Exhibit 10.7
AMENDMENT NO. 3
TO
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This Amendment No. 3 ("Amendment") to the Amended and Restated
Revolving Credit Agreement is made as of May 3, 2002 by and among Pemstar Inc.,
duly organized under the laws of the State of Minnesota ("Customer"), Turtle
Mountain Corporation, duly organized under the laws of the State of North Dakota
("Turtle Mountain") and Pemstar Pacific Consultants Inc., duly organized under
the laws of the State of California ("Pemstar Pacific Consultants") (Customer,
Turtle Mountain and Pemstar Pacific Consultants, collectively the "Credit
Parties", individually a "Credit Party") and IBM Credit Corporation, a Delaware
corporation ("IBM Credit").
RECITALS:
A. The Credit Parties have entered into that certain Amended and
Restated Revolving Credit Agreement dated as of June 29, 2001 (as amended,
modified or supplemented from time to time, the "Agreement").
B. The parties have agreed to modify the Agreement as more specifically
set forth below, upon and subject to the terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Credit Parties and IBM Credit hereby agree as follows:
Section 1. Definitions. All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement.
Section 2. Amendment. The Agreement is hereby amended as follows:
A. Attachment A to the Agreement is hereby amended as follows:
1. Section I. (A) is amended in its entirety to read as follows
"(A) Credit Facility: Revolving A: Sixty-five Million Dollars ($65,000,000)
Revolving Credit Facility"
2. Section III Financial Covenants is amended by (i) amending the definition of
Subordinated Debt used in Section III of Attachment A in its entirety to read as
follows: "Subordinated Debt" shall mean Customer's indebtedness to third parties
as evidenced by an executed Notes Payable Subordination Agreement in favor of
IBM Credit including without limitation "Subordinated Debt (2002);" and (ii)
deleting the following paragraph:
"On and after the date the Proposed Debt Issuance is closed (provided such date
is on or prior to May 7, 2002 and the transactions contemplated thereby are
closed and IBM Credit and US Bank provide written consent to the Proposed Debt
Issuance and the gross cash proceeds from the Proposed Debt Issuance is at least
$20,000,000 and the conditions to effectiveness set forth in Section 5 hereof
have been satisfied), Customer will be required to maintain the following
financial ratios, percentages and amounts as of the fiscal period under review
by IBM Credit:..."
and substituting in lieu thereof the following new paragraph:
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"On and after the date the initial tranche of Subordinated Debt (2002) is closed
(provided that such date is on or prior to May 8, 2002 ("Initial Funding Date")
and IBM Credit and US Bank provide written consent to the Subordinated Debt
(2002) and the gross cash proceeds received by the Customer from the initial
tranche of Subordinated Debt (2002) is at least $5,000,000 on the Initial
Funding Date and the conditions to effectiveness set forth in Section 5 of
Acknowledgment, Waiver #2 and Amendment to Financing Agreement dated March 29,
2002 between the Credit Parties have been satisfied (except that Customer shall
only be required to receive gross cash proceeds from the initial tranche of
Subordinated Debt (2002) in an amount equal to $5,000,000 by May 8, 2002),
Customer will be required to maintain the following financial ratios,
percentages and amounts as of the fiscal period under review by IBM Credit:..."
B. (a) The following new definitions are added:
"Change of Control": as defined in the Securities Purchase Agreement.
"Enforcement Action": as defined in the Subordinated Convertible Notes.
"Securities Purchase Agreement": means that Securities Purchase Agreement dated
May 3, 2002 between Customer, Smithfield Fiduciary LLC and Citadel Equity Fund
Ltd.
""Subordinated Convertible Notes": shall mean those certain subordinated
convertible notes as issued by Customer pursuant to the Securities Purchase
Agreement in favor of certain holders in the form of the note attached to
Amendment No. 3 to the Amended and Restated Revolving Credit Agreement dated May
3, 2002 among the parties hereto."
""Subordinated Debt (2002)": shall mean all of the indebtedness, liabilities and
obligations of the Customer to the holders of the Subordinated Convertible
Notes, as evidenced by the Subordinated Convertible Notes."
"Subordinated Debt Documents": shall mean the Subordinated Convertible Notes,
the warrants issued by the Customer in favor of the holders of the Subordinated
Debt (2002), the Registration Rights Agreement, dated May 3, 2002 between the
Customer and the holders of the Subordinated Debt (2002) and the Securities
Purchase Agreement.
"Triggering Event": as defined in the Securities Purchase Agreement.
"Triggering Event Redemption Notice": as defined in the Securities Purchase
Agreement.
(b) The following new Section 7.19. is added:
"7.19. Subordinated Convertible Notes. Customer agrees to adhere to the terms of
the Subordinated Convertible Note and the other Subordinated Debt Documents.
