EXHIBIT 99 b
AMENDMENT NUMBER THREE
TO CREDIT AGREEMENT
THIS AMENDMENT NUMBER THREE TO CREDIT AGREEMENT (this
"Amendment") is made as of the 10th day of February, 2000, by and among
CIRCUIT SYSTEMS, INC., an Illinois corporation ("Circuit Systems"),
CIRCUIT SYSTEMS OF TENNESSEE, L.P., a Tennessee limited partnership
("CSTLP") and SVPC CIRCUIT SYSTEMS, INC., a California corporation
("SVPCCSI" and together with Circuit Systems and CSTLP, the
"Borrowers"), and LASALLE BANK NATIONAL ASSOCIATION, f/k/a LaSalle
National Bank ("Bank"), as Agent for the Lenders now or hereafter named
in the Loan Agreement (hereinafter defined).
BACKGROUND
A. Borrowers are obligated and indebted to Bank and the other
Lenders pursuant to the terms of that certain Credit Agreement dated
as of January 6, 1999, as amended and supplemented from time to time
(the "Loan Agreement"), and various instruments, agreements and
documents executed in connection therewith (collectively, the "Loan
Documents"), pursuant to which Lenders have made loans and advances to
the Borrowers.
B. Borrowers have informed Lenders that Borrowers are in
breach of certain provisions of the Loan Agreements, including without
limitation, certain financial covenants set forth in the Loan
Agreements.
C. Borrowers have requested that Bank (a) amend the Loan
Agreement to make additional funds available to Borrowers under the
revolving loan facility, and (b) waive those Events of Default referred
to in Section 1 hereof on the terms and conditions contained herein.
D. Capitalized terms used herein but not defined herein shall
have the same meanings assigned to them in the Loan Documents.
NOW, THEREFORE, in consideration of the premises set forth above
and the mutual promises contained in this Consent, and for other good
and valuable consideration, the receipt and sufficiency of which hereby
are acknowledged, Borrowers and Bank, on behalf of the Lenders, agree
as follows:
1. WAIVER. Effective upon the execution and delivery by
Borrowers of this Amendment to Bank and satisfaction of the conditions
precedent set forth herein, Bank hereby waives any defaults in
existence under Section 6.4 the Loan Agreement. The waiver set forth
in this Section 1 shall be a limited waiver and shall not constitute a
waiver of other violations or any subsequent violations, whether of a
different or like nature, nor shall it constitute a course of conduct
or dealing.
2. AMENDMENTS TO LOAN AGREEMENT
2.1 The first full paragraph of the definition of "Borrowing
Base" set forth in Section 1.1 of the Loan Agreement is hereby amended
in its entirety to read as follows:
"Borrowing Base:
For the Revolving Credit Loans: The lesser of $16,000,000 or the
sum of (i) 85% of the face amount of Eligible Accounts, (ii) the
lesser of $3,000,000 or the sum of (1) 50% of the value of
Eligible Finished Goods and (2) 75% of the value of Eligible
Finished Goods on Consignment, (iii) the sum of 40% of the value
of SVPCCSI's Raw Materials Inventory and 50% of the value of all
other Borrowers' Raw Materials Inventory, but in no event
greater than $2,000,000, and (iv) 60% of the current market
value of the common stock of SigmaTron held by CSI, as such
market value is quoted on a recognized securities exchange, but
in no event greater than $2,000,000."
2.2 The definition of "Eligible Finished Goods on Consignment"
set forth in Section 1.1 of the Loan Agreement is hereby amended in its
entirety to read as follows:
"Eligible Finished Goods on Consignment" means that portion of
the Borrowers' finished goods Inventory (i) which is held by
Lucent Technologies, Inc., Xxxx Electronics, Inc., or such other
Account Debtors approved by Agent in writing, (ii) which is
subject to a consignment agreement which is in form and
substance acceptable to Agent, (iii) is located in the United
States, and (iv) in which the Agent holds a perfected first
priority Lien."
