EXHIBIT 10.1
SEVENTH AMENDMENT AND WAIVER
This SEVENTH AMENDMENT AND WAIVER (this "Amendment") is
entered into as of February 27, 2004, among SOLECTRON CORPORATION, a Delaware
corporation (the "Borrower"), XXXXXXX XXXXX CREDIT PARTNERS L.P. ("GSCP"), as
sole lead arranger, sole book runner and co-syndication agent, JPMORGAN CHASE
BANK ("JPMorgan"), as co-syndication agent, THE BANK OF NOVA SCOTIA
("Scotiabank"), as documentation agent, the lenders party hereto (each, a
"Lender," and collectively, the "Lenders"), and BANK OF AMERICA, N.A., as
Administrative Agent.
The Borrower, GSCP, JPMorgan, Scotiabank, the Lenders, and the
Administrative Agent entered into a Three-Year Credit Agreement dated as of
February 14, 2002, which agreement was amended by an Amendment Agreement dated
as of June 18, 2002, a Second Amendment Agreement dated as of August 19, 2002, a
Third Amendment Agreement dated as of February 13, 2003, a Fourth Amendment
Agreement dated as of July 9, 2003, a Fifth Amendment and Waiver dated as of
August 27, 2003, and a Sixth Amendment dated as of November 21, 2003 (as in
effect as of the date of this Amendment, the "Credit Agreement").
The Borrower has requested that the Lenders agree to certain
amendments to the Credit Agreement and certain waivers thereof, and the Lenders
party hereto have agreed to such request, subject to the terms and conditions of
this Amendment.
In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
1. Definitions; References; Interpretation.
(a) Unless otherwise specifically defined herein, each term used herein
(including in the Recitals hereof) which is defined in the Credit Agreement
shall have the meaning assigned to such term in the Credit Agreement.
(b) As used herein, "Amendment Documents" means this Amendment, the
Consent and Agreement related hereto and the Credit Agreement (as amended by
this Amendment).
(c) Each reference to "this Agreement," "hereof," "hereunder," "herein"
and "hereby" and each other similar reference contained in the Credit Agreement,
and each reference to "the Credit Agreement" and each other similar reference in
the other Loan Documents, shall from and after the Effective Date refer to the
Credit Agreement as amended hereby.
(d) The rules of interpretation set forth in Sections 1.02 and 1.05 of
the Credit Agreement shall be applicable to this Amendment.
2. Amendments to Credit Agreement. Subject to the terms and conditions
hereof, the Credit Agreement is amended as follows, effective as of February 27,
2004 (the "Effective Date"):
(a) Clause (iii) of the defined term "Annualized EBITDA" in Section
1.01 of the Credit Agreement shall be amended in its entirety to read as
follows:
(iii) the Cash Restructuring Charges deducted in calculating
Consolidated Net Income for such period, provided that the
cumulative aggregate amount of Cash Restructuring Charges
taken from and after the quarter ending on November 30, 2002,
shall not exceed $300,000,000.00 in the aggregate
(b) Clause (a) of the defined term "Borrowing Base" in Section 1.01 of
the Credit Agreement shall be amended in its entirety to read as follows:
(a) the then applicable Receivables Advance Rate multiplied by
the Eligible Receivables as of the last day of the most
recently ended calendar month
(c) Sub-clause (iv) of the defined term "Cash Interest Coverage Ratio"
in Section 1.01 of the Credit Agreement shall be amended in its entirety to read
as follows:
(iv) the Cash Restructuring Charges deducted in calculating
Consolidated Net Income for such fiscal quarter, provided,
that the cumulative aggregate amount of Cash Restructuring
Charges from and after November 30, 2002, shall not exceed
$300,000,000.00
(d) The defined term "Consolidated Net Income" in Section 1.01 of the
Credit Agreement shall be amended in its entirety to read as follows:
"Consolidated Net Income" means, for any period, for the
Borrower and its Subsidiaries on a consolidated basis, the net
income of the Borrower and its Subsidiaries from continuing
operations (before extraordinary items, and excluding gains or
losses from Dispositions of assets) for that period plus, in
connection with measuring compliance with Sections 7.13(a),
7.13(b) and 7.13(c) only, profits or losses from discontinued
operations for the fiscal quarters ending February 28, 2003,
May 31, 2003, August 29, 2003 and February 27, 2004, to the
extent any such fiscal quarter is included in that period.
