent
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
COLLATERAL AGENT: UNION BANK OF CALIFORNIA, N.A.,
As Collateral Agent
By:
------------------------------------
Name:
Title:
9
EXISTING BANKS: CALIFORNIA BANK & TRUST,
As a Bank
By: /s/ S. C. Bellicini
------------------------------------
Name: S. C. BELLICINI
Title: SENIOR VICE PRESIDENT
By: /s/ Xxxxxx Xxxx
------------------------------------
Name: Xxxxxx Xxxx
Title: AVP
UNION BANK OF CALIFORNIA, N.A.,
As a Bank
By:
------------------------------------
Name:
Title:
SANWA BANK CALIFORNIA,
As a Bank
By:
------------------------------------
Name:
Title:
COMERICA BANK - CALIFORNIA,
As a Bank
By:
------------------------------------
Name:
Title:
10
U.S. BANK NATIONAL ASSOCIATION,
As a Bank
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
NEW BANK: IBM CREDIT CORPORATION,
As a Bank
By:
------------------------------------
Name:
Title:
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ATTACHMENT 1
SCHEDULE I
BANKS
Bank Revolving Loan Commitment
CALIFORNIA BANK & TRUST $30,000,000
Applicable Lending Office:
000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Address for Notices:
000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Relationship Manager
Xxxx Microproducts
Telephone: (000) 000-0000
Facsimile (000) 000-0000
UNION BANK OF CALIFORNIA, N.A. $30,000,000
Applicable Lending Office:
00 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Address for Notices:
Northern California Commercial
Banking Group
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Vice President
Telephone: (000) 000-0000
Facsimile (000) 000-0000
1-1
COMERICA BANK - CALIFORNIA $30,000,000
Applicable Lending Office:
California Corporate Banking
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Address for Notices:
California Corporate Banking
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile (000) 000-0000
SANWA BANK CALIFORNIA $20,000,000
Applicable Lending Office:
San Xxxx CBC
000 Xxxxxxx Xxxxxxxxx
Xxx Xxxx, XX 00000-0000
Address for Notices:
000 Xxxxxxx Xxxxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile (000) 000-0000
1-2
U.S. BANK NATIONAL ASSOCIATION $20,000,000
Applicable Lending Office:
U.S. Bank National Association
Corporate Banking Center
0000 Xxxxx Xxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
Address for Notices:
U.S. Bank National Association
California Corporate Banking
0000 Xxxxx Xxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile (000) 000-0000
IBM CREDIT CORPORATION $30,000,000
Applicable Lending Office:
IBM Credit Corporation
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Address for Notices:
IBM Credit Corporation
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Region Manager, West
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
1-3
ATTACHMENT 2
SCHEDULE II
PRICING GRID
XXXXX 0 XXXXX 0 XXXXX 0 XXXXX 0 XXXXX 5
PERIOD PERIOD PERIOD PERIOD PERIOD
APPLICABLE
MARGINS: 1.45% 1.65% 1.85% 2.05% 2.25%
EXPLANATION
1. The Applicable Margin for each Revolving LIBOR Loan will be set for
each Pricing Period and will vary depending upon whether such period is
a Level 1 Period, a Level 2 Period, a Level 3 Period, a Level 4 Period
or a Level 5 Period.
2. The first Pricing Period, which commences on the November 12, 1998 and
ends on February 28, 1999, will be a Level 3 Period.
3. Each Pricing Period thereafter will be a Xxxxx 0 Xxxxxx, x Xxxxx 0
Xxxxxx, x Xxxxx 0 Period, a Level 4 Period or a Level 5 Period
depending upon Borrower's Leverage Ratio (as calculated pursuant to the
definition of "Leverage Ratio" set forth in Schedule 1.01) for the most
recent fiscal quarter period ending prior to the first day of such
Pricing Period as follows:
(a) If, during any Pricing Period, Borrower's Leverage Ratio is
less than 2.00 to 1.00, Borrower's pricing will be a Level 1
Period.
