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Exhibit 10.5
THIRD AMENDMENT AND MODIFICATION AGREEMENT
THIRD AMENDMENT AND MODIFICATION AGREEMENT dated as of September 14, 1998
(this "Amendment") by and among HADCO CORPORATION, a Massachusetts corporation
(the "Borrower"); the direct and indirect subsidiaries of the Borrower listed on
the signature pages hereto (collectively, the "Guarantors"); BANKBOSTON, N.A.,
AS AGENT (the "Agent") and BANKBOSTON, N.A., individually, and the other lending
institutions (collectively, the "Banks") listed on SCHEDULE 1 to the Amended and
Restated Revolving Credit Agreement dated as of December 8, 1997 (as amended and
in effect from time to time, the "Credit Agreement") among the Borrower, the
Banks and the Agent. Terms not otherwise defined herein which are defined in the
Credit Agreement shall have the respective meanings assigned to such terms in
the Credit Agreement, as amended hereby.
WHEREAS, the Borrower has requested that the Agent and the Banks amend
certain provisions of the Credit Agreement; and
WHEREAS, upon the terms and subject to the conditions contained herein, the
Agent and the Banks are willing to amend such provisions of the Credit
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained in the
Credit Agreement, the other Loan Documents and this Amendment 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 OF ss.1.1 OF THE CREDIT AGREEMENT. Section 1.1 of the
Credit Agreement is hereby amended by:
(a) inserting the following new definitions in the order
required by alphabetical order:
"ACCOUNTS RECEIVABLE. All rights of the Borrower or any of the
Guarantors to payment for goods sold, leased or otherwise marketed in the
ordinary course of business and all rights of the Borrower or any of the
Guarantors to payment for services rendered in the ordinary course of
business and all sums of money or other proceeds due thereon pursuant to
transactions with account debtors, except for that portion of the sum of
money or other proceeds due thereon that relate to sales, use or property
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taxes in conjunction with such transactions, recorded on books of account
in accordance with generally accepted accounting principles."
"AGENCY ACCOUNT AGREEMENTS. See ss.8.17.1."
"APPLICABLE BASE RATE USAGE FEE MARGIN. For any fiscal quarter or
portion thereof, one-half of one percent (0.50%) per annum; PROVIDED,
HOWEVER, that in the event that the ratio of Consolidated Funded Debt
(calculated as of the last day of such fiscal quarter or portion thereof)
to EBITDA (calculated for the four fiscal quarters ending on the last day
of such fiscal quarter or portion thereof and, in connection with any
Permitted Acquisition of a Target pursuant to ss.9.5.2(b), including, if
and to the extent approved in writing by the Majority Banks, EBITDA of such
Target on a PRO FORMA basis) meets the requirements set forth in the chart
below, the Applicable Base Rate Usage Fee Margin shall, commencing with
(but not before) the date (the "Base Rate Usage Fee Margin Adjustment
Commencement Date") which is ten (10) days after the date on which the
Borrower delivers to the Banks the financial statements referred to in
ss.8.4(a) or (b) for such fiscal quarter or portion thereof and ending with
the date (the "Base Rate Usage Fee Margin Adjustment Termination Date")
which is nine (9) days after the next date on which the Borrower delivers
to each of the Banks the financial statements referred to in ss.8.4(a) or
(b), be the percentage set forth opposite the applicable ratio of
Consolidated Funded Debt to EBITDA in the table below; PROVIDED, HOWEVER,
that in connection with any Permitted Acquisition pursuant to ss.9.5.2(b),
the next Base Rate Usage Fee Margin Adjustment Termination Date shall be
deemed to be one day prior to the Permitted Acquisition Funding Date for
such Permitted Acquisition, and the next Base Rate Usage Fee Margin
Adjustment Commencement Date (with the Applicable Base Rate Usage Fee
Margin to be based upon the ratio contained in the Permitted Acquisition
Ratio Compliance Certificate for such Permitted Acquisition) shall be the
Permitted Acquisition Funding Date for such Permitted Acquisition:
Ratio of Consolidated Funded Applicable Base
Debt to EBITDA Rate Usage Fee Margin
-------------- ---------------------
Greater than or equal to 3.5:1.0 0.50%
Greater than or equal to 3.0:1.0 0.25%
but less than 3.5:1.0
Less than 3.0:1.0 0.0%
If any financial statements referred to above are not delivered within the
time periods specified in ss.8.4(a) or, as the case may be, ss.8.4(b),
then, until such financial statements are delivered, the Applicable Base
Rate Usage Fee Margin as at the end of the fiscal period that would have
been covered thereby shall, for the purposes of this definition, be deemed
to be
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0.50%. In addition, at all times while a Default or Event of Default shall
have occurred and be continuing, the Applicable Base Rate Usage Fee Margin
shall, for the purposes of this definition, be deemed to be 0.50%."
(b) amending the definition of "Applicable Commitment Fee
Percentage" by inserting, immediately after the text "to EBITDA (calculated
for the four fiscal quarters ending on the last day of such fiscal quarter
or portion thereof" and immediately before the text ") meets the
requirements set forth in the chart below," the text: "and, in connection
with any Permitted Acquisition of a Target pursuant to ss.9.5.2(b),
including, if and to the extent approved in writing by the Majority Banks,
EBITDA of such Target on a PRO FORMA basis".
(c) amending the definition of "Applicable Eurodollar Rate
Margin" by inserting, immediately after the text "to EBITDA (calculated for
the four fiscal quarters ending on the last day of such fiscal quarter or
portion thereof" and immediately before the text ") meets the requirements
set forth in the chart below," the text: "and, in connection with any
Permitted Acquisition of a Target pursuant to ss.9.5.2(b), including, if
and to the extent approved in writing by the Majority Banks, EBITDA of such
Target on a PRO FORMA basis".
(d) inserting the following new definition in the order
required by alphabetical order:
"APPLICABLE EURODOLLAR RATE USAGE FEE MARGIN. For any fiscal quarter
or portion thereof, three-quarters of one percent (0.75%) per annum;
PROVIDED, HOWEVER, that in the event that the ratio of Consolidated Funded
Debt (calculated as of the last day of such fiscal quarter or portion
thereof) to EBITDA (calculated for the four fiscal quarters ending on the
last day of such fiscal quarter or portion thereof and, in connection with
any Permitted Acquisition of a Target pursuant to ss.9.5.2(b), including,
if and to the extent approved in writing by the Majority Banks, EBITDA of
such Target on a PRO FORMA basis) meets the requirements set forth in the
chart below, the Applicable Eurodollar Rate Usage Fee Margin shall,
commencing with (but not before) the date (the "Eurodollar Rate Usage Fee
Margin Adjustment Commencement Date") which is ten (10) days after the date
on which the Borrower delivers to the Banks the financial statements
referred to in ss.8.4(a) or (b) for such fiscal quarter or portion thereof
and ending with the date (the "Eurodollar Rate Usage Fee Margin Adjustment
Termination Date") which is nine (9) days after the next date on which the
Borrower delivers to each of the Banks the financial statements referred to
in ss.8.4(a) or (b), be the percentage set forth opposite the applicable
ratio of Consolidated Funded Debt to EBITDA in the table below; PROVIDED,
HOWEVER, that in connection with any Permitted Acquisition pursuant to
ss.9.5.2(b), the next Eurodollar Rate Usage Fee Margin Adjustment
Termination Date shall be deemed to be one day prior to the Permitted
Acquisition Funding Date
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for such Permitted Acquisition, and the next Eurodollar Rate Usage Fee
Margin Adjustment Commencement Date (with the Applicable Eurodollar Rate
Usage Fee Margin to be based upon the ratio contained in the Permitted
Acquisition Ratio Compliance Certificate for such Permitted Acquisition)
shall be the Permitted Acquisition Funding Date for such Permitted
Acquisition:
Ratio of Consolidated Funded Applicable Eurodollar
Debt to EBITDA Rate Usage Fee Margin
-------------- ---------------------
Greater than or equal to 2.0:1.0 0.750%
Less than 2.0:1.0 0.625%
If any financial statements referred to above are not delivered within the
time periods specified in ss.8.4(a) or, as the case may be, ss.8.4(b),
then, until such financial statements are delivered, the Applicable
Eurodollar Rate Usage Fee Margin as at the end of the fiscal period that
would have been covered thereby shall, for the purposes of this definition,
be deemed to be 0.75%. In addition, at all times while a Default or Event
of Default shall have occurred and be continuing, the Applicable Eurodollar
Rate Usage Fee Margin shall, for the purposes of this definition, be deemed
to be 0.75%."
(e) deleting the definition of "Balance Sheet Date" in its
entirety and substituting in lieu thereof the following definition:
"BALANCE SHEET DATE. October 25, 1997."
(f) inserting, in the order required by alphabetical order,
the following new definitions:
"BKB CONCENTRATION ACCOUNT. See ss.8.17.1. "
"BORROWER STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement dated or
to be dated on or prior to the Third Amendment Effective Date between the
Borrower and the Agent and in form and substance satisfactory to the Agent
and the Banks."
"BORROWING BASE. At the relevant time of reference thereto, an amount
determined by the Agent by reference to the most recent Borrowing Base
Report, commercial finance and collateral audit reports delivered by the
Borrower to the Agent pursuant to ss.2.10, the most recent appraisal of the
Eligible Fixed Assets delivered to the Banks and the Agent pursuant to
ss.8.4(f) and other information obtained by or provided to the Agent, as
adjusted pursuant to the provisions below, which is equal to the sum of:
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(a) 85% of Eligible Accounts Receivable for which invoices have been
issued and are payable; PLUS
(b) 70% of Eligible Foreign Accounts Receivable for which invoices
have been issued and are payable; PLUS
(c) 40% of the net book value (determined on a first-in first-out
basis at the lower of cost or market) of Eligible Inventory; PLUS
(d) a percentage to be determined from time to time by the Agent in
its sole discretion (but not to exceed, in any event, 40%) of the net book
value (determined on a first-in, first-out basis at the lower of cost or
market) of Eligible Foreign Inventory; PLUS
(e) 45% of the Determined Value of Eligible Fixed Assets; MINUS
(f) Reserves; MINUS
(g) The aggregate amount of the outstanding obligations of the
Borrower in respect of the "UDC ERA" and the UDC REDPP" obligations
referenced on SCHEDULE 9.1.
The Agent may, in its commercially reasonable discretion (except with
respect to modification of the lending formula with respect to Eligible
Foreign Inventory, which modification shall be in the Agent's sole
discretion and for the benefit of the Banks), from time to time, upon
fifteen (15) days' prior notice to the Borrower, (x) reduce the lending
formula with respect to Eligible Accounts Receivable or Eligible Foreign
Accounts Receivable to the extent that the Agent determines that: (i) the
dilution with respect to the Accounts Receivable for any period has
increased in any material respect or may be reasonably anticipated to
increase in any material respect above historical levels, or (ii) the
general creditworthiness of account debtors or other obligors of the
Borrower or any Guarantor has materially declined or (y) reduce the lending
formula(s) with respect to Eligible Inventory, Eligible Foreign Inventory
or, as the case may be, Eligible Fixed Assets, to the extent that the Agent
determines that: (i) the number of days of the turnover of the inventory of
the Borrower or any Guarantor for any period has changed in any material
adverse respect, (ii) the liquidation value of the Eligible Fixed Assets
or, as the case may be, the Eligible Inventory or Eligible Foreign
Inventory, or any category thereof, has materially decreased, or (iii) the
nature and quality of the inventory of the Borrower or any Guarantor or, as
the case may be, of the assets comprised in Eligible Fixed Assets, has
deteriorated in any material respect or the mix of such inventory has
changed materially. In determining whether to reduce the lending
formula(s), the Agent may consider events, conditions, contingencies or
risks which are also considered in determining Eligible Accounts
Receivable, Eligible Foreign Accounts Receivable, Eligible Inventory,
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Eligible Foreign Inventory or Eligible Fixed Assets or in establishing the
Reserves."