(e) Clause (k) of the defined term "Ineligible Receivables" in Section
1.01 of the Credit Agreement shall be amended in its entirety to read as
follows:
(k) Receivables owing by any Receivables Debtor or any of its
Affiliates who has failed to make full payment within 60 days
from the invoice due date on more than 25% of the aggregate
amount of Receivables owing to the Borrower and its U.S.
Subsidiaries by such Receivables Debtor
(f) The defined term "Receivables Advance Rate" in Section 1.01 of the
Credit Agreement is amended in its entirety to read as follows:
"Receivables Advance Rate" means, as of any date of
determination, 75%.
(g) In Section 1.01 of the Credit Agreement, the following new
definition of "Eligible Receivables" is inserted:
"Eligible Receivables" means, as of any date of determination,
the aggregate
Seventh Amendment and Waiver (3-Year)
2
Dollar amount of the Receivables of the Borrower and its U.S.
Subsidiaries, minus any Ineligible Receivables of the Borrower
and its U.S. Subsidiaries.
(h) Section 7.13(a) of the Credit Agreement shall be amended by
replacing the table contained therein with the following table:
FISCAL QUARTER ENDING MAXIMUM RATIO
--------------------- -------------
February 27, 2004 4.25 to 1.0
May 31, 2004 4.25 to 1.0
August 31, 2004 4.0 to 1.0
November 30, 2004 3.5 to 1.0
(i) Section 7.13(d) of the Credit Agreement shall be amended in its
entirety to read as follows:
Liquidity Ratio. Permit the Liquidity Ratio for any fiscal
quarter of the Borrower to be less than 0.9 to 1.0. For the
avoidance of doubt, assets and liabilities of Subsidiaries
whose operations have been discontinued will continue to be
included in the determination of the Liquidity Ratio.
(j) References in the Credit Agreement to the "364-Day Credit
Agreement", the "364-Day Credit Documents", the "364-Day Guaranty", the "364-Day
Lenders" and the "364-Day Outstanding Amount" shall be disregarded. The 364-Day
Credit Agreement has terminated.
(k) The final sentence of Section 10.08 is deleted.
(l) Schedule 3 to the Compliance Certificate attached to the Credit
Agreement as Exhibit C, is amended and restated in its entirety to read as set
forth in Annex 1 hereto.
3. Representations and Warranties. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders as follows:
(a) No Default or Event of Default has occurred and is continuing (or
would result from the amendment of the Credit Agreement contemplated hereby).
(b) The execution, delivery and performance by the Borrower of the
Amendment Documents have been duly authorized by all necessary corporate and
other action and do not and will not require any registration with, consent or
approval of, or notice to or action by, any Person (including any Governmental
Authority) in order to be effective and enforceable.
(c) The Amendment Documents constitute the legal, valid and binding
obligations of the Borrower, enforceable against it in accordance with their
respective terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency,
Seventh Amendment and Waiver (3-Year)
3
reorganization, moratorium and other laws affecting creditor's rights generally
and by equitable principles (regardless of whether enforcement is sought in
equity or at law).
(d) All representations and warranties of the Borrower contained in the
Credit Agreement are true and correct in all material respects (except to the
extent such representations and warranties expressly refer to an earlier date,
in which case they shall be true and correct as of such earlier date and except
that this subsection (d) shall be deemed instead to refer to the last day of the
most recent quarter and year for which financial statements have then been
delivered in respect of the representation and warranty made in Section 5.05 of
the Credit Agreement and to take into account any amendments to the Schedules to
the Credit Agreement and other disclosures made in writing by the Borrower to
the Administrative Agent and the Lenders after the Closing Date and approved by
the Administrative Agent and the Required Lenders).
(e) There has occurred since November 21, 2003, no event or
circumstance that has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(f) The Borrower is entering into this Amendment on the basis of its
own investigation and for its own reasons, without reliance upon the
Administrative Agent and the Lenders or any other Person.
(g) The Borrower's obligations under the Credit Agreement and under the
other Loan Documents are not subject to any defense, counterclaim, set-off,
right of recoupment, abatement or other claim.