(b) If, during any Pricing Period, Borrower's Leverage Ratio is
greater than or equal to 2.00 to 1.00 but less than or equal
to 2.50 to 1.00, Borrower's pricing will be a Level 2 Period.
(c) If, during any Pricing Period, Borrower's Leverage Ratio is
greater than 2.50 to 1.00 but less than or equal to 3.00 to
1.00, Borrower's pricing will be a Level 3 Period.
(d) If, during any Pricing Period, Borrower's Leverage Ratio is
greater than 3.00 to 1.00 but less than or equal to 3.25 to
1.00, Borrower's pricing will be a Level 4 Period.
(e) If, during any Pricing Period, Borrower's Leverage Ratio is
greater than 3.25 to 1.00, Borrower's pricing will be a Level
5 Period.
2-1
ATTACHMENT 3
FORM OF ASSIGNMENT AND DELEGATION AGREEMENT
THIS ASSIGNMENT AND DELEGATION AGREEMENT (this "Agreement"), dated as
of December 8, 1999, is entered into by and between UNION BANK OF CALIFORNIA,
N.A., a national banking association, in its capacity as collateral agent under
the Restated Credit Agreement referred to in Recital A below (in such capacity,
"Collateral Agent") and IBM CREDIT CORPORATION, a Delaware corporation ("IBM
Credit").
RECITALS
A. Each of Collateral Agent and IBM Credit is a party to that certain
Third Amended and Restated Credit Agreement dated as of November 12, 1998 (as
amended, the "Restated Credit Agreement") among Xxxx Microproducts Inc., a
California corporation ("Borrower"), the financial institutions from time to
time listed in Schedule I thereto (the "Banks"), California Bank & Trust, a
California banking association, as administrative agent for the Banks (in such
capacity, "Administrative Agent") and Collateral Agent.
B. Pursuant to Paragraph 7.10 of the Restated Credit Agreement,
Collateral Agent is authorized from time to time to (i) assign or transfer all
or any portion of its rights, benefits or privileges as "collateral agent" under
the Restated Credit Agreement or under any of the other Credit Documents to one
or more Banks and/or (ii) delegate to or subcontract with, or authorize or
appoint any other Bank to perform all or any portion of the duties, covenants or
obligations to be performed by Collateral Agent under the Restated Credit
Agreement or under any of the other Credit Documents.
C. In order to authorize IBM Credit to assume certain of Collateral
Agent's duties and responsibilities with respect to that portion of the
Collateral consisting of or related to Inventory, Collateral Agent has decided
to delegate, subcontract with, authorize and appoint IBM Credit to perform a
portion of the duties, covenants or obligations to be performed by Collateral
Agent under the Restated Credit Agreement and the other Credit Documents with
respect to such Collateral upon the terms and conditions herein set forth.
D. In order to enable IBM Credit to assume certain of Collateral
Agent's duties and responsibilities with respect to that portion of the
Collateral consisting of or relating to inventory, IBM Credit has agreed, upon
the authorization, direction and delegation of the Collateral Agent, to perform
a portion of the duties, covenants or obligations to be performed by the
Collateral Agent under the Restated Credit Agreement and the other Credit
Documents with respect to such Collateral upon the terms and conditions herein
set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Collateral Agent and IBM Credit hereby agree as follows:
3-1
1. Definitions, Interpretation. All capitalized terms defined above and
elsewhere in this Agreement shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Restated Credit Agreement, as
amended. The rules of construction set forth in Section I of the Restated Credit
Agreement shall, to the extent not inconsistent with the terms of this
Agreement, apply to this Agreement and are hereby incorporated by reference.
