1
EXHIBIT 10.33
FIRST AMENDMENT TO CREDIT AGREEMENT
(Borrowing Base)
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (Borrowing Base)(this
"Amendment") dated effective as of April 15, 1997 (the "Effective Date"), is by
and between XETEL CORPORATION ("Borrower"), and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association whose principal office is located
in Houston, Texas (the "Bank").
PRELIMINARY STATEMENT
The Bank and the Borrower have entered into a Credit Agreement (with
Borrowing Base) dated as of August 23, 1996 (the "Credit Agreement"). The
"Agreement", as used in the Credit Agreement, shall also refer to the Credit
Agreement as amended by this Amendment. All capitalized terms defined in the
Credit Agreement and not otherwise defined herein shall have the same meanings
herein as in the Credit Agreement. The Bank and the Borrower have agreed to
amend the Credit Agreement to the extent set forth herein, and in order to,
among other things, renew, modify and increase the Commitment.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the Bank and the Borrower hereby agree as
follows:
Section 1. Revolving Credit Note. Section 1.1 of the Credit
Agreement is amended by redesignating the same as Section 1.1.A and by
substituting the following for the Section 1.1.A of the Credit Agreement:
"Subject to the terms and conditions hereof, the Bank agrees to make
loans ("Revolving Loan" or "Revolving Loans") to Borrower from time to
time before the Termination Date, not to exceed at any one time
outstanding for Borrower the lesser of the Borrowing Base or
$10,000,000.00 (the "Commitment"), Borrower having the right to
borrow, repay and reborrow. Each Revolving Loan and Repayment must be
at least the minimum amount required in the Revolving Note. The
Revolving Loans may only be used for supporting Borrower's accounts
receivable and inventory. The Bank and the Borrower agree that Chapter
15 of the Texas Credit Code shall not apply to this Agreement, the
Revolving Note or any Revolving Loan. The Revolving Loans shall be
evidenced by and shall bear interest and be payable as provided in the
promissory note of Borrower dated the Effective Date (together with
any and all renewals, extensions, modifications, replacements, and
rearrangements thereof and substitutions therefor, the "Revolving
Note") which is given in renewal, modification and increase of that
certain promissory note dated August 23, 1996 in the original
principal amount of $7,000,000.00 (including all prior notes of which
said note represents a renewal, extension, modification, increase,
substitution, rearrangement or replacement thereof, the "Renewed
Note"). The parties hereto agree that there is as of the Effective
Date an outstanding principal balance of $-0- under the Revolving Note
leaving a balance as of the Effective Date of $10,000,000.00 under the
Commitment available for Revolving Loans subject to the terms and
conditions of this Agreement. "Termination Date" means the earlier of
(a) August 31, 1998; or (b) the date specified by Bank pursuant to
Section 6.1 hereof.
Section 2. The Credit Agreement is amended by adding a new Section
1.1.B to read as follows:
"ADVANCE TERM NOTE 1.1.B Bank agrees to extend an advance loan
converting to a term loan on the Advance Termination Date (as defined
in the Advance Term Note) in the amount of $2,500,000.00
("Advance/Term Loan" or "Advance/Term Loans") to Borrower as evidenced
by a promissory note in proper form in the original principal amount
of $2,500,000.00 dated April 3, 1997 and maturing August 31, 2000
(together with any and all renewals, extensions, modifications and
replacements thereof and substitutions therefor, the "Advance/Term
Note")." The Advance/Term Loans shall be for the purpose of financing
Borrower's leasehold improvements."
Section 3. The Credit Agreement is amended by adding a new Section
1.1.C to read as follows:
"LOANS AND NOTES 1.1.C "Loan" or "Loans" shall refer to each and all
Revolving Loans and all Advance/Term Loans. "Note" or "Notes" shall
refer to each and both of the Revolving Note and the Advance/Term
Note."
