EXHIBIT 10.1
AMENDMENT NO. 2 TO
LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT ("Amendment No. 2"), dated
as of June 30, 2003, by and among PEMSTAR Inc., a Minnesota corporation
("Parent"), Turtle Mountain Corporation, a North Dakota Corporation ("Turtle
Mountain"), PEMSTAR Pacific Consultants Inc., a California corporation ("PPC",
and together with Parent and Turtle Mountain, each individually a "Borrower" and
collectively, "Borrowers"), Gentlelife, Inc., a California corporation, formerly
known as Kinderlife Instruments Inc. ("Guarantor") and Congress Financial
Corporation (Central), an Illinois corporation, in its capacity as
administrative and collateral agent pursuant to the Loan Agreement (as
hereinafter defined) acting for and on behalf of the parties thereto as lenders
(in such capacity "Agent").
W I T N E S S E T H :
WHEREAS, Agent, Borrowers, Guarantor, Fleet Capital Corporation, a Rhode
Island corporation, in its capacity as Documentation Agent for Lenders (in such
capacity, "Documentation Agent"), and the parties to the Loan Agreement as
lenders, whether by execution of the Loan Agreement or an Assignment and
Acceptance (individually, each a "Lender" and collectively, "Lenders"), have
entered into financing arrangements pursuant to which Lenders (or Agent on
behalf of Lenders) have made, and may make, loans and advances and provide other
financial accommodations to Borrowers as set forth in the Loan and Security
Agreement, dated April 25, 2003, by and among Agent, Borrowers, Guarantor,
Documentation Agent and Lenders (as amended by Amendment No. 1 to Loan and
Security Agreement, dated April 25, 2003, as amended hereby and as the same may
hereafter be further amended, modified, supplemented, extended, renewed,
restated or replaced, the "Loan Agreement", and together with all agreements,
documents and instruments at any time executed and/or delivered in connection
therewith or related thereto, as from time to time amended and supplemented,
collectively, the "Financing Agreements");
WHEREAS, Borrowers and Guarantor have requested that Agent and Lenders
agree to amend the Loan Agreement to change the financial covenant, the terms
and conditions for the sale of certain real property of Parent, and the terms
and conditions pursuant to which Parent may guarantee certain indebtedness of
its foreign subsidiaries;
WHEREAS, Agent and Lenders are willing to agree to such amendments, subject
to the terms and conditions herein; and
WHEREAS, by this Amendment Xx. 0, Xxxxx, Xxxxxxx, Borrowers and Guarantor
desire and intend to evidence such consent and amendments.
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
and covenants contained herein, the parties hereto agree as follows:
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1. Definitions.
(a) Amendment to Definition.
(i) Section 1.29(m) of the Loan Agreement is hereby amended to
delete the reference therein to "twenty-five (25%) percent" and replace such
reference with the following: "thirty (30%) percent until January 4, 2004 and
twenty-five (25%) percent thereafter".
(ii) Section 1.59 of the Loan Agreement is hereby amended to
delete the reference therein to "$25,000,000" and replace such reference with
the following: "$15,000,000".
(a) Additional Definition. As used herein, the term "Amendment No. 2"
shall mean this Amendment No. 2 to Loan and Security Agreement by and among
Agent, Lenders, Borrowers and Guarantor, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced and
the Loan Agreement and the other Financing Agreements are hereby amended to
include, in addition to and not in limitation of, such definition.
(b) Interpretation. For purposes of this Amendment No. 2, unless
otherwise defined herein, all terms used herein, including, but not limited to,
those terms used and/or defined in the recitals above, shall have the respective
meanings assigned to such terms in the Loan Agreement.
2. Interest Rate. Notwithstanding anything to the contrary contained in the
Loan Agreement or any of the other Financing Agreements, commencing on the date
hereof and ending on January 4, 2004, the Interest Rate shall be a rate equal to
one and one-half (1 1/2%) percent in excess of the Prime Rate calculated on a
per annum basis, provided, that, such rate may be increased in accordance with
Section 1.57(c) of the Loan Agreement. After January 4, 2004, the Interest Rate
shall be determined as set forth in the Loan Agreement without regard to this
Section 2.