Customer promptly, but in no event later than 1 day after its receipt thereof,
give to IBM Credit copies of all notices (including without limitation notices
of any redemptions under the Subordinated Convertible Notes) given and received
in connection with the Subordinated Debt Documents and Subordinated Debt (2002)
including without limitation, notices of any Triggering Event, Change of
Control, Triggering Event Redemption Notice, Triggering Event Notice, Change of
Control Notice, Change of Control Redemption Notice and notice of a sale or
disposition of assets by the Customer and/or its Subsidiaries which would allow
the holders of the Subordinated Debt (2002) to take an Enforcement Action and
notices of any Triggering Event or Change of Control or a sale of assets of the
Customer or any (direct or indirect) Subsidiary or Affiliate of Customer that
could allow the holder of the Subordinated Debt (2002) to take an Enforcement
Action (as such capitalized terms are defined in the Subordinated Convertible
Notes).
(c) Section 8.2. is amended in its entirety to read as follows:
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"8.2. Disposition of Assets. No Credit Party will (nor will any Credit Party
permit any of its direct or indirect Subsidiaries, including without limitation,
Foreign Subsidiaries to) directly or indirectly, sell, lease, assign, transfer
or otherwise dispose of any assets other than (i) sales of inventory in the
ordinary course of business and short term rental of inventory as demonstrations
in amounts not material to it, and (ii) voluntary dispositions of individual
assets and obsolete or worn out property in the ordinary course of business,
provided, that the aggregate book value of all such assets and property so sold
or disposed of under this section 8.2 (ii) in any fiscal year shall not exceed
5% of the consolidated assets of such Credit Party or Subsidiary as of the
beginning of such fiscal year. Notwithstanding the foregoing, in no event shall
any Credit Party or any other direct or indirect Subsidiaries of any Credit
Party (including, without limitation, Foreign Subsidiaries) sell assets for less
than fair value.
(d) Section 8.14. is amended in its entirety to read as follows:
"8.14. Indebtedness. No Credit Party will create, incur, assume or permit to
exist any Indebtedness except for (i) Permitted Indebtedness and (ii)
Subordinated Debt (2002) issued by the Customer up to $50,000,000 provided that
the first tranche of debt must be issued by no later than May 8, 2002 in an
amount not less than $5,000,000."
(e) The following new Section 8.21. is added:
"8.21. The Credit Parties shall not cause or permit any Affiliate or Subsidiary
of any Credit Party to (directly or indirectly including any Foreign
Subsidiaries) redeem, acquire or purchase, the Subordinated Debt (2002) from the
Customer or any holder of the Subordinated Debt (2002). Prior to the
indefeasible payment in full of the Obligations, the Credit Parties shall not
(and shall not permit any Affiliate or Subsidiary of a Credit Party), directly
or indirectly, make any payment on, or redeem, repurchase, defease or make any
sinking fund payment on account of, or any other provision for, or otherwise
pay, acquire or retire for value, any of the Subordinated Convertible Notes and
the Subordinated Debt (2002) except for (a) regularly scheduled payments of
interest (which shall not include payments due upon the giving of any Redemption
Notice (as defined in the Subordinated Convertible Notes) that are not
prohibited by Section 15 of the Subordinated Convertible Notes and other
subordination provisions therein or by any other subordination agreement and (b)
Pro Rata Permitted Payments (as defined in the Securities Purchase Agreement)."
(f) The following new Section 8.22. is added:
"8.22. The Customer shall not amend, modify or supplement the Subordinated Debt
Documents or any of the terms and conditions of the Subordinated Debt (2002)
without the prior written consent of IBM Credit."
(g) The following new Section 9.1.(V) is added:
"9.1.(V) (i) A breach of Section 7.19., 8.2., 8.14., 8.21. or 8.22. shall have
occurred, (ii) any Triggering Event or default occurs under the terms of any of
the Subordinated Convertible Notes, (iii) any Change of Control occurs (iv) any
sale of assets by the Customer or any of its (direct or indirect) Subsidiaries
or Affiliates shall have occurred for less than fair value without the consent
of IBM Credit (v) any holder of the Subordinated Debt (2002) shall deliver a
Triggering Event Redemption Notice, Holder Redemption Notice or Change of
Control Redemption Notice, or the Customer shall deliver a Company Optional
Redemption Notice (as such capitalized terms are defined in the Subordinated
Convertible Note) or (vi) any other event shall have occurred that would permit
any holder of all or any portion of the Subordinated Debt (2002) to declare the
Subordinated Debt (2002) to be due and payable prior to the Maturity Date (as
defined in the Subordinated Convertible Note) or that would result in
acceleration of the Subordinated Debt (2002) or redemption of the Subordinated
Debt (2002)."
