EXHIBIT 10.2
ACKNOWLEDGMENT, WAIVER AND AMENDMENT #8
TO
FINANCING AGREEMENT
This ACKNOWLEDGMENT, WAIVER AND AMENDMENT #8 ("Amendment") TO THE
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made as of September 27, 2002
by and between 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:
WHEREAS, the Credit Parties and IBM Credit have entered into that
certain Amended and Restated Revolving Credit Agreement dated as of June 29,
2001 (as amended, supplemented or otherwise modified from time to time, the
"Agreement");
WHEREAS, the Credit Parties are in default (as more specifically
explained in Section 2 hereof);
WHEREAS, the Credit Parties are requesting that IBM Credit waive
certain defaults; and
WHEREAS, IBM Credit is willing to waive such defaults subject to the
terms and conditions set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the premises set forth herein, and
for other good and valuable consideration, the value and sufficiency of which is
hereby acknowledged, the parties hereto 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. Acknowledgment.
A. The Credit Parties acknowledge that the financial covenants set forth in
Attachment A to Agreement are applicable to the financial results of the Credit
Parties for the fiscal month ending August 31, 2002 (unless otherwise indicated
below), and the Credit Parties were required to maintain such financial
covenants at all times. The Credit Parties further acknowledge that their actual
attainment was as follows:
Covenant Covenant Requirement Covenant Actual for the monthly
-------- -------------------- -------------------------------
period ending August 31, 2002
-----------------------------
(a) Net Profit after Tax Equal to or Greater than (.25) N/A
to Revenue percent quarterly for the fiscal
quarter ending September 30, 2002
Equal to or Greater than .75 percent
quarterly for the fiscal year ending N/A
December 30, 2003
Equal to or Greater than .25 percent
quarterly for the fiscal N/A
quarter ending March 31, 2003
Equal to or Greater than .75 percent
quarterly for the fiscal quarter
ending June 30, 2003 N/A
and all fiscal quarters thereafter
(b) Net Profit to Tax Equal to or Greater than (3.25) N/A
After revenue percent for the fiscal year ending
(Annual) March 31, 2003 and 1.25 percent for
all fiscal year ends thereafter
(c) Total Liabilities to Greater than Zero and 1.41:1.0
Tangible Net Worth Equal to or less than 1.6:1.0
(d) Current Assets to Greater than 2.0:1.0 1.98:1.0
Current Liabilities
(e) Fixed Charge Coverage Equal to or Greater than 1.00:1.0 N/A
Ratio for each fiscal month beginning
December 31, 2002, including the fiscal
months ending January 31, 2003 and
February 28, 2003, and 1.30:1.0 for each
fiscal month beginning March 31, 2003 and
for all fiscal months thereafter
(f) Maximum Capital Less than or equal to N/A
Expenditures $40,000,000 for the fiscal year
ending March 31, 2002 and $18,000,000 for
the fiscal year ending March 31, 2003 and
all fiscal year ends thereafter
(g) Net Profit After Equal to or greater than 1.5 percent N/A
Tax to Revenue for the fiscal quarter ending
(U.S. Credit Parties December 31, 2002 and all fiscal
operations only) quarters thereafter
(h) EBITDA Equal to or Greater than N/A
(U.S. Credit Parties ($19,000,000) for the six months
operations only) ending June 30, 2002 and
$5,500,000 for all fiscal quarters
thereafter
(i) EBITDA Equal to or Greater than N/A
($23,000,000) for the six
months ending June 30, 2002 and
$6,000,000 for all fiscal quarters
thereafter
B. The Credit Parties acknowledge that the following default occurred:
Term Requirement Default
---- ----------- -------
(a) Credit Parties failed to comply with As required under Section Credit Parties exceeded the
the limits on Investments and Equity 7.16. (F) of the Agreement limit of $ 1,500,000 under
Investments as Section 7.16 (F) ( )
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described in Section
7.16(f) of the Agreement related to $10,500,000
investment in Pemstar of
Mexico.
Section 3. Waivers to Agreement. Subject to the terms and conditions set forth
herein including, without limitation, Section 5 hereof, IBM Credit hereby waives
the defaults of the Credit Parties with the terms of the Agreement to the extent
such defaults are set forth in Section 2 hereof and for the periods indicated
above. The waiver shall not be effective until the conditions to effectiveness
set forth in Section 5 have been fulfilled to IBM Credit's satisfaction in its
sole discretion and shall not be deemed a waiver of compliance with these
Sections after the date hereof. The waiver set forth herein shall not apply to
any other or subsequent failures to comply with the Agreement or this Amendment.