4. Conditions of Effectiveness.
(a) The effectiveness of Sections 2 and 5 of this Amendment shall be
subject to the satisfaction of each of the following conditions precedent:
(1) The Administrative Agent shall have received from the
Borrower and the Required Lenders a duly executed original (or, if elected by
the Administrative Agent, an executed facsimile copy) of this Amendment.
(2) The Administrative Agent shall have received the consent
of the Subsidiaries of the Borrower party to the Pledge Agreement, the Interco
Subordination Agreement, the Security Agreement or the Guaranty, in form and
substance satisfactory to the Administrative Agent, in their capacities as such,
to the execution and delivery hereof by the Borrower.
(3) The Administrative Agent shall have received evidence of
payment by the Borrower of all fees, costs and expenses due and payable as of
the date hereof hereunder and under the Credit Agreement, including any fees
arising under or referenced in Section 6 of this Amendment and any costs and
expenses payable under Section 7(g) of this Amendment (including the
Administrative Agent's Attorney Costs, to the extent invoiced on or prior to the
date hereof).
(4) The Administrative Agent shall have received from the
Borrower, in form and substance satisfactory to the Administrative Agent, copies
of the resolutions passed by the board
Seventh Amendment and Waiver (3-Year)
4
of directors of the Borrower, certified as of the date hereof by the Secretary
or an Assistant Secretary of the Borrower, authorizing the execution, delivery
and performance of this Amendment, together with such incumbency certificates
and/or other certificates of Responsible Officers of the Borrower, as the
Administrative Agent may require to establish the identities of and verify the
authority and capacity of each Responsible Officer thereof authorized to act as
such in connection with this Amendment and each other Loan Document to which the
Borrower is a party.
(5) The Administrative Agent shall have received all other
documents it or the Required Lenders may reasonably request relating to any
matters relevant hereto, all in form and substance satisfactory to the
Administrative Agent.
(b) For purposes of determining compliance with the conditions
specified in Section 4(a), each Lender that has executed this Amendment shall be
deemed to have consented to, approved or accepted, or to be satisfied with, each
document or other matter either sent, or made available for inspection, by the
Administrative Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to such Lender.
(c) From and after the Effective Date, the Credit Agreement is amended
as set forth herein. Except as expressly amended pursuant hereto, the Credit
Agreement shall remain unchanged and in full force and effect and is hereby
ratified and confirmed in all respects.
(d) The Administrative Agent will notify the Borrower and the Lenders
of the satisfaction of the conditions precedent in this Section 4.
5. Waivers. Subject to the terms and conditions hereof, the Banks party
hereto waive (i) non-compliance with Section 7.05 of the Credit Agreement
resulting from the transfer by the Borrower of certain assets to Solectron
Suppliserv Corporation, a Delaware corporation ("Suppliserv") on or about
January 8, 2004, prior to Suppliserv's change of status to a Loan Party on or
about January 29, 2004; and (ii) non-compliance with Section 7.13(c) of the
Credit Agreement resulting from the inclusion of profits or losses from
discontinued operations in connection with the determination of Consolidated Net
Income for the fiscal quarter ending November 30, 2003.
6. Fees. The Borrower shall pay (through the Administrative Agent) to each
Lender that executes and delivers this Amendment by no later than 12:00 p.m.
(Pacific time) on March 15, 2004 a non-refundable amendment fee equal to $5,000.
Such amendment fee shall be fully-earned upon becoming due and payable, shall
not be refundable for any reason whatsoever and shall be in addition to any fee,
cost or expense otherwise payable by the Borrower pursuant to the Credit
Agreement or this Amendment.
7. Miscellaneous.
(a) The Borrower acknowledges and agrees that the execution and
delivery by the Administrative Agent and the Lenders of this Amendment shall not
be deemed to create a course
Seventh Amendment and Waiver (3-Year)
5
of dealing or an obligation to execute similar waivers or amendments under the
same or similar circumstances in the future.
(b) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and thereto and their respective successors and assigns.
(c) This Amendment shall be governed by and construed in accordance
with the law of the State of New York (including Sections 5-1401 and 5-1402 of
the General Obligations Law of the State of New York), provided that the
Administrative Agent and the Lenders shall retain all rights arising under
Federal law.
