End of Month

EX-10.57 3 dex1057.htm LETTER OF AMENDMENT DATED AUGUST 4, 2009 Letter of amendment dated August 4, 2009

Exhibit 10.57

Wachovia Capital Finance Corporation (Canada)

141 Adelaide Street West, Suite 1500

Toronto, Ontario M5H 3L5

 

  August 4, 2009   

VIA EMAIL

SMTC Manufacturing Corporation of California

2302 Trade Zone Boulevard

San Jose, California USA 95131

-and-

SMTC Manufacturing Corporation of Massachusetts

109 Constitution Boulevard, Unit 160

Franklin, Massachusetts USA 02038

-and-

SMTC Mex Holdings, Inc.

635 Hood Road

Markham, Ontario Canada L3R 4N6

Dear Ms. Jane Todd:

 

  Re: Wachovia Capital Finance Corporation (Central), Export Development Canada, SMTC Manufacturing Corporation of California, SMTC Manufacturing Corporation of Massachusetts and SMTC Mex Holdings, Inc.

Reference is made to the second amended and restated US loan agreement dated as of August 7, 2008 as amended by letter agreement dated April 2, 2009 (as amended, modified, supplemented, extended, renewed, restated or replaced from time to time, the “US Loan Agreement”) between Wachovia Capital Finance Corporation (Central), as the Revolving Lender and the Agent, Export Development Canada, as the Tranche B Lender and the Tranche B Agent, and each of SMTC Manufacturing Corporation of California, SMTC Manufacturing Corporation of Massachusetts and SMTC Mex Holdings, Inc., as the US Borrowers.

 

  1. Definitions. In this letter, unless otherwise defined or the context otherwise requires, all capitalized terms shall have the respective meanings specified in the US Loan Agreement.

 

  2. Amendment to US Loan Agreement.

 

  (a) This letter is an amendment to the US Loan Agreement. Unless the context of this letter otherwise requires, the US Loan Agreement and this letter shall be read together and shall have effect as if the provisions of the US Loan Agreement and this letter were contained in one agreement. The term “Agreement” when used in the US Loan Agreement means the US Loan Agreement as amended by this letter, together with all amendments, modifications, supplements, extensions, renewals, restatements and replacements thereof from time to time.


  (b) The US Loan Agreement is amended as follows:

 

  (i) Schedule 8.18 hereto shall be a schedule to the US Loan Agreement.

 

  (ii) Section 8.18 EBITDA” of the US Loan Agreement is deleted and replaced with:

8.18    EBITDA

Each US Borrower shall ensure that EBITDA for SMTC Corporation and its Subsidiaries, calculated at the end of each month on a consolidated trailing twelve (12) month basis, shall not be less than the amounts set forth in the table below:

 

End of Month

   TTM EBITDA
January 2009    US$ 5,900,000
February 2009    US$ 6,200,000
March 2009    US$ 3,400,000
April 2009    US$ 3,400,000
May 2009    US$ 4,200,000
June 2009    US$ 3,700,000
July 2009    US$ 4,200,000
August 2009    US$ 4,000,000
September 2009    US$ 3,700,000
October 2009    US$ 3,800,000
November 2009    US$ 4,300,000
December 2009    US$ 3,800,000
January 2010    US$ 4,200,000
February 2010    US$ 4,700,000
March 2010    US$ 5,500,000
April 2010    US$ 4,200,000
May 2010    US$ 4,700,000
June 2010    US$ 5,500,000

 

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It is the intention of the Agent, the Tranche B Agent and the US Borrowers to reset in writing the EBITDA covenant in Section 8.18 by July 10, 2010 and if the Agent, the Tranche B Agent and the US Borrowers cannot agree on such reset by July 10, 2010 then the US Borrowers shall comply with the Fixed Charge Coverage Ratio in Section 8.22.

The Agent, the Tranche B Agent and the US Borrowers acknowledge and agree that Schedule 8.18 sets out how the Agent calculated the EBITDA covenant in Section 8.18 and that total 2008 EBITDA of US$5,897,000 in column A in Schedule 8.18 represents EBITDA for 2008 retrieved from SMTC Corporation’s 2008 financial statements.”.