2.3 The definition of "Revolving Credit Termination Date" set
forth in Section 1.1 of the Loan Agreement is hereby amended in its
entirety to read as follows:
"Revolving Credit Termination Date means August 1, 2001."
2.4 The definition of "Term Loan Maturity Date" set forth in
Section 1.1 of the Loan Agreement is hereby amended in its entirety to
read as follows:
"Term Loan Maturity Date means August 1, 2001."
2.5 The Loan Agreement is hereby amended to provide that upon
the expiration of any LIBOR-Rate Interest Period with respect to any
Revolving Loan Tranche or Term Loan Tranche in existence on the date of
this Amendment, all such Revolving Loan Tranches and Term Loan Tranches
shall thereafter bear interest at the Base Rate Option and Borrowers
shall not be permitted to elect the LIBOR-Rate Option.
2.6 Upon the effectiveness of this Amendment, the applicable
Margin for Base Rate Loans and the Pricing Matrix for the Unused
Availability Fee shall be as follows and Annex B to the Loan Agreement
shall be amended accordingly:
"Applicable Margin for the Revolving Credit Loans and Term Loan:
Funded Debt/ Unused Availability
EBITDA Ratio Prime + Fee
------------ ------- -------------------
Greater than or equal to .75% .50%
5.25 to 1.0
Less than 5.25 to 1.0 but .50% .375%
greater than or equal to
4.50 to 1.0
Less than 4.50 to 1.0 but .50% .25%
greater than or equal to
3.50 to 1.0
Funded Debt/ Unused Availability
EBITDA Ratio Prime + Fee
------------ ------- -------------------
Less than 3.50 to 1.0 but .25% .25%
greater than or equal to
2.50 to 1.0
less than 2.50 to 1.0 .0% .125%
2.7 Sections 6.4(a)-(d) of the Loan Agreement are hereby
amended in their entirety to read as follows:
"6.4(a) Minimum EBITDA. Borrowers' consolidated EBITDA shall
not be less than the amounts set forth in the table below for
the indicated fiscal periods of Borrowers' Fiscal Years set
forth below ending as of the last day of such indicated fiscal
period:
Fiscal Period of Borrowers Minimum EBITDA
-------------------------- --------------
Nine months ending 1/31/00 $4,150,000
Ten months ending 2/29/00 $5,000,000
Eleven months ending 3/31/00 $6,000,000
Twelve months ending 4/30/00 $7,100,000
Three months ending 7/31/00 $2,775,000
Six months ending 10/31/00 $6,100,000
Nine months ending 1/31/01 $9,000,000
Twelve months ending 4/30/01 $12,000,000
"6.4(b) Adjusted Debt Service Ratio. For the indicated fiscal
periods of Borrowers' Fiscal Years set forth below ending as of
the last day of such indicated fiscal periods, Borrowers shall
not permit the ratio of (i) Borrowers' consolidated EBITDA for
such period, less (1) the sum of Borrowers' consolidated Capital
Expenditures for such period, minus increased long term
Indebtedness of Borrowers incurred during such period, and (2)
Borrowers' cash income taxes paid for such period, to (ii)
Borrowers' consolidated Debt Service for such period, measured
as of the last day of such indicated fiscal periods, to be less
than the ratios set forth below for the indicated fiscal
periods:
Fiscal Period Minimum Adjusted Debt
of Borrowers Service Ratio
-------------------------- -----------------------
Nine months ending 1/31/00 - 0.10 to 1.0
Ten months ending 2/29/00 0.30 to 1.0
Eleven months ending 3/31/00 0.35 to 1.0
Twelve months ending 4/30/00 0.40 to 1.0
Three months ending 7/31/00 0.80 to 1.0
Six months ending 10/31/00 0.90 to 1.0
Nine months ending 1/31/01 1.00 to 1.0