Section 4. Amendment.
The Agreement is hereby amended as follows:
A. Attachment A to the Agreement is hereby amended by deleting such
Attachment A in its entirety and substituting, in lieu thereof, the Attachment A
attached hereto. Such new Attachment A shall be effective as of the date
specified in the new Attachment A. The changes contained in the new Attachment A
include, without limitation, the following:
1. Section I of Attachment A is amended in its entirety to read as
follows:
"I. Fees, Rates and Repayment Terms:
(A) Credit Facility:
Revolving A: Sixty-five Million Dollars ($65,000000) Revolving
Credit Facility
(B) Borrowing Base:
(i) (a) 90% of the amount of each Credit Party's Eligible Accounts
from International Business Machines Corp. ("IBM") or its domestic
subsidiaries as account debtor pursuant to agreements between such
Credit Party and IBM in form and substance satisfactory to IBM
Credit as of the date of determination as reflected in the
Customer's most recent Collateral Management Report;
(b) 90% of the amount of each Credit Party's accounts from IBM's
foreign subsidiaries as account debtor as of the date of
determination as reflected in the Customer's most recent Collateral
Management Report but in no event shall the aggregate amount
permitted under this Section IB(i)(b) exceed One Million Dollars
($1,000,000);
Notwithstanding Section 3.1 (A) of the Agreement, for purposes of
this Section (i), Accounts from IBM that allow for payment to be
made within 60 days shall be included for purposes of calculating
the Borrowing Base provided that such Accounts are on standard
terms and otherwise satisfy the criteria for eligibility in IBM
Credit's sole discretion.
(ii) 80% of the amount of each Credit Party's Eligible Accounts
from Honeywell Inc. ("Honeywell"), Minnesota Mining & Manufacturing
Company ("3M"), and Applied Materials, Inc. ("Applied Materials")
as account debtor, provided such account debtors remain investment
grade, in IBM Credit's sole discretion, and pursuant to agreements
between such Credit Party and such account debtor, in form and
substance satisfactory to IBM Credit as of the date of
determination as reflected in the Customer's most recent Collateral
Management Report;
Notwithstanding Section 3.1 (A) of the Agreement, for purposes of
this Section (ii), Accounts from Honeywell that allow for payment
to be made within 45 days shall be included for purposes of
calculating the Borrowing Base provided that such Accounts from
Honeywell are on standard terms and otherwise satisfy the criteria
for eligibility in IBM Credit's sole discretion.
(iii) 80% of the amount of each Credit Party's other Eligible
Accounts, other than Concentration Accounts, as of the date of
determination as reflected in the Customer's
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most recent Collateral Management Report provided, however, IBM
Credit has a first priority security interest in such Eligible
Account;
(iv) a percentage, determined from time to time by IBM Credit in
its sole discretion, of the amount of Customer's Concentration
Accounts for a specific Concentration Account Debtor as of the date
of determination as reflected in the Customer's most recent
Collateral Management Report; unless otherwise notified by IBM
Credit, in writing, the percentage for Concentration Accounts for a
specific Concentration Account Debtor shall be the same as the
percentage set forth in paragraph (ii) of the Borrowing Base;
The following subsections (v), (vi), (vii) and (viii) specify
valuation rates for Eligible Finished Goods Inventory, Eligible
Parts Inventory and Eligible Inventory (as such terms are defined
below) for the following Credit Parties' at the specified
locations:
Pemstar Inc. = Rochester, MN
Pemstar Inc. = San Jose, CA
Pemstar Inc. = Taunton, MA
Turtle Mountain Corporation = Dunseith, ND
(v) Rochester, MN = 90, Xxx Xxxx, XX x 0%, Xxxxxxx, XX = 0%,
Dunseith, ND = 95% of the lower of (x) book value or (y) fair
market value of each Credit Party's Eligible Finished Goods
Inventory destined for IBM less than 180 days old;
(vi) Rochester, MN = 80%, Xxx Xxxx, XX x 0%, Xxxxxxx, XX = 0%,
Dunseith, ND = 78% of the lower of (x) book value or (y) fair
market value of each Credit Party's Eligible Parts Inventory
destined for IBM less than 180 days old;
(vii) Rochester, MN = 61%, Xxx Xxxx, XX x 0%, Xxxxxxx, XX = 0%,
Dunseith, ND = 75% of the lower of (x) book value or (y) fair
market value of each Credit Party's Eligible Inventory destined for
Honeywell, 3M, and Applied Materials less than 180 days old;
(viii) Rochester, MN (other than Eligible Finished Goods Inventory,
Eligible Parts Inventory and Eligible Inventory destined for
Celestica) = 49%, Rochester, MN (for Eligible Finished Goods
Inventory, Eligible Parts Inventory and Eligible Inventory destined
for Celestica) = 44%, San Jose, CA = 41%, Taunton, MA = 55%,
Dunseith, ND = 44% of the lower of (x) book value or (y) fair
market value of each Credit Party's other Eligible Inventory less
than 180 days old provided, however, IBM Credit has a first
priority security interest in such Eligible Inventory.