2. Assignment and Delegation. Collateral Agent hereby assigns and
transfers to IBM Credit, and delegates to, subcontracts with, authorizes and
appoints IBM Credit, and IBM Credit hereby accepts and agrees, to perform each
of the specific duties and responsibilities set forth on Attachment 1 hereto
that Collateral Agent is otherwise required and/or authorized to perform
pursuant to the Restated Credit Agreement and the other Credit Documents,
together with all such duties and responsibilities as may be reasonably
incidental thereto. In connection with the performance by IBM Credit of such
duties and responsibilities, IBM Credit shall be entitled to receive in the way
of reimbursement any amounts that Collateral Agent is otherwise entitled to
receive under the Restated Credit Agreement and the other Credit Documents,
including without limitation (i) amounts that Collateral Agent is otherwise
entitled to receive pursuant to Paragraph 5.01(c) of the Restated Credit
Agreement (but only to the extent that IBM Credit in fact performs such
inspections and audits provided for therein) and (ii) one-half of the annual
agent's fee that Collateral Agent is otherwise entitled to receive pursuant to
the Agent's Fee Letter.
3. Rights of IBM Credit. Without limiting the scope of any other
provision contained in the Restated Credit Agreement or the other Credit
Documents, the undersigned acknowledge and agree that both Collateral Agent and
IBM Credit shall be entitled to the benefit of all of the indemnities,
immunities and other protective rights that any Bank acting as "Collateral
Agent" is entitled to receive under the Restated Credit Agreement and the other
Credit Documents as if IBM Credit were named as "Collateral Agent" thereunder,
including by way of example but not by limitation, those set forth in Paragraph
7.04 of the Restated Credit Agreement.
4. Limitation on Liability. Neither IBM Credit nor any of its
directors, officers, employees or agents shall be responsible to the Banks, the
Collateral Agent or the Administrative Agent for any action taken or omitted to
be taken by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, except for its or their own gross negligence
or willful misconduct.
5. Actions by IBM Credit. As to any matters not expressly provided for
by this Assignment and Delegation Agreement, IBM Credit shall not be required to
take any action or exercise any discretion, but shall be required to act or to
refrain from acting upon instructions (i) of the Collateral Agent (if the
Collateral Agent has been so instructed by the Required Banks) or (ii) of the
Required Banks, and shall in all cases be fully protected by the Banks in
acting, or in refraining from acting, hereunder or under any other Credit
Document in accordance with any such instructions, and such instructions and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Banks.
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6. Re-Assignment or Re-Delegation of Duties and Responsibilities.
Unless otherwise agreed to between Collateral Agent and IBM Credit, IBM Credit
may re-assign and re-delegate to Collateral Agent all or any portion of the
duties and obligations assigned and delegated to it by Collateral Agent pursuant
to this Agreement at any time by giving thirty (30) days prior written notice
thereof to Administrative Agent, Collateral Agent and the Banks. In addition, at
any time the Required Banks may, in their sole discretion, re-assign and
re-delegate all or any portion of the duties and obligations assigned and
delegated to IBM Credit hereunder to Collateral Agent or such other Bank as
Required Banks may designate. Upon any such re-assignment and re-delegation, all
of the rights, duties and obligations of IBM Credit hereunder shall immediately
and without further action be re-assumed by the Collateral Agent or such other
Bank as Required Banks may designate except that the benefit of all of the
indemnities, immunities and other protective provisions shall continue to apply
to any actions taken by IBM Credit prior to any such re-assignment and
re-delegation.
7. Miscellaneous.
(a) Counterparts. This Agreement may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
(b) Headings. Headings in this Agreement are for convenience
of reference only and are not part of the substance hereof.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
(d) Notices. All notices, requests, demands, consents,
instructions or other communications to or upon Collateral Agent or IBM
Credit under this Agreement shall be given in the manner set forth in
Paragraph 8.01 of the Restated Credit Agreement.
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IN WITNESS WHEREOF, Collateral Agent and IBM Credit have caused this
Agreement to be executed as of the day and year first above written.
UNION BANK OF CALIFORNIA, N.A., in its
capacity as Collateral Agent
By:
------------------------------------
Name:
Title:
IBM CREDIT CORPORATION
By:
------------------------------------
Name:
Title:
Acknowledged and Agreed:
CALIFORNIA BANK & TRUST,
as Administrative Agent
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
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CALIFORNIA BANK& TRUST,
As a Bank
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
As a Bank
By:
------------------------------------
Name:
Title:
SANWA BANK CALIFORNIA,
As a Bank
By:
------------------------------------
Name:
Title:
COMERICA BANK - CALIFORNIA,
As a Bank
By:
------------------------------------
Name:
Title:
3-5
U.S. BANK NATIONAL ASSOCIATION,
As a Bank
By:
------------------------------------
Name:
Title:
IBM CREDIT CORPORATION,
As a Bank
By:
------------------------------------
Name:
Title:
XXXX MICROPRODUCTS INC.