Twelve months ending 4/30/01 1.00 to 1.0
"6.4(c) Minimum Tangible Net Worth. Borrowers' Consolidated
Tangible Net Worth shall not be less than the amount set forth below
for the indicated fiscal periods of Borrowers' Fiscal Years set forth
below ending as of the last day of such indicated fiscal periods:
Fiscal Period of Borrowers Minimum Tangible
Net Worth
-------------------------- ----------------
Nine months ending 1/31/00 $6,400,000
Ten months ending 2/29/00 $8,750,000
Eleven months ending 3/31/00 $8,900,000
Twelve months ending 4/30/00 $9,000,000
Three months ending 7/31/00 $9,175,000
Six months ending 10/31/00 $9,600,000
Nine months ending 1/31/01 $9,750,000
Twelve months ending 4/30/01 $10,000,000
"6.4(d) Maximum Debt to Tangible Net Worth Ratio: Borrowers
shall not permit the ratio of the sum of their consolidated
Indebtedness, less all Indebtedness of Borrowers subordinated to
the Obligations by written agreements acceptable to Agent
("Subordinated Debt") to the sum of Borrowers' consolidated
Tangible Net Worth, plus Subordinated Debt to be more than the
ratios set forth below for the indicated fiscal periods of
Borrowers' Fiscal Years set forth below ending as of the last
day of such indicated fiscal periods:
Maximum Debt to
Fiscal Period Tangible Net Worth
of Borrowers Ratio
-------------------------- ------------
Nine months ending 1/31/00 10.20 to 1.0
Ten months ending 2/29/00 7.75 to 1.0
Eleven months ending 3/31/00 7.75 to 1.0
Twelve months ending 4/30/00 7.75 to 1.0
Three months ending 7/31/00 7.75 to 1.0
Six months ending 10/31/00 7.25 to 1.0
Nine months ending 1/31/01 6.75 to 1.0
Twelve months ending 4/30/01 6.40 to 1.0
2.8 Section 6.1 of the Loan Agreement is hereby amended to add
the following new subsection (vi) thereto:
"(vi) Indebtedness of (1) CSI to Xxxxxxxxx X. Xxxxx, Xxxxx
Xxxxx, Xxxxx Xxxxx and Impex Electronics, Inc., (2) Indebtedness
of SVPCCSI and CSI to H.O.T.L.R.T., Inc., and (3) Indebtedness
of CSI to Xxxxxxxxx X. Xxxxx, as assignee of Xxxxxxx X. Xxxx,
Xxxxxxxxx X. Xxxxx, Xxxxx Xxxxx, Xxxxxxxxx X. Xxxxx, as assignee
of Xxxx Xxxxxxx, X.X. Xxxxx, Xxxxxxxx X. Xxxxx, X.X. Xxxxx, as
assignee of Xxxxxxx X. Xxxx and X.X. Xxxxx as assignee of Xxxx
Xxxxxxx, all of which Indebtedness in (1)-(3) above is
subordinated to the repayment of Borrowers' Obligations to
Lenders, by written agreements on terms acceptable to Agent."
3. REAFFIRMATIONS OF COLLATERAL DOCUMENTS
(a) Borrowers are parties to each of the following documents:
(i) Security Agreement (Inventory, Equipment, Accounts and
General Intangibles) dated January 6, 1999;
(ii) Mortgage, Assignment of Leases and Rents, Security
Agreement, Fixture Filing and Financing Statement dated as
of January 7, 1999 and filed with the Xxxx County, Illinois
Recorder on January 13, 1999 as Document No. 99037717 (the
"Elk Grove Village Mortgage"), as heretofore amended;
(iii) Mortgage, Assignment of Leases and Rents, Security
Agreement, Fixture Filing and Financing Statement dated as
of January 7, 1999 and filed with the Lake County, Illinois
Recorder on February 8, 1999 as Document No. 4294762 (the
"Antioch Mortgage"), as heretofore amended; and
(iv) Deed of Trust, Assignment of Leases and Rents,
Security Agreement, Fixture Filing and Financing Statement
dated as of January 7, 1999 and filed with the Santa Xxxxx
County, California Recorder on January 15, 1999 as Document
No. 14600088 (the "Santa Xxxxx Mortgage"), as heretofore
amended.