"BORROWING BASE REPORT. A Borrowing Base Report signed by the
treasurer or chief financial officer of the Borrower and in substantially
the form of EXHIBIT F hereto."
(g) deleting the definition of CCIR International in its entirety and
substituting in lieu thereof the following new definition:
"CCIR INTERNATIONAL. Continental Circuits International, Inc., a
Barbados corporation."
(h) deleting the comma (",") immediately before the word "Corp. " in
the definition of "CCIR of California" and in the definition of "CCIR of
Texas."
(i) inserting the following new definitions in the order required by
alphabetical order:
"COLLATERAL. All of the property, rights and interests of the Borrower
and the Guarantors that are or are intended to be subject to the security
interests and mortgages created by the Security Documents."
"DETERMINED VALUE. At the relevant time of reference thereto, the
lesser of (i) the net book value of Eligible Fixed Assets, determined in
accordance with generally accepted accounting principles, and (ii) the
appraised value of such assets on an orderly liquidation basis determined
by the most recent appraisal thereof conducted pursuant to ss.8.4(f);
PROVIDED that, until the first appraisal has been completed pursuant to
ss.8.4(f), the Determined Value of Eligible Fixed Assets shall be the net
book value of such assets as of the Third Amendment Effective Date,
determined in accordance with generally accepted accounting principles. To
the extent that any Eligible Fixed Asset is encumbered by a lien or
encumbrance which is a Permitted Lien not securing the Obligations, the
amount of the Indebtedness secured by such lien or encumbrance shall be
deducted from the value determined in accordance with the immediately
preceding sentence of this definition of the term "Determined Value"."
"DYNAFLEX. A corporation (i) to be named Dynaflex, Inc. or a name of
reasonably similar description and (ii) to be incorporated under the laws
of the State of Delaware in connection with the Restructuring Transaction
as a wholly owned Subsidiary of Hadco Santa Clara."
"ELIGIBLE ACCOUNTS RECEIVABLE. The aggregate of the unpaid portions of
Accounts Receivable (net of any credits, rebates, offsets, holdbacks or
other adjustments or commissions payable to third parties that are
adjustments to such Accounts Receivable) (i) that the Borrower
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reasonably and in good faith determines to be collectible and not in
dispute; (ii) that are with account debtors or other obligors that (A) are
not Affiliates of the Borrower, (B) are not the United States government or
any agency or instrumentality thereof unless the Borrower shall have
complied, upon the Agent's request therefor, with all requirements and
procedures of the federal Assignment of Claims Act to the satisfaction of
the Agent, (C) purchased the goods or services giving rise to the relevant
Account Receivable in an arm's length transaction, (D) are not insolvent or
involved in any case or proceeding, whether voluntary or involuntary, under
any bankruptcy, reorganization, arrangement, insolvency, adjustment of
debt, dissolution, liquidation or similar law of any jurisdiction and (E)
are, in the Agent's reasonable judgment, creditworthy; (iii) that are in
payment of obligations that have been fully performed, do not consist of
progress billings or bill and hold invoices and are not subject to dispute
or any other similar claims that would reduce the cash amount payable
therefor; (iv) that are not subject to any pledge, restriction, security
interest or other lien or encumbrance other than those created by the Loan
Documents; (v) in which the Agent, for the benefit of the Banks and the
Agent, has a valid and perfected first priority security interest; (vi)
that are not outstanding for more than ninety (90) days past the earlier to
occur of (A) the date of the respective invoices therefor and (B) the date
of shipment thereof in the case of goods or the end of the calendar month
following the provision thereof in the case of services; (vii) that are not
due from an account debtor or other obligor located in Minnesota or any
other jurisdiction in which a failure to receive a certificate of authority
to do business is not subject to subsequent cure unless the Borrower or the
applicable Guarantor (A) has received a certificate of authority to do
business and is in good standing in such state or (B) has filed a notice of
business activities report with the appropriate office or agency of such
state for the current year; (viii) that are not due from any single account
debtor or other obligor if more than fifteen percent (15%) of the aggregate
amount of all Accounts Receivable owing from such account debtor or other
obligor would otherwise not be Eligible Accounts Receivable; (ix) that are
payable in Dollars; (x) that are not payable from an office outside of the
United States; and (xi) that are not secured by a letter of credit unless
the Agent has a prior, perfected security interest in such letter of
credit. General criteria for Eligible Accounts Receivable may be
established and revised for the benefit of the Banks from time to time by
the Agent in the exercise of its commercially reasonable discretion."
"ELIGIBLE FIXED ASSETS. Those fixed assets (excluding all leaseholds)
owned by the Borrower or any of the Guarantors at the relevant time of
reference thereto, which are properly insured in accordance with the
provisions of ss.8.7, (a) which are not subject to any pledge, restriction,
security interest or other lien or encumbrance other than those created by
the Loan Documents or, in the case of fixed assets
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consisting of Real Estate, Permitted Liens, and (b) in which the Agent, for
the benefit of itself and the Banks, has a properly perfected first
priority security interest or mortgage lien; PROVIDED, HOWEVER, that for
the period from the Third Amendment Effective Date through and including
October 26, 1998, Real Estate which would otherwise constitute Eligible
Fixed Assets shall be considered to be Eligible Fixed Assets even if the
Agent does not have a properly perfected first priority mortgage lien
thereon; and PROVIDED FURTHER that equipment located at the Borrower's
facility in Owego, New York and subject to the lease arrangements described
on SCHEDULE 9.1 as "UDC ERA" and "UDC REDPP", which would otherwise be
considered Eligible Fixed Assets, shall be considered Eligible Fixed Assets
notwithstanding the interest of the Tioga County Industrial Development
Agency therein pursuant to such lease arrangements. General criteria for
Eligible Fixed Assets may be established and revised for the benefit of the
Banks from time to time by the Agent in the exercise of its commercially
reasonable discretion."
"ELIGIBLE FOREIGN ACCOUNTS RECEIVABLE. The aggregate of the unpaid
portions of Accounts Receivable (net of any credits, rebates, offsets,
holdbacks, withholding taxes or other adjustments or commissions payable to
third parties that are adjustments to such Accounts Receivable) (i) that
the Borrower reasonably and in good faith determines to be collectible and
not in dispute; (ii) that are with account debtors or other obligors that
(A) are not Affiliates of the Borrower, (B) purchased the goods or services
giving rise to the relevant Account Receivable in an arm's length
transaction, (C) are not insolvent or involved in any case or proceeding,
whether voluntary or involuntary, under any bankruptcy, reorganization,
arrangement, insolvency, adjustment of debt, dissolution, liquidation or
similar law of any jurisdiction and (D) are, in the Agent's reasonable
judgment, creditworthy; (iii) that are in payment of obligations that have
been fully performed, do not consist of progress billings or bill and hold
invoices and are not subject to dispute or any other similar claims that
would reduce the cash amount payable therefor; (iv) that are not subject to
any pledge, restriction, security interest or other lien or encumbrance
other than those created by the Loan Documents; (v) in which the Agent, for
the benefit of the Banks and the Agent, has a valid and perfected first
priority security interest; (vi) that are not outstanding for more than
ninety (90) days past the earlier to occur of (A) the date of the
respective invoices therefor and (B) the date of shipment thereof in the
case of goods or the end of the calendar month following the provision
thereof in the case of services; (vii) that are not due from any single
account debtor or other obligor if more than fifteen percent (15%) of the
aggregate amount of all Accounts Receivable owing from such account debtor
or other obligor would otherwise not be Eligible Foreign Accounts
Receivable; (viii) that are payable in Dollars by a Subsidiary of a
corporation or other entity incorporated or organized under the laws of a
state of the United
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States of America or of the District of Columbia. General criteria for
Eligible Foreign Accounts Receivable may be established and revised for the
benefit of the Banks from time to time by the Agent in the exercise of its
commercially reasonable discretion."
"ELIGIBLE FOREIGN INVENTORY. With respect to the Borrower or any of
the Guarantors, work in progress and raw materials inventory owned by the
Borrower or such Guarantor in an aggregate amount (based on the net book
value thereof determined on a first-in, first-out basis at the lower of
cost or market) not to exceed forty percent (40%) of the net book value
(determined on a first-in, first-out basis at the lower of cost or market)
of all work in progress and raw materials inventory owned by the Borrower
and the Guarantors, whether domestic or foreign; PROVIDED that Eligible
Foreign Inventory shall not include any inventory (i) held on consignment,
or not otherwise owned by the Borrower or such Guarantor, or of a type no
longer sold by the Borrower or such Guarantor, (ii) which has been returned
by a customer or is damaged or subject to any legal encumbrance other than
Permitted Liens, (iii) which is not in the possession of the Borrower or
such Guarantor unless the Agent has received a waiver, consent or other
documentation deemed necessary or appropriate by the Agent from the party
in possession of such inventory in form and substance satisfactory to the
Agent, (iv) which is held by the Borrower or such Guarantor on property
leased by the Borrower or such Guarantor, unless the Agent has received a
waiver from the lessor of such leased property and, if any, sublessor
thereof in form and substance satisfactory to the Agent, (v) as to which
any or all actions deemed necessary or appropriate by the Agent in its sole
discretion (after consultation, at the Borrower's expense, with such legal
counsel, whether foreign or U.S. based, as the Agent may deem necessary or
appropriate) in order properly to create and perfect the Agent's security
interest therein, and to ensure the Agent's first priority interest therein
and the Agent's ability to enforce such security interest, for the benefit
of the Banks and the Agent, have not been taken, (vi) which has been
shipped to a customer of the Borrower or such Guarantor regardless of
whether such shipment is on a consignment basis, (vii) which is not located
in the United States of America, or (viii) which the Agent reasonably deems
to be obsolete or not marketable. General criteria for Eligible Foreign
Inventory may be established and revised for the benefit of the Banks from
time to time by the Agent in the exercise of its commercially reasonable
discretion."