3. Eurodollar Rate Loans. Notwithstanding anything to the contrary
contained in the Loan Agreement or any of the other Financing Agreements, for
the period commencing on the date hereof and ending on January 4, 2004, no
Borrower shall request, and Lenders (or Agent on behalf of Lenders) shall not
make any Eurodollar Rate Loans and the Interest Rate in respect of all Loans
made on and after the date hereof shall be the Interest Rate applicable to Prime
Rate Loans. As of the date hereof, any Eurodollar Rate Loans outstanding shall
be converted to Prime Rate Loans. After January 4, 2004, Eurodollar Rate Loans
shall be available to Borrowers in accordance with the terms of the Loan
Agreement without regard to this Section 3.
4. Sale of Assets, Consolidation, Merger, Dissolution, Etc. Section 9.7(b)
of the Loan Agreement is hereby amended as follows:
(a) Section 9.7(b)(viii)(C) of the Loan Agreement is hereby amended to
delete the reference therein to "$1,500,000" and replace such reference with
"$3,000,000".
(b) Section 9.7(b)(viii)(F) of the Loan Agreement is hereby deleted in
its entirety and replaced with the following: "intentionally omitted".
5. Indebtedness.
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(a) Section 9.9(i)(ii) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following: "(ii) the sum of the maximum aggregate
amount of the liability of Parent (whether contingent or otherwise) pursuant to
all of such guarantees arising after the date hereof shall not, at any time,
exceed $2,000,000;".
(b) Schedule 9.9 to the Information Certificate is hereby amended to
add all of the guarantees listed on Schedule 9.10 to the Information Certificate
to Schedule 9.9 at the end thereof and Schedule 9.10 to the Information
Certificate is hereby amended to delete such guarantees listed therein in their
entirety.
6. Minimum EBITDA.
(a) Section 9.17 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"(a) The EBITDA of Parent and its Subsidiaries (on a consolidated
basis) as of the last day of each month for the immediately preceding
three (3) consecutive months (in each case for this purpose treated as
a single accounting period), commencing with the three (3) consecutive
month period ending June 30, 2003, shall be not less than the amount
for such period set forth on Amended Schedule 9.17(a) to Amendment No.
2.
(b) The EBITDA of Parent and its Subsidiaries other than the
Foreign Subsidiaries (on a consolidated basis) as of the last day of
each month for the immediately preceding three (3) consecutive months
(in each case for this purpose treated as a single accounting period),
commencing with the three (3) consecutive month period ending June 30,
2003, shall be not less than the amount for such period set forth on
Amended Schedule 9.17(b) to Amendment No. 2.
(c) In calculating EBITDA for purposes of this Section 9.17,
notwithstanding anything to the contrary contained herein, the
restructuring charges taken in the quarters ending June 30, 2003 and
September 30, 2003 shall be excluded from such calculation and the
gains from the sale of the Rochester Real Property in accordance with
Section 9.7hereof shall be included in such calculation."
(b) Schedules 9.17(a) and 9.17(b) of the Loan Agreement are each
hereby deleted in their entirety and replaced with Amended Schedule 9.17(a) and
Amended Schedule 9.17(b) included with this Amendment No. 2.
7. Additional Reserves. Without limiting any other rights or remedies of
Agent under the Loan Agreement or any of the other Financing Agreements with
respect to the establishment of Reserves or otherwise, (a) Agent shall on the
date hereof establish a special availability Reserve (the "Special Availability
Reserve") of up to $3,000,000 and (b) Agent may establish Reserves upon the sale
by Parent of the Rochester Real Property in such amounts as Agent may determine
up to the amount of the Net Proceeds thereof received by Agent. The term
"Reserves" as used in the Loan Agreement shall include, in addition and not in
limitation, the Special Availability Reserve. Notwithstanding anything to the
contrary contained in the Loan Agreement or any of the
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other Financing Agreements, the Special Availability Reserve may only be
terminated with the approval of the Required Lenders.
8. Amendment Fee. In addition to all other fees, charges, interest and
expenses payable by Borrowers to Agent and Lenders under the Loan Agreement and
the other Financing Agreements, Borrowers shall pay to Agent for the account of
Lenders, contemporaneously with the effectiveness of this Amendment, an
amendment fee in the amount of $250,000, which fee shall be fully earned and
nonrefundable as of the date hereof and may be charged to any loan account of
Borrowers.
9. Additional Representations, Warranties and Covenants. Each Borrower and
Guarantor represents, warrants and covenants with and to Agent and Lenders as
follows, which representations, warranties and covenants are continuing and
shall survive the execution and delivery hereof:
(a) This Amendment No. 2 has been duly executed and delivered by each
Borrower and Guarantor and is in full force and effect as of the date hereof and
the agreements and obligations of each Borrower and Guarantor contained herein
constitute legal, valid and binding obligations of each Borrower and Guarantor
enforceable against each of them in accordance with their respective terms.