The documents listed in subsections (i) through (iv), together
with any and all other instruments, documents and agreements granting
to Lender a security interest in all personal property, real property
and fixtures of Borrowers, are collectively referred to as the
"Security Agreements".
(b) Each Borrower hereby expressly reaffirms and assumes all of
its obligations and liabilities as set forth in the Security
Agreements, agrees that the obligations secured thereby shall include
all obligations of such Borrower to Lender under the Loan Agreement, as
amended from time to time, including this Amendment, and agrees to be
bound by and abide by and operate and perform under and pursuant to and
comply fully with all of the terms, conditions, provisions, agreements,
representations, undertakings, warranties, and covenants contained in
the Security Agreements, in so far as such obligations and liabilities
may be modified by this Amendment.
4 REPRESENTATIONS AND WARRANTIES. To induce Bank to enter
into this Amendment, Borrowers represent and warrant to Bank that:
(a) Representations and Warranties. On the date hereof, the
representations and warranties set forth in the Loan Documents are true
and correct with the same effect as though such representations and
warranties had been made on the date hereof, except to the extent such
representations and warranties expressly relate to an earlier date.
(b) Events of Default. On the date hereof, no Event of Default
(other than those being waived hereby) under any of the Loan Documents
has occurred and is continuing.
(c) No Conflict. The execution and performance by the
Borrowers of this Amendment and the consummation of the transactions
contemplated by the Amendment to Pledge Agreement will not (i) violate
any provision of law, any order of any court or other agency of
government, the Articles of Incorporation or ByLaws of either Circuit
Systems or SVPCCSI or the Partnership Agreement of CSTLP or (ii)
violate any indenture, contract, agreement or other instrument to which
any Borrower is a party, or by which its property is bound, or be in
conflict with, result in a breach of or constitute (with due notice
and/or lapse of time) a default under, any such indenture, contract,
agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of
the property or assets of any Borrower.
5. CONDITIONS PRECEDENT. The effectiveness of this Amendment
and the agreement by Bank to waive the existing Events of Default and
enter into this Amendment is subject to the following conditions
precedent:
(a) Borrowers shall have delivered to the Bank an executed copy
of this Amendment.
(b) Circuit Systems shall have delivered to the Bank an
executed copy of an Amendment to Pledge Agreement in the form of
Exhibit A hereto, together with share certificates evidencing all of
the issued and outstanding shares of common stock of Infovision, Inc.
and an executed assignment separate from certificate in blank.
(c) Circuit Systems and SVPCCSI shall have delivered to Bank a
copy of the resolutions or written consent of their Boards of
Directors, certified to be true and correct by their Secretaries,
authorizing this Amendment.
(d) Circuit Systems shall have delivered to Bank the original
of the subordinated notes, evidencing the subordinated debt due from
Circuit Systems to Xxxxx Xxxxx, Xxxxx Xxxxx, Impex Electronics, Inc.,
and Xxxxxxxxx X. Xxxxx, together with evidence of the receipt of the
proceeds of the subordinated loans by Xxxxx Xxxxx, Xxxxx Xxxxx, Impex
Electronics, Inc., and Xxxxxxxxx X. Xxxxx to Circuit Systems.
(e) Circuit Systems shall have delivered to Bank an executed
copy of a Subordination Agreement, in the form attached hereto as
Exhibit B, from each of Xxxxxxxxx X. Xxxxx, Xxxxx Xxxxx, Xxxxx Xxxxx
and Impex Electronics, Inc.
(f) Borrowers shall have delivered to Bank an Amendment to
Subordination Agreement in the form of Exhibit C attached hereto
executed by H.0.T.L.R.T., Inc. and Circuit Systems.