"ELIGIBLE INVENTORY. With respect to the Borrower or any of the
Guarantors, work in progress and raw materials inventory owned by the
Borrower or such Guarantor; PROVIDED that Eligible Inventory shall not
include any inventory (i) held on consignment (unless the Borrower or such
Guarantor shall have taken all steps deemed necessary or appropriate by the
Agent in its sole discretion to ensure the Agent's first priority perfected
security interest in such inventory, including, without
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limitation, the filing in the jurisdictions in which such inventory is to
be located of UCC-1 financing statements by the Agent as secured party and
the Borrower or such Guarantor as debtor and of consignment financing
statements pursuant to ss.ss.9-114 and 2-326 of the Uniform Commercial Code
as in effect in the Commonwealth of Massachusetts or any other applicable
jurisdiction showing the Borrower or such Guarantor as consignor and the
consignee of such consignment inventory as consignee, the prior written
notification of any secured creditors of such consignees (with such notice
to be in form and substance satisfactory to the Agent and in compliance
with ss.ss.9-114 and 2-326 of the Uniform Commercial Code as in effect in
the Commonwealth of Massachusetts or any other applicable jurisdiction),
and such other actions or documents as the Agent may request), or not
otherwise owned by the Borrower or such Guarantor, or of a type no longer
sold by the Borrower or such Guarantor, (ii) which has been returned by a
customer or is damaged or subject to any legal encumbrance other than
Permitted Liens, (iii) which is not in the possession of the Borrower or
such Guarantor unless the Agent has received a waiver, consent or other
documentation deemed necessary or appropriate by the Agent from the party
in possession of such inventory in form and substance satisfactory to the
Agent, (iv) which is held by the Borrower or such Guarantor on property
leased by the Borrower or such Guarantor, unless the Agent has received a
waiver from the lessor of such leased property and, if any, sublessor
thereof in form and substance satisfactory to the Agent, understanding,
however, that the Agent may, in its sole discretion, excuse such a waiver
for inventory held at the leased facility located at 4 Hampshire Drive,
Hudson, New Hampshire, (v) as to which appropriate Uniform Commercial Code
financing statements showing the Borrower or such Guarantor as debtor and
the Agent, for the benefit of the Banks and the Agent, as secured party
have not been filed in the proper filing office or offices in order to
perfect the Agent's security interest therein, (vi) which has been shipped
to a customer of the Borrower or such Guarantor regardless of whether such
shipment is on a consignment basis, (vii) which is not located within the
United States of America, or (viii) which the Agent reasonably deems to be
obsolete or not marketable. General criteria for Eligible Inventory may be
established and revised for the benefit of the Banks from time to time by
the Agent in the exercise of its commercially reasonable (except as
otherwise set forth in clause (i) above) discretion."
"FIXED CHARGE COVERAGE RATIO. For any four consecutive fiscal quarters
of the Borrower, the ratio of (a)(i) EBITDA for such period, MINUS (ii)
Capital Expenditures made by the Borrower or any of its Subsidiaries during
such period, but excluding, for each period of four consecutive fiscal
quarters ending on or before the end of the Borrower's third fiscal
quarter, 1999, $30,000,000 of Capital Expenditures made or to be made with
respect to Continental Circuits' inner layer facility located in Phoenix,
Arizona and its quick turn facility located in Austin,
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Texas, MINUS (iii) cash taxes paid by the Borrower or any of its
Subsidiaries during such period to (b)(i) principal payments on
Indebtedness made by the Borrower or any of its Subsidiaries during such
period PLUS (ii) Consolidated Total Interest Expense of the Borrower and
its Subsidiaries."
(j) deleting the definition of "Guarantor" in its entirety and
substituting in lieu thereof the following new definition:
"GUARANTORS. (i) Hadco Santa Clara; Hadco Phoenix, CCIR of Texas,
until the consummation of the Restructuring Transaction, CCIR of
California, and immediately following the Restructuring Transaction,
Dynaflex; and (ii) any other direct or indirect Subsidiary of the Borrower
(other than Hadco FSC, New Zycon, Hadco Scotland, Hadco Ireland, Hadco
Malaysia, Hadco Singapore, New Continental or CCIR International)."
(k) inserting the following new definitions in the order required by
alphabetical order:
"HADCO IRELAND. A wholly owned Subsidiary of the Borrower to be
incorporated under the laws of Ireland."
"HADCO PHOENIX STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement
dated or to be dated on or prior to the Third Amendment Effective Date
between Hadco Phoenix and the Agent and in form and substance satisfactory
to the Agent and the Banks."
"HADCO SANTA CLARA STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement
dated or to be dated on or prior to the Third Amendment Effective Date
between Hadco Santa Clara and the Agent and in form in substance
satisfactory to the Agent and the Banks. "
"HADCO SCOTLAND. Hadco Scotland Limited, a Scottish limited company
and wholly owned Subsidiary of the Borrower."
"HADCO SINGAPORE. A wholly owned Subsidiary of the Borrower or one of
the Borrower's Subsidiaries to be incorporated under the laws of
Singapore."
"INTERIM CONCENTRATION ACCOUNTS. See ss.8.17.1."
(l) deleting the definition of "Loan Documents" in its entirety and
substituting in lieu thereof the following new definition:
"LOAN DOCUMENTS. This Credit Agreement, the Notes, the Letter of
Credit Applications, the Letters of Credit, the Security Documents, the
Agent's Side Letter, the Third Amendment Side Letter, the Post-Closing
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Letter, any interest rate protection agreements entered into with any of
the Banks in connection herewith and any other documents, instruments and
agreements executed from time to time in connection therewith."
(m) inserting the following new definitions in the order required by
alphabetical order:
"MORTGAGED PROPERTY. Any Real Estate which is subject to any
Mortgage."
"MORTGAGES. The several mortgages and/or deeds of trust, dated or to
be dated on, prior to or after the Third Amendment Effective Date, from any
of the Borrower and the Guarantors to the Agent with respect to the fee and
leasehold interests of the Borrower and the Guarantors in the Real Estate
and in form and substance satisfactory to the Banks and the Agent."
"OPERATING ACCOUNT. The Borrower's Account No. 525-67832 with BKB."
"RESERVES. As determined by the Agent, such amounts as the Agent may
from time to time establish and revise in the exercise of its commercially
reasonable discretion (a) to reflect events, conditions, contingencies or
risks which do or may (i) adversely affect in any material respect either
(A) any Collateral, the rights of the Agent or any of the Banks in any
Collateral or its value or (B) the security interest and other rights of
the Agent or any of the Banks in the Collateral (including the
enforceability, perfection and priority thereof) or (ii) adversely affect
in any material respect the assets (other than any Collateral) or business
or financial condition of the Borrower or any of its Subsidiaries or (b) to
reflect the belief of the Agent that any Borrowing Base Report or other
collateral report or financial information furnished by or on behalf of the
Borrower to the Agent or any of the Banks is or may have been incomplete,
inaccurate or misleading in any material respect."
"RESTRUCTURING TRANSACTION. The restructuring transaction pursuant to
which (a) Dynaflex is to be incorporated, (b) those assets of CCIR of
California pertaining to CCIR of California's "Dynaflex" operations are to
be transferred to Dynaflex, (c) Dynaflex is to become a wholly owned
Subsidiary of Hadco Santa Clara and (d) CCIR of California is to be merged
into the Borrower."
"SECURITY AGREEMENT. The Security Agreement, dated or to be dated on
or prior to the Third Amendment Effective Date, among the Borrower, the
Guarantors and the Agent and in form and substance satisfactory to the
Banks and the Agent."
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"SECURITY DOCUMENTS. The Guaranties, the Security Agreement, the
Mortgages, the Stock Pledge Agreements, the Agency Account Agreements, and
all other instruments and documents, including without limitation, Uniform
Commercial Code financing statements, required to be executed or delivered
pursuant to any Security Documents."
(n) deleting the definition of "Stock Pledge Agreement" in its
entirety and substituting in lieu thereof the following new definition:
"STOCK PLEDGE AGREEMENTS. The Borrower Stock Pledge Agreement, the
Hadco Santa Clara Stock Pledge Agreement and the Hadco Phoenix Stock Pledge
Agreement."
(o) amending the definition of "Swing Line Settlement Date" by
deleting from the end of clause (d) thereof the text "of the Total
Commitment," and substituting in lieu thereof the text "of the lesser of
the Total Commitment and the Borrowing Base,".
(p) inserting the following new definitions in the order required by
alphabetical order:
"THIRD AMENDMENT. The Third Amendment and Modification Agreement dated
as of September 14, 1998 among the Borrower, the Guarantors, the Agent and
the Banks."
"THIRD AMENDMENT EFFECTIVE DATE. The "Effective Date", as defined in
the Third Amendment."
"THIRD AMENDMENT SIDE LETTER AGREEMENT. The letter agreement dated as
of the Third Amendment Effective Date between the Agent and the Borrower
with respect to the payment of fees and other conditions agreed upon by the
Agent and the Borrower."
ss.2. AMENDMENT OF ss.2.1 OF THE CREDIT AGREEMENT. Section 2.1 of the
Credit Agreement is hereby amended by deleting the text "PROVIDED that the sum
of the outstanding amount of the Loans (after giving effect to all amounts
requested) PLUS the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not at any time exceed the Total Commitment;" and substituting
in lieu thereof the following text: "PROVIDED that the sum of the outstanding
amount of the Loans (after giving effect to all amounts requested) PLUS the
Maximum Drawing Amount and all Unpaid Reimbursement Obligations shall not at any
time exceed the lesser of (i) the Total Commitment and (ii) the Borrowing
Base;".
ss.3. AMENDMENT OF ss.2.9.1(a) OF THE CREDIT AGREEMENT. Section 2.9.1(a) of
the Credit Agreement is hereby amended by deleting the text "exceed the Total
Commitment," at the end of clause (i) of the proviso thereof and
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substituting in lieu thereof the text "exceed the lesser of the Total Commitment
and the Borrowing Base".
ss.4. ADDITION OF ss.ss.2.10 AND 2.11 OF THE CREDIT AGREEMENT. The Credit
Agreement is hereby amended by inserting, immediately after ss.2.9.3 of the
Credit Agreement and immediately before ss.3 of the Credit Agreement, the
following new ss.ss.2.10 and 2.11:
"2.10. CHANGE IN BORROWING BASE. The Borrowing Base shall be
determined monthly (or at such other interval as may be specified pursuant
to ss.8.4(h)) by the Agent by reference to the Borrowing Base Report,
commercial finance and collateral audit reports delivered to the Banks and
the Agent pursuant to ss.8.9.3, and the appraisals of Eligible Fixed Assets
delivered to the Banks and the Agent pursuant to ss.8.4(f) and other
information obtained by or provided to the Agent. The Agent shall give to
the Borrower and the Banks written notice (which notice may be given by
facsimile) of any change in the Borrowing Base determined by the Agent. In
the case of a reduction in the lending formula with respect to Eligible
Accounts Receivable or Eligible Inventory, such notice shall be effective
15 days after its receipt by the Borrower, and in the case of any change in
the general criteria for Eligible Accounts Receivable or Eligible
Inventory, such notice shall be effective 15 days after its receipt by the
Borrower. In the case of a change in the Borrowing Base resulting from a
change in the Determined Value of Eligible Fixed Assets based upon the
results of any such appraisal or reappraisal, such notice shall be
effective 30 days after its receipt by the Borrower. Prior to the time that
such notice becomes effective, the Borrowing Base shall be computed as it
would have been computed in the absence of such notice.