Section 3. Section 1.4 of the Credit Agreement is amended by
substituting the following for Section 1.4 of the Credit Agreement:
"In consideration of the Commitment, Borrower will pay a Commitment
Fee (computed on the basis of the actual number of days elapsed in a
year comprised of 360 days) of one-eighth (1/8) of one percent (1%) on
the Revolving Loan based on the daily average difference between the
Commitment and the principal balance of the Revolving Note from the
date hereof to the Termination Date. The Commitment Fee is due and
payable quarterly in arrears beginning on September 30, 1996."
Section 4. Section 7.4 of the Credit Agreement is amended as follows:
"All representations, warranties, covenants and agreements made by or
on behalf of Borrower in connection with the Loan
First Amendment, Xetel Corporation, April 15, 1997
Page 1 of 2
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Documents will survive the execution and delivery of the Loan
Documents; will not be affected by any investigation made by any
Person, and will bind Borrower and the successors, trustees, receivers
and assigns of Borrower and will benefit the successors and assigns of
the Bank; provided that Bank's agreement to make Loans to Borrower
will not inure to the benefit of any successor or assign of Borrower
except for an approved merger or business combination. Except as
otherwise provided herein, the term of this Agreement will be until
the later of the final maturity of the Revolving Note or the Term
Note, whichever is later and the full and final payment of all
Obligations and all amounts due under the Loan Documents."
Section 5. Section 7.6 of the Credit Agreement is amended as follows:
"EXPENSES 7.6 Any provision to the contrary notwithstanding, and
whether or not the transactions contemplated by this Agreement are
consummated, Borrower agrees to pay on demand all reasonable, direct
out-of-pocket expenses (including, without limitation, the fees and
expenses of counsel for Bank) in connection with the negotiation,
preparation, execution, filing, recording, modification, supplementing
and waiver of the Loan Documents and the making, servicing and
collection of the Loans. Notwithstanding anything contained herein to
the contrary, Borrower shall not pay more than $1,500.00 for any
single, annual field analysis of Borrower's assets. Borrower agrees to
pay Bank's standard Documentation Preparation and Processing Fee for
preparation, negotiation and handling of this Agreement not to exceed
the amount of $1,500.00. Borrower also agrees to pay Bank a
transaction fee of $8,500.00, which fee is due and payable upon the
execution of this Amendment. The obligations of the Borrower under
this and the following section will survive the termination of this
Agreement."
Section 6. Exhibit A of the Credit Agreement is hereby amended by
replacing prior Exhibit A with the Exhibit A attached hereto and hereby
incorporated into this Amendment and the Credit Agreement for all purposes.
Section 7. Exhibit C of the Credit Agreement is hereby amended by
replacing prior Exhibit C with the Exhibit C attached hereto and hereby
incorporated into this Amendment and the Credit Agreement for all purposes.
Section 8. The Borrower hereby represents and warrants to the Bank
that after giving effect to the execution and delivery of this Amendment: (a)
the representations and warranties set forth in the Credit Agreement are true
and correct on the date hereof as though made on and as of such date; and (b)
no Event of Default, or event which with passage of time, the giving of notice
or both would become an Event of Default, has occurred and is continuing as of
the date hereof.
Section 9. This Amendment shall become effective as of the Effective
Date upon its execution and delivery by each of the parties named in the
signature lines below.
Section 10. The Borrower further acknowledges that each of the other
Loan Documents is in all other respects ratified and confirmed, and all of the
rights, powers and privileges created thereby or thereunder are ratified,
extended, carried forward and remain in full force and effect except as the
Credit Agreement is amended by this Amendment.
Section 11. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed an original and all of which taken
together shall constitute but one and the same agreement.
Section 12. This Amendment shall be included within the definition of
"Loan Documents" as used in the Agreement.
Section 13. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND AS APPLICABLE, THE LAWS OF
THE UNITED STATES OF AMERICA.
