AMENDMENT NO. 1 TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT ("Amendment") is
dated as of August 7, 2000 and is entered into by and between EFTC Corporation,
and RM Electronics, Inc. (collectively the "Borrower"), the various financial
institutions that are or may from time to time become parties to the Agreement
referred to below (collectively, the "Lenders" and, individually a "Lender") and
Bank of America, N.A., as agent (in such capacity, together with its successors
and assignees in such capacity, the "Agent") and the sole lead arranger for the
Lenders. All capitalized terms used herein but not otherwise defined shall have
the meanings ascribed to them in the Agreement (as hereinafter defined).
WITNESSETH
WHEREAS, the Borrower, the Lenders and the Agent have entered into that
certain Loan and Security Agreement dated as of March 30, 2000, as amended and
supplemented (the "Agreement"); and
WHEREAS, the Borrower desires to amend the Agreement and the Agent and
the Lenders are willing to do so, subject to the terms and conditions stated
herein;
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Agent, the Borrower and Lenders hereby agree as
follows:
Section 1. Amendment to the Agreement. The Agent, Lenders and
Borrower agree that the Agreement shall be amended as follows:
A. Amendment to Section 1. The definitions of "Borrowing
Base", "EBITDA", "Fixed Charges" and "Inventory Limit" contained in
Section 1 of the Agreement are amended to read as follows:
"`Borrowing Base' means, at any time, an amount equal
to (a) the lesser of (i) the Maximum Revolver Amount or (ii)
the sum of (A) (1) the Accounts Advance Rate times (2) the
difference between (y) the Net Amount of Eligible Accounts
less (z) the Honeywell Reserve; plus (B) the lesser of (1) the
Inventory Limit or (2) the sum of (x) the Inventory Advance
Rate times the value of Eligible Inventory consisting of raw
materials and finished goods plus (y) 30% of the value of
Eligible Inventory consisting of work in process minus (z) the
Availability Reserve; minus (b) the sum of (i) reserves for
accrued and unpaid interest on the Obligations, (ii) the
Environmental Compliance Reserve, (iii) the Bank Product
Reserves, (iv) the Rent Reserve, and (v) all other reserves
which the Agent deems necessary in the exercise of its
reasonable credit judgment to maintain with respect to any
Borrower's account, including reserves for any amount which
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the Agent or any Lender may be obligated to pay in the future
for the account of any Borrower.
`EBITDA' means, for any period, the sum of:
(1) the Adjusted Net Earnings From Operations of
the Parent for such period; plus (or minus)
(2) to the extent that any of the items referred
to in any of clauses (i) through (v) below are deducted (or
added) in calculating such net income (or net loss):
(i) Interest Expense of the Parent (to
the extent it exceeds interest income of the Parent) for
such period;
(ii) income tax expense of the Parent
with respect to operations for such period;
(iii) the amount of all depreciation and
amortization of the Parent for such period;
(iv) the amount of any non-recurring
charges incurred in Fiscal Year 2000 in respect of: (x)
transaction costs, (y) moving the `NEO' facility (not to
exceed $500,000), and (z) consulting fees (not to exceed
$3,500,000) provided, however, the sum of all transaction
costs that have been incurred in the Parent's Fiscal Year
2000, cannot exceed $7,000,000; and
(v) the amount of any non-recurring charges
incurred in the second, third, and fourth fiscal quarters of
Fiscal Year 2000 and the first and second quarters of Fiscal
Year 2001 in respect of: (A) operating losses and other
closure costs associated with the Parent's Fort Lauderdale,
Florida facility, moving the Southwest Mil-Spec Manufacturing
Facility from Tucson to Phoenix and moving the Parent's
headquarters facility from Denver to Phoenix (not to exceed
$1,900,000 in actual cash expenses for moving, relocation,
headhunter fees, severance, retention, signing bonuses and
other expenses associated with relocation), (B) fees and costs
associated with the hiring of new management and reimbursement
of direct costs incurred by Xxxxxx and Xxxx on behalf of the
Borrowers (not to exceed $1,800,000), (C) moving the "NEO"
facility (not to exceed $1,500,000 in actual costs and
expenses in addition to those charges itemized in subsection
(iv) above), (D) write-down of property plant and equipment,
accounts receivable and inventory, as well as any other
non-cash charges associated with, among other things, the
relocations (not to exceed $8,500,000, in non-cash charges),
and (E) costs associated with early termination of Hewitson
consulting agreements (not to exceed $800,000 in addition to
other consulting fees itemized in subsection (iv) above),
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provided, however, that none of these cash and noncash items
were contemplated or accounted for in the Latest Projections
delivered to the Agent on or prior to the Closing Date and
provided further that the sum of all such cash transactions
shall not exceed $6,000,000 and that the sum of all non-cash
transactions shall not exceed $8,500,000.