Eligible Finished Goods Inventory shall mean finished goods
inventory in salable condition less than 180 days old, owned by a
Credit Party free and clear of any Liens (other than Liens pursuant
to this Agreement),_ and designated and identified as product to be
sold to IBM as evidenced by (i) non-cancellable purchase orders
from IBM or (ii) a non-cancellable written agreement that IBM will
purchase such inventory, in each case, in form and substance
satisfactory to IBM Credit.
Eligible Parts Inventory shall mean parts inventory and floor stock
raw materials in good condition less than 180 days old, owned by a
Credit Party free and clear of any Liens (other than Liens pursuant
to this Agreement), and designated and identified as parts to be
used to manufacture product (the Eligible Finished Goods Inventory)
to be sold to IBM as evidenced by (i) non-cancellable purchase
orders from IBM to such Credit Party or (ii) a non-cancellable
written agreement that IBM will purchase such inventory, in each
case, in form and substance satisfactory to IBM Credit.
Eligible Inventory shall mean raw materials, floor stock raw
materials and finished goods inventory less than 180 days old owned
by a Credit Party free and clear of any Liens (other than Liens
pursuant to this Agreement) designated and identified by the
Customer in its periodic collateral report or borrowing request to
IBM Credit as inventory applicable to product sold, or to be
manufactured and sold, by a Credit Party to an end user pursuant to
non-cancellable purchase orders or other written agreements binding
such end user to
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purchase such product, in each case, in form and substance
satisfactory to IBM Credit.
Notwithstanding the foregoing, IBM Credit may consider Eligible
Finished Goods Inventory, Eligible Parts Inventory and/or Eligible
Inventory in the Borrowing Base greater than 180 days old provided
that (i) a purchase order is in place between the end-user and the
Credit Party, in form and substance satisfactory to IBM Credit or
(ii) Credit Party provides evidence to IBM Credit, in form and
substance satisfactory to IBM Credit, that the end-user is paying
all carrying costs associated with such Eligible Finished Goods,
Eligible Parts Inventory and/or Eligible Inventory. Under no
circumstances will Eligible Finished Goods, Eligible parts
Inventory or Eligible Inventory be considered in the Borrowing Base
if older than 365 days.
IBM Credit will consider Eligible Finished Goods Inventory,
Eligible Parts Inventory and/or Eligible Inventory to be ineligible
if the end-user customer with respect to such Eligible Finished
Goods Inventory, Eligible Parts Inventory and/or Eligible Inventory
becomes delinquent in its payments of accounts receivable to the
Credit Parties and such accounts receivable owing from such account
debtor are not eligible pursuant to the terms of Section 3.1 (C) of
the Agreement.
Notwithstanding the foregoing, assets of Pemstar Pacific
Consultants shall not be included for the purposes of calculating
the Borrowing Base. For purposes of calculating the Borrowing Base,
Pemstar Pacific Consultants shall not be deemed a Credit Party.
In addition, to the extent IBM Credit does not have first priority
security interest in any Eligible Accounts, Eligible Finished Goods
Inventory, Eligible Parts Inventory and Eligible Inventory such
item will not be included for purposes of calculating the Borrowing
Base.
(C) Collateral Insurance Amount: Seventy Million Dollars ($70,000,000).
(D) Applicable Margin: Prime Rate plus 3.50%.
(E) Delinquency Fee Rate: Prime Rate plus 6.500%.
(F) Shortfall Transaction Fee: Shortfall Amount multiplied by 0.30%.
(G) Other Charges:
(i) Unused Line Fee: 0.375% per annum on the daily average unused
portion of the Credit Line for each day from the closing date of
the Agreement and shall be computed on the basis of a 360 day year
and payable monthly in arrears and upon the maturity or termination
of the Agreement.