(d) This Amendment may be executed in any number of counterparts, each
of which shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument. Each of the parties hereto
understands and agrees that this document (and any other document required
herein) may be delivered by any party thereto either in the form of an executed
original or an executed original sent by facsimile transmission to be followed
promptly by mailing of a hard copy original, and that receipt by the
Administrative Agent of a facsimile transmitted document purportedly bearing the
signature of a Lender or the Borrower shall bind such Lender or the Borrower,
respectively, with the same force and effect as the delivery of a hard copy
original. Any failure by the Administrative Agent to receive the hard copy
executed original of such document shall not diminish the binding effect of
receipt of the facsimile transmitted executed original of such document of the
party whose hard copy page was not received by the Administrative Agent.
(e) This Amendment and the other Amendment Documents contain the entire
and exclusive agreement of the parties hereto with reference to the matters
discussed herein. This Amendment supersedes all prior drafts and communications
with respect hereto. This Amendment may not be amended except in accordance with
the provisions of Section 10.01 of the Credit Agreement.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment, the
Credit Agreement or the Loan Documents.
(g) The Borrower agrees to pay or reimburse Bank of America (including
in its capacities as Collateral Agent and as Administrative Agent), GSCP,
JPMorgan and Scotiabank upon demand, for all reasonable costs and expenses
(including reasonable Attorney Costs) incurred by Bank of America (including in
its capacities as Collateral Agent and as Administrative Agent), GSCP, JPMorgan
and Scotiabank in connection with the development, preparation, negotiation,
execution and delivery of the Amendment Documents.
[Signature pages follow]
Seventh Amendment and Waiver (3-Year)
6
IN WITNESS WHEREOF, the parties hereto have caused this
Seventh Amendment and Waiver to be duly executed and delivered by their proper
and duly authorized officers as of the day and year first above written.
SOLECTRON CORPORATION
By: /s/ Xxxxx Xxxxx
-----------------
Xxxxx Xxxxx
Title: VP & Treasurer
S-1
BANK OF AMERICA, N.A., as Administrative
Agent and Lender
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Director
S-2
XXXXXXX XXXXX CREDIT PARTNERS
L.P.
By: /s/ Xxxxxxx Xxxx
----------------------------------------
Name: Xxxxxxx Xxxx
Title: Authorized Signatory
X-0
XXX XXXX XX XXXX XXXXXX
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
Title: Director
S-4
BNP PARIBAS
By:
________________________________________
Name:
Title:
By:
________________________________________
Name:
Title:
S-5
CSAM FUNDING II
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Name: Xxxxx Xxxxxx
Title: Authorized Signatory
S-6
DBS BANK LTD., LOS ANGELES
AGENCY
By: /s/ Xxxxxxx Xxx
----------------------------------------
Name: Xxxxxxx Xxx
Title: General Manager, DBS Bank Los
Angeles
S-7
FLEET NATIONAL BANK
By: /s/ Xxxx Xxxx
----------------------------------------
Name: Xxxx Xxxx
Title: Managing Director
S-8
FOOTHILL INCOME TRUST, L.P.
By: /s/ Xxxx Xxxxx
----------------------------------------
Name: Xxxx Xxxxx
Title: Managing Member
S-9
JPMORGAN CHASE BANK
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
S-10
XXXXXX XXXXXXX
SENIOR FUNDING, INC.
By:
________________________________________
Name:
Title:
X-00
XXX XXXXX XXXX XX XXXXXXXX PLC
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Senior Vice President
S-12
STANDARD CHARTERED BANK
By: /s/ Xxxx XxXxxxxx
---------------------------------------
Name: Xxxx XxXxxxxx
Title: EVP
By: /s/ Xxxx Xxxxx
---------------------------------------
Name: Xxxx Xxxxx
Title: SVP
S-13
CONSENT AND AGREEMENT OF SUBSIDIARIES
Each of the undersigned, in its capacity as a Guarantor, a
party to the Interco Subordination Agreement, the Security Agreement and/or the
Pledge Agreement, acknowledges that its consent to the foregoing Seventh
Amendment and Waiver (the "Agreement") is not required, but each of the
undersigned nevertheless does hereby consent to the foregoing Agreement and to
the documents and agreements referred to therein. Nothing herein shall in any
way limit any of the terms or provisions of the Guaranty of the undersigned, the
Interco Subordination Agreement, the Security Agreement or the Pledge Agreement
executed by the undersigned in the Administrative Agent's and the Lenders'
favor, or any other Loan Document executed by the undersigned (as the same may
be amended from time to time), all of which are hereby ratified and affirmed in
all respects.