2.11. REPAYMENTS OF LOANS AFTER EVENT OF DEFAULT. Following the
occurrence and during the continuance of a Default or an Event of Default
of which the account officers of the Agent active on the Borrower's account
have knowledge, all funds transferred to the BKB Concentration Account or
to the Operating Account and for which the Borrower has received credits
may, in the Agent's sole discretion, be applied to the Obligations in
accordance with ss.13.4. "
ss.5. AMENDMENT OF ss.3.2 OF THE CREDIT AGREEMENT. Section 3.2 of the
Credit Agreement is hereby amended by deleting the first sentence thereof in its
entirety and substituting in lieu thereof the following text:
"If at any time the sum of the outstanding amount of the Loans
(including Swing Line Loans), the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations exceeds the lesser of (i) the Total Commitment
and (ii) the Borrowing Base, then the Borrower shall immediately pay the
amount of such excess to the Agent for the
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respective accounts of the Banks and, if applicable, the Swing Line
Lender."
ss.6. AMENDMENT OF ss.4.1.1 OF THE CREDIT AGREEMENT. Section 4.1.1 of the
Credit Agreement is hereby amended by deleting the proviso at the end of the
first sentence thereof and substituting in lieu thereof the following text:
"PROVIDED, HOWEVER, that, after giving effect to such request (a) the sum
of the aggregate Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not exceed $15,000,000 at any time and (b) the sum of (i)
the Maximum Drawing Amount on all Letters of Credit, (ii) all Unpaid
Reimbursement Obligations, and (iii) the amount of all Loans outstanding
(after giving effect to all amounts requested) shall not exceed the lesser
of (x) the Total Commitment and (y) the Borrowing Base."
ss.7. AMENDMENT OF ss.5.1 OF THE CREDIT AGREEMENT. Section 5.1 of the
Credit Agreement is hereby amended by:
(a) inserting, immediately after the text "(the "Agent's Side
Letter")" and immediately before the text "in accordance with the terms and
conditions thereof.", the following text: "and in the Third Amendment Side
Letter Agreement."
(b) inserting, at the end thereof, the following text:
"The Borrower further agrees to pay to the Agent for the PRO RATA
account of each Bank in accordance with such Bank's Commitment Percentage a
usage fee calculated (a) at the rate per annum equal to the Applicable
Eurodollar Rate Usage Fee Margin on the sum of the average daily amount,
during each calendar quarter or portion thereof, commencing with the Third
Amendment Effective Date, of the Maximum Drawing Amount PLUS all Unpaid
Reimbursement Obligations PLUS the outstanding amount of all Eurodollar
Rate Loans PLUS the outstanding amount of all Swing Line Loans which are
Fixed Rate Loans and (b) at a rate per annum equal to the Applicable Base
Rate Usage Fee Margin on the sum of the average daily amount, during each
calendar quarter or portion thereof, commencing with the Third Amendment
Effective Date, of the outstanding amount of all Base Rate Loans PLUS the
outstanding amount of all Swing Line Loans which are not Fixed Rate Loans.
Such usage fee shall be payable quarterly in arrears on the first day of
each calendar quarter for the immediately preceding calendar quarter or
portion thereof commencing on the first such date following the Third
Amendment Effective Date."
ss.8. AMENDMENT OF ss.6 OF THE CREDIT AGREEMENT. Section 6 of the Credit
Agreement is hereby deleted in its entirety and the following new ss.6 is hereby
inserted in lieu thereof:
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"ss.6. COLLATERAL SECURITY AND GUARANTIES.
ss.6.1. SECURITY OF BORROWER. The Obligations shall be secured by a
perfected first priority security interest (subject only to Permitted Liens
entitled to priority under applicable law) in substantially all of the assets of
the Borrower, whether now owned or hereafter acquired, pursuant to the terms of
the Security Documents to which the Borrower is a party.
ss.6.2. GUARANTIES AND SECURITY OF GUARANTORS. The Obligations shall also
be guaranteed by each Guarantor pursuant to the terms of its Guaranty. The
Obligations of the Guarantors under the Guaranties shall in turn be secured by a
perfected first priority security interest (subject only to Permitted Liens
entitled to priority under applicable law) in substantially all of the assets of
each such Guarantor, whether now owned or hereafter acquired, pursuant to the
terms of the Security Documents to which such Guarantor is a party."
ss.9. AMENDMENT OF ss.7.3 OF THE CREDIT AGREEMENT. Section 7.3 of the
Credit Agreement is hereby deleted in its entirety, and the following new ss.7.3
is hereby substituted in lieu thereof:
"7.3. TITLE TO PROPERTIES; LEASES. Except as indicated on SCHEDULE 7.3
hereto, the Borrower and its Subsidiaries own all of the assets reflected
in the consolidated balance sheet of the Borrower and its Subsidiaries, as
at the Balance Sheet Date, or acquired since that date (except property and
assets sold or otherwise disposed of in the ordinary course of business
since that date), subject to no rights of others, including any mortgages,
leases, conditional sales agreements, title retention agreements, liens or
other encumbrances except Permitted Liens. Without limiting the foregoing,
the Borrower and the Guarantors own all of the trademarks, copyrights,
patents and other intellectual property rights reflected in such
consolidated balance sheet, subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention
agreements, liens or other encumbrances other than licenses thereof to
third parties for fair market value."
ss.10. AMENDMENT OF ss.7.5 OF THE CREDIT AGREEMENT. Section 7.5 of the
Credit Agreement is hereby amended by deleting the first sentence thereof in its
entirety and substituting in lieu thereof the following text:
"7.5. NO MATERIAL CHANGES, ETC. Except as set forth on SCHEDULE 7.5
hereto and in the press release of the Borrower dated August 19, 1998 and
distributed to the Agent and the Banks on the Third Amendment Effective
Date, since the Balance Sheet Date, there has occurred no materially
adverse change in the financial condition or business of the Borrower and
its Subsidiaries, as shown on or reflected in the consolidated balance
sheet of the Borrower and its Subsidiaries as at the Balance Sheet Date,
for the year then ended, or the consolidated
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statements of income for the fiscal year of the Borrower then ended, other
than changes in the ordinary course of business that have not had any
materially adverse effect, either individually or in the aggregate, on the
business or financial condition of the Borrower and its Subsidiaries,
considered as a whole."
ss.11. AMENDMENT OF ss.7.6 OF THE CREDIT AGREEMENT. Section 7.6 of the
Credit Agreement is hereby amended by inserting the following new sentence at
the end thereof:
"Attached hereto as SCHEDULE 7.6 is a true, correct and complete list of
all patents, patent applications, federally registered copyrights,
trademarks, trademark applications, trade names and other intellectual
property owned by any of the Transaction Parties as of the Third Amendment
Effective Date."
ss.12. AMENDMENT OF ss.7.17 OF THE CREDIT AGREEMENT. Section 7.17 of the
Credit Agreement is hereby amended by inserting, immediately before the period
(".") at the end thereof, the text "or as a condition to the recording of any
Mortgage".
ss.13. AMENDMENT OF ss.7.18 OF THE CREDIT AGREEMENT. Section 7.18 of the
Credit Agreement is hereby deleted in its entirety and the following new ss.7.18
is hereby substituted in lieu thereof:
"7.18. SUBSIDIARIES, ETC. Hadco Santa Clara, New Zycon, Hadco FSC,
Hadco Scotland, Hadco Phoenix, New Continental and, following the
incorporation thereof, Hadco Ireland are or, as the case may be, will be
the only direct Subsidiaries of the Borrower, and the Borrower owns or, in
the case of Hadco Ireland, will, following the incorporation thereof, own
one hundred percent (100%) of the capital stock of each such entity. (As of
the Effective Date, it is not known whether Hadco Singapore, following the
incorporation thereof, will be a direct or indirect subsidiary of the
Borrower). Hadco Malaysia and (following the consummation of the
Restructuring Transaction) Dynaflex are the only Subsidiaries of Hadco
Santa Clara, and Hadco Santa Clara owns or (with respect to Dynaflex,
following the consummation of the Restructuring Transaction) will own one
hundred percent (100%) of the capital stock of each such entity. CCIR of
Texas, CCIR International and (until the consummation of the Restructuring
Transaction) CCIR of California are the only Subsidiaries of Hadco Phoenix,
and Hadco Phoenix owns one hundred percent (100%) of the capital stock of
CCIR of Texas and CCIR International and will own, until the consummation
of the Restructuring Transaction, one hundred percent (100%) of the capital
stock of CCIR of California. None of New Zycon, New Continental, Hadco FSC,
Hadco Scotland, CCIR of California, CCIR of Texas, Hadco Malaysia or CCIR
International has any Subsidiaries, and following the incorporation
thereof, none of Dynaflex, Hadco Ireland or Hadco Singapore will have
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any Subsidiaries. Except as set forth on SCHEDULE 7.18 hereto, none of the
Transaction Parties is engaged in any joint venture or partnership with any
other Person."
ss.14. ADDITION OF ss.ss.7.21 AND 7.22 TO THE CREDIT AGREEMENT. The Credit
Agreement is hereby amended by inserting, immediately after ss.7.20 of the
Credit Agreement and immediately before ss.8 of the Credit Agreement, the
following new ss.ss.7.21 and 7.22:
"7.21. PERFECTION OF SECURITY INTERESTS, ETC. Except for those items
set forth on SCHEDULE 7.21 hereto (and only for the time periods permitted
by SCHEDULE 7.21), all filings, assignments, pledges and deposits of
documents or instruments have been made and all other actions have been
taken that are necessary or advisable, under applicable law, to establish
and perfect the Agent's security interest in the Collateral. The Collateral
and the Agent's rights with respect to the Collateral are not subject to
any setoff, claims, withholdings or other defenses except for the rights of
holders of Permitted Liens. The Borrower or one of the Guarantors is the
owner of the Collateral free from any lien, security interest, encumbrance
and any other claim or demand, except for Permitted Liens."
"7.22. BANK ACCOUNTS. SCHEDULE 7.22 sets forth the account numbers and
location of all Interim Concentration Accounts and other bank accounts of
the Borrower or any of the other Transaction Parties."
ss.15. AMENDMENT OF ss.8.4 TO THE CREDIT AGREEMENT. Section 8.4 of the
Credit Agreement is hereby amended by:
(a) inserting, at the end of subsection (e) thereof, immediately
before the semicolon (";"), the text "and contemporaneously with the
delivery of the financial statements referred to in subsections (a) and (b)
of this ss.8.4, projections, satisfactory in form and substance to the
Agent, for the four consecutive fiscal quarters of the Borrower immediately
following the quarter(s) for which such financial statements are to be
delivered";
(b) deleting the word "and" at the end of subsection (e) thereof;
(c) inserting new subsection (f), (g) and (h) immediately after
subsection (e) and immediately before existing subsection (f) thereof, with
the following text:
"(f) as soon as practicable, but in any event not later than
forty-five (45) days after request by the Agent made after determining
in its discretion that an appraisal or reappraisal of the value of
Eligible Fixed Assets of the Borrower or any Guarantor is necessary to
insure the accuracy of the Borrowing Base, an
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appraisal or reappraisal, as the case may be, of the value of such
Eligible Fixed Assets, which appraisal or reappraisal shall be
conducted at the expense of the Borrower or such Guarantor by an
appraiser selected by the Agent in form and substance satisfactory to
the Agent;
(g) within fifteen (15) days after the end of each fiscal month, an
Accounts Receivable aging report satisfactory in form and substance to
the Agent;
(h) within fifteen (15) days after the end of each fiscal month or at
such earlier time as the Agent may reasonably request, a Borrowing
Base Report setting forth the Borrowing Base as at the end of such
calendar month or other date so requested by the Agent; and".