THIS WRITTEN AMENDMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN
AGREEMENT" AS DEFINED IN SECTION 26.02(a) OF THE TEXAS BUSINESS & COMMERCE
CODE, AND REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed effective as of the Effective Date.
BORROWER: XETEL CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Address:
-----------------------------
BANK: TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By:
----------------------------------
Name:
--------------------------------
Title:
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First Amendment, Xetel Corporation, April 15, 1997
Page 2 of 2
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EXHIBIT A
BORROWING BASE REPORT
Accounts Receivable and Inventory
Borrowing Base Report for Period Beginning: ____________________ and Ending
____________________ ("Current Period") required by the Credit Agreement dated
August 23, 1996 (as amended, restated, and supplemented from time to time, the
"Agreement") by and between XETEL CORPORATION and Texas Commerce Bank National
Association
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THE BORROWING BASE REPORT MUST BE SUBMITTED TO BANK WITHIN 20 DAYS OF THE LAST
DAY OF EACH FISCAL MONTH END. BORROWER MUST PROVIDE THE FOLLOWING ALONG WITH
THE BORROWING BASE REPORT: ACCOUNTS RECEIVABLE AGINGS AND LISTING AND ACCOUNTS
PAYABLE AGINGS
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Line 1. Total Accounts as of the end of the Current Period $
Ineligible Accounts as of the end of the Current Period: -----------------
2. That portion (e.g., invoice) of all of the Accounts
of any Account Debtor where the Account is more than
90 days from invoice date (net of unapplied cash and
return material authorizations) $
------------------
3. That portion of all of the Accounts of any Account
Debtor which exceeds 25% of the dollar amount of the
total of all Accounts for all Account Debtors for
the Current Period (Line 1) $
------------------
4. Intercompany and Affiliate Accounts (Total Intercompany
and Affiliate Accounts = $________________________ less
$_________________________ [not to exceed $500,000.00 in the
aggregate] in Intercompany and Affiliate Accounts
which Borrower, by signing below, certifies as arising
from "arms length" transactions) $
------------------
5. Government Accounts [Government Accounts means
receivables owed by the U.S. government or by the
government of any state, county, municipality, or
other political subdivision as to which Bank's
security interest or ability to obtain direct payment
of the proceeds is governed by any federal or state
statutory requirements other than those of the Uniform
Commercial Code, including, without limitation,
the Federal Assignment of Claims Act of 1940,
as amended.] $
------------------
6. Foreign Accounts $
------------------
7. Accounts subject to any dispute or setoff or contra account $
------------------
8. Other Ineligible Accounts $
------------------
9. Total Ineligible Accounts for the Current Period $
-----------------
(Add Lines 2 through 8)
10. Total Eligible Accounts for the Current Period $
-----------------
(Line 1 - Line 9)
11. Multiplied by: Accounts Advance Factor 80%
12. Equals: Accounts Component of Borrowing Base $
13. Total Foreign Accounts secured by a letter of credit issued
by a bank satisfactory to the Bank or covered by Exim bank
insurance ("Secured Foreign Accounts") $
-----------------
14. Multiplied by: Secured Foreign Accounts Advance Factor 90%
15. Equals: Secured Foreign Accounts Component of Borrowing Base $
-----------------
EXHIBIT A
Page 1 of 2 Pages
4
16. Accounts of Ericsson, Inc., Dell Computer Corp., Dell
International, Inc. and all Subsidiaries of Dell International, Inc.