KAVLICO CORPORATION
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: Treasurer
S-14
CONSENT AND AGREEMENT OF SUBSIDIARIES
Each of the undersigned, in its capacity as a Guarantor, a
party to the Interco Subordination Agreement, the Security Agreement and/or the
Pledge Agreement, acknowledges that its consent to the foregoing Seventh
Amendment and Waiver (the "Agreement") is not required, but each of the
undersigned nevertheless does hereby consent to the foregoing Agreement and to
the documents and agreements referred to therein. Nothing herein shall in any
way limit any of the terms or provisions of the Guaranty of the undersigned, the
Interco Subordination Agreement, the Security Agreement or the Pledge Agreement
executed by the undersigned in the Administrative Agent's and the Lenders'
favor, or any other Loan Document executed by the undersigned (as the same may
be amended from time to time), all of which are hereby ratified and affirmed in
all respects.
SOLECTRON FUNDING CORPORATION
SOLECTRON HOLDINGS, LTD.
SOLECTRON INTERNATIONAL DISTRIBUTION, INC.
SOLECTRON OREGON CORPORATION
SOLECTRON TEXAS, INC.
FORCE COMPUTERS, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
S-15
CONSENT AND AGREEMENT OF SUBSIDIARIES
Each of the undersigned, in its capacity as a Guarantor, a
party to the Interco Subordination Agreement, the Security Agreement and/or the
Pledge Agreement, acknowledges that its consent to the foregoing Seventh
Amendment and Waiver (the "Agreement") is not required, but each of the
undersigned nevertheless does hereby consent to the foregoing Agreement and to
the documents and agreements referred to therein. Nothing herein shall in any
way limit any of the terms or provisions of the Guaranty of the undersigned, the
Interco Subordination Agreement, the Security Agreement or the Pledge Agreement
executed by the undersigned in the Administrative Agent's and the Lenders'
favor, or any other Loan Document executed by the undersigned (as the same may
be amended from time to time), all of which are hereby ratified and affirmed in
all respects.
SOLECTRON USA, INC.
STREAM INTERNATIONAL, INC.
STREAM NEW YORK INC.
SOLECTRON FEDERAL SYSTEMS, INC.
MEMQUEST, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
S-16
CONSENT AND AGREEMENT OF SUBSIDIARIES
Each of the undersigned, in its capacity as a Guarantor, a
party to the Interco Subordination Agreement, the Security Agreement and/or the
Pledge Agreement, acknowledges that its consent to the foregoing Seventh
Amendment and Waiver (the "Agreement") is not required, but each of the
undersigned nevertheless does hereby consent to the foregoing Agreement and to
the documents and agreements referred to therein. Nothing herein shall in any
way limit any of the terms or provisions of the Guaranty of the undersigned, the
Interco Subordination Agreement, the Security Agreement or the Pledge Agreement
executed by the undersigned in the Administrative Agent's and the Lenders'
favor, or any other Loan Document executed by the undersigned (as the same may
be amended from time to time), all of which are hereby ratified and affirmed in
all respects.
SOLECTRON TEXAS, L.P.
By: SOLECTRON TEXAS, INC., as General
Partner
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
S-17
CONSENT AND AGREEMENT OF SUBSIDIARIES
Each of the undersigned, in its capacity as a Guarantor, a
party to the Interco Subordination Agreement, the Security Agreement and/or the
Pledge Agreement, acknowledges that its consent to the foregoing Seventh
Amendment and Waiver (the "Agreement") is not required, but each of the
undersigned nevertheless does hereby consent to the foregoing Agreement and to
the documents and agreements referred to therein. Nothing herein shall in any
way limit any of the terms or provisions of the Guaranty of the undersigned, the
Interco Subordination Agreement, the Security Agreement or the Pledge Agreement
executed by the undersigned in the Administrative Agent's and the Lenders'
favor, or any other Loan Document executed by the undersigned (as the same may
be amended from time to time), all of which are hereby ratified and affirmed in
all respects.
