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SECOND AMENDMENT
TO
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
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Second Amendment dated as of June 26, 1998 to Amended and Restated
Revolving Credit Agreement (the "Second Amendment"), by and among FLEXTRONICS
INTERNATIONAL LTD., a company incorporated in Singapore (the "Borrower"),
BANKBOSTON, N.A. (formerly known as The First National Bank of Boston) and the
other lending institutions listed on Schedule 1 to the Credit Agreement (as
hereinafter defined) (the "Banks"), amending certain provisions of the Amended
and Restated Revolving Credit Agreement dated as of January 14, 1998 (as amended
and in effect from time to time, the "Credit Agreement") by and among the
Borrower, the Banks and BankBoston, N.A. as agent for the Banks (the "Agent").
Terms not otherwise defined herein which are defined in the Credit Agreement
shall have the same respective meanings herein as therein.
WHEREAS, the Borrower and the Banks have agreed to modify certain terms and
conditions of the Credit Agreement as specifically set forth in this Second
Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ss.1. Amendment to Section 1.1 of the Credit Agreement. Section 1.1 of the
Credit Agreement is hereby amended as follows:
(a) the definition of "Applicable Margin" is hereby amended by deleting
such definition in its entirety and restating it as follows:
Applicable Margin. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a
"Rate Adjustment Period"), the Applicable Margin shall be the applicable
margin set forth below with respect to the Company's Pricing Leverage
Ratio, as determined for the fiscal period of the Company and its
Subsidiaries ending immediately prior to the applicable Rate Adjustment
Period.
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Base Eurodollar Letter of Acceptance Fee Commitment
Level Pricing Leverage Ratio Rate Rate Credit Rate Fee
Loans Loans Fees Rate
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I Less than 1.50:1.00 0 50.00 50.00 50.00 20.00
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II Equal to or greater than 0 62.50 62.50 62.50 20.00
1.50:1.00 but less than
2.00:1.00
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III Equal to or greater than 0 87.50 87.50 87.50 25.00
2.00:1.00 but less than
2.50:1.00
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IV Equal to or greater than 0 112.50 112.50 112.50 25.00
2.50:1.00 but less than
3.00:1.00
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V Equal to or greater than 0 137.50 137.50 137.50 25.00
3.00:1.00 but less than
3.50:1.00
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VI Equal to or greater than 0 162.50 162.50 162.50 25.00
3.50:1.00 but less than
4.00:1.00
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VII Equal to or greater than 0 187.50 187.50 187.50 25.00
4.00:1.00
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Notwithstanding the foregoing, (a) for purposes of interest on
Revolving Credit Loans outstanding, the Letter of Credit Fees, the
Acceptance Fee Rate and the Commitment Fee Rate payable during the period
commencing on June 26, 1998 through the date immediately preceding the
first Adjustment Date to occur after the fiscal quarter ended June 26,
1998, the Applicable Margin shall be at Level III set forth above, and (b)
if the Company fails to deliver any Compliance Certificate pursuant to
ss.9.4(c) hereof then, for the period commencing on the next Adjustment
Date to occur subsequent to such failure through the date immediately
following the date on which such Compliance Certificate is delivered, the
Applicable Margin shall be at the highest Applicable Margin set forth
above.
(b) the definition of "Excluded Subsidiaries" is hereby amended by deleting
such definition in its entirety and restating it as follows:
Excluded Subsidiaries. Collectively, Astron Technologies Ltd.,
Flextronics Industrial (Shenzhen) Limited, Flextronics Computer (Shekou)
Limited, Zhuhai Daomen Xxxx Xx Technology Co. Ltd., Zhuhai Daomen Xxxx Xx
Electronics Co. Ltd., Flex Asia (UK) Ltd., EnergiPilot AB, Proactive, Inc.,
Marathon Business Park LLC, any Unrestricted Subsidiary and any other
Subsidiary formed or acquired after the Closing Date and which is not
required to become a Guarantor pursuant to ss.9.14 hereof and which does
not elect to become a Guarantor pursuant to ss.7 hereof; provided, however,
to the extent any Person which is an Excluded Subsidiary hereunder
subsequently elects or is otherwise required to become a Guarantor
hereunder and complies with ss.6.2 hereof, such Person shall cease being an
Excluded Subsidiary hereunder on the date all the conditions of ss.7.4 have
been satisfied.
(c) the definition of "Total Funded Indebtedness" is hereby amended by
deleting the words "less the sum of (a) cash of the Company and its Subsidiaries
existing on the date of determination plus (b) Investments of the Company and
its Subsidiaries made pursuant to ss.10.3(a), (b) or (c) hereof" from such
definition;
(d) by inserting the following definitions in the appropriate alphabetical
order:
Pricing Leverage Ratio. As at any date of determination, the ratio of
(a) Total Pricing Funded Indebtedness of the Company and its Subsidiaries
outstanding on such date to (b) the EBITDA of the Company and its
Subsidiaries for the period of four (4) consecutive fiscal quarters
(treated as a single accounting period) most recently ended on such date.