or otherwise approved by
Bank in writing ("Acceptable Foreign Accounts") $
-----------------
17. Multiplied by: Acceptable Foreign Accounts Advance Factor 80%
18. Equals: Acceptable Foreign Accounts Component of Borrowing
Base $
-----------------
19. Net book value of Inventory as of the end of the Current Period $
-----------------
20. Less Other Ineligible Inventory $
21. Total Eligible Inventory as of the end of the
Current Period (Line 19 - Line 20) $
-----------------
22. Multiplied by: Inventory Advance Factor 25%
23. Equals: Inventory Component of Borrowing Base $
(Not to exceed 40% of the Borrowing Base at any time when -----------------
the aggregate amount outstanding under the Notes is equal to or
less than $7,000,000.00 and not to exceed 33% of the Borrowing Base
at any time when the aggregate amount outstanding under the Note
is greater than $7,000,000.00)
24. Total BORROWING BASE (not to exceed $7,000,000.00) as of
the end of the Current Period (Line 12 + Line 15 + Line 18
+ Line 23) $
-----------------
25. Less: Aggregate principal amount outstanding under
the Notes as of the end of the Current Period:
Revolving Note $
----------------
Term Note $
----------------
26. Equals: Amount available for borrowing subject to the terms of
the Agreement, if positive; or amount due, if negative $
-----------------
The terms "Accounts" and "Inventory" have the respective meanings as set forth
in the Texas Business and Commerce Code in effect as of the date of the
Agreement. Inventory shall be valued at the lesser of: (a) market value; and
(b) cost. "Other Ineligible Accounts" mean all such Accounts of Borrower that
are not subject to a first and prior Lien in favor of Bank, those Accounts that
are subject to any Lien not in favor of Bank and those Accounts of Borrower as
shall be deemed from time to time to be, in the sole judgment of Bank,
ineligible for purposes of determining the Borrowing Base. "Other Ineligible
Inventory" means that Inventory of Borrower that is not subject to a first and
prior Lien in favor of Bank, that Inventory that is subject to any Lien not in
favor of Bank and that Inventory of Borrower as shall be deemed from time to
time to be in the sole judgment of Bank, ineligible for purposes of determining
the Borrowing Base. All other terms not defined herein shall have the
respective meanings as in the Agreement.
Borrower certifies that the above information and computations are true,
correct, complete and not misleading as of the date hereof.
Borrower: XETEL CORPORATION
By:
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Name:
----------------------------------------------------------------------
Title:
---------------------------------------------------------------------
Address:
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Date:
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EXHIBIT A
Page 2 of 2 Pages
5
EXHIBIT C to Agreement between
XETEL CORPORATION ("Borrower") and Texas Commerce Bank National Association
("Bank") dated August 23, 1996 (as may be amended, restated and supplemented
in writing).
REPORTING REQUIREMENTS, FINANCIAL COVENANTS
AND COMPLIANCE CERTIFICATE
FOR CURRENT REPORTING PERIOD ENDING ________________, 199__ ("END DATE")
A. REPORTING PERIOD. THIS EXHIBIT WILL BE IN PROPER FORM AND SUBMITTED
WITHIN 45 DAYS OF THE END OF EACH FISCAL QUARTER INCLUDING THE LAST REPORTING
PERIOD OF THE FISCAL YEAR AND WITH THE FISCAL YEAR END FINANCIAL STATEMENT.
BORROWER'S FISCAL YEAR ENDS ON MARCH 31.
========================================================================================================================
B. Financial Reporting. Borrower will provide the following financial information within the times Compliance
indicated: Certificate
========================================================================================================================
WHO WHEN DUE WHAT Compliance
--- -------- ---- (Circle)
Yes No
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BORROWER (i) Within 90 days of fiscal Annual financial statements (balance Yes No
year end sheet, income statement, cash flow
statement) Audited (with unqualified
opinion) by independent certified public
accountants satisfactory to Bank,
accompanied by Compliance Certificate.