 

  (iii) Section 8.22 Fixed Charge Coverage Ratio” of the US Loan Agreement is deleted and replaced with:

8.22    Fixed Charge Coverage Ratio

In the event that the Agent, the Tranche B Agent and the US Borrowers cannot agree to reset in writing the EBITDA covenant in Section 8.18 by July 10, 2010 then each US Borrower shall ensure that SMTC Corporation and its Subsidiaries maintain a Fixed Charge Coverage Ratio of not less than 1.25:1 calculated at the end of each fiscal month starting with July 2010 on a consolidated trailing twelve (12) month basis and in accordance with GAAP.”.

 

  (iv) Section 8.24 Maximum Unfunded Capital Expenditures” of the US Loan Agreement is deleted and replaced with:

8.24    Maximum Unfunded Capital Expenditures

Each US Borrower shall ensure that SMTC Corporation and its Subsidiaries do not, directly or indirectly, make or commit to make, whether through purchase, capital leases or otherwise, unfunded Capital Expenditures in an aggregate amount in excess of US$1,000,000 for fiscal year 2009 of SMTC Corporation.

It is the intention of the Agent, the Tranche B Agent and the US Borrowers to reset in writing the Maximum Unfunded Capital Expenditures covenant in Section 8.24 by July 10, 2010 and if the Agent, the Tranche B Agent and the US Borrowers cannot agree on such reset by July 10, 2010 then the maximum unfunded capital expenditure amount above shall be US$500,000 for fiscal year 2010 and each fiscal year of SMTC Corporation on a go forward basis.”.

 

  (c) The effective date of the amendment to the US Loan Agreement provided in this letter is August 4, 2009.

 

  3. No Novations. Nothing in this letter, or in the US Loan Agreement when read together with this letter, shall constitute a novation, payment, re-advance or reduction or termination in respect of any Obligations.

 

  4. Financing Agreement. This letter is a Financing Agreement.

 

Page 3


  5. Expenses. The US Borrowers shall pay all fees, expenses and disbursements including, without limitation, legal fees, incurred by or payable to the Agent, Tranche B Agent and US Lenders in connection with the preparation, negotiation, completion, execution, delivery and review of this letter and all other documents and instruments arising therefrom and/or executed in connection therewith.

 

  6. Conditions Precedent to Effectiveness. This letter shall not be effective until each of the following conditions has been met to the satisfaction of each of the Agent, the Tranche B Agent and the US Lenders or has been waived in writing (in whole or in part) by all of them in their sole respective discretion:

 

  (a) the Agent, the Tranche B Agent and the US Lenders have received this letter duly authorized, executed and delivered by each of the US Borrowers and the Obligors;

 

  (b) [no Default or Event of Default has occurred and is continuing; and

 

  (c) no material adverse change shall have occurred with respect to any of the US Borrowers or the Obligors since the date of the Agent’s latest field examination and no change or event shall have occurred which would have a material adverse effect on any of the US Borrowers or the Obligors.

 

  7. Continuance of US Loan Agreement and Security.

 

  (a) The US Loan Agreement, as amended by this letter, shall be and continue in full force and effect and is hereby confirmed and the rights and obligations of all parties thereunder shall not be affected or prejudiced in any manner except as specifically provided for herein.

 

  (b) Each of the US Borrowers and the Obligors hereby acknowledges, confirms and agrees that:

 

  (i) all security delivered by the US Borrowers and the Obligors secures the payment of all of the Obligations including, without limitation, the obligations arising under the US Loan Agreement, as amended by the terms of this letter; and

 

  (ii) the Agent, the Tranche B Agent and the US Lenders shall continue to have valid, enforceable and perfected first priority liens upon the collateral described in the Financing Agreements, subject only to liens expressly permitted pursuant to the US Loan Agreement.