Restricted Subsidiary. Any Subsidiary which is not an Unrestricted
Subsidiary. Neither the Company nor any Subsidiary shall have the right to
change the status of a Restricted Subsidiary to an Unrestricted Subsidiary,
but the Company or any Subsidiary shall have the right to change the status
of an Unrestricted Subsidiary to a Restricted Subsidiary, subject to
compliance with the provisions of ss.9.14 hereof.
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Total Pricing Funded Indebtedness. All Indebtedness of the Company and
its Subsidiaries for borrowed money (including without limitation, all
guarantees by such Person of Indebtedness of others for borrowed money),
purchase money Indebtedness and with respect to Capitalized Leases,
determined on a consolidated basis in accordance with generally accepted
accounting principles, less the sum of (a) cash of the Company and its
Subsidiaries existing on the date of determination plus (b) Investments of
the Company and its Subsidiaries made pursuant to ss.10.3(a), (b) or (c)
hereof.
Unrestricted Subsidiary. Collectively, (a) Neutronics Electronic
Industries Holdings AG, Althofen Electronics GmbH, HTR Technical Resources
Kft, Ecoplast Kft, Conexao Informatica Ltda, Flextronics do Brazil
Servicios Ltda and (b) any other Subsidiary of the Company, direct or
indirect, as to which (i) such Subsidiary conducts substantially all of its
business in countries other than the United States of America and is
organized under the laws of a jurisdiction other than the United States of
America and the States (or the District of Columbia) thereof; (ii) the
principal operations of such Subsidiary are not located in the United
States; (iii) the Company has provided the Agent with an officer's
certificate certifying that the Company has designated such Subsidiary as
an Unrestricted Subsidiary at or prior to the time such Subsidiary is
formed or acquired by the Company, as the case may be, and the Company has
provided written notice to the Agent in reasonable detail of such
designation within five (5) Business Days after designation thereof; (iv)
the Company owns not less than eighty percent (80%) of the capital stock of
such Subsidiary and not less than eighty percent (80%) of the Voting Stock
of such Subsidiary; (v) all of such Subsidiary's liabilities (other than
liabilities permitted to be guaranteed by the Company pursuant to ss.10.1
hereof) are non-recourse as to the Company or any Restricted Subsidiary;
and (vi) such Subsidiary does not own any capital stock of, or own or hold
any lien, security interest or other encumbrance on, any property of the
Company or any other Restricted Subsidiary, provided, however, no
Subsidiary shall be designated after the date hereof as an Unrestricted
Subsidiary if any Default or Event of Default would exist immediately after
giving effect to such designation.
ss.2. Amendment to Section 9 of the Credit Agreement. Section 9 of the
Credit Agreement is hereby as follows:
(a) Section 9.16 of the Credit Agreement is hereby amended by
deletingss.9.16 in its entirety and restating it as follows:
9.16. Payment of Astron Obligation. The Company shall make all
payments under the Astron Sales Agreement, the Services Agreement dated
February 2, 1996 between the Company, Astron Technologies Limited and
Xxxxxxx Xxxx (the "Xxxx Service Agreement") and the Supplemental Services
Agreement dated February 2, 1996 between Astron Group Limited and Xxxxxxx
Xxxx (the "Supplemental Xxxx Agreement") which are able to be paid pursuant
to such agreements in Astron Consideration Shares (as to the Astron Sales
Agreement) or ordinary shares of the Company (pursuant to the Xxxx Service
Agreement and the Supplemental Xxxx Agreement); provided, however, the
Company shall be permitted to make such payments in cash so long as no
Default or Event of Default has occurred and is continuing and the Company
can demonstrate to the satisfaction of the Agent that the Pricing Leverage
Ratio at the time of such cash payment is equal to or less than 2.50:1.00
both before and after giving effect to such cash payments.
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(b) Section 9.20 of the Credit Agreement is hereby amended by
deletingss.9.20 in its entirety and restating it as follows:
9.20. Unrestricted Subsidiaries. The Company shall at all times
designate persons constituting a majority of the directors (or members of
the governing body) of, and at all times have the power, directly or
indirectly, to direct the management and polices of each Unrestricted
Subsidiary.