Note: Unqualified statements are
required unless the Bank gives written
approval allowing for a qualified
designation
------------------------------------------------------------------------------------------
(ii) Within 45 days of each Unaudited interim financial statements Yes No
Reporting Period End Date, accompanied by Compliance Certificate
including final period of
fiscal year
------------------------------------------------------------------------------------------
(iii) Within 30 days of each Borrowing Base Report (Exhibit A), along Yes No
fiscal month end with accounts receivable aging and
listing, inventory report and accounts
payable aging
========================================================================================================================
C. FINANCIAL COVENANTS. Borrower will comply COMPLIANCE CERTIFICATE
with the following financial covenants, defined
in accordance with GAAP and the definitions in
Section 8, and incorporating the calculation
adjustments indicated on the Compliance
Certificate:
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REQUIRED ACTUAL REPORTED Compliance
Except as specified otherwise, each covenant For Current Reporting Period/as of the End Date (Circle)
will be maintained at all times and reported for
each Reporting Period or as of each Reporting
Period End Date, as appropriate: Yes No
------------------------------------------------------------------------------------------------------------------------
I. Effective March 31, 1996, maintain a Tangible Stockholders' Equity $ Yes No
Net Worth as adjusted of at least -------------
$21,500,000.00. Note: At the end of each fiscal Minus: Goodwill $
year, beginning on March 31, 1997, and on the -------------
last day of each fiscal year thereafter, this Other Intangible
covenant will increase by 50% of Borrower's Assets $
annual net income generated and 100% of all -------------
equity created from stock issuance and Loans/Advances to
acquisition (net of goodwill). Increases to this Equity holders $
covenant on each fiscal year end are based on -------------
financial results generated over the twelve Loans to Affiliates $
months preceding each fiscal year end. -------------
Plus: Subordinated Debt $
-------------
=Tangible Net Worth as adjusted $
-------------
------------------------------------------------------------------------------------------------------------------------
II. Maintain a Current Ratio of at least 1.50 : Current Assets $ divided by Current Yes No
1.0. -------------------
Liabilities ($ + $ )
--------------------- --------------
[Note: Current Liabilities includes all Loan draws
made on the $10,000,000 revolving Note]
= $
-----------------------
Current Ratio
========================================================================================================================
D. Other Required Covenants to be maintained and to be certified. COMPLIANCE
CERTIFICATE
========================================================================================================================
REQUIRED ACTUAL REPORTED Compliance
-------- ---------------
* Bank may, in its sole and absolute discretion, approve (Circle)
certain one time write-offs that may then be added back
to net income to calculate losses.
------------------------------------------------------------------------------------------------------------------------
(i) Quarterly losses* shall not exceed Quarterly losses for the fiscal quarter Yes No
$3,000,000.00 per fiscal quarter in the aggregate. ending ______, equal $______ in the aggregate.
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(ii) No losses* for more than two (2) consecutive For the fiscal quarter ending _________, there Yes No
fiscal quarters. is/is not a loss; for the immediately preceding
fiscal quarter there was/was not a loss.
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(iii) No Losses* for any two (2) consecutive fiscal Quarterly losses for the fiscal quarter ending Yes No
quarters which exceed $4,000,000.00 in the aggregate. ____, equal $___ in the aggregate and quarterly
losses for the immediately preceding fiscal
quarter end, equal $________ in the aggregate.
------------------------------------------------------------------------------------------------------------------------
(iv) Additional Indebtedness, Liens and capital For fiscal year: ________________, Yes No
leases are limited to $1,500,000.00 in the aggregate debt for borrowed money = $_____________,
for fiscal year 1997 and $2,000,000.00 in the Plus capital lease payments = $______________,
aggregate for fiscal year 1998. Plus Other Indebtedness = $______________.
Equals Total of: $ ______________
========================================================================================================================
EXHIBIT C Page 1 of 3 Pages
6
THE ABOVE SUMMARY REPRESENTS SOME OF THE COVENANTS AND AGREEMENTS CONTAINED IN
THE AGREEMENT AND DOES NOT IN ANY WAY RESTRICT OR MODIFY THE TERMS AND
CONDITIONS OF THE AGREEMENT. IN CASE OF CONFLICT BETWEEN THIS EXHIBIT C AND
THE AGREEMENT, THE AGREEMENT SHALL CONTROL.