'Fixed Charges' means, for any period, the sum of (i)
the aggregate amount of cash required to be paid by the
Borrowers in respect of Interest Expense for such period, (ii)
the aggregate amount of cash required to be paid by the
Borrowers in respect of income taxes for such period, (iii)
all non-financed Capital Expenditures of the Borrowers made in
such period, excluding the first $7,400,000 of Capital
Expenditures incurred since the Closing Date, and (iv) all
payments made in such period on account of: (x) the principal
amount of the Borrowers' Debt for Borrowed Money (other than
the Obligations), (y) Distributions, if any, allowed under
Section 9.10, and (z) Restricted Investments, if allowed,
under Section 9.10.
`Inventory Limit' means $32,500,000 until July 1,
2001 and at all times thereafter means the lesser of (a)
$22,500,000 or (b) the outstanding amount of Loans advanced at
such time in respect of Eligible Accounts."
B. Additions to Section 1. Section 1 of the Agreement is
amended to add the following definition:
"`Inventory Advance Rate' means fifty percent (50%)
which percent shall be reduced by one percentage point on
November 1, 2000 and continuing to be further reduced by one
percentage point on the first day of each month thereafter
until the Inventory Advance Rate is forty-five percent (45%),
provided, however, the Inventory Advance Rate shall be fifty
percent (50%) beginning as of July 1, 2001 and at all times
thereafter."
C. Amendment to Section 9. Sections 9.24 and 9.25 of the
Agreement are amended in their entirety to read as follows:
"9.24 Operating Lease Obligations. Neither any
Borrower nor any of its Subsidiaries shall enter into, or
suffer to exist, any lease of real or personal property as
lessee or sublessee (other than a Capital Lease), if, after
giving effect thereto, the aggregate amount of Rentals (as
hereinafter defined) payable by the Borrowers and their
Subsidiaries on a consolidated basis in any Fiscal Year in
respect of such lease and all other such leases would exceed
$18,000,000 (such amount being referred to herein as
`Permitted Rentals'). The term `Rentals' means all payments
due from the lessee or sublessee under a lease, including,
without limitation, basic rent, percentage rent, property
taxes, utility or maintenance costs, and insurance premiums.
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9.25 Capital Expenditures. To the extent that no
other term of this Agreement would be breached thereby, the
Parent shall be entitled to make Capital Expenditures: (a) for
the acquisition of Equipment and related software to the
extent necessary to conduct its business, (b) up to $7,400,000
of Capital Expenditures for any purpose necessary to conduct
its business, and (c) up to an additional $3,000,000 of
Capital Expenditures not covered by the foregoing clause (b)
for the acquisition of Real Estate to be used in its business:
provided, however, that in connection with acquiring any such
Real Estate that is not financed with purchase money Debt, the
Parent shall provide the Agent with a deed of trust, mortgage
or equivalent documentation providing the Agent with a Lien on
such Real Estate, and such Real Estate shall be Collateral
hereunder."
Section 2. Consent. Notwithstanding any terms of the Agreement to the
contrary, the Agent and the Lenders consent to the Borrower obtaining
$14,000,000, net of expenses, in proceeds from the issuance of exchange notes in
accordance with that certain First Amendment to the Securities Purchase
Agreement, dated March 30, 2000, by and between the Purchaser and the Company,
dated as of July 12, 2000, between Xxxxxx-BLM Funding, LLC and EFTC Corporation
and the Amended and Restated Annex I thereto (collectively, the "July Securities
Purchase Agreement".)