MAGNETIC DATA CALIFORNIA, LLC
By: SOLECTRON CORPORATION, as Sole
Member
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President &
Chief Accounting Officer
S-18
CONSENT AND AGREEMENT OF SUBSIDIARIES
Each of the undersigned, in its capacity as a Guarantor, a
party to the Interco Subordination Agreement, the Security Agreement and/or the
Pledge Agreement, acknowledges that its consent to the foregoing Seventh
Amendment and Waiver (the "Agreement") is not required, but each of the
undersigned nevertheless does hereby consent to the foregoing Agreement and to
the documents and agreements referred to therein. Nothing herein shall in any
way limit any of the terms or provisions of the Guaranty of the undersigned, the
Interco Subordination Agreement, the Security Agreement or the Pledge Agreement
executed by the undersigned in the Administrative Agent's and the Lenders'
favor, or any other Loan Document executed by the undersigned (as the same may
be amended from time to time), all of which are hereby ratified and affirmed in
all respects.
SOLECTRON EUROPE HOLDINGS LLC
By: SOLECTRON CORPORATION, as Sole Member
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President &
Chief Accounting Officer
S-19
CONSENT AND AGREEMENT OF SUBSIDIARIES
Each of the undersigned, in its capacity as a Guarantor, a
party to the Interco Subordination Agreement, the Security Agreement and/or the
Pledge Agreement, acknowledges that its consent to the foregoing Seventh
Amendment and Waiver (the "Agreement") is not required, but each of the
undersigned nevertheless does hereby consent to the foregoing Agreement and to
the documents and agreements referred to therein. Nothing herein shall in any
way limit any of the terms or provisions of the Guaranty of the undersigned, the
Interco Subordination Agreement, the Security Agreement or the Pledge Agreement
executed by the undersigned in the Administrative Agent's and the Lenders'
favor, or any other Loan Document executed by the undersigned (as the same may
be amended from time to time), all of which are hereby ratified and affirmed in
all respects.
SMART MODULAR TECHNOLOGIES (P.R.), INC.
SMART MODULAR TECHNOLOGIES (MA), INC.
APEX DATA, INC.
SMART MODULAR TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxx
-----------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
S-20
ANNEX 1 TO SEVENTH AMENDMENT AND WAIVER
SCHEDULE 3
to the Compliance Certificate
For the Quarter/Year ended _______________, _____ (the "Statement Date") ______
I. SECTION 7.10 - CAPITAL EXPENDITURES
A. Capital expenditures during the four-fiscal-quarter period
beginning September 1, 200__. $____________________
B. Permitted capital expenditures during such period: $ 300,000,000
C. Remaining availability (amount overspent) for covenant compliance
[I.B. minus I.A.]: $____________________
Covenant compliance? YES / NO
II. SECTION 7.13(a) - MAXIMUM DEBT TO ANNUALIZED EBITDA RATIO
A. Consolidated Indebtedness (other than under ACES and XXXXx) as
of the Statement Date: $____________________
B. Annualized EBITDA as of the Statement Date
1. Consolidated EBITDA for the Subject Period(1)
a. Consolidated Net Income: $____________________
b. Consolidated Interest Charges: $____________________
c. Taxes used or included in determining
Consolidated Net Income: $____________________
d. Depreciation or amortization expense
deducted in determining Consolidated Net
Income: $____________________
e. Non-Cash Restructuring Charges deducted in
calculating Consolidated
-------------------
(1) "Subject Period" means the four-fiscal-quarter period ending on the
Statement Date.
