EXHIBIT 10.46
CONSENT AND AMENDMENT TO CREDIT AGREEMENT
AND AMENDMENT TO LOAN DOCUMENTS
THIS CONSENT AND AMENDMENT TO CREDIT AGREEMENT AND AMENDMENT
TO LOAN DOCUMENTS (the "Consent and Amendment") is made this 12th
day of December, 1997, by and among BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, U.S. BANK NATIONAL ASSOCIATION
(successor by merger to United States National Bank of Oregon),
ABN AMRO BANK, N.V., DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH, FLEET NATIONAL BANK, KEYBANK NATIONAL
ASSOCIATION, THE BANK OF NOVA SCOTIA and THE SUMITOMO BANK,
LIMITED (each individually a "Lender" and collectively the
"Lenders") BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
and U.S. BANK NATIONAL ASSOCIATION (successor by merger to United
States National Bank of Oregon) as co-agents for Lenders, BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION as administrative
agent for Lenders (the "Agent"), and MICRON ELECTRONICS, INC., a
Minnesota corporation (the "Borrower").
RECITALS
A. Borrower, Lenders and Agent are parties to that certain
Credit Agreement dated as of June 27, 1997 (as the same may be
amended, modified or extended from time to time the "Credit
Agreement") and the related Loan Documents described therein.
B. Since the date of the Credit Agreement, the office of
Agent responsible for Agent's duties under the Credit Agreement
has been changed from its Seattle, Washington office to its San
Francisco, California office.
C. Borrower has expressed to Lenders and Agent its
intention to sell one of its subsidiaries, Micron Custom
Manufacturing Services, Inc. ("Micron Custom") during the second
quarter of its current fiscal year. The sale of Micron Custom,
absent the consent of Agent (with consent of the Majority
Lenders), is prohibited under the terms of Section 7.2 of the
Credit Agreement.
D. Borrower has requested that Agent consent to the sale
of Micron Custom, and that Lenders and Agent make modifications
to certain covenants in the Credit Agreement. Agent and Lenders
are prepared to consent to the sale of Micron Custom and to
modify the Credit Agreement as requested by Borrower on the terms
and conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. Definitions. Capitalized terms used herein and not
otherwise defined shall have the meaning given in the Credit
Agreement.
2. Consent to Sale. Subject to the terms and conditions
of this Consent and Amendment, Agent and Lenders hereby consent
to the sale of all or substantially all of the capital stock of
Micron Custom Manufacturing Services, Inc. This consent, when
effective as provided in Section 5 hereof, shall further
constitute a waiver by Agent and Lenders of their respective
rights to exercise remedies under the Credit Agreement in respect
of a breach of Borrower's obligations under Section 7.2 of the
Credit Agreement resulting from such sale.
3. Amendments to Credit Agreement. The Credit Agreement
is amended as follows:
(a) Amendment to Definitions. In Section 1.1,
amendments are made to the definitions, as follows:
(1) Business Day. In the definition of "Business
Day" each reference to "Seattle, Washington" shall be amended to
read "San Francisco, California."
(2) EBITDA. The definition of "EBITDA" is added
to read as follows:
"EBITDA" means, for any period, Borrower's
Net Income (or net loss), excluding any taxes
associated therewith, plus the sum of (i) interest
expense, (ii) income tax expense, (iii) depreciation
expense and (iv) amortization expense, in each case
determined on a consolidated basis in accordance with
GAAP for such period.
(3) Funded Debt. The definition of "Funded Debt"
is added to read as follows:
"Funded Debt" means, as of any date of
determination, the sum of (i) all indebtedness or
liability of Borrower for borrowed money, (ii) all
Capital Leases of Borrower, in each case determined on
a consolidated basis, and (iii) all indebtedness or
liability for borrowed money or for Capital Leases for
which Borrower is directly or contingently liable as
obligor, guarantor, or otherwise, or in respect of
which such person otherwise assures a creditor against
loss.
(4) Notice of Borrowing. In the definition of
"Notice of Borrowing" each reference to "11:00 a.m." shall be
amended to read "10:00 a.m."