Section 3. Conditions. The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent:
A. Amendment. Fully executed copies of this Amendment signed
by the Borrower shall be delivered to Agent.
B. Resolution. A Certificate executed by the Secretary or
Assistant Secretary of Borrower certifying that the resolutions
adopted by the Borrower's Board of Directors in connection with the
Agreement, on or about March 30, 2000, remain in full force and effect
and have not been modified or rescinded since their adoption.
C. Receipt of Proceeds. Receipt by the Borrower of $14,000,000
in proceeds, net of expenses, from the issuance of the exchange notes
in connection with the July Securities Purchase Agreement.
D. Other Documents. Borrower shall have executed and
delivered to Agent such other documents and instruments as Agent may
reasonably require.
Agent agrees to execute and deliver a Certificate to Borrower within ten days of
satisfaction of the conditions contained in this Amendment, certifying the
effective date of the Amendment.
Section 4. Miscellaneous.
A. Survival of Representations and Warranties. All
representations and warranties made in the Agreement or any other
document or documents relating thereto, including, without limitation,
any Loan Document furnished in connection with this Amendment, shall
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survive the execution and delivery of this Amendment and the other
Loan Documents, and no investigation by Agent or Lenders or any
closing shall affect the representations and warranties or the right
of Agent or Lender to rely thereon.
B. Reference to Agreement. The Agreement, each of the Loan
Documents, and any and all other agreements, documents or instruments
now or hereafter executed and delivered pursuant to the terms hereof,
or pursuant to the terms of the Agreement as amended hereby, are
hereby amended so that any reference therein to the Agreement shall
mean a reference to the Agreement as amended hereby.
C. Agreement Remains in Effect. The Agreement and the Loan
Documents, as amended hereby, remain in full force and effect and the
Borrower ratifies and confirms its agreements and covenants contained
therein. The Borrower hereby confirms that, after giving effect to
this Amendment, no Event of Default or Default exists as of such date.
D. Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable
shall not impair or invalidate the remainder of this Amendment and
the effect thereof shall be confined to the provision so held to be
invalid or unenforceable.
E. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
F. Successors and Assigns. This Amendment is binding upon
and shall inure to the benefit of the Lenders and Borrower and their
respective successors and assigns; provided, however, that
Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Lenders.
G. Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to
be an original, but all of which when taken together shall constitute
one and the same instrument.
H. Headings. The headings, captions and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
I. Documentation Fee. The Borrower shall pay to the Agent a
documentation fee in the amount of $2,500 for the Amendment, which
fee may be charged to the Borrower's Loan Account.
J. Amendment Fee. The Borrower shall pay to the Agent, for
the ratable benefit of the Lenders, an amendment fee in the amount
of $75,000 on the execution of the Amendment, which amendment fee may
be charged to the Borrower's Loan Account.
K. NO ORAL AGREEMENTS. THIS AMENDMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS AS WRITTEN, REPRESENTS THE FINAL AGREEMENT
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BETWEEN LENDERS AND BORROWER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN LENDERS AND BORROWER.
IN WITNESS WHEREOF, the parties have executed this Amendment under seal
on the date first written above.
EFTC CORPORATION
By: /s/_________________________
Name: __________________________
Title: _________________________
RM ELECTRONICS, INC.
By: /s/_________________________
Name: __________________________
Title: _________________________
SIGNATURES CONTINUED ON NEXT PAGE]
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BANK OF AMERICA, N.A.
(as Agent)
By: /s/_________________________
Name: __________________________
Title: _________________________
BANK OF AMERICA, N.A.
(as Lender)
By: ____________________________
Name: __________________________
Title: _________________________
PNC BANK, NATIONAL ASSOCIATION
(as Lender)
By: ____________________________
Name: __________________________
Title: _________________________
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