A-1
Net Income: $____________________
f. Cash Restructuring Charges deducted in
calculating Consolidated Net Income (not to
exceed $300,000,000 in aggregate for all
such charges taken from and after the
quarter ending on November 30, 2002): $____________________
g. Goodwill Impairment Charges deducted in
calculating Consolidated Net Income: $____________________
h. Charges relating to inventory write-downs
taken in accordance with GAAP from November
30, 2002, to February 29, 2004 (not to
exceed $150,000,000 in aggregate): $____________________
i. Gains (or losses) on the retirement of
Indebtedness to the extent increasing (or
decreasing) Consolidated Net Income: $____________________
j. Consolidated EBITDA for purposes of this
calculation
[sum of II.B.1.a. through h. minus/plus
II.B.1.i.]: $____________________
2. Annualized EBITDA as of the Statement Date
[II.B.1.j.]: $____________________
C. Debt to Annualized EBITDA ratio
[II.A. divided by II.B.2.]: _____ to 1.0
D. Maximum ratio: _____ to 1.0
Covenant compliance? YES / NO
III. SECTION 7.13(b) - CONSOLIDATED TANGIBLE NET WORTH
A. Consolidated Tangible Net Worth as of the Statement Date
1. Shareholders' Equity (provided that to the extent any
Goodwill Impairment Charge results in any upward
adjustment of $____________________
A-2
Shareholders' Equity, such adjustment
shall be excluded):
2. Intangible Assets: $____________________
3. Cumulative aggregate after-tax Non-Cash Restructuring
Charges deducted in calculating Consolidated Net
Income in any quarter ending after November 30, 2002
(provided that the cumulative aggregate after-tax
Non-Cash and Cash Restructuring Charges shall not
exceed $400,000,000) $____________________
4. Cumulative aggregate after-tax Cash Restructuring
Charges deducted in calculating Consolidated Net
Income in any fiscal quarter ending after November
30, 2002 (provided that the cumulative aggregate
after-tax Non-Cash and Cash Restructuring Charges
shall not exceed $400,000,000) $____________________
5. Cumulative aggregate Goodwill Impairment Charges
deducted in calculating Consolidated Net Income in any
fiscal quarter ending after November 30, 2002: $____________________
6. After-tax charges relating to inventory write-downs
taken in accordance with GAAP from November 30, 2002,
to February 29, 2004 (not to exceed $150,000,000 in
aggregate): $____________________
7. The amount equal to the write-down of deferred tax
assets of $720,785,000 taken on May 30, 2003: $____________________
8. Consolidated Tangible Net Worth on the Statement Date
[III.A.1. minus III.A.2. plus the sum of III.A.3.
through 7.]: $____________________
B. Minimum required Consolidated Tangible Net Worth
1. Base amount: $ 1,660,880,000
2. 50% of Consolidated Net Income earned in each fiscal
quarter ending after November 30,
A-3
2002 (with no deduction for a new loss in any fiscal
quarter): $____________________
3. 50% of the aggregate increases in Shareholders'
Equity after November 30, 2002, from the issuance and
sale of Capital Stock of the Borrower (including upon
any conversion of debt securities (other than ACES)
into Capital Stock) during any fiscal quarter ending
after November 30, 2002: $____________________
4. 100% of the aggregate increases in Shareholders'
Equity after November 30, 2002, by reason of the
conversion of ACES into Capital Stock during any
fiscal quarter ending after November 30, 2002: $____________________
5. Minimum required Consolidated Tangible Net Worth
[sum of III.B.1. through 4.]: $____________________
C. Excess (deficiency) for covenant compliance
[III.A.8. minus III.B.5.]: $____________________
Covenant compliance? YES / NO
IV. SECTION 7.13(c) - CASH INTEREST COVERAGE RATIO
IV-1. BEFORE THE OCCURRENCE OF ANY CAPITAL RAISE
A. Cash Interest Coverage Ratio as of the Statement Date
1. Ratio numerator
a. Consolidated EBITDA for the fiscal quarter
ending on the Statement Date
i. Consolidated Net Income: $____________________
ii. Consolidated Interest Charges: $____________________
iii. Taxes used or included in
determining Consolidated Net Income: $____________________
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iv. Depreciation or amortization
expense deducted in determining
Consolidated Net Income: $____________________
v. Gains (or losses) on the retirement
of Indebtedness to the extent
increasing (or decreasing)
Consolidated Net Income: $____________________
vi. Consolidated EBITDA for the fiscal
quarter ending on the Statement Date
[Sum IV-1.A.1.a.i. through iv.
minus/plus IV-1.A.1.a.v.] $____________________
b. Non-Cash Restructuring Charges deducted in
calculating Consolidated Net Income: $____________________
c. Cash Restructuring Charges deducted in
calculating Consolidated Net Income (not to
exceed $300,000,000 in aggregate for all
such charges taken in any fiscal quarter
ending on or after November 30, 2002): $____________________
d. Goodwill Impairment Charges deducted in
calculating Consolidated Net Income: $____________________
e. Charges relating to inventory write-downs
taken in accordance with GAAP from November
30, 2002, to February 29, 2004 (not to
exceed $150,000,000 in aggregate): $____________________
f. Ratio numerator
[XX-0.X.0.x.xx plus the sum of IV-1.A.1.b.
