EXHIBIT 10.23
FIFTH AMENDMENT TO LOAN AGREEMENT
This Fifth Amendment to Loan Agreement (the "Agreement"), dated as of
November 20, 2001, is by and between XETEL CORPORATION ("Borrower") and THE CIT
GROUP/BUSINESS CREDIT, INC. ("Lender").
RECITALS:
A. Borrower and Lender have entered into that certain Loan Agreement
(the "Agreement") dated as of March 31, 2000, as amended by that certain First
Amendment to Loan Agreement dated as of January 16, 2001, by that certain
Second Amendment to Loan Agreement dated as of March 30, 2001, by that certain
Third Amendment to Loan Agreement dated as of April 30, 2001 and by that
certain Fourth Amendment to Loan Agreement dated as of October 15, 2001,
pursuant to which Lender agreed to extend credit to Borrower in form of a loan
under the terms and provisions stated therein.
B. Borrower and Lender now desire to amend the Agreement as herein set
forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
ARTICLE II
AMENDMENTS TO AGREEMENT AND OTHER COVENANTS
2.1 Amendment to Section 2.1(f). Effective as of the date hereof, the
following sentence is hereby added to the end of Section 2.1(f) of the
Agreement:
"A Reserve established pursuant to this Section 2.1(f) in the
amount of at least $3,000,000 shall be maintained at all times."
2.2 Amendment to Section 3.2(b). Effective as of the date hereof, the
definition of "Applicable Prime Rate Margin" contained in Section 3.2(b) of the
Agreement is hereby amended in its entirety to read as follows:
"(b) 'APPLICABLE PRIME RATE MARGIN' shall mean three-quarters of
one percent (0.75%)."
2.3 Amendment to Section 6.11. Effective as of the date hereof,
Section 6.11 of the Agreement is hereby amended in its entirety to read as
follows:
"6.11 Financial Covenant and Compliance Certificate. Borrower
shall not, directly or indirectly, expend or commit to expend, for
fixed or capital assets (including capital lease obligations) an amount
in excess of the capital expenditure limit set forth in Section 10.4(a)
in any fiscal year of Borrower without Lender's written approval.
Borrower shall provide a Compliance Certificate to Lender on the
forty-fifth (45th) day following the end of each of Borrower's fiscal
quarters setting forth Borrower's compliance with the provisions of
this Section 6.11 and Section 10.4 hereof."
2.4 Deletion of Sections 10.2(c) and 10.4(b). Effective as of the date
hereof, Section 10.2(c) and Section 10.4(b) of the Agreement are hereby deleted
in their entirety.
2.5 Termination of LIBOR Options. Effective as of the date hereof, the
Borrower's ability to request that any Revolving Loans be designated as LIBOR
Loans shall be terminated.
ARTICLE III
CONDITIONS PRECEDENT
3.1 Conditions. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent:
A. Lender shall have received all of the following, in form and
substance satisfactory to Lender:
1. Amendment. This Amendment duly executed by Borrower; and
2. Additional Information. Such additional documents,
instruments and information as Lender or its legal counsel, Winstead
Sechrest & Minick P.C., may reasonably request.
B. The representations and warranties contained herein and in all
other Loan Documents, as amended hereby, shall be true and correct as
of the date hereof as if made on the date hereof, except for Sections
7.1(h) and 7.1(m) of the Agreement. Borrower acknowledges that Lender
does not waive any Event of Default resulting from the Borrower's
inability to represent that such representations and warranties are
true and correct.
C. Other than the matters addressed herein, no Event of Default
shall have occurred and be continuing and no event or condition shall
have occurred that with the giving of notice or lapse of time or both
would be an Event of Default.
D. All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents,
instruments, and other legal matters incident thereto shall be
satisfactory to Lender and its legal counsel, Winstead Sechrest &
Minick P.C.
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ARTICLE IV
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
4.1 Ratifications. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Agreement are ratified and confirmed and shall
continue in full force and effect. Borrower and Lender agree that the Agreement
as amended hereby shall continue to be legal, valid, binding and enforceable in
accordance with its terms. Borrower also acknowledges and ratifies that it
claims that it is entitled to certain proceeds from its account debtors Tellabs,
Inc., Tellabs Operations, Inc., Salix Technologies, Inc. and LM Ericsson
Telephone Co. or their respective affiliates, successors or assigns. Borrower
further acknowledges and ratifies that it has granted to Lender a security
interest in all accounts, contract rights and general intangibles (including
choses in action) and any proceeds thereof, specifically including any rights to
payment that Borrower has against its account debtors, including Tellabs, Inc.,
Tellabs Operations, Inc., Salix Technologies, Inc. and LM Ericsson Telephone
Co., or any of their respective affiliates, successors or assigns.