(d) deleting the letter reference "(f)" at the beginning of existing
subsection (f) and substituting in lieu thereof the letter "(i)".
ss.16. ADDITION OF ss.ss.8.5.4 AND 8.5.5 TO THE CREDIT AGREEMENT. The
Credit Agreement is hereby amended by inserting, immediately after ss.8.5.3 and
immediately before ss.8.6 of the Credit Agreement, new ss.ss.8.5.4 and 8.5.5
with the following text:
"8.5.4. NOTIFICATION OF CLAIMS AGAINST COLLATERAL. The Borrower will,
immediately upon becoming aware thereof, notify the Agent in writing of any
setoff, claims (including, with respect to the Real Estate, environmental
claims), withholdings or other defenses to which any of the Collateral, or
the Agent's rights with respect to the Collateral, are subject."
"8.5.5. NOTIFICATION OF ADDITIONAL INTELLECTUAL PROPERTY RIGHTS.
Promptly upon acquisition, creation or, as the case may be, application for
registration or registration of any thereof or upon approval by the
intellectual property committee of the Borrower to file an application or
registration thereof, the Borrower will notify the Agent in writing of any
patents, patent applications, patent application disclosures filed with any
patent office or which the intellectual property committee of the Borrower
has approved for filing as a patent application, registered copyrights or
mask works, applications for registration of copyrights or mask works,
trademark and service mark registrations, trademark and service mark
registration applications, trademarks, service marks and trade names for
which the intellectual property committee of the Borrower has approved
filing trademark registration applications, and unregistered mask works
all of the foregoing whether a foreign or United States right and
whether owned by
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the Borrower or any of the other Transaction Parties, to the extent not
listed on SCHEDULE 7.6. The Borrowers will promptly notify the Agent in
writing of its abandonment of any of the foregoing."
ss.17. AMENDMENT OF ss.8.7 OF THE CREDIT AGREEMENT. Section 8.7 of the
Credit Agreement is hereby amended by deleting the period (".") at the end
thereof and substituting in lieu thereof the following text: "and of the
Security Agreement. The Borrower will, and will cause each of the Guarantors to,
maintain insurance on the Mortgaged Properties in accordance with the terms of
the Mortgages."
ss.18. ADDITION OF ss.ss.8.9.3, 8.9.4 AND 8.9.5 TO THE CREDIT AGREEMENT.
The Credit Agreement is hereby amended by inserting, immediately after ss.8.9.2
of the Credit Agreement and immediately before ss.8.10 of the Credit Agreement,
the following new ss.ss.8.9.3, 8.9.4 and 8.9.5:
"ss.8.9.3. COLLATERAL REPORTS. No more frequently than four times
during each calendar year, or more frequently as determined by the Agent if
an Event of Default shall have occurred and be continuing, upon the request
of the Agent, the Borrower will obtain and deliver to the Agent, or, if the
Agent so elects, will cooperate with the Agent in the Agent's obtaining, a
report of an independent collateral auditor satisfactory to the Agent
(which may be affiliated with one of the Banks) with respect to the
Accounts Receivable and inventory components included in the Borrowing
Base, which report shall indicate whether or not the information set forth
in the Borrowing Base Report most recently delivered is accurate and
complete in all material respects based upon a review by such auditors of
the Accounts Receivable (including verification with respect to the amount,
aging, identity and credit of the respective account debtors and the
billing practices of the Borrower or the applicable Guarantor) and
inventory (including verification as to the value, location and respective
types). All such collateral value reports shall be conducted and made at
the expense of the Borrower.
ss.8.9.4. APPRAISALS. No more frequently than once each calendar year,
or more frequently if required by the Agent to evaluate the value of
Eligible Fixed Assets if an Event of Default shall have occurred and be
continuing or if required by any statute, rule, regulation, or governmental
authority or internal policy of the Agent, the Borrower will, upon the
request of the Agent, obtain and deliver to the Agent appraisal reports in
form and substance and from appraisers satisfactory to the Agent, stating
(i) the then current fair market, orderly liquidation and forced
liquidation values of all or any portion of the equipment or real estate
owned by the Borrower or any of the other Transaction Parties and (ii) the
then current business value of each of the Borrower and the other
Transaction Parties. All such appraisals shall be conducted and made at the
expense of the Borrower.
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ss.8.9.5. ENVIRONMENTAL ASSESSMENTS. Upon the occurrence and during
the continuance of any Event of Default, the Agent may in its discretion
and shall, if required by any statute, rule, regulation, governmental
authority or internal policy of the Agent, from time to time, for the
purpose of assessing and ensuring the value of any Mortgaged Property,
obtain one or more environmental assessments or audits of such Mortgaged
Property prepared by a hydrogeologist, an independent engineer or other
qualified consultant or expert approved by the Agent to evaluate or confirm
(i) whether any Hazardous Substances are present in the soil or water at
such Mortgaged Property and (ii) whether the use and operation of such
Mortgaged Property complies with all Environmental Laws. Environmental
assessments may include without limitation detailed visual inspections of
such Mortgaged Property including any and all storage areas, storage tanks,
drains, dry wells and leaching areas, and the taking of soil samples,
surface water samples and ground water samples, as well as such other
investigations or analyses as the Agent deems appropriate. All such
environmental assessments shall be conducted and made at the expense of the
Borrower."
ss.19. ADDITION OF ss.ss.8.16, 8.17, 8.18 AND 8.19 TO THE CREDIT AGREEMENT.
The Credit Agreement is hereby amended by inserting, immediately after ss.8.15
of the Credit Agreement and immediately before ss.9 of the Credit Agreement, the
following new ss.ss.8.16, 8.17, 8.18 and 8.19:
"ss.8.16. FISCAL YEAR. The Borrower will maintain October 25, 1997 as
the end of its 1997 fiscal year and the end of its fourth fiscal quarter,
1997, and will cause each of its fiscal quarters ending thereafter to end
precisely thirteen (13) calendar weeks following the date on which the
preceding fiscal quarter of the Borrower ended."
"ss.8.17. BANK ACCOUNTS.
ss.8.17.1. GENERAL. The Borrower agrees, upon the request of the
Agent, to establish a depository account (the "BKB Concentration
Account") under the control of the Agent for the benefit of the Banks
and the Agent, in the name of the Borrower and the other Transaction
Parties. The Borrower agrees to cause all account debtors and other
obligors of the Borrower or any of the other Transaction Parties, to
remit all cash proceeds of Accounts Receivable to (i) concentration
depository or other accounts ("Interim Concentration Accounts") with
financial institutions which have entered into agency account
agreements and, if applicable, lock box agreements with the Agent
(collectively, the "Agency Account Agreements") with respect to such
accounts, with each such agreement to be in form and substance
satisfactory to the Agent, or (ii) the BKB Concentration Account or
the Operating Account. On or prior to the Third Amendment Effective
Date or by such other date for the obtaining of Agency Account
Agreements as
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may be specified in SCHEDULE 8.19, the Borrower (a) will deliver to
the Agent fully executed Agency Account Agreements with respect to the
Interim Concentration Accounts pursuant to which the Borrower or one
of the Transaction Parties shall direct all depository institutions
with Interim Concentration Accounts, upon notice from the Agent (which
notice the Agent hereby agrees shall only be given following the
occurrence and during the continuance of a Default or Event of
Default), to cause all funds of the Borrower and the other Transaction
Parties held in such Interim Concentration Accounts to be transferred
daily to, and only to, the BKB Concentration Account, (b) will at all
times ensure that immediately upon the Borrower's or any of the other
Transaction Parties' receipt of any funds constituting cash proceeds
of any Collateral, all such amounts shall have been deposited in an
Interim Concentration Account, the Operating Account or the BKB
Concentration Account, and (c) acknowledges and agrees that following
the occurrence and during the continuance of an Event of Default,
neither the Borrower nor any of the other Transaction Parties shall
have any right to withdraw or otherwise have access to funds in the
BKB Concentration Account or the Operating Account unless otherwise
permitted pursuant to ss.2.11.
ss.8.17.2. ACKNOWLEDGMENT OF APPLICATION. The Borrower hereby
agrees that following the occurrence and during the continuance of a
Default or an Event of Default all amounts received by the Agent in
the BKB Concentration Account and the Operating Account will be the
sole and exclusive property of the Agent, for the accounts of the
Banks and the Agent, to be applied, in accordance with ss.2.11."
"8.18. ADDITIONAL MORTGAGED PROPERTY. At any time following the Third
Amendment Effective Date, upon written request of the Agent, the Borrower
shall, and shall cause any of the other Transaction Parties to, forthwith
(but in any event within 45 days following any such request therefor)
deliver to the Agent for the benefit of the Banks a fully executed mortgage
or deed of trust over any Real Estate owned or leased but not mortgaged to
the Agent on the Third Amendment Effective Date or as required pursuant to
SCHEDULE 8.19, each in form and substance satisfactory to the Agent,
together with such title insurance policies, surveys, evidences of
insurance with the Agent named as loss payee and additional insured, legal
opinions and other documents and certificates with respect to such Real
Estate as the Agent may reasonably request. If, after the Third Amendment
Effective Date, the Borrower or any of the other Transaction Parties
acquires or leases additional Real Estate, the Borrower shall, or shall
cause such other Transaction Party to, promptly notify the Agent in writing
thereof and in each case to the extent requested by the Agent, forthwith
(but in any event within 45 days following any such request therefor)
deliver to the Agent for the benefit of
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the Banks a fully executed mortgage or deed of trust over such Real Estate,
in form and substance satisfactory to the Agent, together with such title
insurance policies, surveys, evidences of insurance with the Agent named as
loss payee and additional insured, legal opinions and other documents and
certificates with respect to such real estate as the Agent may reasonably
request. The Borrower further agrees that, following the taking of such
actions with respect to such Real Estate, the Agent shall have, for the
benefit of the Banks, a valid and enforceable first priority mortgage or
deed of trust over such Real Estate, free and clear of all defects and
encumbrances except for Permitted Liens."