(h) The following new Sections 9.1.(W) and 9.1.(X) are added:
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"9.1.(W) (i) The occurrence of a default or any event of default under the terms
of any agreement between U.S. Bank (or any other holder of Senior Indebtedness)
(as defined in the Subordinated Convertible Notes) (other than IBM Credit) and
the Credit Parties (ii) the failure of any Credit Party to pay to U.S. Bank (or
any other holder of Senior Indebtedness other than IBM Credit) when due any
indebtedness under any agreement between U.S. Bank (or such other holder of
Senior Indebtedness) and the Credit Parties or (iii) the failure by the Customer
to notify IBM Credit in writing immediately of any blocking notice or default
notice given by any holder of Senior Indebtedness pursuant to the Subordinated
Convertible Notes."
"9.1.(X) The Customer shall have failed to issue an initial tranche of
Subordinated Debt (2002) in an amount at least equal to $5,000,000 by May 8,
2002."
Section 3. Representations and Warranties. Each Credit Party makes to
IBM Credit the following representations and warranties all of which are
material and are made to induce IBM Credit to enter into this Amendment.
Section 3.1 Accuracy and Completeness of Warranties and Representations. All
representations made by each Credit Party in the Agreement were true and
accurate and complete in every respect as of the date made, and, as amended by
this Amendment, all representations made by each Credit Party in the Agreement
are true, accurate and complete in every material respect as of the date hereof,
and do not fail to disclose any material fact necessary to make representations
not misleading. Section 3.2 Violation of Other Agreements. The execution and
delivery of this Amendment and the performance and observance of the covenants
to be performed and observed hereunder do not violate or cause any Credit Party
not to be in compliance with the terms of any agreement to which any Credit
Party is a party.
Section 3.3 Litigation. Except as has been disclosed by the Credit Parties to
IBM Credit in writing, there is no litigation, proceeding, investigation or
labor dispute pending or threatened against any Credit Party, which, if
adversely determined, would materially adversely affect any Credit Party's
ability to perform any Credit Party's obligations under the Agreement and the
other documents, instruments and agreements executed in connection therewith or
pursuant hereto. Section 3.4 Enforceability of Amendment. This Amendment has
been duly authorized, executed and delivered by the Credit Parties and is
enforceable against each Credit Party in accordance with its terms.
Section 4. Ratification of Agreement.Except as specifically amended hereby, all
of the provisions of the Agreement shall remain unamended and in full force and
effect. Nothing herein shall be deemed a waiver of any default or consent. Each
Credit Party hereby ratifies, confirms and agrees that the Agreement, as amended
hereby, represents a valid and enforceable obligation of each Credit Party, and
is not subject to any claims, offsets or defenses.
Section 5. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws which govern the Agreement.
Section 6. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one agreement.
Section 7. Conditions to Effectiveness. This Amendment shall only become
effective upon the fulfillment of the following conditions precedent to the
satisfaction of IBM Credit:
1. IBM Credit shall have given its written consent to (i) the issuance
of the Subordinated Debt (2002) and (ii) the Subordinated Debt Documents;
2. U.S. Bank shall have given its written consent to the issuance of
(i) the Subordinated Debt (2002) and (ii) the Subordinated Debt Documents and
the consent shall be in form and substance satisfactory to IBM Credit;
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3. This Amendment shall have been executed by all the parties hereto;
4. Before and after giving effect to this Amendment, the
representations and warranties in Section 6 of the Financing Agreement shall be
true and correct as though made on the date hereof. The execution by the Credit
Parties of this Amendment shall be deemed a representation that the Credit
Parties have complied with the foregoing condition; and
5. Before and after giving effect to this Amendment, no Default or
Event of Default shall have occurred and be continuing under the Financing
Agreement. The execution by the Credit Parties of this Amendment shall be deemed
a representation that the Credit Parties have complied with the foregoing
condition.
IN WITNESS WHEREOF, this Amendment has been executed by duly authorized
officers of the undersigned as of the day and year first above written.
Pemstar Inc. Turtle Mountain Corporation
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
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Print Name: Xxxxx X. Xxxxx Print Name: Xxxxx X. Xxxxx
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Title: Vice President, General Counsel Title: Secretary
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Date: May 3, 2002 Date: May 3, 2002
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ATTEST: ATTEST:
/s/ Xxxx X. Xxxxxx /s/ Xxxx X. Xxxxxx
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Print Name: Xxxx X. Xxxxxx Print Name: Xxxx X. Xxxxxx
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Pemstar Pacific Consultants Inc. IBM Credit Corporation
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxx Xxxxxx
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Print Name: Xxxxx X. Xxxxx Print Name: Xxx Xxxxxx
-------------------------- -------------------------
Title: Secretary Title: Manager of Credit
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Date: May 3, 2002 Date: 5/3/02
-------------------------------- -------------------------------
ATTEST: ATTEST:
/s/ Xxxx X. Xxxxxx
-------------------------------------- -------------------------------------
Print Name: Xxxx X. Xxxxxx Print Name:
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Form of Subordinated Note
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