The undersigned hereby certifies that the above information and computations
are true and correct and not misleading as of the date hereof, and that since
the date of the Borrower's most recent Compliance Certificate (if any):
[ ] No default or Event of Default has occurred under the
Agreement during the current Reporting Period, or been discovered from a prior
period, and not reported.
[ ] A default or Event of Default (as described below) has
occurred during the current Reporting Period or has been discovered from a
prior period and is being reported for the first time and:
[ ] was cured on ___________________________________.
[ ] was waived by Bank in writing on _______________.
[ ] is continuing.
Description of Event of Default:
-----------------------------------------------
--------------------------------------------------------------------------------
.
-------------------------------------------------------------------------------
Executed this day of , 19 .
------------------------- ------------------------- ---
BORROWER: XETEL CORPORATION
SIGNATURE:
---------------------------------------------------------------------
NAME:
--------------------------------------------------------------------------
TITLE: (Chief Financial Officer or President)
-------------------------------------------------------------------------
ADDRESS:
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EXHIBIT C Page 2 of 3 Pages
7
EXHIBIT B
REQUEST FOR LOAN
LETTERHEAD OF BORROWER
Texas Commerce Bank National Association
700 Lavaca
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Re: Request for Revolving Loan under Agreement
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Gentlemen:
This letter confirms our oral or telephonic request of
_________________________, 19____, for a Revolving Loan in accordance with that
certain Credit Agreement (as amended, restated and supplemented from time to
time, the "Agreement") dated as of August 23,1996 between you and us. Any term
defined in the Agreement and used in this letter has the same meaning as in the
Agreement.
The proposed Revolving Loan is to be in the amount of
$________________________________ and is to be made on ____
____________________, 19_____, which is a Business Day. The proposed Revolving
Loan should bear interest at the (check one:) [ ] LIBOR Rate; or [ ] the Prime
Rate. The proceeds of the proposed Revolving Loan should be (check one:) [ ]
deposited into account number ________________ with the Bank; or [ ]
____________________________________________________
________________________________________________________________________________
___________.
The undersigned hereby certifies that:
(1) The representations and warranties made by the Borrower or by
any other Person in the Agreement and the other Loan Documents
are true and correct on and as of this date as though made on
this date.
(2) The proposed Revolving Loan complies with all applicable
provisions of the Agreement.
(3) No Event of Default has occurred and is continuing.
Sincerely,
XETEL CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT B Page 1 of 1
First Amendment, Xetel Corporation, April 3, 1997
8
ANNEX I
LOAN DOCUMENTS
"Loan Documents" includes, but is not limited to, the following:
1. Agreement
2. Revolving Note; Term Note
3. [ ] Assignment covering:
[ ] Life insurance
[ ] Deposit account
[ ] Other (specify)
4. Borrowing Base Report
5. Compliance Certificate
6. [x] Security Agreements, in Proper Form, covering:
[x] Accounts
[ ] Equipment
[x] Inventory
[ ] Securities
[ ] Secured note
[ ] Certificate of deposit or deposit account
[ ] Partnership interest
[ ] Rights under contract
[ ] Other (specify)
7. [ ] Deed of Trust
8. [ ] Title Insurance Policy
9. [x] Financing Statements
10. [ ] Guaranty by:
11. [x] Certificate of Account Status
12. [ ] Opinion of Borrower' Counsel
13. [x] Certified Copies of Organizational and Authority Documents
14. [x] Insurance policies and certificates
15. [ ] Subordination Agreement covering: [ ] debt to:
[ ] lien of:
16. [x] Financial Statements of: Borrower
17. [x] UCC search
18. [ ] Regulation U Purpose Statement (U-1)
Loan Documents - ANNEX I Page 1 of 1
First Amendment, Xetel Corporation, April 3, 1997