(b) Amendments to Section 2.2: Section 2.2 is hereby
amended and restated as follows:
Section 2.2 Borrowing Base Activation. The
occurrence of any of the following events shall
constitute a "Borrowing Base Activation Event"
hereunder: (a) the Funded Debt to EBITDA Ratio, on a
consolidated basis, exceeds 2.00 to 1 as of the end of
any fiscal quarter ending on or after November 27, 1997
and before March 3, 1999 or exceeds 1.50 to 1 as of the
end of any fiscal quarter ending on or after March 3,
1999; or (b) Borrower shall incur on a consolidated
basis, pretax losses for two (2) consecutive fiscal
quarters. Once a Borrowing Base Activation Event shall
have occurred it shall be deemed to be continuing for
all purposes hereunder until Borrower shall have
delivered financial statements in accordance with
Section 6.10 hereof demonstrating that (a) in the case
of fiscal quarters ending on or after November 27, 1997
and before March 3, 1999, as of the last day of the
applicable fiscal quarter, the Funded Debt to EBITDA
Ratio was equal to or less than 2.00 to 1, or, in the
case of fiscal quarters ending on or after March 3,
1999, as of the last day of the applicable fiscal
quarter, the Funded Debt to EBITDA Ratio was equal to
or less than 1.50 to 1, and (b) Borrower had not
incurred (on a consolidated basis) pretax losses for
such fiscal quarter and the immediately preceding
fiscal quarter.
(c) Amendment to Section 2.7: In the second sentence
of subsection 2.7(b) the reference to "11:00 a.m." shall be
amended to read "10:00 a.m." In the fifth sentence of subsection
2.7(b) the words "by telephone (confirmed promptly by telex or
facsimile transmission)" are hereby deleted, and the words "by
telex or facsimile transmission" are substituted in their stead.
(d) Amendment to Section 2.11: In the first sentence
of subsection 2.11(a) the words "Commercial Loan Service Center,
Seattle, Washington" are hereby deleted, and the words "Payment
Office set forth in Schedule 9 attached hereto" are substituted
in their stead.
(e) Amendment to Section 3.2: In the second sentence
of subsection 3.2(a) the words "at least one (1) Business Day"
are hereby deleted, and the words "at least three (3) Business
Days (or such shorter time as Agent may agree to in its sole
discretion)."
(f) Amendment to Section 3.4: In the first sentence
of Section 3.4 the words "Commercial Loan Service Center" are
hereby deleted, and the words "Payment Office set forth in
Schedule 9 attached hereto" are substituted in their stead.
(g) Amendments to Section 6.13: Section 6.13 is
hereby amended and restated as follows:
Section 6.13 Minimum Tangible Net Worth.
Borrower shall maintain on a consolidated basis as of
the end of each fiscal quarter a Tangible Net Worth
equal to or greater than the sum of (a) Two Hundred
Twenty-five Million Dollars ($225,000,000), (b) seventy-
five percent (75%) of Borrower's Net Income for each
fiscal quarter after the fiscal quarter ended November
28, 1996 in which Borrower has a positive Net Income,
and (c) seventy-five percent (75%) of the amount, if
any, by which the shareholders' equity of Borrower has
increased since the fiscal quarter ended November 28,
1996 as a result of the issuance of common stock or the
conversion of debt securities into common stock. In
the event that Borrower sells all or substantially all
of the capital stock of Micron Custom Manufacturing
Services, Inc., the amount set forth in clause (a) of
the preceding sentence shall be adjusted by an amount
such that the difference between the sum of clauses (a)
through (c) of the preceding sentence and the Tangible
Net Worth of Borrower shall be neither increased or
decreased as a result of such sale. Such adjustment
shall be effective as of and after the end of
Borrower's fiscal quarter during which such sale or
other disposal occurred.
(h) Amendments to Section 6.15: Section 6.15 is
hereby amended and restated as follows:
Section 6.15 Maximum Funded Debt to EBITDA Ratio.
Borrower shall maintain as of the last day of any
fiscal quarter, a Funded Debt to EBITDA Ratio of not
more than the ratio set forth below:
For Fiscal
Quarters Ending Maximum Ratio
On or after
November 27, 1997
and before
March 3, 1999 2.00 to 1
On or after
March 3, 1999 1.50 to 1
As used herein, "Funded Debt to EBITDA Ratio" means, as
of any date of determination, the ratio of (a) Funded
Debt of Borrower on a consolidated basis on such day to
(b) EBITDA of Borrower on a consolidated basis for the
period consisting of the four (4) consecutive fiscal
quarters ending on such day. In the event that
Borrower sells all or substantially all of the capital
stock of Micron Custom Manufacturing Services, Inc.,
the EBITDA used to calculate the Funded Debt to EBITDA
Ratio as of and after the last day of the fiscal
quarter during which such sale occurred, shall exclude
any gains or losses attributable to such sale.