(b) No action of, or filing with, or consent or any governmental or
public body or authority, and no approval or consent of any other party, is or
will be required to authorize, or is or will be otherwise required in connection
with, the execution, delivery and performance of this Amendment No. 2.
(c) After giving effect to the provisions of this Amendment No. 2, no
Event of Default exists or has occurred as of the date of this Amendment No. 2.
10. Conditions Precedent. The effectiveness of the amendments contained
herein shall be subject to: (a) the receipt by Agent of this Amendment No. 2
duly authorized, executed and delivered by the parties hereto and (b) the
receipt by Agent of the approval of Required Lenders, in form and substance
satisfactory to Agent, to the terms and conditions of this Amendment No. 2.
11. Effect of this Amendment. Except as expressly set forth herein, no
other amendments, consents, changes or modifications to the Financing Agreements
are intended or implied, and in all other respects the Financing Agreements are
hereby specifically ratified, restated and confirmed by all parties hereto as of
the effective date hereof and Borrowers shall not be entitled to any other or
further amendment or consent by virtue of the provisions of this Amendment No. 2
or with respect to the subject matter of this Amendment No. 2. To the extent of
conflict between the terms of this Amendment No. 2 and the other Financing
Agreements, the terms of this Amendment No. 2 shall control. The Loan Agreement
and this Amendment No. 2 shall be read and construed as one agreement.
12. Governing Law. The validity, interpretation and enforcement of this
Amendment No. 2 and the other Financing Agreements and any dispute arising out
of the relationship between the parties hereto whether in contract, tort, equity
or otherwise, shall be governed by the internal laws of the State of Illinois
but excluding any principles of conflicts of law or other rule of law that
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would cause the application of the law of any jurisdiction other than the laws
of the State of Illinois.
13. Binding Effect. This Amendment No. 2 shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
14. Headings. The headings listed herein are for convenience only and do
not constitute matters to be construed in interpreting this Amendment No. 2.
15. Counterparts. This Amendment No. 2 may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment No. 2, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto. Delivery of an executed counterpart of this
Amendment No. 2 by telefacsimile shall have the same force and effect as
delivery of an original executed counterpart of this Amendment No. 2. Any party
delivering an executed counterpart of this Amendment No. 2 by telefacsimile also
shall deliver an original executed counterpart of this Amendment No. 2, but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment No. 2 as to such
party or any other party.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to
be duly executed and delivered by their authorized officers as of the day and
year first above written.
AGENT BORROWERS
CONGRESS FINANCIAL CORPORATION PEMSTAR INC.
(CENTRAL), as Agent
By: /s/ Xxxxx Xxxxx By: /s/ Xxxx X. Xxx
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Title: Vice President Title: CFO
------------------------ ------------------------
TURTLE MOUNTAIN CORPORATION PEMSTAR PACIFIC CONSULTANTS INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxx X. Xxx
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Title: Secretary Title: CFO
------------------------ ------------------------
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GUARANTOR
GENTLELIFE, INC.
By: /s/ Xxxxx X. Xxxxx
---------------------------
Title: Secretary
------------------------
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AMENDED SCHEDULE 9.17
TO
LOAN AND SECURITY AGREEMENT
Amended Schedule 9.17(a)
For the three (3) immediately preceding consecutive month
period ended:
June 30, 2003 $0
July 31, 2003 $3,368,000
August 31, 2003 $7,032.000
September 30, 2003 $8,500,000
October 31, 2003 $10,700,000
November 30, 2003 $11,100,000
December 31, 2003 $14,000,000
January 31, 2004 $11,800,000
February 28, 2004 $12,500,000
March 30, 2004 $9,300,000
As of the
last day of each month
thereafter $8,175,000
Amended Schedule 9.17(b)
For the three (3) immediately preceding consecutive month
period ended:
June 30, 2003 ($2,103,000)
July 31, 2003 ($202,000)
August 31, 2003 $1,474,000
September 30, 2003 $4,100,000
October 31, 2003 $5,800,000
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November 30, 2003 $6,900,000
December 31, 2003 $5,800,000
January 31, 2004 $5,100,000
February 28, 2004 $5,200,000
March 30, 2004 $2,100,000
As of the
last day of each month
thereafter $2,550,000
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