through e.] $____________________
2. Consolidated Cash Interest Charges during the fiscal
quarter ending on the Statement Date: $____________________
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3. Cash Interest Coverage Ratio as of the Statement Date
[IV-1.A.1.f. divided by IV-1.A.2.] _____ to 1.0
B. Minimum ratio: _____ to 1.0
Covenant compliance? YES / NO
IV-2. FROM AND AFTER THE OCCURRENCE OF ONE OR MORE CAPITAL RAISES
A. Cash Interest Coverage Ratio as of the Statement Date
[IV-1.A.3.] _____ to 1.0
B. Minimum ratio
1. Ratio numerator
a. Numerator of item IV-1.B. _____
b. Projected Consolidated Cash Interest Charges
for the fiscal quarter ending on the
Statement Date, contained in the Company
Plan dated January 30, 2003: $____________________
c. [IV-2.B.1.a. multiplied by IV-2.B.1.b.]: $____________________
2. Ratio denominator
a. [IV-2.B.1.b.]: $____________________
b. Actual Consolidated Cash Interest Charges in
connection with such Capital Raises during
the fiscal quarter ending on the Statement
Date (adjusted to take into account any Swap
Contracts entered into on the closing date
of such Capital Raises): $____________________
c. [Sum of IV-2.B.2.a. and b.]: $____________________
3. Minimum ratio
[IV-2.B.1.c. divided by IV.2.B.2.c.] (provided that
this minimum ratio is not less
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than the applicable ratio set forth in the proviso of
Section 7.13(c)(ii)): _____ to 1.0
Covenant compliance? YES / NO
V. SECTION 7.13(d) - LIQUIDITY RATIO
A. Liquidity Ratio as of the Statement Date
1. Ratio numerator (each of the following items not
subject to a Lien other than Liens in favor of the
Collateral Agent pursuant to the Loan Documents and
any nonconsensual Permitted Liens)
a. Cash: $____________________
b. Cash equivalents: $____________________
c. Marketable securities: $____________________
d. Accounts receivable: $____________________
e. Ratio numerator
[Sum of V.A.1.a. through d.]: $____________________
2. Ratio denominator
a. Accounts payable: $____________________
b. Consolidated Indebtedness: $____________________
c. Subordinated Indebtedness: $____________________
d. Indebtedness under XXXXx $____________________
e. Attributable Indebtedness in respect of
capital leases and Synthetic Lease Obligations
which are fully cash collateralized: $____________________
f. Direct or contingent obligations arising
under letters of credit, banker's
acceptances, bank guaranties, surety bonds
and similar instruments, unless constituting
a matured reimbursement or payment
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obligation that is no longer contingent
(unless cash collateralized): $____________________
g. Obligations with respect to Swap Termination
Values: $____________________
h. Any Guarantee Obligations relating to items
V.A.2.c. through g.: $____________________
i. Ratio denominator
[Sum of V.A.2.a. and b. minus the sum of
V.A.2.c. through h.]: $____________________
3. Liquidity Ratio as of the Statement Date
[V.A.1.e. divided by V.A.2.i.]: _____ to 1.0
B. Minimum ratio: _____ to 1.0
Covenant compliance? YES / NO
VI. SECTION 7.13(e) - MINIMUM CASH
A. [Sum of V.A.1.a. through c.]: $____________________
B. Minimum required amount on or prior to February 11, 2004
1. Base amount: $ 700,000,000
2. Outstanding Amount of Revolving Loans under the 364-Day
Credit Agreement: $____________________
3. Outstanding Amount of Revolving Loans and L/C
Obligations under the Three-Year Credit Agreement: $____________________
4. Minimum required amount
[Sum of VI.B.1. through 3.]: $____________________
C. Excess (deficiency) for covenant compliance
[VI.A. minus VI.B.4.]: $____________________
D. Minimum required amount after February 11, 2004
1. Base amount: $ 500,000,000
2. Outstanding Amount of Revolving Loans and L/C
Obligations under the Three-Year Credit
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Agreement: $____________________
3. Minimum required amount
[Sum of VI.D.1. and 2.]: $____________________
C. Excess (deficiency) for covenant compliance
[VI.A. minus VI.D.3.]: $____________________
Covenant compliance? YES / NO
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