(ii) Prepayment Fee: A prepayment premium, payable to IBM Credit in
the event that the Customer terminates the Credit Line prior to
Termination Date, in an amount equal to the amount of the Credit
Line in effect as of the date of notice of termination or date of
default, multiplied by one half of one percent (0.50%).
(iii) Waiver Fee of Sixty-five Thousand Dollars ($65,000.00)."
2. Section III. Financial Covenants of Attachment A immediately after the
definitions is amended and restated as follows:
"Customer will be required to maintain the following financial ratios,
percentages and amounts as of the last day of the fiscal period under review by
IBM Credit:
On a consolidated basis:
Covenant Covenant Requirement
-------- --------------------
(a) Net Profit after Tax ($1,700,000) for the fiscal month ending
to Revenue (on a monthly September 30, 2002
basis) ($2,800,000) for the fiscal month ending
October 30, 2002
($3,600,000) for the two fiscal month period
ending November 30, 2002
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($3,700,000) for the fiscal quarter
ending December 31, 2002
($2,100,000) for the fiscal month ending
January 31, 2003
($2,600,000) for the two fiscal month
period ending February 28, 2003
($2,000,000) for the fiscal month ending
March 31, 2003, and Equal to or greater
than .75 percent of Revenues quarterly
for the fiscal quarter ending June 30,
2003 and at all times thereafter
(b) Net Profit After Tax Equal to or greater than 1.25 percent at
to Revenue (on an annual fiscal year ending March 31, 2004, and
basis) for all fiscal year ends thereafter
(c) Total Liabilities to Greater than Zero
Tangible Net Worth and Equal to or Less than 1.6:1.0
(d) Current Assets to Greater than 1.70:1.0 for the fiscal
Current Liabilities months September and October 2002,
greater than 1.60:1.0 for the fiscal
months November and December 2002,
greater than 1.50:1.0 for the fiscal
months January, February and March 2003,
and 2.0:1.0 at all times thereafter
(e) Maximum Capital Less than or equal to $18,000,000 for the
Expenditures fiscal year ending March 31, 2003 and all
fiscal quarters thereafter provided,
however, no Credit Party may make any
Capital Expenditure in excess of
$1,000,000 without the prior written
consent of IBM Credit.
(f) Net Profit After Net loss not greater than $3,000,000 for
Tax to Revenue the month ending September 30, 2002
(U.S. Credit Parties Net loss not greater than $3,400,000 for
operations only) the month ending October 31, 2002
Net loss not greater than $5,100,000 for
the two month period ending November 30,
2002;
Net loss not greater than $6,200,00 for
the three month period ending December
31, 2002
Net loss not greater than $2,700,000 for
the month ending January 31, 2003
Net loss not greater than $3,800,000 for
the two month period ending February 28,
2003
Net loss not greater than $4,300,000 for
the three month period ending March 31,
2003; Equal to or Greater than 1.5% of
Revenues for each fiscal quarter.
thereafter beginning at June 30, 2003
(g) EBITDA Equal to or less than ($1,300,000) for
(U.S. Credit Parties the month ending September 30, 2002 Equal
operations only) to or less than ($1,800,000) for the
month ending October 31, 2002 Equal to or
less than ($1,800,000) for the two months
ended November 30, 2002;
Equal to or less than ($1,300,000) for
the three months ending December 31, 2002
Equal to or less than ($1,200,000) for
the month ending January 31, 2003 Equal
to or less than ($700,000) for the two
months ending February 28, 2002;
Equal to or greater than a $300,000 for
the three months ending March 31, 2003,
and Equal to or greater than $5,500,000
for all fiscal quarters thereafter
(h) EBITDA Equal to or Greater than $750,000 for the
month ending September 30, 2002 Not less
than ($300,000) for the month ending
October 31, 2002 Equal to or Greater than
$1,500,000 for the two month period
ending November 30, 2002 Equal to or
Greater than $3,900,000 for the three
month period ended December 31, 2002
Equal to or greater than $300,000 for the
month ending January 31,
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2003
Equal to or Greater than $2,200,000
for the two month period ending February
28, 2003
Equal to or Greater than $5,300,000 for
the three month period ending
March 31, 2003;
Equal to or Greater than $6,000,000 for
all fiscal quarters thereafter"
3. Attachment C to the Agreement is hereby amended by deleting such Attachment C
in its entirety and substituting, in lieu thereof, the Attachment C attached
hereto. Such new Attachment C shall be effective as of the date specified in the
new Attachment A.