(i) Amendments to Section 6.16: Section 6.16 is
hereby amended and restated as follows:
Section 6.16 [INTENTIONALLY BLANK].
(j) Amendments to Section 9.6: The following is here
added to the end of Section 9.6:
If no successor agent has accepted appointment as Agent
by the date which is thirty (30) days following a
retiring Agent's notice of resignation, the retiring
Agent's resignation shall nevertheless thereupon become
effective and the Banks shall perform all of the duties
of the Agent hereunder until such time, if any, as the
Majority Lenders appoint a successor agent as provided
for above.
(k) Amendments to Section 11.5: In the first
sentence of Section 11.5 the words "under its name on the
signature pages hereof" are hereby deleted, and the words "in
Schedule 9 attached hereto" are substituted in their stead.
(l) Addition of Schedule 9: Schedule 9 is hereby
added as set forth in Schedule 9 attached hereto.
4. Amendment to Notes. In Paragraph No. 1 of each Note
the words "Commercial Loan Service Center, Fifth Avenue Plaza
Building, 13th Floor, 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx
00000" are hereby deleted, and the words "Payment Office located
at the address set forth in Schedule 9 to the Credit Agreement"
are substituted in their stead.
5. Conditions to Effectiveness. Notwithstanding anything
contained herein to the contrary, this Consent and Amendment
shall not become effective until each of the following conditions
is fully and simultaneously satisfied:
(a) Delivery of Amendment. Borrower, Agent and each
Lender shall have executed and delivered counterparts of this
Consent and Amendment to Agent.
(b) Corporate Authority. Agent shall have received in
form and substance reasonably satisfactory to it a Certificate of
Secretary of Borrower certifying that: (1) the Board of Directors
Resolutions dated March 31, 1997 (the "Board Resolutions") which
were attached to the Certificate of Secretary of Borrower dated
June 27, 1997 delivered to Agent in connection with the execution
and delivery of the Credit Agreement (the "Secretary
Certificate"), have not been amended, annulled, rescinded or
revoked and remain in full force and effect and that there exist
no other resolutions of the Board of Directors of Borrower
relating to the matters set forth in the Board Resolutions;
(2) the Articles of Incorporation and Restated Bylaws which were
attached to the Secretary Certificate have not been modified
since prior to June 27, 1997; (3) no proceeding for the amendment
or modification of or for any other change in the Articles of
Incorporation and Restated Bylaws referred to in clause (2)
hereof or for the merger, consolidation, liquidation or
dissolution of Borrower has been taken since June 27, 1997, and
no such action is pending; and (4) the person who has signed the
Amendment on behalf of Borrower continues to be duly elected to
the office or offices of Borrower set forth opposite their name
on the Secretary Certificate
(c) Representations True; No Default. The
representations of Borrower as set forth in Article 5 of the
Credit Agreement shall be true on and as of the date of this
Consent and Amendment with the same force and effect as if made
on and as of this date. No Event of Default and no event which,
with notice or lapse of time or both, would constitute an Event
of Default, shall have occurred and be continuing or will occur
as a result of the execution of this Consent and Amendment.
6. Representations and Warranties. Borrower hereby
represents and warrants to Lenders and Agent that each of the
representations and warranties set forth in Article 5 of the
Credit Agreement is true and correct in each case as if made on
and as of the date of this Consent and Amendment and Borrower
expressly agrees that it shall be an additional Event of Default
under the Credit Agreement if any representation or warranty made
hereunder shall prove to have been incorrect in any material
respect when made.
7. No Further Amendment. Except as expressly modified by
this Consent and Amendment, the Credit Agreement and the other
Loan Documents shall remain unmodified and in full force and
effect and the parties hereby ratify their respective obligations
thereunder. Without limiting the foregoing, Borrower expressly
reaffirms and ratifies its obligation to pay or reimburse Agent
and Lenders on request for all reasonable expenses, including
legal fees, actually incurred by Agent or such Lender in
connection with the preparation of this Consent and Amendment and
the closing of the transactions contemplated hereby and thereby.