"ss.8.19. THIRD AMENDMENT POST-CLOSING REQUIREMENTS. The Transaction
Parties shall complete, or shall cause the completion of, all of the
conditions, actions and items set forth on SCHEDULE 8.19 on or before the
respective due dates therefor set forth on SCHEDULE 8.19. Such conditions,
actions and items shall not be deemed waived by virtue of the fact that
they are not completed on the Third Amendment Effective Date."
ss.20. AMENDMENT OF ss.9.1 OF THE CREDIT AGREEMENT. Section 9.1 of the
Credit Agreement is hereby amended by:
(a) deleting the dollar amount "$50,000,000" from each of subsections
(f) and (g) thereof and substituting in lieu thereof the dollar amount
"$30,000,000";
(b) deleting the dollar amount "$55,000,000" in clause (iii) of
subsection (i) thereof and substituting in lieu thereof the dollar amount
"$65,000,000";
(c) deleting the word "and" immediately before clause (iv) of
subsection (i) thereof;
(d) inserting, immediately before the semicolon (";") at the end of
clause (iv) of subsection (i) thereof, the following text:
"(v) CCIR International to the Borrower in an aggregate amount not to
exceed $2,000,000; and (vi) Hadco Scotland, Hadco Singapore and/or Hadco
Ireland to the Borrower in an aggregate amount for all such entities not to
exceed $5,000,000".
ss.21. AMENDMENT OF ss.9.2 OF THE CREDIT AGREEMENT. Section 9.2 of the
Credit Agreement is hereby amended by:
(a) deleting, from the introductory paragraph thereof, immediately
before clause (v) thereof the text "or");
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(b) inserting, in the introductory paragraph thereof, immediately
after clause (v) thereof and immediately before the proviso set forth
therein, the following new clause (vi):
"(vi) enter into or permit to exist any arrangement or agreement,
enforceable under applicable law, which directly or indirectly prohibits
the Borrower or any of the other Transaction Parties from creating or
incurring any lien, encumbrance, mortgage, pledge, charge, restriction or
other security interest other than in favor of the Agent for the benefit of
the Banks and the Agent under the Loan Documents and other than customary
anti-assignment provisions in leases and licensing agreements entered into
by the Borrower or such other Transaction Party in the ordinary course of
its business, provisions restricting Hadco Malaysia to the extent contained
in the credit facility with Bank Bumiputra Malaysia Berhad permitted by
ss.9.1 and the Indenture;
(c) inserting the text "other than Mortgaged Properties" in
subsection (d) thereof immediately after the text "liens on properties";
(d) inserting the text "other than Mortgaged Properties" in
subsection (e) thereof immediately after the text "and other like liens on
properties";
(e) inserting the text "other than Mortgaged Properties" in
subsection (f) thereof immediately after the text "encumbrances on Real
Estate";
(f) inserting the following text immediately before the semicolon
(";") at the end of subsection (f) thereof: "and encumbrances on Mortgaged
Properties to the extent agreed upon by the Agent and set forth as
exceptions in the title policies delivered by the Borrower or any Guarantor
to the Agent with respect to such Mortgaged Properties and in compliance
with the terms and conditions of this Credit Agreement";
(g) inserting the text "other than Mortgaged Properties" in
subsection (h) thereof immediately after the text "mortgages on real or
personal property".
ss.22. AMENDMENT OF ss.9.3(f) OF THE CREDIT AGREEMENT. Section 9.3(f) of
the Credit Agreement is hereby deleted in its entirety, and the following new
subsection (f) is hereby substituted in lieu thereof:
"(f) Investments consisting of (i) (A) the Guaranties or (B)
Guaranties issued by the Guarantors of the Borrower's obligations under the
Subordinated Notes, and (ii) Investments by the Borrower in (A) any of the
Guarantors, (B) Hadco FSC in an aggregate amount not to exceed $2,000,000, (C)
New Zycon or New Continental in an aggregate amount not to exceed $50,000, (D)
CCIR International in an aggregate amount not to exceed
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$2,000,000, and (E) Hadco Ireland, Hadco Singapore and Hadco Scotland in an
aggregate amount for all such entities not to exceed $5,000,000;"
ss.23. AMENDMENT OF ss.9.5 OF THE CREDIT AGREEMENT. Section 9.5 of the
Credit Agreement is hereby amended by:
(a) deleting from ss.9.5.2(a) thereof the text "the Borrower may make
one or more asset or stock acquisitions in an amount not to exceed
$25,000,000 in any individual case or $50,000,000 in the aggregate" and
substituting in lieu thereof the following text: "the Borrower may make one
or more asset or stock acquisitions in an amount not to exceed $30,000,000
in the aggregate".
(b) deleting from the beginning of ss.9.5.2(b) thereof the text
"subject to the requirements of this ss.9.5.2(b), the Borrower may effect
asset or stock acquisitions in addition to those otherwise permitted by
this ss.9.5.2 to the extent that" and substituting in lieu thereof the
following text: "subject to the requirements of this ss.9.5.2(b), the
Borrower may, if and to the extent approved in advance by the Majority
Banks in writing, effect asset or stock acquisitions in addition to those
otherwise permitted by this ss.9.5.2 to the extent that".
(c) deleting from ss.9.5.2(b) thereof the text "and PROVIDED FURTHER
that, contemporaneously with the closing of such Permitted Acquisition, any
newly acquired Subsidiary shall, pursuant to documentation in form and
substance satisfactory to the Agent and the Agent's Special Counsel, become
a party to and Guarantor under, and be bound by all of the terms and
conditions of, a Guaranty in the form of EXHIBIT E hereto and shall provide
to the Agent, in addition to such Guaranty, such evidence of corporate
authorization, legal opinions and other documentation as the Agent may
request." and substituting in lieu thereof the following text:
"and PROVIDED FURTHER that, contemporaneously with the closing of such
Permitted Acquisition, the Borrower shall (i) take such action as may
be necessary or advisable in the opinion of the Agent to pledge or
cause to be pledged to the Agent, for the benefit of the Banks and the
Agent, on a perfected, first-priority basis all of the capital stock
or other equity interests of such Subsidiary pursuant to a pledge
agreement in form and substance satisfactory to the Agent, which such
pledge agreement shall be a Stock Pledge Agreement and a Security
Document hereunder, (ii) cause such Subsidiary to guaranty all of the
Obligations hereunder pursuant to a Guaranty in the form of EXHIBIT E,
which Guaranty shall be a Guaranty and Security Document hereunder,
(iii) cause such Subsidiary to take all steps as may be necessary or
advisable in the opinion of the Agent to grant to the Agent, for the
benefit of the Banks and the Agent, a first priority, perfected
security
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interest in substantially all of its assets as collateral security for
such guaranty, pursuant to security documents, mortgages, pledges and
other documents in form and substance satisfactory to the Agent, each
of which documents shall be Security Documents hereunder; and (iv)
deliver to the Agent all such evidence of corporate authorization,
legal opinions (including local counsel opinions where applicable),
and other documentation as the Agent may request."
ss.24. AMENDMENT OF ss.9.10 OF THE CREDIT AGREEMENT. Section 9.10 of the
Credit Agreement is hereby amended by deleting the section heading and inserting
"9.10 AGREEMENTS WITH RESPECT TO CERTAIN SUBSIDIARIES OF THE BORROWER," and by
inserting the following sentence at the end of ss.9.10:
"Neither the Borrower nor any of the other Transaction Parties shall
(a) without limiting the Indebtedness and Investment limitations set
forth in ss.ss.9.1(i), 9.3(f) and 9.3(g), transfer assets to Hadco
Scotland, Hadco Ireland, Hadco Singapore (following the incorporation
thereof) or Hadco Malaysia in an aggregate amount exceeding, for all
such entities, $2,000,000 or (b) permit Hadco Scotland, Hadco Ireland,
Hadco Singapore (following the incorporation thereof) or Hadco
Malaysia at any one time to own, hold or have an interest in, property
or assets, whether tangible or intangible and including cash and cash
equivalents, in excess of those reasonably required for the conduct of
each such entity's business operations in the ordinary course."
ss.25. ADDITION OF ss.ss.9.12 AND 9.13 TO THE CREDIT AGREEMENT. The Credit
Agreement is hereby amended by inserting, immediately after ss.9.11 of the
Credit Agreement and immediately before ss.10 of the Credit Agreement, the
following new ss.ss.9.12 and 9.13:
"9.12. BANK ACCOUNTS. The Borrower will not, and will not permit
any of the other Transaction Parties to, (i) establish any bank
accounts other than those Interim Concentration Accounts and other
accounts, all listed on SCHEDULE 7.22, without the Agent's prior
written consent, (ii) violate directly or indirectly any Agency
Account Agreement or other bank agency or lock box agreement in favor
of the Agent for the benefit of the Banks and the Agent with respect
to such account, (iii) deposit into any of the payroll accounts listed
on SCHEDULE 7.22 any amounts in excess of amounts necessary to pay
current payroll obligations from such accounts, (iv) at any time
deposit or maintain in the accounts designated on SCHEDULE 7.22 as
"Imprest" accounts an aggregate amount for all such accounts in excess
of $100,000, (v) at any time maintain in any accounts opened by or on
behalf of Hadco Malaysia, Hadco Singapore, Hadco Ireland, Hadco FSC or
Hadco
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Scotland and listed on SCHEDULE 7.22 an aggregate amount for all such
accounts in excess of $700,000, (vi) at any time deposit or maintain
in Account No. 00015321 with State Street Bank & Trust Company,
designated on SCHEDULE 7.22 as "TC East Freight" an aggregate amount
in excess of $20,000, (vii) deposit or maintain in any of the accounts
listed on SCHEDULE 7.22 and designated as "Dependent Care", "Santa
Clara Voluntary Disability Plan-Contributions" or "Santa Clara
Voluntary Disability Plan-Distributions" any amounts in excess of
amounts necessary for the Borrower or such Transaction Party to meet
its state or federally mandated obligations with respect to dependent
care tax credits or, as the case may be, disability plans, or (viii)
at any time deposit or maintain in any of the accounts designated on
SCHEDULE 7.22 as "Rabbi Trust-Money Market" and "Rabbi
Trust-Disbursements" any amounts in excess of those to be distributed
to employees of Hadco Santa Clara in connection with the Zycon
Employee Distribution upon the vesting of their interests therein
(with the aggregate of such amounts to be distributed being less than
$2,000,000 as of the Third Amendment Effective Date). Upon request of
the Agent, the Borrower shall, within ten (10) business days following
any request therefor, document for the Agent the flow of funds to and
from the accounts referenced in (iv) and (v) hereof."
"9.13. CREATION OF SUBSIDIARIES. None of the Transaction Parties
shall create any Subsidiary (not existing on the Third Amendment
Effective Date and other than Subsidiaries disclosed in ss.7.18
hereof) unless (a) one hundred percent (100%) of the capital stock or
other equity interests of such Subsidiary are owned by a Guarantor or
the Borrower, (b) prior to the formation of such Subsidiary, the
Borrower shall notify the Agent and the Banks thereof in writing, and
(c) contemporaneously with the formation of such Subsidiary, the
Borrower shall, or shall cause such other Transaction Party to, (i)
take all steps as may be necessary or advisable in the opinion of the
Agent to pledge to the Agent, for the benefit of the Banks and the
Agent, on a perfected, first-priority basis, all of the capital stock
or other equity interests of such Subsidiary (except that 65% (or such
larger percentage as may be permitted without creating material
adverse tax consequences for the Borrower under the Code) of the
capital stock of Hadco Singapore, Hadco Ireland, Hadco Scotland, Hadco
FSC, CCIR International and Hadco Malaysia shall be pledged) pursuant
to a pledge agreement in form and substance satisfactory to the Agent,
which such pledge agreement shall be a Stock Pledge Agreement and a
Security Document hereunder, (ii) cause any such Subsidiary which is
or is to become a Guarantor to guaranty all of the Obligations
hereunder pursuant to a guaranty in the
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form of EXHIBIT E hereto, which such guaranty shall be a Guaranty and
a Security Document hereunder, (iii) cause any such Subsidiary which
is or is to become a Guarantor to take all steps as may be necessary
or advisable in the opinion of the Agent to grant to the Agent, for
the benefit of the Banks and the Agent, a first priority, perfected
security interest in substantially all of its assets as collateral
security for such guaranty, pursuant to security documents, mortgages,
pledges and other documents in form and substance satisfactory to the
Agent, each of which documents shall be Security Documents hereunder,
and (iv) deliver to the Agent all such evidence of corporate or other
authorization, legal opinions (including local counsel opinions where
applicable) and other documentation as the Agent may request."
ss.26. AMENDMENT OF ss.10.1 OF THE CREDIT AGREEMENT. Section 10.1 of the
Credit Agreement is hereby deleted in its entirety, and the following new
ss.10.1 is hereby substituted in lieu thereof:
"10.1. FUNDED DEBT TO EBITDA. The Borrower will not, as at the end of
any fiscal quarter of the Borrower set forth in the table below, permit the
ratio of (a) Consolidated Funded Debt as at such quarter end to (b) EBITDA
for the four consecutive fiscal quarters then ended to be greater than the
ratio set forth opposite such fiscal quarter in the table below:
Fiscal Quarters Ratio
--------------- -----
3rd FQtr '98, 4th FQtr '98, 1st FQtr '99,
2nd FQtr '99 4.00:1.0
3rd FQtr '99 3.50:1.0
4th FQtr '99 and each fiscal quarter 3.25:1.0
ending thereafter
The calculation of such ratio shall include, on a PRO FORMA basis and
if and to the extent approved by the Majority Banks (which approval shall
require, INTER ALIA, the Agent's and the Banks' receipt of audited
financial statements for any Target acquired in accordance with
ss.9.5.2(b), together with an unqualified audited opinion letter from
Arthur Andersen LLP or another nationally recognized accounting firm
satisfactory to the Agent and the Majority Banks, or which financial
statements or opinion letter shall otherwise be satisfactory to the Agent
and the Majority Banks), EBITDA for such period of any Target acquired in
compliance with ss.9.5.2(b), regardless of whether such acquisition is by
way of stock purchase, asset purchase or pooling of interests."