4. The definition of "Termination Date" in the Agreement is amended in its
entirety to read as follows:
""Termination Date": shall mean December 31, 2003 or such other date as IBM
Credit and Customer may agree from time to time in writing."
5. Section 7.16 (F) of the Agreement is amended in its entirety to read as
follows:
"(F) Notwithstanding anything herein to the contrary, no Credit Party nor any
Subsidiary of a Credit Party shall at any time (i) provide a guarantee of any
Indebtedness of any Unrestricted Domestic Subsidiary (if any) or Foreign
Subsidiary except that (x) the Customer may, pursuant to the Thai Guaranty,
guarantee the obligations of Pemstar Thailand in connection with the Thai Loan
Agreement provided that the aggregate amount of Customer's liability under such
guaranty shall not exceed the lesser of (i) Two Million Five Hundred Thousand
Dollars ($2,500,000) and (ii) the amounts due under the Thai Loan Agreement and
(y) the Customer may provide guaranties to support Foreign Subsidiaries
obligations under operating leases provided that the obligations under all such
guaranties do not exceed Fourteen Million Dollars ($14,000,000) in the
aggregate, (ii) be liable for any other Indebtedness of any Unrestricted
Domestic Subsidiary (if any) or Foreign Subsidiary, or (iii) be liable for any
other Indebtedness (other than Indebtedness to U.S. Bank) which provides that
the holder thereof may (upon notice, lapse of time or both) declare a default
therein (or cause such Indebtedness or the payment thereof to be accelerated,
payable or subject to repurchase prior to its final scheduled maturities) upon
the occurrence of a default with respect to any Indebtedness of an Unrestricted
Domestic Subsidiary (if any) or Foreign Subsidiary, (iv) make loans, advances,
payment of money or goods to an Unrestricted Domestic Subsidiary (if any) or
Foreign Subsidiary except as otherwise provided in Section 8.15 hereof, (v) make
Restricted Payments to an Unrestricted Domestic Subsidiary (if any) or Foreign
Subsidiary or (vi) make any Investment or equity contribution in an Unrestricted
Domestic Subsidiary (if any) or Foreign Subsidiary except that a Credit Party
may make an equity contribution in (w) the Unrestricted Foreign Subsidiaries
(other than Pemstar Thailand) provided that the aggregate amount of all such
Investments and equity contributions in all the Unrestricted Foreign
Subsidiaries (other than Pemstar Thailand) do not exceed Thirteen Million
Dollars ($13,000,000) in the aggregate (x) Foreign Subsidiaries (other than
Unrestricted Foreign Subsidiaries and Pemstar Mexico) provided that the
aggregate amount of all equity investments made by the Credit Parties in any
Foreign Subsidiary (other than Unrestricted Foreign Subsidiaries and Pemstar
Mexico) shall not exceed One Million Five Hundred Thousand Dollars ($1,500,000)
in the aggregate per such Foreign Subsidiary, (y) Pemstar Mexico provided that
the aggregate amount of all such Investments and equity investments in Pemstar
Mexico shall not exceed Ten Million Five Hundred Thousand Dollars ($10,500,000)
in the aggregate and (z) Pemstar Thailand provided that the aggregate amount of
all such Investments and equity investments in Pemstar Thailand shall not exceed
Three Million Six Hundred Thousand Dollars ($3,600,000) in the aggregate. No
Unrestricted Domestic Subsidiary (if any) or Foreign Subsidiary may be merged
into the Customer or any Credit Party or liquidate into or transfer
substantially all of its assets to the Customer or any other Subsidiary (other
than an Unrestricted Subsidiary) without the prior written consent of IBM
Credit. The Credit Parties acknowledge that Unrestricted Domestic Subsidiaries
are not permitted without the prior written consent of IBM Credit."
6. Section 8.21(b) of the Agreement is amended by deleting the reference to "(as
defined in the Securities Purchase Agreement)" and substituting in lieu thereof
"(as defined in the Subordinated Convertible Notes").