 

  (c) To induce the Agent, the Tranche B Agent and the US Lenders to enter into this letter, each of the US Borrowers and the Obligors hereby represent and warrant to each of the Agent, the Tranche B Agent and the US Lenders as follows, which representations and warranties shall survive the execution and delivery of this letter:

 

  (i) the US Borrowers and the Obligors are in compliance with all covenants in the Financing Agreements;

 

Page 4


  (ii) all the representations and warranties set out in the Financing Agreements are true and accurate;

 

  (iii) no Default or Event of Default has occurred or is continuing;

 

  (iv) no material adverse change has occurred with respect to any of the US Borrowers or the Obligors since the date of the Agent’s latest field examination and no change or event has occurred which would have a material adverse effect on any of the US Borrowers or the Obligors;

 

  (v) the execution delivery, delivery and performance of this letter and the transactions contemplated hereunder are all within its powers, have been duly authorized by it and are not in contravention of law or the terms of its organizational documents or any indenture, agreement or undertaking to which it is a party or by which it or its property is bound;

 

  (vi) it has duly executed and delivered this letter; and

 

  (vii) this letter constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

 

  8. Counterparts. This letter may be executed in any number of separate original, facsimile or pdf counterparts, each of which shall be deemed an original and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

 

  9. Governing Law. The validity, interpretation and enforcement of this letter and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by the laws of the State of Illinois.

 

  10. Further Assurances. At the request of any of the Agent, the Tranche B Agent and the US Lenders at any time and from time to time, each of the US Borrowers and the Obligors shall, at their expense, duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be requested by any of the Agent, the Tranche B Agent and the US Lenders to effectuate the provisions or purposes of this letter.

 

  11. Amendments and Waivers. Neither this letter nor any provision hereof shall be amended, modified, waived or discharged orally or by course of conduct, but only by a written agreement signed by the parties hereto.

 

  12. Headings. The division of this letter into sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this letter.

 

  13. Successors and Assigns. This letter shall be binding upon and inure to the benefit of and be enforceable by the Agent, the Tranche B Agent, the US Lenders, the US Borrowers and the Obligors and their respective successors and assigns. The US Borrowers and the Obligors may not assign their respective rights under this letter without the prior written consent of the Agent, the Tranche B Agent and the US Lenders.

 

Page 5


  14. Partial Invalidity. If any provision of this letter is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this letter as a whole, but this letter shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law.

 

  15. Acceptance. If the foregoing correctly sets out our agreement, please indicate your acceptance of this letter by signing below and returning an executed copy to us by no later than 5:00 p.m. on August 4, 2009 (the “Effective Date”). If not so signed and returned to us by all parties hereto on the Effective Date, this letter shall be null and void.

 

 

Yours truly,

   
  REVOLVING LENDER AND AGENT:    
 

WACHOVIA CAPITAL FINANCE

CORPORATION (CENTRAL)

   
 

By:

 

   
   

Name:

  Carmela Massari    
   

Title:

  First Vice President    
     

Wachovia Capital Finance Corporation

(Canada)

   
 

By:

 

 

   
   

Name:

     
   

Title:

     

 

Page 6


 

Agreed this 4th day of August 2009.

   
  TRANCHE B LENDER AND TRANCHE B AGENT:    
  EXPORT DEVELOPMENT CANADA    
 

By:

 

 

   
   

Name:

     
   

Title:

     
 

By:

 

 

   
   

Name:

     
   

Title:

     

 

Page 7


 

Agreed this 4th day of August 2009.

   
 

US BORROWER:

   

US BORROWER:

  SMTC MANUFACTURING CORPORATION OF CALIFORNIA     SMTC MANUFACTURING CORPORATION OF MASSACHUSETTS
 

By:

 

   

By:

 

   

Name:

 

Jane Todd

     

Name:

 

Jane Todd

   

Title:

 

CFO

     

Title:

 

CFO

 

By:

 

   

By:

 

   

Name:

 

John Caldwell

     

Name:

 

John Caldwell

   

Title:

 

CEO

     

Title:

 

CEO

 

US BORROWER:

       
  SMTC MEX HOLDINGS, INC.        
 