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ss.27. AMENDMENT OF ss.10.2 TO THE CREDIT AGREEMENT. Section 10.2 of the
Credit Agreement is hereby deleted in its entirety, and the following new
ss.10.2 is hereby substituted in lieu thereof:
"10.2. EBIT TO INTEREST EXPENSE. (a) For the four consecutive fiscal
quarters of the Borrower ended August 1, 1998, the Borrower will not permit
the ratio of (a) EBIT for such fiscal quarters to (b) Consolidated Total
Interest Expense for such fiscal quarters to be less than 3.0:1.0, and (b)
thereafter, the Borrower will not, as at the end of any fiscal quarter of
the Borrower set forth in the table below, permit the ratio of EBIT for
such fiscal quarter to Consolidated Total Interest Expense for such fiscal
quarter to be less than the ratio set forth opposite such fiscal quarter in
the table below (with such requirement not to be in effect for any quarter
prior to the second fiscal quarter, 1999):
Fiscal Quarter Ratio
-------------- -----
2nd FQtr '99 1.5:1.0
3rd FQtr '99 1.9:1.0
4th FQtr '99 2.2:1.0
1st FQtr '00 and thereafter 2.5:1.0"
ss.28. AMENDMENT OF ss.10.4 OF THE CREDIT AGREEMENT. Section 10.4 of the
Credit Agreement is hereby amended by deleting the first sentence thereof in its
entirety and substituting in lieu thereof the following new sentence:
"The Borrower will not permit the Fixed Charge Coverage Ratio (a) for
the four consecutive fiscal quarters of the Borrower ended August 1, 1998
to be less than 0.69:1.0; and (b) for any other period of four consecutive
fiscal quarters of the Borrower commencing with the four consecutive fiscal
quarters ending with the third fiscal quarter, 1999 of the Borrower (with
such requirement not to be in effect for the four consecutive fiscal
quarter period ending with the fourth fiscal quarter, 1998 or the first or
second fiscal quarters, 1999), to be less than 1.10:1.00."
ss.29. ADDITION OF ss.ss.10.5 AND 10.6 TO THE CREDIT AGREEMENT. The Credit
Agreement is hereby amended by inserting, immediately after ss.10.4 of the
Credit Agreement and immediately before ss.11 of the Credit Agreement, the
following new ss.ss.10.5 and 10.6:
"10.5. EBITDA TO INTEREST EXPENSE. The Borrower will not permit the
ratio of EBITDA for any fiscal quarter ending in the table set forth below
to Consolidated Total Interest Expense for such fiscal quarter to be less
than the ratio set forth opposite such fiscal quarter in the table
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below (with such requirement not to be in effect for any fiscal quarter of
the Borrower after the first fiscal quarter, 1999):
Fiscal Quarter Ratio
-------------- -----
3rd FQtr '98 1.70:1.0
4th FQtr '98 2.70:1.0
1st FQtr '99 3.15:1.0"
"10.6. CAPITAL EXPENDITURES. The Borrower will not make, or permit any
of its Subsidiaries to make, Capital Expenditures in any fiscal quarter of
the Borrower commencing with the third fiscal quarter, 1998 through and
including its fourth fiscal quarter, 1999, that exceed, in the aggregate,
$22,500,000 PLUS, in the case of the fourth fiscal quarter, 1998, and the
first, second, third and fourth fiscal quarters, 1999, of the Borrower,
fifty percent (50%) of any amount permitted to be, but not actually,
utilized during the immediately preceding fiscal quarter."
ss.30. ADDITION OF ss.12.5 TO THE CREDIT AGREEMENT. The Credit Agreement is
hereby amended by inserting, immediately after ss.12.4 of the Credit Agreement
and immediately before ss.13 of the Credit Agreement the following new ss.12.5:
"ss.12.5. BORROWING BASE REPORT. The Agent shall have received the
most recent Borrowing Base Report required to be delivered to the Agent in
accordance with ss.8.4(h) and, if requested by the Agent, a Borrowing Base
Report dated within five (5) days of the Drawdown Date of such Loan or of
the date of issuance, extension or renewal of such Letter of Credit."
ss.31. AMENDMENT OF ss.13.1 OF THE CREDIT AGREEMENT. Section 13.1 of the
Credit Agreement is hereby amended by:
(a) inserting, in subsection (b) thereof, immediately after the text
"the Agent's Fee," and immediately before the text "or other sums due
hereunder," the text "the usage fees,"
(b) inserting, immediately before the semicolon (";") at the end of
subsection (c) thereof the text: "or any of the covenants contained in any
of the Security Documents".
(c) deleting subsection (j) thereof in its entirety, and substituting
the following new subsection (j) in lieu thereof:
"(j) if any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded or the Agent's security interests, mortgages or
liens in a substantial portion of the Collateral shall
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cease to be perfected, or shall cease to have the priority
contemplated by the Security Documents, in each case otherwise than in
accordance with the terms thereof or with the express prior written
agreement, consent or approval of the Banks, or any action at law,
suit or in equity or other legal proceeding to cancel, revoke or
rescind any of the Loan Documents shall be commenced by or on behalf
of the Borrower or any of its Subsidiaries party thereto or any of
their respective stockholders, or any court or any other governmental
or regulatory authority or agency of competent jurisdiction shall make
a determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Loan Documents is illegal,
invalid or unenforceable in accordance with the terms thereof;"
(d) amending subsection (m) thereof by inserting after the text "there
shall occur" the text: "any material damage to, or loss, theft or
destruction of, a substantial portion of the Collateral, whether or not
insured or there shall occur";
(e) deleting subsection (o) in its entirety and substituting in lieu
thereof the following new subsection (o):
"(o) the Borrower or any of the other Transaction Parties shall
be indicted for a state or federal crime, or any civil or criminal
action shall otherwise have been brought or threatened against the
Borrower or any of the other Transaction Parties, a punishment for
which in any such case could include the forfeiture of any assets
(which phrase shall not be deemed to include any payment of money
damages in connection with a criminal action or a civil suit not
related to any forfeiture action) of the Borrower or such other
Transaction Party included in the Borrowing Base or any assets of the
Borrower or such other Transaction Party not included in the Borrowing
Base but having a fair market value in excess of $1,000,000;"
ss.32. ADDITION OF ss.13.4 TO THE CREDIT AGREEMENT. The Credit Agreement is
hereby amended by inserting, immediately after ss.ss.13.3 of the Credit
Agreement and immediately before ss.14 of the Credit Agreement, the following
new ss.13.4:
"13.4 DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that the Agent
receives proceeds as contemplated by ss.2.11 or in the event that,
following the occurrence and during the continuance of any Default or Event
of Default, the Agent or any Bank, as the case may be, receives any monies
in connection with the enforcement of any the Security Documents, or
otherwise with respect to the realization upon any of the Collateral, such
monies shall be distributed for application as follows:
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(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such
monies by the Agent, for the exercise, protection or enforcement by
the Agent of all or any of the rights, remedies, powers and privileges
of the Agent under this Credit Agreement or any of the other Loan
Documents or in respect of the Collateral or in support of any
provision of adequate indemnity to the Agent against any taxes or
liens which by law shall have, or may have, priority over the rights
of the Agent to such monies;
(b) Second, to all Swing Line Loans, in such order or preference
as the Agent may determine;
(c) Third, to all other Obligations in such order or preference
as the Majority Banks may determine; PROVIDED, HOWEVER, that (i)
distributions shall be made (A) PARI PASSU among Obligations with
respect to the Agent's fees payable pursuant to ss.5.1 and all other
Obligations (other than with respect to the Swing Line Loans) and (B)
with respect to each type of Obligation owing to the Banks, such as
interest, principal, fees and expenses, among the Banks PRO RATA, and
(ii) the Agent may in its discretion make proper allowance to take
into account any Obligations not then due and payable;
(d) Fourth, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Banks and the Agent
of all of the Obligations, to the payment of any obligations required
to be paid pursuant to ss.9-504(1)(c) of the Uniform Commercial Code
of the Commonwealth of Massachusetts; and
(e) Fifth, the excess, if any, shall be returned to the Borrower
or to such other Persons as are entitled thereto."
ss.33. AMENDMENT OF ss.15.1(c) OF THE CREDIT AGREEMENT. Section 15.1(c) of
the Credit Agreement is hereby amended by inserting, at the end thereof, the
following additional sentence:
"Such actions include the designation of the Agent as "secured party",
"mortgagee" or the like on all financing statements and other documents and
instruments, whether recorded or otherwise, relating to the attachment,
perfection, priority or enforcement of any security interests, mortgages or
deeds of trust in collateral security intended to secure the payment or
performance of any of the Obligations, all for the benefit of the Banks and
the Agent."