By:
------------------------------------
Name:
Title:
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Attachment 1 to Assignment and Delegation Agreement
Duties and Responsibilities of IBM Credit
IBM Credit shall, at the direction and request of Collateral Agent,
upon proper notice and during normal business hours visit and inspect specific
properties and offices of Borrower and its Subsidiaries, to conduct an audit of
any or all inventory. Each such audit shall include by way of example, but not
limitation performing a physical count of inventory, requesting a complete
inventory report from Borrower, selecting and testing eligibility of a random
sample of inventory, and reviewing and testing discrepancies.
FREQUENCY: Each inventory audit shall take place at such times and
intervals as Collateral Agent may reasonably request, including without
limitation, an annual audit of the inventory of Borrower and its Subsidiaries.
FEES: As set forth in Section 5.01(c) of the Third Amended and Restated
Credit Agreement, as it may be modified from time to time.
SUMMARY: At the completion of each inventory audit IBM Credit shall
provide Collateral Agent with a written summary of such audit. If after review
of the summary and Collateral Agent concludes that additional inventory audit
processes or sampling are required then Collateral Agent, upon 5 business days
prior notice, shall give specific and detailed direction to IBM Credit to
conduct such additional processes or sampling.
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ATTACHMENT 4
FORM OF GUARANTOR CONSENT LETTER
December 8, 1999
TO: ADMINISTRATIVE AGENT,
As Administrative Agent for the Banks
and the Agents under the
Restated Credit Agreement referred to below
1. Reference is made to the following:
(a) The Third Amended and Restated Credit Agreement dated as
of November 12, 1998, among Borrower, the Banks, Administrative Agent
and Collateral Agent, as amended by that certain First Amendment to
Third Amended and Restated Credit Agreement dated as of May 13, 1999,
that certain Second Amendment to Third Amended and Restated Credit
Agreement dated as of July 21, 1999 and that certain Third Amendment to
Third Amended and Restated Credit Agreement dated as of October 15,
1999 (as amended, the "Restated Credit Agreement");
(b) [The Xxxx Canada Guaranty, dated as of November 12, 0000
(xxx " Xxxx Xxxxxx Guaranty"),] [The Xxxx-Tenex Guaranty, dated as of
November 20, 1998 (the "Xxxx-Tenex Guaranty"),] [The Xxxx-Future Tech
Guaranty, dated as of November ____, 1999 (the "Xxxx-Future Tech
Guaranty"),] executed by the undersigned ("Guarantor") in favor of the
Banks and Collateral Agent; and
(c) The Fourth Amendment to Third Amended and Restated Credit
Agreement, dated as of December 8, 1999, among Borrower, the Banks,
Administrative Agent and Collateral Agent (the " Fourth Amendment");
2. Guarantor hereby confirms that it is a wholly-owned subsidiary of
[Xxxx Microproducts Inc., a California corporation] [Xxxx Microproducts Canada
Inc., a California corporation ("Xxxx Canada") and that Xxxx Canada is a
wholly-owned subsidiary of Xxxx Microproducts Inc., a California corporation].
3. Guarantor hereby consents to the Fourth Amendment, including without
limitation, the extension of the Revolving Loan Maturity Date from October 31,
2000 to May 31, 2001 and the increase in the Total Revolving Loan Commitment
from One Hundred Thirty Million Dollars ($130,000,000) to One Hundred Sixty
Million Dollars ($160,000,000). Guarantor expressly agrees that the Fourth
Amendment shall in no way affect or alter the rights, duties, or obligations of
Guarantor, the Banks or Collateral Agent under the [Xxxx Canada Guaranty]
[Xxxx-Tenex Guaranty] [Xxxx-Future Tech Guaranty].