(g) Borrowers shall have delivered to Bank Amendments to
Subordination Agreements in the form of Exhibit D attached hereto
executed by Circuit Systems, SVPCCSI and each of Xxxxxxxxx X. Xxxxx as
assignee of Xxxxxxx X. Xxxx, Xxxxxxxxx X. Xxxxx, Xxxxxxxxx X. Xxxxx as
assignee of Xxxx Xxxxxxx, X.X. Xxxxx, Xxxxx Xxxxx, X.X. Xxxxx as
assignee of Xxxx Xxxxxxx, X.X. Xxxxx as assignee of Xxxxxxx Xxxxx, and
Xxxxxxxx X. Xxxxx.
(h) Borrowers shall have delivered to Bank an executed
consignment agreement, in form acceptable to Bank, between Borrowers
and Xxxx Electronics, Inc., together with evidence of the perfection of
Bank's Lien on all Inventory consigned to Xxxx Electronics, Inc.
(i) Borrowers shall have delivered to Bank a Guaranty executed
by Infovision, Inc. in the form of Exhibit E attached hereto
guarantying the payment of Borrowers' Obligations and an executed
Security Agreement and Financing Statements in the form of Exhibit F
attached hereto granting Bank a Lien on the assets of Infovision, Inc.
as collateral security for Borrowers' obligations.
(j) Borrowers shall have delivered to Bank a Subordination
Agreement in the form of Exhibit G attached hereto executed by Project
Control Solutions, Inc. ("PCS") and Infovision, Inc., whereby PCS
subordinates the repayment of Infovision, Inc.'s obligations to PCS to
the repayment of Infovision, Inc.'s obligations to Bank.
(k) Borrowers shall have delivered to Bank executed Forbearance
Agreements in form acceptable to Bank between CSI and each of PCS,
Xxxxx Xxxxx, Xxxxxxxxx X. Xxxxx, as assignee of Xxxxxxx X. Xxxx,
Xxxxxxxxx X. Xxxxx, Xxxxxxxxx X. Xxxxx, as assignee of Xxxx Xxxxxxx,
X.X. Xxxxx, as assignee of Xxxx Xxxxxxx, X.X. Xxxxx as assignee of
Xxxxxxx Xxxxx, and Xxxxxxxx X. Xxxxx.
(l) Circuit Systems of Tennessee, Inc., the corporate general
partner of CSTLP, shall have delivered to Bank evidence of all required
partnership approvals for CSTLP to execute and deliver this Amendment.
(m) Borrowers shall have delivered to Bank a copy of an
executed employment agreement between CSI and Xxxxxxxxx X. Xxxxx
providing for Xxxxxxxxx X. Xxxxx'x employment as Chief Operating
Officer of CSI on terms acceptable to Bank.
7. GENERAL PROVISIONS.
(a) Except as herein amended or modified, the terms and
provisions of the Loan Documents shall remain unchanged and in full
force and effect and are in all other respects ratified and confirmed.
(b) This Amendment shall be construed in accordance with and
governed by the laws of the State of Illinois, and the obligations of
Borrowers under this Amendment are and shall arise absolutely and
unconditionally upon the execution and delivery of this Amendment.
(c) This Amendment. may be executed in any number of
counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
(d) Borrowers hereby agree to pay all out-of-pocket expenses
incurred by Bank in connection with the preparation, negotiation and
consummation of this Amendment, and all other documents related
thereto, including without limitation, the fees and expense of Bank's
counsel.
IN WITNESS WHEREOF, Borrowers and Bank have caused this
Amendment to be duly executed by their duly authorized officers, each
as of the day and year first above written.
CIRCUIT SYSTEMS, INC.
By: __________________________
Title:____________________________
CIRCUIT SYSTEMS OF TENNESSEE, L.P.
By: __________________________
Title:____________________________
SVPC CIRCUIT SYSTEMS, INC.
By: __________________________
Title:____________________________
LASALLE BANK NATIONAL ASSOCIATION
By: __________________________
Title:____________________________