ss.3. Amendment to Section 10 of the Credit Agreement. Section 10 of the
Credit Agreement is hereby amended as follows:
(a) Section 10.1(h) of the Credit Agreement is hereby amended by
deletingss.10.1(h) in its entirety and restating it as follows:
(h) obligations under (i) Capitalized Leases, (ii) Synthetic Leases
and (iii) other Indebtedness incurred in connection with the acquisition
after the date hereof of any real or person property or any business entity
by any Borrower or such Subsidiary; provided that the aggregate principal
amount of such Indebtedness under this ss.10.1(h)(iii) of the Borrowers and
the Restricted Subsidiaries and any Unrestricted Subsidiary which is
guaranteed by the Company or any Restricted Subsidiary plus the aggregate
principal amount of outstanding secured Indebtedness of any Unrestricted
Subsidiary which is guaranteed by the Company or any Restricted Subsidiary
and which is permitted to be incurred pursuant to ss.10.1(q) hereof shall
not exceed the aggregate amount of $50,000,000 at any one time;
(b) Section 10.1(o) of the Credit Agreement is hereby amended by (a)
deleting the words "other unsecured Indebtedness or Indebtedness secured solely
by a Temporary Lien" which appear in ss.10.1(o) and substituting in place
thereof the words "other unsecured Indebtedness of any Subsidiary or
Indebtedness of a Restricted Subsidiary secured solely by a Temporary Lien"; and
(b) deleting the word "and" which appears at the end of the text of ss.10.1(o);
(c) Section 10.1(p) of the Credit Agreement is hereby amended by deleting
the period which appears at the end of such section and substituting in place
thereof a semicolon and the word "and";
(d) Section 10.1 of the Credit Agreement is further amended by inserting
immediately after the text ofss.10.1(p) the following:
(q) secured Indebtedness of an Unrestricted Subsidiary which is not
otherwise permitted hereunder provided that (i) no Default or Event of
Default shall have occurred and be continuing or would exist as a result of
incurring such Indebtedness; (ii) the Company is in compliance with the
financial covenants set forth in ss.11 hereof on a pro forma basis both
before and immediately after giving effect to such Indebtedness and, to the
extent reasonably requested by the Agent, the Company has demonstrated such
compliance to the reasonable satisfaction of the Agent; (iii) to the extent
such Indebtedness is guaranteed by the Company or any Restricted
Subsidiary, the terms of such Indebtedness (including, without limitation,
the covenants, defaults, penalties and conditions pertaining to such
Indebtedness, but excluding amortization, collateral and maturity) taken as
a whole, are not materially more onerous to the Company and its
Subsidiaries than the terms contained herein taken as a whole; and (iv) to
the extent such Indebtedness is guaranteed by the Company or any Restricted
Subsidiary, the aggregate
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principal amount of such Indebtedness under this ss.10.1(q) of the
Borrowers and their Subsidiaries which is guaranteed by the Company or any
Restricted Subsidiary plus the aggregate principal amount of outstanding
purchase money Indebtedness of any Borrower or any Subsidiary which is
guaranteed by the Company or any Restricted Subsidiary and which is
permitted to be incurred pursuant to ss.10.1(h)(iii) hereof shall not
exceed the aggregate amount of $50,000,000 at any one time.
(e) Section 10.2(xiv) of the Credit Agreement is hereby amended by deleting
the word "and" which appears at the end of such section;
(f) Section 10.2(xv) of the Credit Agreement is hereby amended by (a)
deleting the words "liens on assets of a Subsidiary" and substituting in place
thereof the words "liens on assets of a Restricted Subsidiary"; and (b) deleting
the period which appears at the end of ss.10.2(xv) and substituting in place
thereof a semicolon and the word "and";
(g) Section 10.2 is further amended by inserting immediately after the end
of ss.10.2(xv) the following:
(xvi) liens on assets of any Unrestricted Subsidiary to secure
Indebtedness permitted to be incurred pursuant to ss.10.1(q) hereof.
(h) Section 10.3 is hereby amended by deleting ss.10.3(l) in its entirety
and restating such ss.10.3(l) as follows:
(l) Investments with respect to Indebtedness permitted by ss.10.1(g)
and Investments (other than Investments in an Unrestricted Subsidiary) made
pursuant to the Investment Policy Guidelines;
ss.4. Amendment to Section 11 of the Credit Agreement. Section 11 of the
Credit Agreement is hereby amended as follows:
(a) Section 11.1 of the Credit Agreement is hereby amended by deleting the
ratio "3.50:1.00" which appears in ss.11.1 and substituting in place thereof the
ratio "4.50:1.00"; and
(b) Section 11.3 of the Credit Agreement is hereby amended by (i) deleting
the words "95% of Consolidated Tangible Net Worth at September 30, 1997" and
substituting in place thereof the number "$175,000,000"; and (b) deleting the
date "September 30, 1997" from each place in which it appears in ss.11.3 and
substituting in place thereof the date "March 31, 1998".
ss.5. Amendment to Credit Agreement. Notwithstanding anything to the
contrary contained in the Credit Agreement, from and after the date hereof the
Borrowers shall not be permitted to request any Revolving Credit Loans to be
denominated in an Optional Currency, shall only be permitted to have Revolving
Credit Loans denominated in Dollars and, to the extent there are any Revolving
Credit Loans denominated in any Optional Currency, shall be required to repay
such Revolving Credit Loans on the date hereof.
ss.6. Amendment to Schedules 10.1 and 10.2 of the Credit Agreement.