4. Pursuant to the [Xxxx Canada Guaranty] [Xxxx-Tenex Guaranty]
[Xxxx-Future Tech Guaranty], Guarantor continues to guaranty the payment when
due of, inter alia, all loans, advances, debts, liabilities and obligations,
however arising, owed by the Borrower to any Agent
4-1
or any Bank of every kind and description now existing or hereafter arising
pursuant to the terms of the Restated Credit Agreement as amended by the Fourth
Amendment or any of the other Credit Documents.
5. The [Pledge] [Security] Agreement, dated as of [November 20,
1998][November ___, 1999] executed by Guarantor in favor of Collateral Agent
(the "[Pledge] [Security] Agreement") and any other security granted to any
Agent or any of the Banks from time to time as security for the obligations of
Guarantor under the [Xxxx Canada Guaranty] [Xxxx-Tenex Guaranty] [Xxxx-Future
Tech Guaranty] remains in full force and effect and unamended, and the security
interests, mortgages, charges, liens, assignments, transfers and pledges granted
by Guarantor pursuant to the [Pledge] [Security] Agreement and such other
documents (if any) continue to extend to all debts, liabilities and obligations,
present or future, direct or indirect, absolute or contingent, matured or
unmatured, at any time due or accruing due, of Guarantor to any of the Banks and
any Agent arising under, in connection with or pursuant to the Restated Credit
Agreement and the other Credit Documents, as acknowledged and confirmed by this
Guarantor Consent Letter, notwithstanding the amendment of the Restated Credit
Agreement by the Fourth Amendment.
6. From and after the date hereof, the term "Restated Credit Agreement"
as used in the [Xxxx-Canada Guaranty] [Xxxx-Tenex Guaranty] [Xxxx-Future Tech
Guaranty] shall mean the Restated Credit Agreement, as amended by the Fourth
Amendment.
7. Guarantor's consent to the Fourth Amendment shall not be construed
(i) to have been required by the terms of the [Xxxx Canada Guaranty] [Xxxx-Tenex
Guaranty] [Xxxx-Future Tech Guaranty], any other Credit Document or any other
document, instrument or agreement relating thereto or (ii) to require the
consent of Guarantor in connection with any future amendment of the Restated
Credit Agreement or any other Credit Document.
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IN WITNESS WHEREOF, Guarantor has executed this Guarantor Consent
Letter as of the day and year first written above.
[XXXX/MICROPRODUCTS CANADA-TENEX DATA ULC]
[XXXX MICROPRODUCTS CANADA INC.]
[XXXX MICROPRODUCTS - FUTURE TECH, INC.]
By:
----------------------------
Name:
-----------------------
Title:
----------------------
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ATTACHMENT 5
MATTERS TO BE COVERED BY LEGAL OPINION
1. Borrower (a) is a corporation duly incorporated and validly existing in
good standing under the laws of its jurisdiction of incorporation and
(b) has the requisite corporate power and authority to own, lease and
operate its properties and carry on its business as now conducted.
2. Borrower has the requisite corporate power and authority to enter into
the Amendment and to carry out the transactions contemplated thereby,
and by the Restated Credit Agreement as amended by the Amendment.
3. The Amendment has been duly authorized, executed and delivered by
Borrower, and the Amendment and the Restated Credit Agreement as
amended by the Amendment, each constitutes a legally valid and binding
obligation of Borrower, enforceable against Borrower in accordance with
its terms.
4. The performance by Borrower of its obligations under the Amendment, and
the Restated Credit Agreement as amended by the Amendment, will not (a)
violate any provision of the Certificate of Incorporation or the bylaws
of Borrower, (b) to our knowledge, violate any provision of any law,
rule, regulation, order, writ, judgement, injunction, decree,
determination by a court having jurisdiction over Borrower, (c) result
in a breach of, constitute a default under, or permit the acceleration
of any obligation owed under any Reviewed Agreement listed on Annex A
hereto binding upon Borrower, or (d) to our knowledge, result in the
attachment of a Lien (other than a Permitted Lien) upon any assets of
Borrower.
5-1