33
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ss.34. AMENDMENT OF ss.16 OF THE CREDIT AGREEMENT. Section 16 of the Credit
Agreement is hereby amended by:
(a) deleting the word "and" immediately before clause (f) thereof;
(b) inserting, immediately before the period (".") at the end thereof,
the following text:
"and (g) any fees, costs, expenses and bank charges, including
bank charges for returned checks, incurred by the Agent in
establishing, maintaining or handling agency accounts, lock box
accounts and other accounts for the collection of any of the
Collateral".
ss.35. AMENDMENT OF ss.17 OF THE CREDIT AGREEMENT. Section 17 of the Credit
Agreement is hereby amended by:
(a) deleting the word "or" in front of clause (c) thereof;
(b) inserting, immediately before the proviso contend therein the
following text:
"or (d) the renewal or withdrawal of any provisional credits
granted by the Agent upon the transfer of funds from lock box, bank
agency or concentration accounts or in connection with the provisional
honoring of checks or other items;".
ss.36. REDUCTION OF TOTAL COMMITMENT PURSUANT TO SS.2.3 OF THE CREDIT
AGREEMENT. The Borrower hereby notifies the Agent and the Banks of the exercise
of its right pursuant to ss.2.3 of the Credit Agreement to reduce the Total
Commitment by $100,000,000 to $300,000,000, effective as of the Effective Date
(as hereinafter defined). In connection with such reduction, each of the Agent
and the Majority Banks hereby waives the requirement of ss.2.3 of the Credit
Agreement that the Borrower give seven (7) Business Days prior written notice to
the Agent of its intention to reduce the Total Commitment, and hereby agrees
that this Amendment shall constitute the notice from the Agent to the Banks of
such reduction required by ss.2.3 of the Credit Agreement. The Borrower hereby
agrees to pay to the Agent, for the respective accounts of the Banks, on the
Effective Date, the full amount of any commitment fee accrued on the amount of
such reduction of the Total Commitment.
ss.37. REPLACEMENT OF SCHEDULES 1 AND 7.3 AND EXHIBIT C TO THE CREDIT
AGREEMENT; ADDITION OF SCHEDULES 7.6, 7.21, 7.22 AND 8.19 AND EXHIBIT F;
REVISION OF SCHEDULES 9.1 AND 9.2. SCHEDULES 1 and 7.3 and EXHIBIT C to the
Credit Agreement are hereby deleted in their entirety, and SCHEDULES 1 and 7.3
and EXHIBIT C attached hereto are hereby respectively substituted in lieu
thereof. SCHEDULES 7.6, 7.21, 7.22 and 8.19 and EXHIBIT F
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attached hereto are hereby respectively added as schedules and exhibits to the
Credit Agreement. SCHEDULE 9.1 to the Credit Agreement is hereby amended by
supplementing the reference to the "Bank Line of Credit" of Hadco Malaysia to
permit Indebtedness under such Bank Line of Credit in an aggregate amount not to
exceed $5,000,000 or the equivalent thereof in other applicable currencies at
any time. SCHEDULE 9.1 and SCHEDULE 9.2 to the Credit Agreement are hereby
amended by adding thereto the two items listed on SCHEDULE 7.3 hereto under the
heading "Additions since Balance Sheet Date of October 25, 1997".
ss.38. CONDITIONS TO EFFECTIVENESS. This Amendment shall be deemed to be
effective as of September 14, 1998 (the "Effective Date") (PROVIDED, HOWEVER,
that ss.ss.27 and 28 shall be deemed to be effective as of July 30, 1998), upon
the Agent's receipt of the following, each in form and substance satisfactory to
the Agent:
(a) facsimile copies of original counterparts (to be followed promptly
by original counterparts) or original counterparts of (i) this Amendment,
duly executed by each of the Borrower, the Guarantors, the Agent and the
Majority Banks, and (ii) each of the Security Documents (as defined in the
Credit Agreement, as amended hereby), each duly executed by the Borrower
and/or each Guarantor party thereto;
(b) payment to the Agent in cash, for the account of each Bank, (i) an
amendment fee of $375,000, $187,500 of which has already been paid and
distributed to the Banks and (ii) the amount of the commitment fee accrued
on the $100,000,000 reduction of the Total Commitment pursuant to ss.36;
(c) a duly executed Secretary's certificate of the Secretary or
Assistant Secretary of the Borrower and each Guarantor certifying (and
where applicable, attaching copies of) the Borrower's or such Guarantor's
(i) Charter documents; (ii) By-laws; (iii) resolutions of its Board of
Directors authorizing the transactions contemplated hereby; and (iv) the
incumbency of officers entitled to sign this Amendment and the Security
Documents on behalf of the Borrower or such Guarantor, as the case may be;
(d) good standing certificates for each of the Borrower and the
Guarantors from its jurisdiction of incorporation and from each
jurisdiction in which such entity has qualified to do business as a foreign
corporation;
(e) favorable legal opinions from Hamilton & Dahmen, LLP and New York
local counsel;
(f) duly executed UCC-1 financing statements showing the Borrower
and/or the Guarantor as debtors in each such jurisdiction;
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(g) stock certificates and duly executed blank stock powers with
respect to all shares of capital stock pledged pursuant to any of the Stock
Pledge Agreements other than those stock certificates and stock powers
referenced in ss.ss.8-10 of SCHEDULE 8.19 hereto;
(h) intentionally omitted;
(i) an initial Borrowing Base Report;
(j) an initial Accounts Receivable aging report;
(k) a duly executed Perfection Certificate (as defined in the Security
Agreement) from each of the Borrower and each Guarantor; and
(l) such other documents, agreements and items as the Agent may
require, including, without limitation, execution and delivery, together
with performance of the agreements and delivery of the items specified
therein, of a fee letter satisfactory in form and substance to the Agent,
duly executed by the Agent and the Borrower.
ss.39. REPRESENTATIONS AND WARRANTIES; NO DEFAULT; AUTHORIZATION. Each of
the Borrower and the Guarantors hereby represents and warrants to each of the
Agent and the Banks as follows:
(a) Each of the representations and warranties of the Borrower and the
Guarantors contained in the Credit Agreement, the other Loan Documents or
in any document or instrument delivered pursuant to or in connection with
the Credit Agreement, the other Loan Documents or this Amendment was true
as of the date as of which it was made, and no Default or Event of Default
has occurred and is continuing as of the date of this Amendment or would
occur after giving effect to the transactions contemplated by this
Amendment; and
(b) This Amendment has been duly authorized, executed and delivered by
the Borrower and each of the Guarantors, and shall be in full force and
effect upon the satisfaction of the conditions set forth in ss.38 hereof,
and the agreements of the Borrower and each of the Guarantors contained
herein, in the Credit Agreement as herein amended, or in the other Loan
Documents respectively, constitute the legal, valid and binding obligations
of the Borrower and each of the Guarantors party hereto or thereto,
enforceable against the Borrower or such Guarantor, in accordance with
their respective terms, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights and except to the
extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceeding therefor may be brought.
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ss.40. RATIFICATION, ETC. Except as expressly amended hereby, the Credit
Agreement, the other Loan Documents and all documents, instruments and
agreements related thereto are hereby ratified and confirmed in all respects and
shall continue in full force and effect. All references in the Credit Agreement
or such other Loan Documents or in any related agreement or instrument to the
Credit Agreement or such other Loan Documents shall hereafter refer to such
agreements as amended hereby, pursuant to the provisions of the Credit
Agreement.
ss.41. NO PRESENT CLAIMS. In order to eliminate any possibility that any
past conditions, acts, omissions, events, circumstances or matters would impair
or otherwise adversely affect any of the rights, interests, contracts,
collateral security or remedies of the Agent or any of the Banks, each of the
Borrower and the Guarantors hereby acknowledges and agrees that: (i) neither it
nor any of the other Transaction Parties has any claim or cause of action
against the Agent, any of the Banks or any of their directors, officers,
employees or agents; (ii) neither it nor any of the other Transaction Parties
has any offset right, counterclaim or defense of any kind against any of its
obligations, indebtedness or liabilities to the Agent and/or the Banks,
including, without limitation, the Obligations; and (iii) each of the Agent and
the Banks has heretofore properly performed and satisfied in a timely manner all
of its obligations to each of the Borrower and the other Transaction Parties.
ss.42. EXPENSES. Without limiting the expense reimbursement requirements
set forth in ss.16 of the Credit Agreement, the Borrower agrees to pay on demand
all costs and expenses, including reasonable attorneys' fees, of the Agent
incurred in connection with this Amendment.
ss.43. NO IMPLIED WAIVER, ETC. Except as expressly provided herein, nothing
contained herein shall constitute a waiver of, impair or otherwise affect any of
the Obligations, any other obligations of the Borrower or any of the Transaction
Parties or any right of the Agent or the Banks consequent thereon. The waivers
and consents provided herein are limited strictly to their terms. Neither the
Agent nor any of the Banks shall have any obligation to issue any further waiver
or consent with respect to the subject matter hereof or any other matter.
ss.44. COUNTERPARTS. This 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.45. GOVERNING LAW. THIS AMENDMENT SHALL FOR ALL PURPOSES BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CHOICE OR CONFLICTS OF LAWS).
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a
document under seal as of the date first above written.
HADCO CORPORATION
By: /s/ Timothy P. Losik
-------------------------------------------
Name: Timothy P. Losik
Title: Senior VP, CFO, Treasurer
BANKBOSTON, N.A., individually and as Agent
By: /s/ Jeffrey G. Millman
-------------------------------------------
Name: Jeffrey G. Millman
Title: Vice President
ABN AMRO BANK N.V.
By: /s/ Bruce W. Swords / Dave A. Carroll
-------------------------------------------
Name: Bruce W. Swords Dave A. Carroll
Title: Vice President Officer
THE BANK OF TOKYO - MITSUBISHI TRUST COMPANY
By: /s/ Jim Brown
-------------------------------------------
Name: Jim Brown
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Robert McMillan
-------------------------------------------
Name: Robert McMillan
Title: Corporate Banking Officer
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KEYBANK NATIONAL ASSOCIATION.
By: /s/ Lawrence A. Mack
-------------------------------------------
Name: Lawrence A. Mack
Title: Senior Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Brian K. Chin
-------------------------------------------
Name: Brian K. Chin
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ Terrence M. Pitcher
-------------------------------------------
Name: Terrence M. Pitcher
Title: Vice President
THE FUJI BANK, LIMITED
By: /s/ Teiji Teramoto
-------------------------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
SUNTRUST BANK, ATLANTA
By: /s/ Melissa Swint
-------------------------------------------
Name: Melissa Swint
Title: Operations Officer
By: /s/ W. David Wisdom
-------------------------------------------
Name: W. David Wisdom
Title: Group Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:
-------------------------------------------
Name:
Title:
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FIRST UNION NATIONAL BANK,
successor by merger to CORESTATES BANK, N.A.
By: /s/ Robert A. Brown
-------------------------------------------
Name: Robert A. Brown
Title: Vice President
STATE STREET BANK AND TRUST COMPANY
By: /s/ Bruce S. Daniels
-------------------------------------------
Name: Bruce S. Daniels
Title: Vice President
MELLON BANK, N.A.
By: /s/ R. Jane Westrich
-------------------------------------------
Name: R. Jane Westrich
Title: Vice President
THE SANWA BANK, LIMITED
By:
-------------------------------------------
Name:
Title:
USTRUST
By: /s/ Daniel G. Eastman
-------------------------------------------
Name: Daniel G. Eastman
Title: Vice President
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Each of the undersigned hereby acknowledges the foregoing Amendment as of the
Effective Date and agrees that its obligations under the Guaranty to which it is
a party will extend to the Agreement, as so amended, and the other Loan
Documents, as so amended.
HADCO SANTA CLARA, INC.
By: /s/ Timothy P. Losik
--------------------------------------
Title: Senior VP, CFO, Treasurer
HADCO PHOENIX, INC.
By: /s/ Timothy P. Losik
--------------------------------------
Title: Senior VP, Treasurer
CCIR OF CALIFORNIA CORP.
By: /s/ Timothy P. Losik
--------------------------------------
Title: CFO, Treasurer
CCIR OF TEXAS CORP.
By: /s/ Timothy P. Losik
--------------------------------------
Title: CFO, Treasurer