Schedules 10.1 and 10.2 of the Credit Agreement are each hereby amended as
follows:
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(a) Schedule 10.1 of the Credit Agreement is hereby amended by deleting
from Schedule 10.1 all Indebtedness incurred by Neutronics, and substituting in
place thereof the Indebtedness set forth on the annex to Schedule 10.1 attached
hereto; and
(b) Schedule 10.2 of the Credit Agreement is hereby amended by deleting
from Schedule 10.2 all liens on assets of Neutronics securing Indebtedness of
Neutronics and substituting in place thereof the liens set forth on the annex to
Schedule 10.2 attached hereto.
ss.7. Conditions to Effectiveness. This Second Amendment shall not become
effective until the Agent receives a counterpart of this Second Amendment,
executed by the Borrower, the Guarantors and the Majority Banks.
ss.8. Representations and Warranties. The Borrower hereby repeats, on and
as of the date hereof, each of the representations and warranties made by it in
ss.8 of the Credit Agreement, and such representations and warranties remain
true as of the date hereof (except to the extent of changes resulting from
transactions contemplated or permitted by the Credit Agreement and the other
Loan Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse, and to the extent that
such representations and warranties relate expressly to an earlier date),
provided, that all references therein to the Credit Agreement shall refer to
such Credit Agreement as amended hereby. In addition, the Borrower hereby
represents and warrants that the execution and delivery by the Borrower of this
Second Amendment and the performance by the Borrower of all of its agreements
and obligations under the Credit Agreement as amended hereby are within the
corporate authority of each the Borrower and has been duly authorized by all
necessary corporate action on the part of the Borrower.
ss.9. Ratification, Etc. Except as expressly amended hereby, the Credit
Agreement and all documents, instruments and agreements related thereto,
including, but not limited to the Security Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this Second Amendment shall be read and construed as a
single agreement. All references in the Credit Agreement or any related
agreement or instrument to the Credit Agreement shall hereafter refer to the
Credit Agreement as amended hereby.
ss.10. No Waiver. Nothing contained herein shall constitute a waiver of,
impair or otherwise affect any Obligations, any other obligation of the Borrower
or any rights of the Agent or the Banks consequent thereon.
ss.11. Counterparts. This Second Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
ss.12. Governing Law. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO CONFLICT OF LAWS).
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IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as a document under seal as of the date first above written.
FLEXTRONICS INTERNATIONAL LTD.
By:__________________________________
Title:
BANKBOSTON, N.A.
By:__________________________________
Title:
ABN AMRO BANK N.V.
By: _________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By: _________________________________
Name:
Title:
BANQUE NATIONALE DE PARIS, SAN
XXXXXXXXX XXXXXX
By: _________________________________
Name:
Vice President
PARIBAS
By: _________________________________
Name:
Title:
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COMERICA BANK
By: _________________________________
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: _________________________________
Name:
Title:
SUMITOMO BANK OF CALIFORNIA
By: _________________________________
Name:
Title:
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RATIFICATION OF GUARANTY
Each of the undersigned guarantors hereby acknowledges and consents to the
foregoing Second Amendment as of June 26, 1998, and agrees that each of the
Guarantees dated as of January 14, 1998 from each of the undersigned Guarantors
remain in full force and effect, and each of the Guarantors confirms and
ratifies all of its obligations thereunder.
FLEXTRONICS INTERNATIONAL USA, INC.
By:__________________________________
Title:
FLEXTRONICS INTERNATIONAL (UK) LTD.
By:__________________________________
Title:
FLEXTRONICS MANUFACTURING (HK) LTD.
By:__________________________________
Title:
FLEXTRONICS SINGAPORE PTE. LTD.
By:__________________________________
Title:
FLEXTRONICS HOLDING (UK) LTD.
By:__________________________________
Title:
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FLEXTRONICS MALAYSIA SDN BHD
By:__________________________________
Title:
FLEXTRONICS INTERNATIONAL
MARKETING (L) LTD.
By:__________________________________
Title:
FLEXTRONICS HOLDINGS AB
By:__________________________________
Title:
FLEXTRONICS INTERNATIONAL
SWEDEN AB
By:__________________________________
Title:
ASTRON GROUP LIMITED
By:__________________________________
Title:
DTM PRODUCTS CORPORATION
By:__________________________________
Title:
ANNEX TO SCHEDULE 10.1
ANNEX TO SCHEDULE 10.2