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Section 5. Conditions to Effectiveness of Waiver. The waiver set forth in
Section 3 hereof shall become effective only upon the fulfillment of all of the
following conditions precedent, to the satisfaction of IBM Credit in its sole
discretion:
(i) this Amendment shall have been executed by each of the parties hereto and
IBM Credit shall have received a fully executed copy of this Amendment by no
later than September 30, 2002;
(ii) the Credit Parties shall pay to IBM Credit a waiver fee, in immediately
available funds, equal to Sixty- five thousand dollars ($65,000.00) on or prior
to September 30, 2002. Such waiver fee payable to IBM Credit hereunder shall be
nonrefundable and shall be in addition to any other fees IBM Credit may charge
the Credit Parties; and
(iii) before and after giving effect to this Amendment, the representations and
warranties in Section 6 of the 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
(iv) IBM Credit shall have received evidence satisfactory to it in its sole
discretion that U.S. Bank shall have waived (in writing) all defaults under its
financing facility with the Credit Parties and amended its financial covenants
by no later than September 30, 2002 and such waiver and amendment shall be in
form and substance satisfactory to IBM Credit or a certification from the Credit
Parties that no default or event of default exists under their financing
facilities with U.S. Bank and accordingly no such waiver and amendment is
required.
Section 6. Additional Requirements. The Agreement is hereby amended by
inserting the following additional covenants:
Additional Covenants.
(a) The Credit Parties agree that the Credit Parties shall provide to IBM
Credit, in form and substance satisfactory to IBM Credit, a certified copy of
the shareholder and certificate register updated to reflect the additional
pledge of shares by the Credit Parties to IBM Credit of Pemstar Luxembourg
S.a.r.l. shares on or prior to October 15, 2002.
(b) The Credit Parties are to deliver to IBM Credit by no later than October 15,
2002 an opinion of counsel (from counsel satisfactory to IBM Credit) covering
the issuance of additional shares of Pemstar Luxembourg S.a.r.l. and such
opinion shall be in form and substance satisfactory to IBM Credit.
The failure by any of the Credit Parties to comply with any of the above
covenants or the failure of any of the above requirements to be satisfied
(within the above time frames) in IBM Credit's determination in its sole
discretion shall constitute an immediate Event of Default under the Agreement.
Section 7. Rights and Remedies. Except to the extent specifically waived
herein, IBM Credit reserves any and all rights and remedies that IBM Credit now
has or may have in the future with respect to each Credit Party, including any
and all rights or remedies which it may have in the future as a result of each
Credit Parties' failure to comply with its financial covenants or any other
covenants to IBM Credit. Except to the extent specifically waived herein neither
this Amendment, any of IBM Credit's actions or IBM Credit's failure to act shall
be deemed to be a waiver of any such rights or remedies. The Credit Parties and
IBM Credit agree that failure to comply with the terms and provisions of this
Amendment or the Agreement constitute a new default under the Agreement.
Section 8. 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 8.1 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 8.2 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.
8
Section 8.3 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 8.4 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 8.5 Consent of Other Lenders. The Credit Parties acknowledge and agree
that the execution and delivery of this Amendment will not trigger an event of
default, default or Triggering Event (as defined in the Subordinated Convertible
Notes) under the terms of the Subordinated Debt (2002) and that no default or
Triggering Event exists thereunder.
Section 9. 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. The amendment
contained herein shall be effective only with respect to the matters referred to
herein and shall not be deemed an amendment for any other purpose whatsoever.
Section 10. Governing Law. This Amendment shall be governed by and interpreted
in accordance with the laws which govern the Agreement.
Section 11. 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.
IN WITNESS WHEREOF, this Amendment has been executed by duly authorized
representatives of the undersigned as of the day and year first above written.
IBM Credit Corporation Pemstar Inc.
By: \s\ Xxxxxx X. Xxxxxxxx By: \s\ Xx Xxxxxxx
--------------------------------- -------------------------------
Print Name: Xxxxxx X. Xxxxxxxx Print Name: Xx Xxxxxxx
------------------------- -----------------------
Title: Manager Title: CEO
------------------------------ ----------------------------
Date: September 27, 2002 Date: September 27, 2002
------------------------------- -----------------------------
Turtle Mountain Corporation Pemstar Pacific Consultants, Inc.
By: \s\ X.X. Xxxxx By: \s\ Xx Xxxxxxx
--------------------------------- -------------------------------
Print Name: X. X. Xxxxx Print Name: Xx Xxxxxxx
------------------------- -----------------------
Title: Secretary Title: CEO
------------------------------ ----------------------------
Date: September 27, 2002 Date: September 27, 2002
------------------------------ -----------------------------
Turtle Mountain Corporation
By: \s\ Xx Xxxxxxx
---------------------------------
Print Name: Xx Xxxxxxx
-------------------------
Title: CEO
------------------------------
Date: September 27, 2002
-------------------------------
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