By:

 

       
   

Name:

 

Jane Todd

       
   

Title:

 

CFO

       
 

By:

 

       
   

Name:

 

John Caldwell

       
   

Title:

 

CEO

       

 

Page 8


OBLIGORS:

Each of the undersigned Obligors hereby:

 

  (a) acknowledges, confirms and agrees that such Obligor’s Financing Agreements (as each of the same may have been amended, modified, supplemented, extended, renewed, restated or replaced) remain in full force and effect as at the date hereof in respect of the Obligations under the US Loan Agreement;

 

  (b) acknowledges and confirms that such Obligor has received a copy of the US Loan Agreement and this letter and understands and agrees to the terms thereof;

 

  (c) acknowledges and confirms that the representations and warranties set forth in the Financing Agreements to which it is a party continue to be true and correct as of the date hereof; and

 

  (d) acknowledges and confirms that it is in compliance with the covenants set forth in the Financing Agreements to which it is a party as of the date hereof.

Dated as of the 4th day of August, 2009.

 

  SMTC CORPORATION     SMTC HOLDINGS, LLC
 

By:

 

   

By:

 

   

Name:

 

Jane Todd

     

Name:

 

Jane Todd

   

Title:

 

CFO

     

Title:

 

CFO

 

By:

 

   

By:

 

   

Name:

 

John Caldwell

     

Name:

 

John Caldwell

   

Title:

 

CEO

     

Title:

 

CEO

  HTM HOLDINGS, INC.     RADIO COMPONENTES DE MEXICO, S.A. DE C.V.
 

By:

 

   

By:

 

   

Name:

 

Jane Todd

     

Name:

 

Jane Todd

   

Title:

 

CFO

     

Title:

 

CFO

 

By:

 

   

By:

 

   

Name:

 

John Caldwell

     

Name:

 

John Caldwell

   

Title:

 

CEO

     

Title:

 

CEO

 

Page 9


  SMTC DE CHIHUAHUA, S.A. DE C.V.    
 

By:

 

   
   

Name:

 

Jane Todd

   
   

Title:

 

CFO

   
 

By:

 

   
   

Name:

 

John Caldwell

   
   

Title:

 

CEO

   

 

Page 10


SCHEDULE 8.18

EBITDA CALCULATIONS

[NTD: See attached.]

 

Page 11


SMTC

EBITDA

  (US$)    A
Actual
2008
    B
Plan
2009
    C
85%
plan
    D
Rolling 12-mth
2009
   E
Rolling 12-mth
adj non
qtr mths
   F
Covenant

Jan

     $ (1,016   $ (461   $ (530   $ 6,383    $ 5,883    $ 5,900

Feb

       30        107        91        6,444      6,194      6,200

Mar

       3,316        347        295        3,423      3,423      3,400

Apr

       (475     233        198        4,096      3,366      3,400

May

       107        466        396        4,385      4,135      4,200

Jun

       1,300        698        593        3,678      3,678      3,700

Jul

       (950     360        306        4,934      4,204      4,200

Aug

       1,187        600        510        4,257      4,007      4,000

Sep

       1,212        693        589        3,634      3,634      3,700

Oct

       (589     390        332        4,555      3,816      3,800

Nov

       371        394        335        4,519      4,269      4,300

Dec

       1,404        759        645        3,760      3,760      3,800

Total

     $ 5,897      $ 4,586      $ 3,760      $ 3,760    $ 3,760    $ 3,800

Per 2008 10 K

     $ 5,897               

Jan 2010

       $ 380      $ 332      $ 4,680    $ 4,180    $ 4,200

Feb 2010

         394        335        4,983      4,733      4,700

Mar 2010

         759        645        5,447      5,447      5,500

Note:

If financial covenant is not reset by April 10, 2010, April test will be FCCR 1.25:1

Column A represents actual EBITDA for 2008 retrieved from client’s projection model and total matched to 2008 10-K

Column B represents EBITDA per 2009 projections

Column C represents 85% of 2009 projected EBITDA

Column D represents rolling EBITDA (A and C)

Column E is the same as D except that non-qtr month ends are lower than in D-QTR end periods are equal

Column F covenant (rounded)