8. Miscellaneous.
(a) Entire Agreement. This Consent and Amendment
comprises the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior oral or written
agreements, representations or commitments.
(b) Counterparts. This Consent and Amendment may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original, and all of which taken
together shall constitute one and the same Consent and Amendment.
(c) Governing Law. This Consent and Amendment and the
other agreements provided for herein and the rights and
obligations of the parties hereto and thereto shall be construed
and interpreted in accordance with the laws of the State of
Washington.
(d) Oral Agreements Not Enforceable.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FOREBEAR FROM ENFORCING REPAYMENT
OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
EXECUTED AND DELIVERED by the duly authorized officers of
the parties as of the date first above written.
BORROWER: MICRON ELECTRONICS, INC.
By /s/ T. Xxxx Xxxx
---------------------------------
Its Executive Vice President, Finance,
Chief Financial Officer
LENDERS: BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By /s/ Xxxxxxx X. XxXxxxxxx
---------------------------------
Its Managing Director
U.S. BANK NATIONAL ASSOCIATION
By /s/ Xxxx Xxxxxx
---------------------------------
Its Vice President
ABN AMRO BANK, N.V.
By /s/ Lei-Xxx Xxxx
---------------------------------
Its Vice President
By /s/ Xxxxx Xxxxxxx
---------------------------------
Its Senior Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By /s/ Xxxxx X. Xxxxxxx
---------------------------------
Its Vice President
By /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Its Vice President
FLEET NATIONAL BANK
By /s/ Xxxxx X. Xxxxxx
---------------------------------
Its Vice President
KEYBANK NATIONAL ASSOCIATION
By /s/ X. X. Xxxxxx
---------------------------------
Its Assistant Vice President
THE BANK OF NOVA SCOTIA
By /s/ Maarten Van Otterloo
---------------------------------
Its Senior Relationship Manager
THE SUMITOMO BANK, LIMITED
By /s/ Xxxx Xxxxx
---------------------------------
Its Joint General Manager
AGENT: BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By /s/ Xxxxxxx X. XxXxxxxxx
---------------------------------
Its Managing Director
CO-AGENTS: BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By /s/ Xxxxxxx X. XxXxxxxxx
---------------------------------
Its Managing Director
U.S. BANK NATIONAL ASSOCIATION
By /s/ Xxxx Xxxxxx
---------------------------------
Its Vice President
SCHEDULE 9
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
MICRON ELECTRONICS, INC.
Micron Electronics, Inc.
000 Xxxx Xxxxxxx Xxxx
Xxxxx, XX 00000
Attention: T. Xxxx Xxxx
Executive Vice President - Finance
and Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
Address for Notices of Borrowing and
Notices of Conversion/Continuation:
Bank of America National Trust
and Savings Association
Agency Management Services #5596
0000 Xxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxx
Xx. Associate Agency Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Notices (other than Notice of Borrowing
and Notices of Conversion/Continuation):
Bank of America National Trust
and Savings Association
Credit Products - High Technology - #3697
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. XxXxxxxxx
Managing Director
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Bank of America National Trust
and Savings Association
Credit Products - High Technology - #3697
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxx Xxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Domestic and Offshore Lending Office:
Bank of America National Trust
and Savings Association
ABA No. 000-000-000
0000 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Account No.: 12336-15795
Reference: Micron Electronics, Inc.
U.S. BANK NATIONAL ASSOCIATION
U.S. Bank National Association
Oregon Commercial Banking Division
000 X.X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Treasury Director
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
ABN AMRO BANK, N.V.
ABN AMRO Bank, N.V.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxx-Xxx Miao
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
DEUTSCHE BANK AG
Deutsche Bank AG, New York Branch
and/or Cayman Islands Branch
00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Director
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
FLEET NATIONAL BANK
Fleet National Bank
MA BOF 04 M
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
KEYBANK NATIONAL ASSOCIATION
KeyBank National Association
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: X.X. Xxxxxx
Assistant Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
THE BANK OF NOVAL SCOTIA
The Bank of Noval Scotia
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Maarten Van Otterloo
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
THE SUMITOMO BANK, LIMITED
The Sumitomo Bank, Limited
Credit Control
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
The Sumitomo Bank, Limited
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxx
Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