4.2 Representations and Warranties. Borrower hereby represents and warrants
to Lender that (i) the execution, delivery and performance of this Amendment and
any and all other Loan Documents executed and/or delivered in connection
herewith have been authorized by all requisite corporate action on the part of
Borrower and will not violate the articles of incorporation or bylaws of
Borrower, (ii) the representations and warranties contained in the Agreement, as
amended hereby, and any other Loan Document are true and correct on and as of
the date hereof as though made on and as of the date hereof, (iii) other that
the conditions resulting in the Overadvance addressed by this Amendment, no
Event of Default has occurred and is continuing and no event or condition has
occurred that with the giving of notice or lapse of time or both would be an
Event of Default, and (iv) Borrower is in full compliance with all covenants and
agreements contained in the Agreement as amended hereby.
ARTICLE V
MISCELLANEOUS
5.1 Survival of Representations and Warranties. All representations and
warranties made in this Amendment or any other Loan Document including any Loan
Document furnished in connection with this Amendment shall survive the execution
and delivery of this Amendment and the other Loan Documents, and no
investigation by Lender or any closing shall affect the representations and
warranties or the right of Lender to rely upon them.
5.2 Reference to Agreement. Each of the Loan Documents, including the
Agreement and any and all other agreements, documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.
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5.3 Expenses of Lender. As provided in the Agreement, Borrower agrees to
pay on demand all costs and expenses incurred by Lender in connection with the
preparation, negotiation, and execution of this Amendment and the other Loan
Documents executed pursuant hereto and any and all amendments, modifications,
and supplements thereto, including without limitation the costs and fees of
Lender's legal counsel, and all costs and expenses incurred by Lender in
connection with the enforcement or preservation of any rights under the
Agreement, as amended hereby, or any other Loan Document.
5.4 Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
5.5 Applicable Law. This Amendment and all other Loan Documents executed
pursuant hereto shall be governed by and construed in accordance with the laws
of the State of New York.
5.6 Successors and Assigns. This Amendment is binding upon and shall
inure to the benefit of Lender and Borrower and their respective successors and
assigns, except Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Lender.
5.7 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
5.8 Effect of Waiver. No consent or waiver, express or implied, by Lender
to or for any breach of or deviation from any covenant, condition or duty by
Borrower or Guarantor shall be deemed a consent or waiver to or of any other
breach of the same or any other covenant, condition or duty.
5.9 Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.10 Release and Waiver of Claims. Borrower hereby unconditionally and
irrevocably remises, acquits, and fully and forever releases and discharges
Lender and all respective affiliates and subsidiaries of Lender, its respective
officers, servants, employees, agents, attorneys, principals, directors and
shareholders, and their respective heirs, legal representatives, successors and
assigns (collectively, the "Released Lender Parties") from any and all claims,
demands, causes of action, obligations, remedies, suits, damages and
liabilities (collectively, the "Borrower Claims") of any nature whatsoever,
whether now known, suspected or claimed, whether arising under common law, in
equity or under statute, which Borrower ever had or now has against the
Released Lender Parties which may have arisen at any time on or prior to the
date of this Amendment and which were in any manner related to any of the Loan
Documents or the enforcement or attempted enforcement by Lender of rights,
remedies or recourses related thereto. Borrower covenants and agrees never to
commence, voluntarily aid in any way, prosecute or cause to be commenced or
prosecuted against any of the Released Lender Parties any action or other
proceeding based upon any of the Borrower Claims which may have arisen at any
time on
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or prior to the date of this Amendment and were in any manner related to any of
the Loan Documents. The agreements of Borrower set forth in this Section 5.10
shall survive termination of this Amendment.
5.11 Reservation of Rights. Lender does not waive any Event of Default
which may exist under the Agreement and the Loan Documents. Lender expressly
reserves any and all rights and remedies available under the Agreement and the
other Loan Documents, and execution of this Amendment shall not act as a waiver
of, nor prevent Bank from exercising any right, remedy, or power available to
Lender, including, without limitation, all rights, remedies and powers granted
under the Loan Documents and at law or in equity.
5.12 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS, DOCUMENTS
AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS AMENDMENT EMBODY
THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.
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EXECUTED as of the date first written above.
BORROWER:
XETEL CORPORATION
By:
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Name:
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Title:
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LENDER:
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
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Name:
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Title:
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